According to the consulting giant, Deloitte, GitHub saw the launch of more than 26,000 Blockchain projects in 2016. Github is a popular development platform and supports the code for over 86,000 Blockchain projects. This includes the largest Blockchain project, Bitcoin.
Deloitte reports that while there have been thousands of new Blockchain programs, a major chunk of them become inactive in some time and only 8% of all Blockchain projects are active now. These numbers are alarming. A failure rate of 92% raises concerns.
China Academy of Information and Communications Technology (CAICT) has recently completed a research on Blockchain projects and revealing that about 92% of Blockchain projects fail with the average life of a project being 1.22 years.
There are several reasons that affect the success or failure of a Blockchain project. Almost 15% of the software developed by organizations are still active. Whereas, when it comes to programs developed by users, only 7% of them are active.
Why do these projects fail?
Let's discuss some common reasons for Blockchain project failures.
As discussed earlier, projects developed by users generally fail from the beginning or have a short lifespan. Users generally tinker around and develop prototype ideas that need to progress iteratively to gain traction. This doesn't usually happen, thus resulting in failure. Also, user-developed programs are mostly aimed at creating a standalone Blockchain instead of a foundation that enables the development of several applications.
2. Number of committers
The number of contributors to a program also plays an important role in its success or failure. The projects with high number of contributors have a higher chance of survival. Studies show that projects with high failure rate were the ones in which a single committer developed the majority of content.
If a project has only one committer, it generally happens that they get disengaged and give their time to other projects. This is why projects with just one lead or sole developer often die out. At the same time, we know several successful projects maintained by a single developer. When it comes to having multiple contributors to a project, its survival chances become higher. With several committers, developers don't need to have their complete focus on one project. And since most organizations have multiple committers, projects by organizations have statistically higher chances of success than those by individual users.
3. Number of copies
Projects that have more copies (known as forks) have higher chances of survival than those with few or no copies at all. When there are only a few copies, even those with just a few committers have high failure rates. While there have been successful projects that were forks of other projects, but usually fork projects have low chances of success because they don't get many committers.
What keeps transactions safe?
Blockchains are considered very safe. Here are some points that make them so secure.
As a transaction is completed, it is reviewed by peers and is validated. Once it is validated, it is added to the Blockchain. Since there is no central location doing the review, a hacker will need to hack all nodes simultaneously to hack one block. This is not practically possible, which is what makes Blockchains so secure.
Each record in the Blockchain is secured through encryption. Participants of the network have private keys. If a record is changed, its signature becomes void and the peers get to know right then that a change has happened. It's important to generate immediate notifications so that any alteration is quickly detected.
While Blockchains have inherent security features, the projects' infrastructure will play an important role. Make sure to have an infrastructure that prevents the access to sensitive information, denies unauthorized attempts to alter data, and guards the encryption keys using high security standards.
There can be security related events or human error issues. You must always be ready for a situation which may go out of your control. While a public Blockchain is more exposed to exceptional conditions, problems can occur with private Blockchains as well. There should always be a plan on what do in case of a security issue.
Maintenance of keys
Private keys are managed through software or smart cards. Both of these methods need some level of protection to make sure that the keys are safe. If the Blockchain is designed to involve physical goods such as freight or money, it's important to ensure a smooth way in which the smart contract events will be translated to physical processes.
While these are the general guidelines to keep Blockchains secure, keep in mind that public and private Blockchains differ considerably. In a public Blockchain, systems on the public internet are used to validate the transactions and add blocks to the ledger. In a private Blockchain, there are only permitted members. These members are generally organizations. This forms a private members-only type of business network.
Make sure you don't make the common mistakes when developing a new Blockchain project. The recent studies have revealed the major reasons for failure for most Blockchain projects. Are you making these mistakes? Evaluate your project before the execution phase to make sure it's a success.
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