The hype around blockchain is just getting started. According to forecasts from Gartner, the technology is at the beginning of its hype cycle and will clear the trough of disillusionment by 2024.
“The forecast would indicate that the Peak of Inflated Expectations will occur in 2020 and that the Trough of Disillusionment will get cleared in 2024. Geoffrey Moore would likely conclude that blockchain will ‘cross the chasm’ in 2024,” the authors write in Gartner’s Forecast: Blockchain Business Value Worldwide 2017-2030.
The trough of disillusionment is a phase on the Gartner Hype Cycle which all technologies pass through. It represents the disappointment that follows the ‘peak of inflated expectations’. On the other side of the trough is the ‘plateau of productivity’ when the tech becomes mainstream and starts to pay dividends.
By 2025, when blockchain reaches the ‘plateau of productivity’, the business value added from blockchain will be more than $176 billion dollars. That amount rises to $3.1 trillion by 2030, according to the report.
This growth in blockchain business value forecasted by Gartner shows the typical “double-hump” growth patten of an emerging technology.
“Growth in 2020 will reach 120 per cent before dropping off to a low of 27 per cent in 2023 and then reaching its second peak of growth in 2026 at 104,” according to the report.
In the next five years most of the value add will come from manufacturing — representing 40 per cent of business value add by 2020 — and digital cash. According to Gartner analysts, digital cash has the “first mover advantage” and will represent more than half of the total business value add from blockchain through 2023.
Overall the initial value of blockchain technology will come from generating new revenue. Cost savings will then be the primary value add from 2024 before new revenue regains value majority in 2030, according to the report.
Failure to launch
According to the report, blockchain technology is “fraught with difficulties not easily overcome” and success in the early years of blockchain will be hard to come by. It’s a point exemplified in the spectacular failure rate of early blockchain initiatives. Some of which are outlined in the report.
80 per cent of blockchain initiatives will not reach “live” production by 2018; most will be terminated prematurely. By the end of next year nine out of 10 insurance blockchain and smart initiatives won’t get past a pilot program. Through 2021, 95 per cent of data management projects using blockchain will fail because of either performance challenges or misapplication of the technology.
However these failures to launch aren’t necessarily a bad thing or an indictment on blockchain. Rather they may be cases of organisations testing the blockchain waters – a necessary step in order to extract value from the technology, the authors said.
“Companies will have to try blockchain to determine if there is value for them in blockchain — that is, whether there will be new revenue possibilities, cost savings or improvements in their customer’s user experience.”