Whenever a new technological innovation make its presence felt, industry leaders, technology evangelists, business fraternity and developers leave no stone unturned to assess and evaluate its applications to their problem domain and explore possible solutions. Blockchain is no exception.
Oftentimes we get so overwhelmed about a technological innovation that we tend to forget basics and jump to adopt the technology blindly—only to realize that our problem space was quite different from other implementers. This is, perhaps, because it is so easy to imagine high-level use cases. In the case of blockchain, millions of dollars have been spent researching the technology over the past few years, and numerous tests have been conducted to determine whether or not blockchain technology is appropriate in various scenarios. But you need to keep this in mind: Each problem is unique and needs thorough analysis by each solution seeker before you make the call as to whether or not blockchain solves your problem.
How blockchain formalizes and secures new digital relationships
The blockchain revolution is essentially poised to create the backbone of a layer of the internet for transactions and interactions of value (often called the Internet of Value as opposed to the Internet of Information, which includes the client-server, accounts and master copy databases used for over 20 years).
This diagram shows the salient features of blockchain technology, telling us what it has to offer and whether or not it suits your problem space as a solution.
Salient features of blockchain Source:d and adapted from Deloitte U.K.
Digging deeper to understand when and if blockchain is right for you
To sum up succinctly, blockchain is a distributed ledger technology (DLT) where non-trusting individuals transact with each other the peer-to-peer way with no intermediary in between. Blockchain is enabled by smart contracts with proof of transactions stored in a distributed database where each transaction is irreversible and immutable.
You can take steps to systematically understand how to determent whether or not a given problem/project can be solved or moved to blockchain. Follow the steps on this flow chart to help you make the right choice based on these parameters:
- Database and data
- Trust
- Transactors
- Security
- Cost effectiveness
- Expensive central authority
- Smart enforcement
- Near real-time settlement
Follow this flow chart illustrating the steps to take as you decide whether or not to migrate to blockchain.
- Database—Blockchain is “distributed ledger technology” by nature. If there is no need to “distribute” the ownership of the database, then you should be using a different database structure.
- Data in the Database—Data is the most vital part of any database, but If in your case along with the data, if the transaction on data is also equally critical, then one should only think of blockchain.
- Transactors—If and only if the data is getting updated frequently by multiple transactors, then look no further. Blockchain is the right solution.
- Trust—If the various transactors involved do not trust each other yet they need to transact with each other, then blockchain can use cryptography to solve the problem of trust.
- Central Authority and Cost Effectiveness—If in your solution the central authority that solves the problem of trust by authentication and authorizing the transaction is expensive in terms of time and cost, then blockchain can solve that problem in a much more cost effective way. If your solution is subject to large middleman fees or confirmation time delays, then blockchain is a natural fit to expedite this process, cutting down on costs for all users
- Security—Security is critical piece in any database. If you are looking for most efficient and secure way to protect transaction details, then blockchain is the answer.
- Smart Enforcement and Near Real-time Settlement—If you need to enforce certain regulations and legalities without brokers and middlemen and need real-time settlement without needing a manual intervention, then blockchain is the right choice..
You should realize that you will encounter very few use case scenarios where all the project requirements map fully to the features of blockchain.
Also note that the application of this flowchart may reveal that you may not have a “yes” answer to all the questions posed, but that does not stop you from exploring the potential of blockchain, even if your project/use case maps partially.
Bear in mind: Blockchain essentially is a distributed ledger technology that enables users to create database environments where multiple mutually untrusting users can exchange value or append records without a central coordinator. This allows your business to remove the need for central parties or brokers in various processes, eliminating the fees, human error, time and the security risks that they entail.
Next steps?
Congratulations, you have now learned the systematic way to arrive at the right use case for making the move to blockchain technology.
Myriad applications of blockchain technology can greatly affect existing transactional systems for the better. But before implementing one of these applications, it is critical to first determine what your use case needs are—before leaping to the conclusion that blockchain is a viable solution for you.
Take the next step: Work your way through the flow chart (either fully or partially), then you are well on your way to knowing that you have a sound blockchain use case.
Also check out my blog for a different viewpoint as you plan for implementing blockchain:
Featured articles:
- Blockchain: Prep starts now; adoption comes later
- How to make the business case for blockchain
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Meet Infrastructure Insights Blogger Vikas C. Sajjan. Vikas has 16+ years of experience in IT industry with his expertise spanning from Embedded Systems to Enterprise Mission Critical Platforms. He is an Open Source contributor and Evangelist and his contributions range from firmware, boot loader (u-boot) to Linux Kernel. Currently he is a Senior Technologist at HPE Solution Engineering Team which is focused on creating Solution Reference Architectures for enterprise use cases based on traditional, hybrid cloud and emerging digital technology scape.
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