The blockchain industry has seen major growth over the past few years. Virtually everyone and their dog has come up with a new use case for blockchain technology, even though most of these ideas are not viable whatsoever. It turns out just 8% of the 26,000 open-source blockchain projects created back in 2016 are still around today. That’s a worrisome statistic, albeit not entirely surprising either.
Blockchain is a Kill-or-be-Killed Industry
While it is commendable that so many open-source blockchain projects were created in 2016, it’s quickly become evident most of them will not survive in the years to come. With a survival rate of just 8% right now, it is pretty obvious this particular industry is highly competitive. Bright ideas and some money don’t necessarily make for successful business ventures in the long run; that much is certain. That doesn’t mean interest in this particular technology will dwindle anytime soon.
Research by Deloitte shows that a lot of people give up on creating blockchain projects once things get tough. Indeed, the technology itself has a ton of potential, but most projects will never utilize it to its fullest. It is a lot easier to say that a given project will use blockchain technology than to make it actually happen. Most projects are abandoned within months, which is a pretty disturbing trend right now.
It is unclear why this trend is so prevalent, though. A lot of projects require years of work before they can get anywhere close to reaching their potential. Anyone who gets involved in blockchain development needs to understand they can’t make good things happen in mere weeks or months. There will be many challenges followed by even more setbacks. Overcoming all those hurdles will eventually result in success, but it can be pretty difficult to see things through, for obvious reasons.
One thing Deloitte’s report doesn’t mention is what types of projects were abandoned the most. Nor do we know if any of the projects in question involved cryptocurrency, such as altcoins being abandoned by developers once they were listed on exchanges and the premines were cashed out. It seems highly likely some of these failed ventures involve altcoins, though. Otherwise, there is no way one could find 26,000 open-source blockchain projects on GitHub that were created in 2016 alone. Counting altcoins would certainly help explain these numbers, as most alternative cryptocurrencies are abandoned shortly after launching.
One other interesting statistic Deloitte points out is that the average lifespan of an open-source blockchain project is just one year. In fact, most projects shut down within their first six months. By that time, the original excitement among developers and supporters has started to dwindle as it becomes harder to provide meaningful updates on a regular basis. Plus, developing a blockchain-based project is very difficult, especially if one doesn’t get paid for doing so in any significant manner.
It will be interesting to see what all of this means for the future of blockchain technology. With so many banks, financial service providers, and cryptocurrency developers working on this technology, the mortality rate will not necessarily go down over time. A lot of projects will never make it past the proof of concept stage either, depending on their long-term viability. This competitive business should not be underestimated by any means.