02/02/2021

Blockchain Primer for 2019

Published 4 January 2019 - ID G00709935 - 11 min read

ARCHIVED This research is provided for historical perspective; portions may not reflect current
conditions.

By Analysts Avivah Litan, Adrian Leow

Initiatives: Application and Product Portfolio Governance

Blockchain “winter” is now settling in after several years of extreme market hype.
Despite this, IT leaders must prepare for the inevitable blockchain “spring” that will
emerge once the core-enabling technologies and use cases evolve and mature,
resulting in significant benefits for the enterprise.

Scope
This initiative explains the disruptive potential of blockchain; also, how to create the strategy and tactics
to test and deploy blockchain in order to remain competitive in the future.

Gartner’s blockchain research for organizations focuses on:

■ Blockchain strategies: Arming EA and technology innovation leaders with the right tools to evaluate
their risk tolerance, business strategy and culture alongside the radically disruptive nature of
blockchain, and giving them the frameworks for new governance and business models.

■ Blockchain technologies: Understanding how blockchain-related technologies will evolve and mature
over time in the enterprise. How to balance the opportunities provided by blockchain-related
technologies with their appropriateness for use cases, and their limitations and challenges in
integrating with current systems.

■ Blockchain markets: How to recognize the differences, as well as the interdependencies, between
different industry initiatives and, subsequently, how to maximize business value by determining use
cases that most benefit from this unique technology. Also, evaluating and selecting technology and
service providers that best meet the needs of applications, platforms and services.

Some content may not be available as part of your current Gartner subscription. Contact an Account
Executive if you wish to discuss expanding your access to Gartner content.

Analysis

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Blockchain Overview

Gartner (January 2019)

IT leaders such as enterprise architecture (EA) and technology innovation leaders, and CIOs, face a
confusing, complicated and rapidly evolving blockchain technology landscape. At the same time, every
IT leader needs to understand that this technology is likely to impact their business in some way during
the next five years. This impact will be either because their competitors are implementing it, or because
they will be asked or required to participate in a blockchain network with other organizations in their
ecosystem.

EA and technology innovation leaders must approach blockchain technology with deliberation, by
establishing best practices and strategies for its use, and simultaneously understand the future
possibilities it enables and can best address. They must also assess the costs and benefits of adopting
this new technology against using proven legacy technology such as databases, and ensure they only
adopt blockchain for use cases that legacy technology cannot support.

We will continue to present frameworks for assessing the benefits and opportunities of blockchain. We
will analyze the strategies, governance and business processes, use cases, technology features and
vendors that should be evaluated and implemented as part of this journey. Using our research, IT leaders

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can either forge ahead to new ways of doing digital business with partners and customers, or be
prepared to join the pack, when participation in a blockchain platform becomes inevitable.

Topics
Sentiment among many blockchain industry observers has soured since the heady hype of the past few
years. A “blockchain winter” is settling in for at least the next two to three years, as we traverse through
the Trough of Disillusionment (see “Hype Cycle for Blockchain Business, 2018”). 1

For many, blockchain is a technology looking for a problem. Much of the resulting disillusionment is due
to the misalignment of blockchain with the requirements of enterprise projects. But it also is due to
complete blockchain technology — with features such as decentralized consensus, elimination of central
authorities, tokenization, data confidentiality, scalability, manageability, security services and more — still
not being ready for enterprise use. In 2019, IT leaders, including CIOs, trying to embrace blockchain face
a confusing array of technology questions. They seek to understand: how it works, why they need it,
what value it offers over legacy database or other technologies, what use cases are most appropriate
and how to work with their peers in a consortia. They also need to understand how to integrate
blockchain into their existing systems and processes.

Our research centers on the following topics:

Planned Research
■ Analyses of various surveys, including from end-user enterprise and service providers, to inform an
understanding of the blockchain market today, and how it will evolve during the next five years

■ The future integration of Internet of Things (IoT) and blockchain networks, and the potential this
integration enables

■ The future integration of artificial intelligence (AI) with blockchain components such as smart
contracts and transaction risk assurance

■ Hype Cycles for blockchain business and blockchain technology

■ Predicts reports for blockchain business and blockchain technology

■ Top 10 strategic technology trends for 2019, for blockchain

■ Use cases for various sectors, such as supply chain, trade and supply chain finance, insurance,
government, media and entertainment, communications, corporate and retail cryptocurrency
payments, CRM and customer service, higher education, and more

■ How regulatory compliance is driving blockchain adoption and innovation in many use cases

■ How tokens are shaking industry foundations and providing new revenue opportunities

■ How blockchain adoption will affect an organization’s business models

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■ How to navigate the limits and implications of blockchain governance

■ Establishing governance and business processes for blockchain consortia and industry participants

■ Adopting a framework for managing smart contracts

■ A review of blockchain as a service — blockchain platforms in the cloud

■ A technical primer for assessing a blockchain platform

■ A framework for evaluating blockchain consensus algorithms

■ Analysis of the evolution of blockchain-based identity and security services, and applications

■ A review of the approach of top technology providers to blockchain

■ Market Guide for blockchain technology platforms

■ Market Guide for smart contract providers

■ Market Guide for blockchain consulting and POC development services

■ Cool Vendors in blockchain technology and blockchain business

Suggested First Steps

■ “The Future of Blockchain: 8 Scalability Hurdles to Enterprise Adoption” — Scalability concerns will
continue to hinder enterprise adoption of blockchain. EA and technology innovation leaders must
assess technical and operating model scalability factors, and plan their projects accordingly.

■ “Blockchain Technology Spectrum: A Gartner Theme Insight Report” — Blockchain carries higher
stakes for the enterprise than most technologies, but the landscape is fluid and understanding
incomplete. This special report offers models and frameworks, along with research into technologies
and security, to help enterprises make the right investments at the right time.

■ “Blockchain Status 2018: Market Adoption Reality” — The 2018 Gartner CIO Survey provides factual
evidence about the massively hyped state of blockchain adoption and deployment. EA and
technology innovation leaders should use these results to temper enthusiasm and manage business
expectations.

■ “Practical Blockchain: A Gartner Trend Insight Report” — Blockchain is evolving from a digital currency
infrastructure into a platform for digital transformation. This report helps CIOs understand its use, and
whether the hype is true about how it can help with transaction costs, integration, technology
readiness, business-model creation and efficiency.

■ “The Bitcoin Blockchain: The Magic and the Myths” — Blockchain technology derived from the Bitcoin
stack promises much in the era of digital business. Senior executives and CIOs must understand its
scope of choices, limitations and lack of maturity before making strategic investments.

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■ “The Disruptive Potential of Blockchain Technology” — CIOs view blockchain as having great
disruptive potential. However, most enterprises’ blockchain projects, as conceived, are neither
disruptive, nor do they need blockchain in the first place. Real innovation will occur outside
conventional enterprises — including nondisruptive transformation.

Essential Reading
■ “Predicts 2019: Blockchain Business” — Blockchain introduces a new vector to accelerate the move to
digital business. This allows EA and technology and innovation leaders to create or represent assets
in a digital context and to create a new, decentralized economic and societal model.

■ “Predicts 2019: Blockchain Technologies” — Permissioned blockchain technology is maturing and

scaling by anchoring itself to public blockchain and its improvements. Voting, identity management
and cryptocurrency activities are promising use cases for EA and technology innovation leaders to
consider for the future.

■ “Market Guide for Blockchain Platforms” — Blockchain technology is both nascent and evolving
rapidly. EA and technology innovation leaders must focus on building competence and proper
expectations for such an immature set of functions and components that constitute a blockchain
platform.

■ “Hype Cycle for Blockchain Business, 2018” — Interest in blockchain continues unabated among
enterprises. Much of the focus is educational and experimental as executives struggle to understand
concepts and applicability. Industries have made some progress, but maturity timelines are uncertain,
and adoption at scale remains very scarce.

■ “Hype Cycle for Blockchain Technologies, 2018” — Blockchain technical capabilities are evolving, but
fail to match the extreme hype and are not yet sufficient for mission-critical enterprise use.
Blockchain-inspired solutions lead enterprise conversations. The market will traverse the Trough of
Disillusionment before significant value is realized.

■ “Blockchain-Based Transformation: A Gartner Trend Insight Report” — While blockchain holds long-
term promise in transforming business and society, there is little evidence in short-term reality. This
Special Report highlights the scope of this transformation, how it impacts various industries, and the
current state and evolution of these technologies.

Evidence
Gartner’s 2018 CIO Agenda Survey shows that blockchain adoption remains sluggish across the globe,
especially in North America. The percentage of CIOs worldwide with blockchain projects in production
tripled from 1% of respondents in the 2018 survey to 3.3% in the 2019 survey. However, the percentage of
CIOs with no interest at all rose from 34% to more than 40% during the same period. CIOs with plans to
deploy blockchain projects remained roughly the same; approximately 55% say they will deploy
blockchain during the next three years.

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Adoption figures for blockchain differ considerably across regions. For example, only 1.5% of North
American CIOs say they have blockchain projects in production, while that number jumps to 5.3% of
CIOs in the Asia/Pacific region.

These numbers emerge against a backdrop of lukewarm sentiment among CIOs. Only 4.4% believe
blockchain is a “game changer” for their organization — compared with about 26% who say the same
about AI, and 24% who say it about data analytics.

Promising Projects

Despite the survey results, Gartner sees promising multicompany consortia projects — that use key
blockchain features — moving forward into successful pilots or early implementations. The common
denominators in these blockchain projects include:

■ The majority of industry (or consortia) participants need a distributed ledger where every participant
has access to the same single source of truth (SSOT).

■ Once written to the blockchain, the data is immutable and cannot be deleted or updated.

■ A reliable and robust audit trail is needed to satisfy the use case; for example, to prove the provenance
or state of an asset so that, for example, counterfeits are readily identified and traced.

■ The various participants in the blockchain consortia all have a vested interest in its success; there is
no single entity in direct control of all activities.

Some of these features, most notably data immutability, are not readily available using traditional legacy
technologies. Even projects that embrace only these blockchain attributes promise to yield significant
benefits for participants in these permissioned, “blockchain-inspired” networks (as opposed to
“blockchain complete” networks).

Document Revision History

Blockchain Primer for 2019 - 4 January 2019

Blockchain Primer for 2018 - 1 February 2018

Related Priorities

Initiative Name Description

Application Gartner’s research provides essential advice and tools to help navigate organizational
Leaders and engagement changes; necessary to maximize the value of the organization’s
investment in technology.

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Initiative Name Description

PMO Evolution for This initiative encompasses practices and tools required to enable initiative and
Digital portfolio management to maximize portfolio value. As new digital business practices
emerge, the PMO role must adapt.

Application Arch., Organizations can use this research to build and improve internal competencies to
Dev, Integration create and scale differentiated and innovative digital products that support digital
and Platforms business demand.

ERP This initiative equips enterprises with the skills and knowledge required to assess,
select, deploy and manage ERP in ways that maximize business value.

Agile and DevOps Agile and DevOps encompasses activities that result in continuous delivery of value.
Collaborative culture, product-centric mindset, agile practices and automation
underpin the value stream.

CIO: Strategy, To be fit for digital and composable business, strategy and governance must become
Governance and adaptive and continual, and operating models must become more tightly integrated
Operating Models and agile to accelerate execution.

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