Why Blockchain Companies Fail To Break-Even?

Why Blockchain Companies Fail To Break-Even?

Naveen Joshi 03/03/2022
Why Blockchain Companies Fail To Break-Even?

Blockchain companies struggle to break-even due to the lack of skilled workers, mishandling of data and little understanding of the technology.

Although a tsunami-like revolution, blockchain companies in the market are facing many hurdles on account of misinformation, myths, and the embryonic nature of the infrastructure on which the blockchain technology is built.

What is Blockchain?

Blockchain is a system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.

How_Does_a_Transaction_Get_into_Blockchain.png

Source: Euromoney

Blockchain enables multiple parties to share access to the same data, at virtually the same time, with an unprecedented level of confidence.

What is The Break Even Point?

The break even point (break-even price) for a trade or investment is determined by comparing the market price of an asset to the original cost; the breakeven point is reached when the two prices are equal. 

Break-Even.png

In corporate accounting, the break even point formula is determined by dividing the total fixed costs associated with production by the revenue per individual unit minus the variable costs per unit. In this case, fixed costs refer to those which do not change depending upon the number of units sold. Put differently, the breakeven point is the production level at which total revenues for a product equal total expenses.

What Are the Problems Faced by Blockchain Companies?

Due to its robust framework and a secure data logging protocol, the blockchain technology has ended up finding applications in fields other than finance and cryptocurrency. With the rise of this technology, the number of blockchain companies providing exclusive blockchain services and solutions are rising in the market too. But, because the technology is still quite new, it faces many hurdles, especially, with regards to its implementation in any given traditional field.

Leveraging an emerging and disruptive technology, the blockchain companies face several challenges on their way to innovation and diversification:

Problems_Faced_by_Blockchain_Companies.png

1. Misinformation and Volatility 

The biggest hurdle that blockchain companies face are the myths that flood the blockchain market. The underlying principle for bitcoins, the blockchain technology is considered synonymous with cryptocurrency. A lot of companies are still under the false impression that blockchains are basically a form of cryptocurrency or a system that deals majorly with the financial aspects of a business. That is, however, not the case. Blockchains and Bitcoins are highly distinct from each other. Another misconception amongst people is that blockchain is a free of cost technology. There are some who also believe that blockchain is highly public, just like the bitcoin network. Battling all these misconceptions around the technology makes it difficult for companies starting out with blockchain solutions to get business.

2. Difficulties of Handling Data

Blockchain technology, as of now, is meant to handle massive data sets. Corporations and well-established businesses, which deal with massive amounts of data, can employ this technology to secure the expanding database. These companies, however, have their own database management systems for some copious amounts of data. Smaller companies, on the other hand, do not have huge data sets to deal with. These companies fear that investing in blockchain to deal with small amounts of business information would turn out financially unwise for them. This limits the scope of expansion for the blockchain companies.

3. Shortage of Skilled Workers

Blockchain technology is still growing. Researchers are still working to make the technology full proof. And the scalability factor changes accordingly. Starting a company with something that is still adapting itself can be quite challenging. There is a scarcity of software developers in the market who can code blockchain programs, leave alone improvising the existing ones. The technology also comes with a brand-new vocabulary and is difficult to grasp easily. Expert technicians who can help build, program, and set up an entire blockchain system for a company, are hard to find. Thus, the growth of the technology coupled with a lack of skilled labor that can help set things up poses a challenge for the blockchain companies establishing themselves in the market.

4. Lack of Knowledge, Funding and Research & Development

Technical solutions of any kind come only with research and development. Continuous study to fine-tune the scalability and to improve the performance of the overall system can promote the use of blockchains in small industries. This will also foster an in-depth analysis of the intrinsic errors and flaws that blockchains currently face. Intensive programs and seminars to spread the word, debunking myths, and differentiating fact from fiction will help in battling the prevalent misconceptions.

All these solutions can come into effect only when companies offering blockchain services will come together and contribute to the enhancement and expansion of scope of the technology, while preparing their businesses to incorporate blockchains into their existing infrastructure.

Share this article

Leave your comments

Post comment as a guest

0
terms and condition.
  • No comments found

Share this article

Naveen Joshi

Tech Expert

Naveen is the Founder and CEO of Allerin, a software solutions provider that delivers innovative and agile solutions that enable to automate, inspire and impress. He is a seasoned professional with more than 20 years of experience, with extensive experience in customizing open source products for cost optimizations of large scale IT deployment. He is currently working on Internet of Things solutions with Big Data Analytics. Naveen completed his programming qualifications in various Indian institutes.

   

Latest Articles

View all
  • Science
  • Technology
  • Companies
  • Environment
  • Global Economy
  • Finance
  • Politics
  • Society
Save
Cookies user prefences
We use cookies to ensure you to get the best experience on our website. If you decline the use of cookies, this website may not function as expected.
Accept all
Decline all
Read more
Analytics
Tools used to analyze the data to measure the effectiveness of a website and to understand how it works.
Google Analytics
Accept
Decline