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Less than 2% of Blockchain-using projects actually need it, argues BBA

Photo of: Joseph Stone
by Joseph Stone

According to a recent report, the blockchain is used as a solution by a significant number of companies that do not have clearly defined issues. However, they claim to have solved these so-called problems with this new technology. The report concluded that almost half of the companies examined had no evidence of a problem being resolved.

The Centre for Evidence-Based Blockchain (CEBB), operating on behalf of the British Blockchain Association (BBA), a non-profit association established in 2017, has published a peer-reviewed paper that focuses on “Evidence-Based Blockchain (EBB)” and presents “the results of a global study of blockchain projects in startups”.

The objective of the EBB, according to the website, is to promote “the adoption of blockchains and distributed ledgers (DLTs) in the public and private sectors based on evidence”. The CEBB is described as “a neutral, decentralized and global initiative of the world’s leading research universities and academic institutions, advising policy makers, governments and BBA member organizations”, whose objective is to advance evidence-based blockchains.

The BEBB analyzed 517 blockchain and start-up projects launched between December 2016 and June 2020, according to the document, using a random sample of projects from the Angel.co database.

According to their results, 160 companies had no evidence of a clearly defined problem; 297 had unfiltered evidence (such as non-peer-reviewed trials and research papers, blog posts, opinions, etc.) and 27 had peer-reviewed evidence.

The authors said:
“Our study found that nearly half of the blockchain companies had no explicit evidence of the problem to be solved. About a third of them did not cite a benchmarking analysis or intervention, and less than 2% presented evidence of results supported by critically evaluated, peer-reviewed information”.

CEBB also pointed out that a study by the U.S. Agency for International Development (USAID) examined 43 blockchain projects and companies that claimed to have solved a number of problems through distributed registries, finding that “almost no companies” were willing to share their results or MERL (monitoring, evaluation, research, and learning) processes. “Other observational data revealed that 80-90% of token projects based on blockchains did not deliver on their promises,” the paper says.

The authors define EBB as “conscientious, explicit and sound decision making based on professional expertise and evidence from organizations, stakeholders and scientific research,” and it attempts to address five major problems in the blockchain space:

  • the inability to clearly define the problem to be solved, because sometimes the blockchain is applied to a problem that does not exist or is not significant enough to require a decentralized solution;
  • failure to examine different sources of evidence and not always start by looking for the best available scientific evidence ;
  • Inadequate assessment of the quality of the evidence;
  • lack of application of evidence to improve processes;
  • not adequately reporting the results of experiments, especially when the results are unfavourable.

Among the recommendations, the BBA has taken this into account:

“For every £100 spent on the blockchain or distributed registers, we propose that at least £2 be devoted to ensuring that the other £98 actually work.”