You may remember my last blog article about blockchain, I talked about how business continuity and disaster recovery will benefit from the use of blockchain technology. Now we ask, “How should businesses identify if blockchain is a good tool for the job?” The term “decentralization” is a blockchain’s main characteristic which involves game theory and cryptography as a core of its protocol design. It includes features such as immutability, liveness and safety guarantees of transaction, and censorship or attack from malicious actors.
Public and Private Blockchain
Did you know there are public and private blockchains? Public blockchains are type networks that anyone can access and add transactions to. This ensures no single entity has control, but rather everyone must trust the network’s protocol. To give an example, Bitcoin and Ethereum are available on the public blockchain.
Other organizations, such as Hyperledger, that are private enterprises cater to companies who engage in global transactions, such as supply chain and financial services. Access to Hyperledger is permissioned and controlled to determine who can both join and access the network.
Deciding on Blockchain Use Case
In a typical online application that has a database back-end in client-server environment, a central organization has full control of records and transactions, and therefore has the ability to alter transactions stored in centralized servers, such as Amazon’s AWS. Applications can mimic the characteristics of a decentralized application, but safety and trust are not guaranteed.
Transaction per second (TPS) is also where a centralized database works best. It is capable of processing thousands of TPS while most of the current blockchain technologies are not yet capable of handling of such speed.
Blockchain assessment questionnaires published by the World Economic Forum, helps organizations in deciding if a centralized database or blockchain is best suited for their business requirements. They also provided this great flowchart below to help you determine if blockchain is your answer:
Image: Creative Commons/World Economic Forum
Though blockchain technology is revolutionary, it is well-suited for certain cases and not always a silver bullet for all business challenges. Perhaps a traditional online database application is a better solution when considering what technology to support your next-generation application.
Don’t let the pros and cons of either proponent convince you that their approach is better. Instead, do a careful analysis of your requirements and how they may or may not be met by blockchain technologies.