The blockchain hype starting in the late 2010s has nearly died, replaced by intense interest in AI and hurt by sketchy cryptocurrency and NFT schemes, some experts say.
Gartner’s last hype cycle for blockchain, released in July 2024, had most blockchain-related technologies moving past the peak of inflated expectations and headed into the trough of disillusionment. Related technologies headed into the trough include NFTs, Web3, decentralized exchanges, and blockchain for IoT.
The excitement has faded so much that the IT analyst firm may not release another hype cycle chart for blockchain, says Adrian Leow, vice president in Gartner’s applications and software engineering leaders group.
There has been limited success with blockchain technologies with specific use cases, such as the Vatican using NFTs to put its archives online. Most of the value from blockchain won’t happen for another five years or so, Leow says.
Blockchain technologies “just really haven’t hit the heights that was promised,” Leow says. “This is not an overnight sensation.”
There’s still interest in some related technologies, including cryptocurrency and blockchain wallets, but Leow doesn’t see widespread adoption in the future unless blockchain is paired with other emerging technologies such as AI and quantum computing. “The technology is still going to evolve, but not on its own,” he says.
For example, blockchain may be able to give organizations a level of trust and security when they string multiple AI agents together to create a multi-step business or IT process, he says.
Interoperability and scalability problems
In addition to overpriced NFTs and crypto controversies, a major problem with blockchain has been scalability and interoperability across ledgers and with other technologies, Leow says.
In addition, C-suite and board interest in blockchain has taken a nosedive, he says, replaced by demands that CIOs invest in AI. The spending on AI takes money away from other IT projects, including blockchain.
“Blockchain has a lot of promise, but it’s tactical,” Leow says. “The blockchain experimentation that’s happening is what you’re willing to burn, and it’s more an experiment to see what is possible, but it’s not replacing your existing processes or tools.”
A recent criticism of blockchain comes from Jim Fowler, CTO at insurance carrier Nationwide. While insurance carriers were an early example of potential users, Fowler talks about blockchain as an example of how to avoid getting distracted by shiny, new technologies.
“Blockchain is a fantastic technology, and it’s a bright and shiny object that has zero to no use,” Fowler recently told CIO.com’s Dan Roberts. “So stop investing in it. We talk about it not as stopping it but putting it on the shelf and saying, ‘Okay, we’ve gone as far as we need to at this point.’
“We understand it,” he adds. “We understand the prospects and the opportunity. We understand why it’s not being taken up. Let’s put it on the shelf, and every year we’ll revisit to see if something changed.”
Lacking benefits at scale
Fowler is not alone in his skepticism about blockchain. It hasn’t yet delivered practical benefits at scale, says Salome Mikadze, co-founder at software development firm Movadex. Still, the technology is showing promise in some niche areas, such as secure data sharing or certain supply chain scenarios, she says.
“Most of us agree that while it’s an exciting idea, its real-world applications are still limited,” Mikadze adds. “In short, blockchain is on the shelf for now — something we check in on periodically, but not a priority until it proves its worth in the real world.”
The crazy hype around digital art NFTs turned blockchain into a bit of a joke, adds Trevor Fry, an IT consultant and fractional CTO. Many organizations haven’t found other uses for blockchain, he says.
“Blockchain was marketed as this must-have innovation, but in practice, it doesn’t solve a problem that many companies or people have,” he says. “Unlike AI and LLMs, which have real-world applications across industries and have such a low barrier to entry that everyone can easily try it, blockchain’s use cases are very niche, though not useless.”
Fry sees eventual benefits in supply chain tracking and data integrity, situations where a secure and decentralized record can matter.
“But right now, it’s not solving a big enough pain point for most organizations to justify the complexity and cost and hiring people who know how to develop and work with it,” he adds. “Until that changes, companies will keep investing in AI, automation, and tools that drive clear ROI instead of experimenting with blockchain ‘just because.’”
Uses behind the scenes
Other IT leaders see blockchain benefits right now. Mogul Club, a platform for micro investing in real estate, uses blockchain to track ownership in a property, says Eitan Prince, CTO of the company.
In the right scenario, blockchain offers “unparalleled transparency, security, and efficiency” to digitize real world assets, he says. Unfortunately, scammers have given blockchain a bad name, he adds.
“Most people associate blockchain with rug pulls, honeypots, worthless memecoins, and other scams,” Prince says. “And I do think that random memecoins and NFTs not associated with any real asset are useless.”
But blockchain has many legitimate uses, he says, such as tracking real estate transactions. In many cases, these uses are invisible to end users, such as the buyers and sellers of property.
“If a person were to transfer that ownership to someone else, we can trace the history of who owned it and for what value at any time,” Prince says. “That feels a lot safer to me than worrying about a piece of paper somewhere in your house.”
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Source: News