Why Use a Blockchain?
A lot of hype has been created around blockchain technology, as all of the possibilities surrounding the invention have become understood. Millions of dollars have been spent in recent years researching blockchain technology, and numerous tests have been conducted for various scenarios. All of this has lent to a lot of excitement for what the technology can accomplish.
The blockchain offers new tools for authorization and authentication in the digital world, as it erases the need for centralized administrators. As such, it’s helping new digital relationships emerge. By formalizing and securing digital interactions and transactions, the blockchain revolution is in a position to exist as the backbone to the new Internet of Value, as opposed to the traditional Internet of Information. The Internet of Information contains the client-server, accounts, and master copy databases that have been in use for twenty years.
These are questions to ask if you’re looking into whether the blockchain is right for you.
Should or Can the Data be Controlled by a Central Authority?
There are still a lot of reasons why a third party should be in charge of some authorizations and authentications, and sometimes third party control is completely desirable and necessary. However, if existing IT infrastructure involving accounts and log-ins isn’t sufficient for identity security, then the problem could be solved using blockchain technology.
Blockchains may be the solution when it comes to private key cryptography, which enables push transactions. These transactions don’t require centralized systems and elaborate accounts. If your database requires millions of dollars to secure transactions, blockchain may be your answer.
Is the Data Dynamic with an Auditable History?
Paper is hard to counterfeit because of physical seals and complex appearances. However, if data is in constant flux with transactions occurring frequently and consistently, then paper may not be the best medium to keep up with the system of record. Manual data entry also has its limitations. If the data and its history is important, then blockchains offer a solution by enabling many separate parties to write entries into a system of record.
Is the Speed of the Transaction Important?
If your database requires high-performance, millisecond transactions, then it’s best to stay with a traditional centralized system; as databases, blockchains are slow and there is a cost to storing data, with the processing (or “mining”) of every block in a chain. For now, centralized data systems based on traditional client-server models are faster and less expensive. Perhaps in the future as blockchain technology improves, it’ll become faster, but currently it is the much slower option.
While blockchain technology is still emerging and still under study, it offers many exciting opportunities. However, there may be some cases in which using traditional technology is better for you. When it comes to managing and securing digital relationships as part of a system of record, you can use the questions above as a guideline to determine whether using a blockchain is right for you and for the use and goals of your data.