Blockchain technology has been one of the most discussed innovations in the field of information technology (IT) over the past decade. More and more startups and companies are considering projects related to blockchain technology or already commercializing blockchain solutions in various business or public sector domains.
However, research from Forbes and Gartner in 2019 shows that despite significant investments and interest in this technology, more than 90% of blockchain projects are unsuccessful. This is almost twice the failure rate of traditional IT implementations. What sets blockchain technology apart from other IT solutions and why is its development so challenging?
Blockchain technology – what is it?
In traditional IT, we are familiar with centralized systems where a single network node performs the main computing and data storage functions. Data is stored in a database, allowing for quick storage of large amounts of data and organizing fast data search or editing. For example, the US telecommunications giant AT&T has one of the largest databases – nearly 2 trillion records. The most popular database model, the relational database, was created in the 1970s.
The main requirement of centralized IT solutions is that system (and data) control is carried out by a single entity responsible for data authenticity, storage, and other functions. Traditional IT solutions like Google search, YouTube video storage, Facebook or Instagram social networks, the Social Security database, Vilnius University’s Moodle system, and others are well-established technologies with decades of development and plenty of educational materials, courses, and certifications available for professionals.
Blockchain is a digital database. Like in a traditional database, any data can be stored in a blockchain: purchase and sale information, property rights, securities, personal data records, weather conditions or aircraft movement data, and more. Data records are stored in data blocks that are interconnected to form a unified blockchain.
So, while traditional databases store all data in a single central server, blockchain technology stores identical copies of databases in each network node. When a new data block is added to the blockchain, the data in that block cannot be deleted or changed. Therefore, blockchain technology is considered quite secure (protected from unauthorized changes). To change information stored in data blocks, one would need to hack into all network computers and make identical changes in all stored data copies.
What hinders the exploitation of blockchain technology’s potential?
There are many reasons why blockchain technology projects face failures. Apart from technological challenges, overcoming human factors or other related challenges is necessary to fully exploit the potential of blockchain technology.
Many new technologies enter the market gradually – first, there is an increase in interest in the technology, much discussion about its potential, and high expectations are created, followed by the initiation of the first improvement and implementation projects. However, first-generation technologies rarely meet the high expectations.
According to financial consulting firm Deloitte, only 8% of the 86,000 blockchain technology projects on the Github platform were successful. Out of 200 projects submitted to the Illinois blockchain initiative, only a few remain. The European Commission’s Joint Research Centre presented a report on seven pilot blockchain projects, stating that about half of the pilot projects were halted before transitioning to large-scale usage. Therefore, looking at various data related to early blockchain projects, we can see that many projects were not successful and struggled to meet the high expectations.
Blockchain technology projects can be likened to Abraham Maslow’s quote: „If the only tool you have is a hammer, every problem will look like a nail.“ Many startups and other companies became interested in this technology and wanted to implement it in their operations. Implementing technology in a company involves problem-solving, so the problem should first be analyzed, and possible solutions should be considered, with blockchain technology being one of the chosen solutions. However, in many cases, technology is chosen first, and then ways to use it are sought, without considering the specific characteristics of blockchain technology.
There is often a misconception that implementing new technologies will not change the business model and processes. This misconception usually arises from a lack of knowledge about blockchain technologies. According to a 2019 Forbes study, 92.5% of blockchain technology projects fail due to a lack of knowledge and understanding of the technologies. This knowledge gap is more common among managers, project managers, and product owners. Therefore, when implementing blockchain technologies, interdisciplinary knowledge about the technology, its impact on business processes, cybersecurity, and more is needed. Researchers and industry representatives agree that managers‘ knowledge, skills, and involvement in implementing IT solutions determine project success, but this golden rule is often forgotten when developing blockchain technology projects.
What knowledge and competencies are needed?
It would not be entirely accurate to say that the lack of adherence to the golden rule about knowledge and skills when implementing IT projects is the main problem of blockchain technology project teams. Since these technologies are still new and rapidly evolving, encompassing many organizational decisions, it is not yet clearly understood and defined what specific knowledge and skills are needed to successfully implement a blockchain project. However, looking at the high number of unsuccessful projects and analyzing their causes, it becomes clear that implementing blockchain technologies requires interdisciplinary and comprehensive knowledge of technology, management, law, and other areas. Therefore, researchers from Vilnius, Tartu (Estonia), Copenhagen (Denmark), and Dortmund (Germany) technical universities, implementing the „BlockNet“ project, created a blockchain technology training course and compiled a list of specific competencies required for a specialist in this field – understanding blockchain functions and capabilities, trust management and smart contracts knowledge, evaluation of various blockchain models, schemes, and solutions, blockchain technology development skills, knowledge of laws and other regulations governing the use of blockchain technologies, and more.
Where to learn blockchain technology in Lithuania?
The demand for employees and experts with knowledge and skills in blockchain technology is very high and constantly growing. Today, blockchain technologies are mostly applied in the financial sector. Interest in this technology from other sectors, government institutions, academic communities, and the general public is also high because blockchain technology is a radically new way to register and distribute information.
In Lithuania, the first training on blockchain technology started in 2019 at an adult programming school, followed by individual study subjects at several universities in our country.
At Vilnius University’s Kaunas Faculty, as well as in three foreign partner universities, interdisciplinary blockchain technology training courses were developed under the „BlockNet“ project, delivered both remotely and in person. These courses aim to provide students and the general public with deeper knowledge of the most advanced blockchain technologies, their development, security principles, and application in modern business environments. These courses look at blockchain technologies from various perspectives: business development, logistics, cybersecurity, and computer systems engineering.
A new course developed by researchers from four countries‘ universities was tested at the Kaunas Faculty in the Financial Technology (FinTech) master’s program. Students gained knowledge about blockchain technologies and their application in technological and managerial aspects. Courses from Dortmund Technical University were tested as part of the „Logistics“ module, as blockchain technologies are becoming increasingly important in facilitating information flows in logistics and supply chains. Students at the University of Copenhagen learned to create blockchain programs, while the course at the University of Tartu was tested in the IT security program, where students gained knowledge about blockchain information security aspects.
Currently, 172 unique users have tested the „BlockNet“ courses, performing over 42,000 activities. You can join the „BlockNet“ courses on Vilnius University’s open learning platform: https://atviri.emokymai.vu.lt.
The project „BlockChain Network Online Education for interdisciplinary European Competence Transfer“ (BlockNet) is funded by Erasmus+ KA2 program funds (project no: 2018-1-LT01-KA203-047044).
In conclusion, blockchain technology holds great promise for revolutionizing various industries and sectors. However, to fully harness its potential, it is essential to address the challenges and acquire the necessary knowledge and skills to successfully implement blockchain projects. By investing in education and training in blockchain technology, Lithuania is paving the way for a future workforce equipped to navigate the complexities of this innovative technology.