Why Most Blockchain Projects Fail to Deliver Real-World Value and How the Industry Can Fix It

Blockchain technology has been hailed as one of the biggest technological innovations of our time. Its promises of decentralization, transparency, and the ability to democratize various industries caught the attention of several developers, investors, and tech enthusiasts alike. But after over a decade of experimentation and hype, most blockchain projects haven't been able to deliver tangible, real-world value.

The question we have to ask is: Why aren’t these projects living up to their potential? And perhaps more importantly, how can the blockchain industry break the cycle of unrealized promises?

In this week's newsletter, we'll explore why this is happening and how blockchain can find its path to real-world value.

The Hype vs. Reality

If you’ve been paying attention to the blockchain space over the years, you know the script. At the start, there’s an ambitious whitepaper, followed by a shiny new token launch, a lot of buzz, and some exciting promises. But when you look closely afterwards, most of these projects fail to achieve what they set out to do. Even worse, they end up creating something that the average person can’t use, understand, or benefit from.

In 2021, a Chainalysis report showed that 37% of crypto projects launched in recent years had already failed or were abandoned. That's a significant number. It’s not that the technology behind these projects is fundamentally flawed, but it seems like the industry hasn’t been asking the right questions. Why are so many blockchain projects failing to deliver? The answer is simple: they’re not solving problems that people actually have or, if they are, they’re doing it in a way that’s too expensive to scale.

The “Blockchain for Everything” Mentality

There’s a dangerous mentality in the blockchain space that has existed for a while known as “blockchain for everything” It’s the idea that blockchain is the perfect solution for every problem, even when it isn’t. While blockchain has undoubtedly created new opportunities for many industries, it’s not the silver bullet that some make it out to be.

Take the tokenization trend, for example. Many blockchain projects have set out to tokenize real-world assets—things like art, real estate, and even identities. On paper, this sounds incredible. But in practice, tokenization often doesn’t add much value. It’s clunky, expensive, and difficult for most people to wrap their heads around. You may ask yourself: Why not just use traditional systems, which are often more efficient, easier to understand, and more widely accepted?

The problem isn’t the technology—it’s how the technology is applied. Blockchain shouldn’t be shoehorned into every business model or problem. The real challenge is to figure out where it can offer a unique advantage. Otherwise, we’re just building solutions in search of problems.

The UX Problem: Blockchain’s Blind Spot

Another critical issue is the glaring lack of user-centric design in most blockchain projects. Most of them are so focused on the backend and the flashy tech that they’ve ignored the need to make it easy for regular users to use.

Let’s consider decentralized finance (DeFi), a sector that’s arguably been one of the most hyped areas of blockchain. The idea behind DeFi is to eliminate middlemen—like banks—and give users greater control over their money.

But for most people, interacting with a decentralized exchange (DEX) or a lending protocol is like entering a foreign country without a map. High fees, poor interface design, and a steep learning curve make it hard for the average person to understand how it works, let alone get involved. And let's not even start on the risks—bugs, hacks, and poor code that can result in loss of funds without refunds.

Until all of these improve, blockchain will remain an industry dominated by only developers and crypto enthusiasts, rather than reaching the mainstream.

Regulation: Stuck in Legal Limbo

Another huge obstacle standing in the way of blockchain’s real-world value is regulatory uncertainty. Governments and regulators are still struggling to figure out how to handle blockchain, and the legal gray area makes it incredibly difficult for blockchain projects to scale or even launch in some cases.

In the U.S., for instance, the Securities and Exchange Commission (SEC) has been aggressively cracking down on projects it believes are operating as unregistered securities. This has created an environment where many projects are unsure whether they are compliant or if they could be next on the regulatory chopping block. It’s a minefield out there, and until there’s some clear regulatory framework, blockchain will struggle to scale beyond a niche market of crypto enthusiasts and risk-takers.

What the industry needs is a framework that fosters innovation while protecting consumers. Blockchain technology could transform more industries if it were given the regulatory green light, but the current uncertainty stifles development and discourages investment. Without this clarity, blockchain will remain in its experimental phase—promising, but untested and untrusted by the majority.

How Blockchain Can Deliver Real Value

So, how can blockchain move beyond being a tech fantasy to deliver the real-world impact it was promised? It starts with two things: practicality and user-centricity. Here’s how:

Build with real-world problems in mind: Blockchain isn’t the solution to everything. Stop chasing trends and ask: Does this actually solve a problem that people care about? Focus on industries where blockchain has a real advantage—finance, supply chains, healthcare, and government services. Find the problems that no one has solved yet, and use blockchain to address them.

Make it easy to use: The learning curve for blockchain products is steep, and that’s a major barrier to mainstream adoption. User-friendly design is non-negotiable if blockchain wants to go mainstream. Simplify processes and make sure users can interact with blockchain without needing a tech resource. The future of blockchain isn’t about creating more complex systems, but simplifying them for everyday use.

Clarity in regulation: Governments and regulators need to work with the industry to develop a clear and consistent regulatory framework. Blockchain’s potential can’t be unlocked until there’s a roadmap that encourages innovation without legal uncertainty.

Foster Community-driven Development: Blockchain projects often fail because they’re top-down, driven by a small group of developers or investors who aren’t in tune with the broader community’s needs. The most successful blockchain projects will be those that foster strong, engaged communities and prioritize user feedback.

This means building open-source ecosystems where contributors can suggest, test, and iterate on ideas. By keeping the development process transparent and community-driven, blockchain projects can better align with the real-world needs of users and ensure that they are building something that has lasting value and adoption.

Collaborate, don’t compete: The blockchain space is full of competition, but too often that competition turns into infighting. Instead of focusing on who’s going to win, the industry should focus on working together to solve common challenges. That kind of cooperation will push the ecosystem forward faster than any single project can alone.

Conclusion

Blockchain has always had enormous potential. But until the industry stops chasing after shiny objects and starts solving real problems, it will remain in a perpetual state of “almost there.” Blockchain can change the world, but only if the industry focuses on making real, user-friendly solutions that scale and address the issues people actually care about. The time for talking about potential is over—let’s get to work on delivering value.