Gartner, Inc. (NYSE: IT), a research and advisory firm specializing in the financial and IT industries and a member of the S&P 500, recently released a report for its clients titled “Hype Cycle for Blockchain Technologies, 2019.” The report shows that most corporate blockchain solutions are still five to ten years away from having a transformational impact on any industries as the company defines it.
For years, all sorts of companies have flooded the media with reports of using blockchain technology for everything from tracking vegetables to fake luxury handbags. These claims mostly involved tests that were done only for the sake of publicity, riding the coattails of cryptocurrency, and almost never about actual products. A new report from Gartner asserts that in reality the enterprise solutions behind these projects are still five to ten years away from making an actual impact.
Gartner: Blockchain Technologies Have Not Lived up to the Hype
For enterprise blockchain solutions to become mainstream, Gartner said users shouldn’t have to worry about picking the right platform, the right smart contract language, the right system interfaces, and the right consensus algorithms. Additionally, the company explained that concerns about how users will interoperate with partners that use different blockchain platforms for their projects must be rectified.
“Blockchain technologies have not yet lived up to the hype and most enterprise blockchain projects are stuck in experimentation mode”, said Avivah Litan, analyst and research vice president at Gartner. “Blockchain is not yet enabling a digital business revolution across business ecosystems and may not until at least 2028, when Gartner expects blockchain to become fully scalable technically and operationally.”
When Will the Blockchain Hype End?
The Gartner report shows that enterprise blockchain is sliding into what the research company defines as the “Trough of Disillusionment” and the market will begin to climb out of this phase only by 2021. According to Gartner, the trough of disillusionment is the third phase of a technology’s “hype cycle” – comprising the period during which interest wanes as experiments and implementations fail to deliver. During this phase, producers of the technology shake out or fail and investments continue only if the surviving providers improve their products to the satisfaction of early adopters.
Gartner: Hype Cycle for Blockchain Technologies, October 2019
The hype around corporate distributed ledgers has been unrelenting in recent years and the term “blockchain” was deemed the most misused buzzword of 2018. A survey of 120 marketers and 181 ad agency executives was conducted in January 2019 to find out what words or terms were given too much weight in the advertising industry last year. 26% of participants picked “blockchain” as the most overrated word of 2018, giving it the number one spot in the poll.
Blockchain Will Transform Most Industries in 10 Years
Information technology service management giant Gartner foresees blockchain becoming transformative for most industries within 10 years.
Gartner made its remarks in the press release accompanying its 2019 Hype Cycle for Blockchain research, published on Sept. 12.
“Some level” of blockchain adoption in the next 3 years: CIOs
The Hype Cycle report tries to provide “an overview of how blockchain capabilities are evolving from a business perspective and maturity across different industries.”
Research vice-president at Gartner David Furlonger said:
“Even though they are still uncertain of the impact blockchain will have on their businesses, 60% of CIOs in the Gartner 2019 CIO Agenda Survey said that they expected some level of adoption of blockchain technologies in the next three years. However, the existing digital infrastructure of organizations and the lack of clear blockchain governance are limiting CIOs from getting full value with blockchain.”
This data shows how the market changed when compared with the results of the survey that Gartner published in May last year when only 66% of chief information officers (CIOs) knew about blockchain but only 22% planned on using it.
Blockchain adoption in multiple industries
Per the release, nearly 18% of banking and investment services CIOs say that they have adopted or plan to employ some form of blockchain technology within the next 12 months. Another 15% plans to do so in the next two years.
“We see blockchain in several key areas in banking and investment services, primarily focused on permissioned ledgers. … We also expect continued developments in the creation and acceptance of digital tokens. However considerable work needs to be completed in nontechnology-related fields.”
Gartner also notes that the blockchain industry is seeing the deployment of solutions allowing “users to create their own tokens to support the design of competition as well as to enable trading of virtual goods.”
Another Gartner research executive Christophe Uzureau noted:
“High user volumes and rapid innovation make the gaming sector a testing ground for innovative application of blockchain. It is the perfect place to monitor how users push the adaptability of the most critical components of blockchain: decentralization and tokenization.”
Lastly, Gartner reports that blockchain is being used in retail for tracking and tracing services, counterfeit protection, inventory management and auditing. Still, the report notes that the full potential will be only reached once blockchain will be combined with artificial intelligence and the internet of things.
Tokenization and decentralization are key
Lastly, the report notes that blockchain can transform business models across all industries, but only if businesses adopt complete blockchain ecosystems. The author concludes:
“Without tokenization and decentralization, most industries will not see real business value.”
As Cointelegraph recently reported, according to recent research the blockchain devices market is expected to grow by 42.5% at a compound annual growth rate by 2024.