An effective start to your Enterprise Blockchain project! (Part 1 of 2)
The success of Bitcoin has made Blockchain technology extremely popular among businesses who are on their Digital journeys. To put the magnitude of hype in perspective, the shares of a tiny US soft drinks company called Long Island Iced Tea Corp went up by as much as 432% in a day after it changed its name to Long Blockchain Corporation.
All of a sudden there are mind boggling number of use-cases that are identified in almost all industries and people are trying to use DLT (Distributed Ledger Technology) or Blockchain (which is the first complete implementation of DLT), everywhere as if they have found a technology to solve the world’s hunger. Having said that, there is no doubt that this is a revolutionary technological advancement that could disrupt many businesses. By the way, Blockchain is a clever implementation of combining a lot of existing technologies, game theory and incentive model, and is not a technology by itself! In case you would like to read some foundational stuff on Blockchains before you read this (which I recommend), links to some of the articles are listed at the end.
While enterprise architects and business tech leaders are hunting for a problem that they can solve using this shiny new technology, it is key to step back and evaluate your needs and various other aspects before deciding the real applicability of Blockchain or DLT to solve your problem. Moreover, this is a technology that is yet to have adequate mainstream adoption and the technology and the products around the technology are still nascent. Hence it is critical to ask some important questions.
Having said that, if you are part of an innovation organization or start-up, do not think too much. Start off with something that you believe in, learn & adjust fast and change the world. Keep the questions aside and take the plunge!
If not, let us start asking some applicability questions.
1) Have you defined the real business problem or a potential opportunity that needs a blockchain solution?
If the problem at hand is solved to a large extent and replacing the existing system with Blockchain delivers only incremental value, then you are not looking at the right problem. Instead replacing an existing system with an implementation of a Blockchain system should give you phenomenal benefits like ‘extremely high efficiencies’ or ‘disintermediation’ or ‘a completely new business model’. Choose your problem statement wisely. Ask yourself, “If I solve this problem with Blockchain, will it create greater impact or deliver just small incremental benefits?”
Sometimes the questions are simple, but we forget to ask them.
2) Can your business problem be solved by existing/traditional technologies and methods?
Say the problem at hand can be solved by integrating and managing databases of multiple trusted parties by enhancing current, efficient systems, then you don’t need Blockchain.
On the other hand, you may choose to decide that your problem demands some of the key characteristics and promises of Blockchain i.e. distributed and decentralised datastore which is adversary proof, fully consistent, immutable, and fully auditable/verifiable by any participant and allows untrusted parties to transact on the same database. Either ways you should be clear why you are choosing Blockchain over existing/traditional technologies and methods.
3) Did you check if there are 1st or 3rd party online systems available to query and get trusted validation you need to conduct your transaction?
To take an example, if you have something like an organisation’s employee database or a citizen database which can be queried to get authoritative confirmation to make your transaction, then you may not need Blockchain.
4) Do your transactions (change the state of an entry) involve many mutually mistrusting parties and are not willing to agree on the same online trusted 3rd party?
Now this is the key. Even if you have an online system, it is important that all parties transacting/involved in the transaction equally trust that system. Also, if you have very less number of parties and transactions are involved, traditional methods may be more suitable than Blockchain. Some of the benefits of Blockchain are directly proportional to the extent of distribution of the network. E.g.: Immutability is strong, in case the participants are more and weak, in case they are less.
5) Do you really need a database to store the data immutably?
In Blockchain, data once written cannot be modified or deleted – this is the property I would like to highlight here. Do you really need such a capability? Another point to be noted – this property could be an issue in case you are storing Personally Identifiable Information (PII) and you are also under regulations, like the GDPR - where you might need to delete (not mask) PII.
Read the second part of my blog to know more, before venturing into your Blockchain project.
Some articles on fundamentals of Blockchain:
Aug 03, 2020
Jul 14, 2020
Jun 05, 2020
Jun 04, 2020
Dec 02, 2019