As the price of Bitcoin (BTC) continues to reach record levels, the hype surrounding blockchain adoption appears to be diminishing.
The enterprise blockchain began gaining momentum in 2017 when the price of Bitcoin reached nearly $ 20,000. Around this time, major companies such as IBM, JP Morgan and Walmart announced plans to integrate blockchain networks into business processes such as supply chain management. A number of innovative startups have also started building their blockchain networks for commercial use.
One such startup was Insolar, which was founded in 2018 with the goal of creating transparent and efficient business networks for companies using blockchain systems. Peter Fedchenkov, CEO and co-founder of Insolar, told Cointelegraph that the company originally started as an Ethereum ERC-20 token designed to manage a decentralized grocery market. Fedchenkov, however, realized that the Ethereum blockchain could not facilitate this project, so the company turned to developing the blockchain business.
The Insolar was successful at first. In 2019, Fedchenkov said the company signed an agreement with a Fortune 500 customer to implement Insolar’s “Assured Ledger Technology”, a framework that enables interoperability, contract-free distribution and other options designed to facilitate blockchain certification for businesses.
Almost two years later, Fedchenkov shared that Insolar has stopped operations due to the fact that, in his opinion, the blockchain has not been accepted:
“During the first year, we noticed that everyone was happy with the blockchain and what it could do in some business operations such as supply chain management. But recently we made sure that the blockchain met expectations.”
Fedchenkov explained that the COVID-19 pandemic was the main reason behind the late decision in the blockchain business, and noted that conceptual proof budgets have been slashed. For its part, Insolar – which was once a promising startup in the blockchain with a wide range of partnerships with companies like Uranium One and universities such as UC Berkeley – has failed to raise additional funding. “We tried in vain to get a VC round, but given the current climate and sentiments surrounding the blockchain, we couldn’t find supporters,” Fedchenkov said.
Fedchenkov also noted in his blog that “blockchain technology spent the year 2020 getting lost in the pool of frustration with a Gartner injection.”
The blockchain enterprise is not dead
But does this really apply to all enterprise blockchain companies? Martha Bennett, Vice President and Senior Analyst at Forrester, told Cointelegraph that her optimistic observations in mid-2020 remain valid:
“The epidemic has shaken both startups and our own ventures. Some have lost budget and funding, while others have thrived. I communicate regularly with startups that have continued to receive additional funding throughout 2020 and that have started operations in 2021 and are getting calls from potential investors; I have seen several Double sizes throughout 2020. ‘
According to Bennett, the blockchain startups that succeed regardless of the epidemic are being separated in different industries for specific purposes. While these companies are different, Bennett explained that each has specific characteristics.
First of all, Bennett noted that these companies are not “blockchain driven”, noting that companies have faced a fashion buzz at all and are focusing more on solutions and outcomes:
“It’s important to have a clear value proposition and benefits. Some of these startups don’t even mention that they have the blockchain in the pile during the sale, if not specifically.”
For Bennett, Fedchenkov stated that one of the mistakes Insolar made was that it focused primarily on technology and intellectual property. He indicated that the company should have discussed topical issues related to housing, community services and business applications with clients.
Additionally, Bennett believes that today’s successful companies typically offer solutions in which the blockchain is only an important part of a deeper and broader set. Other technologies, such as artificial intelligence or data analysis, are also needed to get the most out of it.
While Insolar developed a groundbreaking proposal, Fedchenkov said companies are not yet ready to make a completely blockchain-based decision due to the lack of proven value and the complexity of the technology.