Blockchain is the one of the most hyped developer technology these days. It can be a life saver for you but there are some cases in which it can do more harm than good. To decide that whether it is the right technology for you business model or not is totally up to you but what we can do is provide you with a few choices that will make it clear that whether you should go for the decentralized technology or not.
Blockchain
Blockchain is a decentralized ledger that stores data in the forms of transactions. This data cannot be changed and anyone on the network has a copy of the data so adding a fake entry in that record is nearly impossible unless 51% people in the network agree to accept that fake entry.
You shouldn’t use Blockchain if you…
1. Don’t want a distributed database?
If you have a good database solution deployed right now for your business and you are happy with it then there probably isn’t any reason to shift from that to blockchain. The switch involves rethinking everything, recording most things, and betting on a new technology that will need many years of work to become as mature as whatever database you’re currently using.
However, if you are limited because of your current database architecture, then shifting to blockchain does have its perks. Everyone in the network can see what is happening and anyone can add anything to the ledger by going through a verifying process. So if your system has a lot of business partners who needs to interact with the system and you are being the bottle neck for them then blockchain might be your knight in shinning armor. An example of this is the effort Maersk and IBM have announced to develop a private-blockchain-based solution for the entire supply chain that makes up the shipping industry. If it was simply Maersk keeping track of its relationships, it could use a traditional database it controls. But if the system is to work for all its partners, then the data store needs to accommodate contributions from many different entities. Blockchain is perfect for that.
2. Don’t want a smarter transaction system
Traditional databases that are widely used in every system are great at simple transactions but if you want to track a life time transaction history of an asses in a transparent way then blockchains have something for this called smart contracts. Smart Contracts are pieces of code that determine the way a particular transaction unfolds. For example, they can be written to include a Deposit upon order placement, an Escrow where the deposit is placed, a Proof of completion of the task or delivery of the product, and a final Payment. These contracts can even persist beyond a single transaction, and affect the future behavior of, and payment stream for, assets. For example, if blockchain was used for selling concert tickets, the Smart Contracts used could be written so that the artist received a portion of any aftermarket sales at scalper prices. Smart contracts are basically blank sheets of paper where you can write any kind of rules and laws and execute them and make them valid on the blockchain after going through the consensus mechanism used.
Smart Contracts are incredibly powerful, but very new and immature, and not for the faint of heart. You literally have to let a piece of code take over something that has some actual worth in the real world. You literally put your assets and business transactions under the control of a bunch of code. Recently, $300M of Ethereum was at least temporarily and perhaps permanently destroyed by accident when a novice programmer stumbled across a bug in the Ethereum Smart Contract implementation and panicked. These complexities and the lack of experience in the current blockchain domain has tied the hands of most of the people working in this technology.
3. Don’t want to trade in your own currency
Having your own currency in the blockchain system is not a necessity. In fact this is where people mostly confuse blockchain with a technology that works around money. Blockchain is a lot more than that but having said that blockchain does have the capacity to give you your own money to trade with for your own system. Since it is clear that you are not making a banking application for yourself but still might want your users to make transactions and exchange assets. You might need some internal trading unit to work on your website that doesn’t require credit card or Paypal every time someone want to buy something from the website. For example, Ripple, which is aiming to revolutionize the international transfer of money, provides an optional currency, XRP, to its partners. XRP has the advantage (so far) of being easy to buy and sell across borders. Then financial institutions or end users can trade out into their local currency as needed.
So if you do need your own system of tokens (which is really what cryptocurrencies are), then blockchain has many of the tools needed to create them. Tokens are also a way to provide stakeholders with a share of the success of your system if that’s appropriate. Through Initial Coin Offerings (ICOs), they can also be a way to fund a project — although they are probably mis-used as often as they are used responsibly.
4. Aren’t ready to pay the environmental cost
Blockchain no matter how awesome it is, it has a huge environmental cost. Blockchain secures its transaction using a cryptographically secure method called the crypto hashes. These hashes requires mining to be done on GPU. The mining rigs requires so much computational power that sometimes hundreds of GPU have to work simultaneously to mining a single block. Taking the most widely known and used blockchain as an example – Bitcoin – last year it was claimed that the computing power required to keep the network running consumes as much energy as was used by 159 of the world’s nations.
5. Don’t need true transparency
We know that blockchain provides true transparency. Everything you do is seen by everyone. So before shifting to the blockchain technology you have to check if this is what you want. If you want your system to be shifted to a totally transparent technology.
However if this is your only concern then using blockchains like Hyperledger Fabric. Hyperledger Fabric is a permissioned blockchain technology in which you can define permissions for every user that uses the blockchain. You can make some portion of your transactions visible and some of them aren’t.
Consider running Blockchain in parallel
Having spoken with a few dozen blockchain-based startups and similar efforts inside larger companies, if you do decide to launch a project to blockchain-enable your application, I’d suggest doing it in careful stages with plenty of prototyping and iteration. Once there are real users of a blockchain system, and real value is stored in it, fixes get time-consuming and expensive. Hopefully, you can do this in parallel with continuing development on your existing systems, in case blockchain doesn’t work out or the effort takes longer than you think.
Depending on all of these basic requirements if this is what you want in your new business model than without a doubt go right ahead and start implementing your new blockchain solution. If you are still scared of the technology a little bit, deploy it parallel next to your current traditional database based system and if you have no intention of moving to the blockchain side than this blog is not to convince you.
If you need help with developing Blockchain based solutions for yourself then contact our blockchain development company.