Blockchain Semantics Insights
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How to decide if Blockchain is required for your BusinessBy Viswanath Kapavarapu | April 5, 2018, 6:39 a.m. GMT
My boss at work told me not to write about the impending greatness of Blockchain any longer as an introduction paragraph in any blog. He says if the reader is here, she already knows that. But I still decided to write a standard paragraph which can be summarized by saying Blockchain is the next best thing after sliced bread. Here is that paragraph.
Blockchain is a very powerful technology that has everyone from business strategists to IT professionals talking. Due to its transparency, censorship-resistance and decentralized nature, businesses are excited to benefit from the blockchain technology. However, it is not always the right tool for the job at hand. In this article, we’re going to examine if blockchain is the right approach for your business?
Blockchain may be necessary when you're dealing with multiple parties that require the reliability of data. Along with this, certain other factors should be taken into consideration while evaluating blockchain technology for your business. These factors include:
- Need for a common shared database among multiple parties.
- Decision making should be transparent and auditable rather than being confidential.
- Data Consistency is required across all the entities involved.
- Need for an immutable database for reference by the parties.
- Need to facilitate transaction among multiple parties who do not trust each other.
If one or more conditions apply from the above, then blockchain is suited for your business. However, there are certain conditions which are not currently well suited to blockchain-based solutions:
- The process involves confidential data
- The use of external services to gather/store data
- The process stores a lot of static data, or the data is quite large
Next, we will discuss in more detail the conditions that are not well suited to blockchain-based solutions.
The Process Involves Confidential Data
The biggest advantage of the blockchain technology is the radical transparency they provide. Methods are being developed to hide confidential data on the Blockchain while sharing it only with relevant parties through specific channels. However, a thorough review should be done to identify whether blockchain is appropriate for your business case. For example, is the business model comfortable with data leakage in encrypted form? What level of encryption is required when transmitting data?
The Use of External Services to Gather/Store Data
A blockchain smart contract currently does not initiate the retrieval of external data. Instead, a trusted third party service known as Oracle must be employed for any such interactions. These oracles fetch the data, store it onto a traditional database and then transmit to the contract as required. However, if you are worried about avoiding interference from third parties, blockchain may not be a best-fit solution for your case.
Business model involves storing a lot of data
With blockchain technology, the entire database is stored across many nodes in a blockchain system. Hence there are pre-defined limits on the amount of data that can be stored. If the process requires files which are quite large to be stored, a different technical solution may be more appropriate.
We meet a lot of clients as a part of our work on Zeonlab to who blockchain is a hammer and everything is a nail. Yes, Blockchain is a hammer. Everything is not a nail.