Businesses have been slow to embrace blockchain. Here’s why

Blockchain is approaching its thirteenth birthday. It may not be old technology, but it can no longer be considered cutting-edge technology either. Admittedly, it took a few years for the separation of Bitcoin and blockchain to happen, and a couple more for businesses to notice. By 2017, however, the applications for blockchain technology in business began to be drawn up.

Fast forward five years, and every business worth its salt has filed some sort of blockchain patent or signed on to a pilot scheme of some sort. And yet, broad-scale integration of blockchain into the heart of modern businesses has yet to materialize. The reasons behind this are due to less ideological and technical concerns.

Make Web3 like Web2

Arguably, the biggest obstacle to broader business adoption of blockchain is due to a central pillar of the blockchain trilemma. As Vitalik Buterin famous proposeddecentralization, security and scalability are the three cornerstones of good blockchain design, but it is only possible to optimize for two of them.

Right now, the last of these pillars – scalability – is the biggest stumbling block. In a 2018 report, nearly half of 200 companies that worked on blockchain claimed scalability was the biggest hurdle they faced. The situation has only marginally improved in the years since.

Companies are used to everything working on demand through the cloud. Data Warehouse; software; AI/ML: you name it, it’s outsourced to specialist technology giants who can deliver the search results almost instantly without burdening the business with the cost of the hardware and software required to generate it. For an industry raised on instant gratification, switching to a blockchain-based infrastructure where transactions take seconds or even minutes to resolve takes some getting used to.

While there are many benefits that blockchain can deliver in terms of trust minimization and transparency, it’s a tough sell for businesses raised on web2. The answer lies in creating faster, more responsive and thus scalable web3 networks that provide all the benefits of blockchain, sugar-coated with the speed expected by the modern enterprise. However, achieving this is more than just a technical challenge; it also requires companies to branch out and try more radical approaches to distributed networking.

Quick off the blocks

There are many solutions to blockchain’s long-standing scalability problem, ranging from tackling the problem directly to bypassing it altogether. The direct approach involves using solutions such as rollups, where transactions are shunted onto a cheaper sidechain and then returned to the modern network in batches, leading to dramatic speed and fee improvements.

The side chain approach is exemplified in networks such as Boba, an Ethereum layer-2 that promises fees 60 times lower than its parent, much higher speed and a robust security model. Boba Network is currently making overtures to non-blockchain companies and believes it can corner the market for cheap blockchain solutions that work out of the box.

Every DAY has its day

While rollups and sister technologies like zk-proofs can scale blockchains like Ethereum, it feels like a lot of work just to gain access to a network that companies weren’t even sure they wanted to join in the first place.

The other approach is to try blockchain analogs that provide the same benefits as a blockchain—trust minimization, decentralization, transparency, censorship resistance—but without the scalability issues. There aren’t many candidates who fit this description, but one of them, known as a DAG, has its advocates. ONE Directed Acyclic Graph avoids the linear way in which blocks are added to a chain, favoring a more organic system of interconnected nodes.

A proponent of this approach, COTI, has upgraded its network to a protocol called MultiDAG 2.0. It may sound like a robot sent back through time to save humanity, but COTI’s DAG architecture is expressly designed for enterprises, especially fintech. It allows such organizations to build their own payment solutions and digitize any currency, with a TPS of 100,000 that rivals any legacy payment network.

The idea is that businesses can enjoy the good bits of blockchain without all the nasties: slow transactions, uncertain network fees and high access costs. It’s possible that even with a wider range of market-ready options, businesses are still not embracing blockchain en masse. What is clear, however, is that until the scalability problem is solved, we will not know how far the blockchain narrative for business must run.

The technical solutions are out there, and it is now up to the companies to step up and put them to the test.