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CIO Authors: Charles Araujo, Jason Bloomberg, Adrian Bridgwater, Ed Featherston, Jackie Kahle

Related Topics: Cloud Computing, Agile Software Development, CIO, Microservices Journal, DevOps Journal, Blockchain

Agile Development: Blog Post

Seven Criteria for Evaluating a Blockchain Business | @ExpoDX #FinTech #Blockchain #DigitalTransformation

The insane world of cryptocurrency may be chock full of schemers, but there is more to the world of blockchain than crypto

Seven Criteria for Evaluating a Blockchain Business

The insane world of cryptocurrency may be chock full of schemers, scammers, and sharks, but there is more to the world of blockchain than crypto.

In fact, the blockchain story is bifurcating, with crypto and all its craziness on one side, and enterprise blockchain on the other.

While it may be fun to poke our stick at the former, Intellyx’s focus is on enterprise digital transformation – which means that bona fide blockchain-based business models are a key part of this ongoing story of disruption.

Regardless, we receive numerous pitches every day from all manner of blockchain-based companies, from the most serious to the silliest.

When we set up a briefing with one of them, we need to quickly determine which camp it belongs in: serious enterprise play or crazy crypto?

We’re not alone. If you’re interested in this space, regardless of whether you’re an investor, participant, or potential customer, you’ll need to separate the wheat from the chaff yourself.

Here, then, are our seven criteria for evaluating such companies – criteria you may find useful as you navigate the turbulent waters of blockchain.

1. Is there a well-defined business problem?

If a company is saying something like ‘blockchain is cool. What can we do with it?’ then you know they’re already on the wrong track. The first step for any new business idea, blockchain or no, is to identify a problem – in particular one people will pay you to solve.

It’s surprising how many blockchain business ideas fail this most important first step. Don’t waste your time on them.

2. Is a blockchain-based approach the best or only way to solve the problem?

Just because a company might be able to use blockchain to address the business problem from #1, that doesn’t mean that blockchain is the best approach. After all, blockchain is still largely on the drawing board, and is potentially only well-suited for certain problems involving multi-party transactions.

There are reasons why so many Internet-based business have centralized transaction processing: it works, we know how to scale it, and it’s a money-maker for the processor. You’d better have a very good reason for walking away from such benefits.

3. How will the company get over the tipping point?

Blockchain at its core is a decentralized, distributed ledger system. To make any blockchain-based business work, therefore, there must be a sufficient number of participants to drive adequate value for other participants to join.

In other words, blockchain is a classic example of Metcalfe’s Law: the value of the network goes up as the number of participants grows.

The problem with Metcalfe’s Law, of course, is the tipping point problem. If there aren’t enough participants, then no one else wants to join. As a result, any blockchain business must have a plan for attracting such participation ahead of this tipping point.

Going viral is one approach – but if a company is betting on virality, run in the other direction. There’s no good way to plan for virality, and it’s virtually impossible to reproduce.

What’s left? Spending money. Lots of it. And regardless of how deep the pockets, success is still far from guaranteed.

4. Who are the ‘miners’ and how will they be compensated?

In the crypto world, the transaction processors who run the distributed nodes are called miners, because Bitcoin and most other cryptocurrencies reward them for processing such transactions.

In the enterprise blockchain world, in contrast, transaction processors may or may not receive such rewards directly from the blockchain infrastructure itself. The question then arises: who will execute the blockchain transactions, and what’s in it for them?

Remember, blockchain business models are almost always decentralized, which means that such miners must step up to the plate on their own – so there had better be a plan for attracting and compensating them.

5. Is there a rational token model?

Every blockchain business essentially creates its own token economy. Such tokens may have true monetary value – in other words, cryptocurrency. Other tokens have utility, meaning that they are basically just coupons a holder of the token can exchange for a product or service.

Utility tokens would typically have monetary value as well, just as grocery coupons do – but regulations in the US and elsewhere treat them differently. In any case, most enterprise blockchain businesses appear to be leaning toward utility tokens.

You have to ask yourself, therefore, how such tokens will actually work once the business is up and running. If someone is supposed to trade a token for a product or service, then will the recipient of that token value it sufficiently to actually provide that product or service?

Do they have monetary value, and if so, how would people cash them in? Are they subject to the speculation that has driven such obscene volatility in the crypto markets, and if so, will such volatility reduce the tokens’ utility?

There are bound to be plenty more questions, but this is a start. See if you can think of more.

6. How will the company make money long-term?

Let’s say the company with the brilliant blockchain business idea is able to pass the tipping point, and now there are plenty of ‘buyers’ and ‘sellers’ willing to exchange tokens for goods or services, and plenty of miners willing to conduct the transactions.

So far, so good. Now ask yourself: how will the original company make money? Remember, the entire kit and caboodle is decentralized, so no one is in charge, including the company that got the thing off the ground.

Will they be happy simply being one of the miners? Do they consider themselves a software company, charging participants in this new blockchain economy a licensing or subscription fee for using their software? Given that much of the blockchain software in the works today is open source, then selling software won’t do. So what’s left?

Today, many such companies are focusing on their initial coin offerings (ICOs), also known as token generation events (TGEs). The idea behind an ICO is to create a large number of tokens out of thin air and sell them to speculators and future users of such tokens in order to fund the startup phase.

Sure, this ICO puts money in the coffers of the company to start, but then what? There has to be a business model (i.e., a way to make money) beyond the ICO itself.

You know what I call a company without a business model? A hobby. And what do I call a company with a lucrative ICO and no business model? A scam.

7. How will distributed consensus work without becoming centralized?

The company that founded this new blockchain ecosystem cannot remain in charge of it for fear of defeating the entire purpose of a decentralized business model in the first place.

Who, then, runs the show? If, say, someone discovers a problem with the underlying technology, who makes the decision how to fix it?

The answer: a consensus of the participants. Consensus, however, is far trickier than you might think.

First of all, who gets a vote? Just the miners? Or do all the ‘buyers’ and ‘sellers’ that participate get a say? And if they do, does their vote count for as much as the miners’ votes? Do all miners get the same vote?

Even if you solve those problems, how many votes are necessary to make a decision? Some systems have a ‘majority rules’ approach – but such an approach leads to the ‘51% problem,’ where the majority can make any changes they like, regardless of the protestations of the minority or the participants without a vote, for that matter.

Another popular system is the ‘unanimous’ approach. No voters are left in the cold with this approach to be sure, but now everyone has veto power. What if there’s one bad apple in the bunch? That party can now veto all decisions, including the one to vote them out of the gang.

What, then, is the best approach to consensus? The answer: nobody knows. This entire area is so new – not just the technology, but the business models as well – that there are numerous unknowns.

The Intellyx Take

Plenty of blockchain business have figured out #1 and #2, and a few have reasonably good, but still risky plans for getting around #3, the tipping point.

But #4 – #7? Nobody really knows what will work long-term. The issues with Bitcoin mining have illustrated that its approach isn’t going to work for enterprise blockchain businesses (and I predict it won’t keep working for crypto much longer, either). There are plenty of alternatives out there, but none of them have been through any kind of trial by fire.

As for tokens? Even Monopoly money is good for playing Monopoly, which tokens aren’t.

The consensus challenge, however, is perhaps the knottiest of all, as there’s an easy downhill path to centralization for all these businesses. Centralized decision making is just so much easier.

And regardless of which consensus model an ecosystem picks, they can always simply vote to put someone in charge and be done with it.

So, skeptics we are and shall remain. Will Intellyx continue to cover the enterprise blockchain space, in spite of our skepticism? Absolutely.

Are we ready to point to any business idea as a leader? Not even close. We’re hardly out of the starting gate.

Copyright © Intellyx LLC. Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. The author does not own any cryptocurrency, nor does he intend to own any in the future. Image credit: public domain.


DXWorldEXPO LLC, the producer of the world's most influential technology conferences and trade shows has announced the conference tracks for CloudEXPO | DXWorldEXPO 2018 New York.

DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City.

Digital Transformation (DX) is a major focus with the introduction of DXWorldEXPO within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term.

A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throughout enterprises of all sizes.

Register for Full Conference "Gold Pass" ▸ Here (Expo Hall ▸ Here)

Sponsorship Opportunities Here

Speaking Opportunities Here

Sponsorship and Speaking Inquiries: info@dxworldexpo.com.

2018 Conference Agenda, Keynotes and 10 Conference Tracks

DXWordEXPO New York 2018 and Cloud Expo New York 2018 agenda present 222 rockstar faculty members, 200 sessions and 22 keynotes and general sessions in 10 distinct conference tracks.

  • Cloud-Native | Serverless
  • DevOpsSummit
  • FinTechEXPO - New York Blockchain Event
  • CloudEXPO - Enterprise Cloud
  • DXWorldEXPO - Digital Transformation (DX)
  • Smart Cities | IoT | IIoT
  • AI | Machine Learning | Cognitive Computing
  • BigData | Analytics
  • The API Enterprise | Mobility | Security
  • Hot Topics | FinTech | WebRTC

Register for Full Conference "Gold Pass" ▸ Here (Expo Hall ▸ Here)

DXWorldEXPO | CloudEXPO 2018 New York cover all of these tools, with the most comprehensive program and with 222 rockstar speakers throughout our industry presenting 22 Keynotes and General Sessions, 200 Breakout Sessions along 10 Tracks, as well as our signature Power Panels. Our Expo Floor brings together the world's leading companies throughout the world of Cloud Computing, DevOps, FinTech, Digital Transformation, and all they entail.

As your enterprise creates a vision and strategy that enables you to create your own unique, long-term success, learning about all the technologies involved is essential. Companies today not only form multi-cloud and hybrid cloud architectures, but create them with built-in cognitive capabilities.

Cloud-Native thinking is now the norm in financial services, manufacturing, telco, healthcare, transportation, energy, media, entertainment, retail and other consumer industries, as well as the public sector.

CloudEXPO is the world's most influential technology event where Cloud Computing was coined over a decade ago and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals.

FinTech Is Now Part of the DXWorldEXPO | CloudEXPO Program!

Financial enterprises in New York City, London, Singapore, and other world financial capitals are embracing a new generation of smart, automated FinTech that eliminates many cumbersome, slow, and expensive intermediate processes from their businesses.

Accordingly, attendees at the upcoming 22nd CloudEXPO | DXWorldEXPO November 11-13, 2018 in New York City will find fresh new content in two new tracks called:

  • FinTechEXPO
  • New York Blockchain Event

which will incorporate FinTech and Blockchain, as well as machine learning, artificial intelligence and deep learning in these two distinct tracks.

Register for Full Conference "Gold Pass" ▸ Here (Expo Hall ▸ Here)

Sponsorship Opportunities Here

Speaking Opportunities Here

Sponsorship and Speaking Inquiries: info@dxworldexpo.com.

FinTech brings efficiency as well as the ability to deliver new services and a much improved customer experience throughout the global financial services industry. FinTech is a natural fit with cloud computing, as new services are quickly developed, deployed, and scaled on public, private, and hybrid clouds.

More than US$20 billion in venture capital is being invested in FinTech this year. DXWorldEXPOCloudEXPO are pleased to bring you the latest FinTech developments as an integral part of our program.

DXWorldEXPO | CloudEXPO are accepting speaking submissions for this new track, so please visit Cloud Computing Expo for the latest information or contact us at info@dxworldexpo.com.

Register for Full Conference "Gold Pass" ▸ Here (Expo Hall ▸ Here)

Sponsorship Opportunities Here

Speaking Opportunities Here

Sponsorship and Speaking Inquiries: info@dxworldexpo.com.

Download Slide Deck ▸ Here

Only DXWorldEXPO | CloudEXPO bring together all this in a single location:

Attend DXWorldEXPO | CloudEXPO. Build your own custom experience. Learn about the world's latest technologies and chart your course to Digital Transformation.

22nd International DXWorldEXPO | CloudEXPO, taking place November 11-13, 2018, in New York City, will feature technical sessions from a rock star conference faculty and the leading industry players in the world.

Register for Full Conference "Gold Pass" ▸ Here (Expo Hall ▸ Here)

Sponsorship Opportunities Here

Speaking Opportunities Here

Sponsorship and Speaking Inquiries: info@dxworldexpo.com.

Download Slide Deck: ▸ Here

Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS - software, platform, and infrastructure as a service.

With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.

Every Global 2000 enterprise in the world is now integrating cloud computing in some form into its IT development and operations. Midsize and small businesses are also migrating to the cloud in increasing numbers.

Register for Full Conference "Gold Pass" ▸ Here (Expo Hall ▸ Here)

Sponsorship Opportunities Here

Speaking Opportunities Here

Sponsorship and Speaking Inquiries: info@dxworldexpo.com.

Download Slide Deck: ▸ Here

Companies are each developing their unique mix of cloud technologies and services, forming multi-cloud and hybrid cloud architectures and deployments across all major industries. Cloud-driven thinking has become the norm in financial services, manufacturing, telco, healthcare, transportation, energy, media, entertainment, retail and other consumer industries, and the public sector.

Sponsorship Opportunities

DXWorldEXPO | CloudEXPO are the single show where technology buyers and vendors can meet to experience and discus cloud computing and all that it entails. Sponsors of DXWorldEXPO | CloudEXPO will benefit from unmatched branding, profile building and lead generation opportunities through:

  • Featured on-site presentation and ongoing on-demand webcast exposure to a captive audience of industry decision-makers.
  • Showcase exhibition during our new extended dedicated expo hours
  • Breakout Session Priority scheduling for Sponsors that have been guaranteed a 35-minute technical session
  • Online advertising on 4,5 million article pages in SYS-CON's i-Technology Publications
  • Capitalize on our Comprehensive Marketing efforts leading up to the show with print mailings, e-newsletters and extensive online media coverage.
  • Unprecedented PR Coverage: Unmatched editorial coverage on Cloud Computing Journal.
  • Tweetup to over 100,000 plus Twitter followers
  • Press releases sent on major wire services to over 500 industry analysts.

Secrets of Our Most Popular Sponsors and Exhibitors ▸ Here

For more information on sponsorship, exhibit, and keynote opportunities, contact info@dxworldexpo.com.

Sponsorship Opportunities Here

Download Slide Deck:Here

Speaking Opportunities

The upcoming 22nd International DXWorldEXPO | CloudEXPO November 11-13, 2018 in New York City, NY announces that its Call For Papers for speaking opportunities is now open.

Secrets of Our Most Popular Faculty Members ▸ Here

Submit your speaking proposal Here or by email info@dxworldexpo.com.

Download Slide Deck: ▸ Here

About DXWorldEXPO LLC

DXWorldEXPO LLC is a Lighthouse Point, Florida-based trade show company and the creator of DXWorldEXPODigital Transformation Conference & Expo. The company produces and presents CloudEXPO, DevOpsSummitFinTechEXPO Blockchain Event, the world's most influential conferences and trade shows.

More Stories By Jason Bloomberg

Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is ranked #5 on Onalytica’s list of top Digital Transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists.

As founder and president of Agile Digital Transformation analyst firm Intellyx, he advises, writes, and speaks on a diverse set of topics, including digital transformation, artificial intelligence, cloud computing, devops, big data/analytics, cybersecurity, blockchain/bitcoin/cryptocurrency, no-code/low-code platforms and tools, organizational transformation, internet of things, enterprise architecture, SD-WAN/SDX, mainframes, hybrid IT, and legacy transformation, among other topics.

Mr. Bloomberg’s articles in Forbes are often viewed by more than 100,000 readers. During his career, he has published over 1,200 articles (over 200 for Forbes alone), spoken at over 400 conferences and webinars, and he has been quoted in the press and blogosphere over 2,000 times.

Mr. Bloomberg is the author or coauthor of four books: The Agile Architecture Revolution (Wiley, 2013), Service Orient or Be Doomed! How Service Orientation Will Change Your Business (Wiley, 2006), XML and Web Services Unleashed (SAMS Publishing, 2002), and Web Page Scripting Techniques (Hayden Books, 1996). His next book, Agile Digital Transformation, is due within the next year.

At SOA-focused industry analyst firm ZapThink from 2001 to 2013, Mr. Bloomberg created and delivered the Licensed ZapThink Architect (LZA) Service-Oriented Architecture (SOA) course and associated credential, certifying over 1,700 professionals worldwide. He is one of the original Managing Partners of ZapThink LLC, which was acquired by Dovel Technologies in 2011.

Prior to ZapThink, Mr. Bloomberg built a diverse background in eBusiness technology management and industry analysis, including serving as a senior analyst in IDC’s eBusiness Advisory group, as well as holding eBusiness management positions at USWeb/CKS (later marchFIRST) and WaveBend Solutions (now Hitachi Consulting), and several software and web development positions.