John Rampton is an entrepreneur, blockchain enthusiast and online marketing guru. He is founder of the online payments company Due.
In this opinion piece, Rampton recalls the lessons he learned when trying to apply blockchain solutions to his startup.
In serving as a record for every bitcoin that has been generated and transferred between parties, the blockchain has a critical role to play. Each cryptocurrency has its own blockchain, so it becomes very important to be able to use it correctly in order to maintain its quality and credibility as a value exchange network.
For me, I originally sought out blockchain for a project that would transform the online database functionality powering our online invoicing and payment system, which included the directory of users, their staff, and their clients.
Because of the complexity of keeping all this transaction data organized and secure, we wanted to offer a streamlined transaction system for our customers that offered greater payment options across multiple traditional and digital currencies while lowering transaction costs and speeding up the payment process.
At the time, I recognized the potential that blockchain technology had to help us quickly advance our technology and the solution we offered customers, thereby creating a competitive advantage.
The only problem? I hadn’t yet developed a deep knowledge of the technology, so mistakes were made along the way.
As a relatively new concept, blockchain is still evolving, so it’s easy to understand how mistakes can be made in terms of how it can actually be used. Many processes are still being tested to see if private blockchain applications will work for various business functions. By sharing the mistakes I’ve made, hopefully others can learn and avoid the same pitfalls
With that, here are the nine things not to do when using blockchain that we learned the hard way.
1. Failing to understand how blockchain actually works
Although dynamic and easier to manage once in the midst of using it, I made the mistake of just assuming I could figure out what blockchain was all about over time.
It’s a much better idea to take the time to read the available research and how-to guides. It’s also a good idea to seek out information from qualified companies that work in the bitcoin and blockchain space, as well as visit forums where you can ask questions and gain a more practical understanding.
If I had done this first, I would not have fumbled along and wasted so much time and effort. For example, I would have realized that certain data systems can sit outside the blockchain and still work without leading to operational redundancies.
2. Not selecting the blockchain software that aligns with my business purpose
Initially, I made the mistake of turning to the bitcoin blockchain because my criteria was a) that I had heard of it before, and b) it had been around the longest in terms of testing and stability.
This made it the most credible choice at the time – but not necessarily the one that would work well with my business need.
The problem is that it wasn’t exactly what I was looking for in terms of my business purpose once I started looking into available custom blockchain software that has since been developed and deployed.
While the new custom blockchain software has yet to go through as much testing, and may not have the same level of robustness, I have found one that aligns with my business needs.
3. Being impatient and trying to rush the timeline for blockchain adoption
I thought everyone else would be as excited as I was about the potential of blockchain for various business applications.
However, I saw that it takes time to get buy-in from other organizations that I wanted to include in my private blockchain. Not only did I have to convince them of the value, but then we also had to agree on using the same software – not the easiest process by any means.
Since then, I’ve had to learn to be patient. But in that time I also turned to a more proactive approach in order to show these organizations the benefits they would receive. Ultimately, I believe they will come around to the idea – eventually.
4. Thinking every business function can be improved with blockchain
Don’t assume like I did that, because blockchain seems so flexible as part of machine technology, that it will help every business function.
That’s because it won’t – at least not right now in its current form.
The good news is that, since the network is only accessible to a limited group of people, anything that doesn’t work as part of a test doesn’t have to end up impacting the business or your brand’s reputation.
5. Believing the system is already protected from user mistakes
While the internet uses domain names rather than numeric-based IP addresses to reference a location, blockchain nodes are only referenced by public key hash, which makes them more susceptible to human error.
This has happened to me as it has to so many others, so developing something similar to how the internet uses domain names could help solve this typical user mistake.
6. Not limiting access to private keys
Within an organization, not everyone should have access to the private key file that unlocks access to the blockchain.
That’s because this can essentially corrupt the ledger because people are using it who may not know what they are doing. While the network needs to be accessible for use, I had to determine how to decide who should use it and, then, how to go about making it accessible.
I am still working on a contingency plan should the private key get corrupted or lost.
7. Making the blockchain too ‘heavy’
I realized that, in using blockchain for business applications with a high volume of information held within various documents, the amount of stored blockchain data can add up quickly.
This is because the blockchain tends to replicate itself with every node that is added. To lighten the blockchain load, thereby returning its processing speed and efficiency, I had to link the blockchain to an external data source.
While this may reduce its reliability to a certain degree through the separation of the data, it is still a better solution to a data-heavy blockchain.
8. Not realizing there are limitations to blockchain as a database
While it is an excellent solution for a secure and private database, it is not a store-all for an endless amount of data. Trying to use it for any large-scale database application is a mistake.
Not only can the database on blockchain not hold all the information you need it to contain reliably, but it also may become too complex with the addition of other necessary database features that help analyze that information.
9. Not seeing the potential flaws within blockchain
Because I’ve been so excited about this new technology, I have taken the approach that it is the end-all solution – but the reality is that there are many inherent flaws in its design that still need to be addressed.
This is a system that continues to evolve, which leaves it open to flaws that will need to be addressed.
That means I had to think more about proceeding with caution before completely integrating blockchain technology into the applications I was using it for within my business.
Instead, I’ve stuck to a testing phase and limited use to see how the flaws that have become apparent are addressed. This is another reason why it is important to continue researching, reading, and engaging with forums and thought leaders in cryptocurrency.
Conclusion
Like mistakes in any part of business, these blockchain errors have become the necessary lessons that propelled me toward greater success with incorporating the technology into my business processes.
The most important lesson? Be open and curious to the potential that blockchain technology may hold for numerous applications – and then proceed thoughtfully with thorough research and testing.
Collaboration among businesses looking to adopt potential applications can make this process that much more fruitful.
Mistake image via Shutterstock