Shelved projects show that blockchain can fall short
With the crypto industry under fire, some blockchain projects are also on the chopping block.
It wasn’t supposed to be like this.
After all, blockchains—distributed ledgers whose promise has been to transform business models—don’t necessarily need crypto. Public blockchains do; private does not.
But the high-profile shutdown of two private blockchain projects in just the past few weeks underscores that blockchain may have been a solution in search of a problem.
So far, in the post-FTX era, there has been no major decoupling of fortunes between crumbling crypto and the blockchain, a reaction some would say is no accident.
At a high level, blockchains allow data and digital assets to be tracked across peer-to-peer interactions in a decentralized manner. As for exactly what these digital assets could be, the sky is the proverbial limit, spanning contracts, non-fungible tokens (NFTs), software, content, movies, music and more.
Some high profile hits
Enterprise blockchain efforts took a high-profile hit this month when TradeLens, a blockchain system developed by AP Moller – Maersk (Maersk) and IBM shut down. At a high level, the ambition had been to digitize supply chains, share information (bills of lading and improved container tracking) and reduce fragmentation. The announcement, according to the websitenoted that the desired “level of cooperation and support has not been possible to achieve at this time.”
Separately, the Australian Securities Exchange was shelved its blockchain project, which would apparently have improved transaction settlements. The reasons? The distributed ledger technique ended up being too complex and the project kept getting delayed (it was scheduled to go live two years ago). Meanwhile, ASX is taking a pre-tax charge of about $164 million when it exits the project.
Note the reasons for the confusion mentioned above: complexity and lack of cooperation. These pain points run counter to the promise that blockchain enthusiasts have embraced over the years: Participate in a “permissionless” permissionless environment, and all sorts of positive operational benefits follow.
It is worth noting that in the case of TradeLens, the project had tracked tens of millions of shipping containers, logging 36 million electronic shipping documents, and the negatives still outweighed the positives.
It may be the case that blockchain sees a double genre. Public blockchains linked to cryptos will be called into question as various exchanges and platforms shake and tumble in the continued fallout stemming from the FTX collapse. And for the private projects, the simple fact remains that corporate austerity requires companies to look at technology projects that have been in the works for years and have yielded no real dividends.
The pressure is also more pronounced in other ways, not just on costs. Consider the fact, as described in his “Blockchain Payments Tracker,” that while many firms see benefits in embracing blockchain, there are headwinds that can hinder the leap from exploration to deployment. Among those risks: Regulation and profits, as shown in the chart below.
How consumers pay online with stored credentials
Convenience prompts some consumers to store their payment information with merchants, while security concerns give other customers pause. For “How We Pay Digitally: Stored Credentials Edition,” a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 U.S. consumers to analyze the consumer dilemma and reveal how merchants can win over holdouts.
