Top Reasons Why Enterprise Blockchain Projects Fail And How To Circumvent Them
Dr. Ravi Chamria
Dr. Ravi Chamria
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Single New Blog Page

Blockchain is a distributed ledger technology that features data immutability, decentralization, and peer-to-peer communication. It helps to build trustless networks for businesses to transact with other organizations. In the enterprise domain, where trust is expensive, Blockchain helps organizations weed out inefficiencies both within the enterprise and industry-wide.

Today, Blockchain is becoming mainstream with the launch of large Blockchain networks and consortia like IBM Food Trust, TradeReboot, Zuron, etc. The question among the enterprise leadership is no more about whether Blockchain technology will work. It is about how we can make it work for us.

While many organizations have invested in enterprise Blockchain projects, the reality is that many of these projects do not make it beyond proof-of-concept. As per a report published by Gartner, only 5% make it to production, and 90% of them will need replacement within two years to stay at the level of the competition. 

Most have either ignored or are no longer interested in making any significant change on the spot. So, what has failed them? There are some common mistakes as to why these enterprise Blockchain systems failed. Let’s know more about them. 

Trying to Apply Blockchain to Everything

While Blockchain technology can disrupt most industries, it is not a solution to every problem. Besides, the technology is still maturing, so it is unsurprising that not everyone understands or knows its use cases. Businesses should determine if their business needs Blockchain instead of implementing it immediately. There are two ways to find that out:

  1. Is the legacy solution ineffective, insecure, or expensive? – Developing and deploying a Blockchain-based solution only makes sense when legacy systems prove inadequate.
  2. Do you have trusted sources to fetch high-quality digital data? – As Blockchains stores data immutably, it is essential to have trustworthy sources that can feed correct data to the Blockchain ledger.

If the answer to these two is yes, a business can certainly benefit from Blockchain technology. However, it is equally important to consider three interconnected areas — scalability, costs, and complexity.

  • Scalability is essential for evaluating the volume of on-chain transactions required for the proposed use cases. If an existing protocol cannot process the required volume, there’s a good chance that a business is not ready for Blockchain technology.
  • Blockchain is a complex technology that requires expertise and businesses to integrate data from trusted sources. Smart contracts implementation is another head-scratching task.
  • The cost incurred in developing and deploying Blockchain technology into a business can be huge. If adding new nodes is too expensive, a business is possibly not ready for Blockchain implementation.

Lack of Incentives

People work when they can gain something. Most firms get this wrong, and they put technical design ahead of economic design. Digital heads accord less priority to users’ incentives and product value. Instead, businesses prioritize hiring top-class technical talent. 

Another reason for the failure of most enterprise Blockchain systems is the fundamental misunderstanding of the Blockchain’s economics and the means to creating long-term monetization. Like social media platforms, Blockchain systems derive most of their value from their users. Therefore, firms should understand the network effects of initial use cases and then line them up with the early user base.

Lack of Governance

The governance mechanism of an Enterprise Blockchain system is perhaps the most significant predictor of a business’s success. While many institutions know what Blockchain governance is and how to best implement it, achieving this goal in the real world is, at times, more challenging than estimated. Blockchain governance requires consensus between users on the network and the consensus accomplished by validators.

Projects like MakerDAO and DASH were the two of the first few projects that aim to harness a “governance model” to diversify trust in trust-less ecosystems. While some might argue that Bitcoin doesn’t have any governance but is still a successful project, others suggest that if Bitcoin had a healthy governance system, it would have been more successful than it has been.

The governance structure becomes very important if you are getting into a Blockchain consortium. Typically, in Blockchain consortia, the industry’s competitors come together and take a collaborative approach. So, having a proper governance structure becomes all the more important. 

Lack of Regulatory Clarity

As with other innovative technologies, Blockchains also struggle with regulatory challenges as the proper regulatory framework is not in place. Besides, regulations have always struggled to keep up with the emerging tech space. “It is a revolution because Blockchains can record identities, financial transactions, and all kinds of legal operations”, says tech guru Chris Skinner. Whether it be the legal validity of identities stored on the Blockchain or transactions executed by smart contracts, a legal and regulatory framework is required.

One interesting use case is the use of Blockchain as a valid regulatory registry for the Internet of Things. In IoT, all connected devices have an identity, and Blockchain can act as a shared registry of such identities and enable secure device-to-device transactions. Now, this would necessitate a legal framework recognizing distributed ledgers as valid regulatory registries.

Blockchain is a “Database” Mentality

The advent of Blockchain technology has led to the creation of the Distributed Ledger Technology or Web3.0 world. Even so, most enterprises who adopt DLT do so thinking they’re deploying traditional databases. As for now, Blockchains can store only limited amounts of data on-chain, which include transactions that are recorded on the ledger. In no way, these ledgers should be considered a database to store data. It simply won’t work. 

So, a sound architecture needs to be designed for a decentralized application. There should be an ideal combination of on-chain and off-chain data design. This helps in achieving desired performance without compromising on security, privacy, or large data sets.

Lack of Blockchain Expertise in Enterprises

As mentioned earlier, Blockchain systems enable value exchange and require sound architecture. This entails knowledge about programming languages (specialized in some cases like Ethereum), incentive mechanisms, cryptography, smart contracts, governance, and tokenomics. This unique skill-set is quite different from the traditional application requirements. A poorly designed Blockchain application will fail to deliver the expected value.

Legacy System Challenges

The enterprise Blockchain applications do not work single-handedly. Rather, the legacy systems, applications, and data sets need to integrate seamlessly. It is a complex exercise as the demands for traditional and distributed systems are different. Besides, while working with some organizations like banks or hospitals, they must adhere to compliance. If the integration is not seamless, it will lead to issues such as data inconsistency, poor user experience, cost overheads, and poor performance.

Poorly defined KPIs

Blockchain applications operate on a decentralized network with stakeholders from within and outside the organization. Thus, the success parameters need to be properly defined for a Blockchain system. 

Some of the Key Performance Indicators (KPIs) could be transaction cost, throughput, growth in the number of stakeholders leading to the network effect, user experience, etc. The KPIs should also align with the business objectives. For example, while working on a trade finance use case, the parameters like time reduced to complete a transaction, the number of documents reduced, and several disputes reduced become important.

High cost of Implementation

As blockchain is a new technology that is involved day by day, so here the cost of implementing this technology is too high, and this is one of the major challenges. 

The high cost of implementation is mainly because of the slow speed of transactions and high energy consumption. For instance, the bitcoin network transacts only 3 to 5 transactions per second, and Ethereum can manage up to 15 transactions per second. It consumes a lot of energy in this process.


One of the most important issues that must be addressed is interoperability, as it is one of the main reasons businesses are indecisive to adopt blockchain technology so far. Most blockchains are kept isolated and do not communicate with other peer networks because they cannot transmit and receive data from a separate blockchain-based system.

Enterprise Blockchain Adoption – Way Forward

While many enterprise Blockchain systems have failed in the past, some have revolutionized the industry through the ideal use of Blockchain technology. Indubitably, the technology holds the potential to disrupt every space, from banking to supply chain and healthcare to voting systems.

 As per Deloitte’s 2020 Global Blockchain Survey, 55% of the surveyed businesses said Blockchain is a top-five strategic priority, 39% already have Blockchain applications in production, and 82% are either hiring staff with Blockchain expertise or plan to within the next 12 months. 85% of the respondents believe their suppliers, customers, and competitors are working on Blockchain solutions to address current challenges in the value chain.

To unlock the value and promise of Web 3.0, the adoption of Blockchain in enterprises needs to be accelerated. To circumvent the challenges mentioned above, Organizations need to articulate a sound adoption strategy that includes implementing the right tools and partnering with the right partners.

About Zeeve 

Zeeve has been at the forefront of enterprise Blockchain adoption, and we have helped many organizations conceptualize and implement Blockchain Technology. Zeeve’s Blockchain as a Service platform supports faster development of decentralized applications through a rich set of ready-to-deploy services and APIs, manages CI/CD pipelines, provides automated deployments of Blockchain nodes and networks, and monitors the Blockchain infrastructure. Zeeve helps save more than 60% in costs and time to market.


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