CrypDoes Your Company Need Blockchain?

Today, blockchain has almost become a daily discussed issue of every people, especially after it received China’s government’s endorsement as a national strategy. Entrepreneurs are even more worried that their companies may fail to approach and grasp an opportunity. Notwithstanding, the necessity of blockchain embedding perhaps remains unknown. Entrepreneurs may directly face the following question: does my company need blockchain?

Bitcoin and its blockchain network entail entities, be them ever linked with trust or not, to perform financial payments without relying on any centrally trusted third party. Meanwhile, Bitcoin and its blockchain network provide transparent and integrity-protected storage. Blockchain has also attracted more attention in the fields of technology-distributed storage, intelligent assets, IoTs, supply chain management, healthcare, ownership distribution, decentralised autonomous organisations, and authority privileging.

In contrast, there are also some access-restricted blockchain networks, though based on the blockchain technology at the same, that only authorises a specific group of personnel to read and write on their blockchain. A public blockchain, like Ethereum and Bitcoin, allows anyone to come in and exit at any time.

Here’s the problem! In general, the licensed blockchain harbours and shares many similarities with the currently prevailing centralised databases. Such a closeness may constitute your doubt on blockchain — — is it really considerate for your enterprise to replace the centralised database with blockchain?

I would recommend you to think about the following questions before coming into the decision:

Q1: Does your business have requirements on data status storage?

The status synchronisation plays a paramount role, especially when it comes to financial payments. As long as there generates a status change, such as “payment succeeded”, “payment failed”, “insufficient balance”, which is what all the trade involvers are supposed to know. Blockchain best suits these scenarios that call for storing data status.

If your business has no requirement on data status storage, there is no point for your company to introduce the blockchain technology.

Q2: Is your data’s status multilaterally written?

There are some intrinsic reasons why the public blockchain projects, such as Bitcoin and Ethereum, may fulfil colossal transfer requests without a central bank mechanism. A public blockchain has massive nodes simultaneously executing the ledgering activities. As results, their ledgering and ledgers function consistently and uniformly. Therefore, we can see that a large number of nodes and ledgers safeguard the blockchain networks’ reliability. Had Bitcoin and Ethereum only maintained one node in ledgering, no safe transfer would be guaranteed.

Likewise, if your product needs and only exists one writer, and does not call for extra security and reliability, any blockchain mechanism would have no productive value for your product. In this case, a standard database, outstripping for its low latency and throughput, fits your needs at best.

Q3: Is there any trusted third party (TTP)?

Commonly speaking, for those who have a TTP, they can make a selection from the following two options: — — authorising a full-time online TTP with the permission to write the data, by which the TTP may play as the verifier of modifications.

— — authorising a TTP to be the public-key certificate issuer in the access-restricted blockchain (where all the writers know the address). Such an option adapts to the condition that the TTP often stays offline.

If all the parties can consensually trust on a particular third party, blockchain would not be of necessity. The reason why blockchain shines in performance is unleashing all the parties from 100% relying on a central hub. That is to say that blockchain is a solution for conducting the payment and settlement in a relatively speedy and costless way when the third party absents. Once in a while, institutional corruptions and bankruptcy can be alarming, indicating that it behoves us to try on such a decentralising solution.

Q4: Are all the participants familiar with each other?

If all the users involved know each other, it would be better for them to create an alliance chain rather than a public chain. An alliance chain only authorises specific enrollers, such as the internal personnel of a company, several cooperating firms, suppliers and clients, to access the data.

However, if not everyone involved knows the rest members, the alliance chain should be excluded from your consideration. Bitcoins and Ethereum are the exemplars of public blockchains. In a logical sense, a public blockchain is somewhere in which not all the people know each other.

Well, there’s another issue deserves your attention: the alliance chain derails itself from the philosophic concept of decentralisation fundamentally featured by the blockchain; it also differs from a centralised database.

Q5: Do the writers and participants trust each other?

For an assumed world without a vicious participant, the blockchain would never come to arise. In short, if writers and participants trust each other, a universally navigable database may turn out the best solution.

If all the writers and participants know each other but do not necessarily trust each other, such a situation entail the usage of blockchain. Then it comes to think about whether an open verification is required, whether everyone (public chain) or a specific group of people (private or alliance chain) should access the data status. These factors define which category of blockchain you shall select.

Q6: Any public censorship and verification may be required?

In a scenario where the writer’s identity remains liquid and opaque, exactly what is going on with many Bitcoin-like cryptocurrencies, a public chain would be your right solution.

In the opposite, once it needs authorising to become a blockchain writer while anyone may read the data, the blockchain still maintains its nature of public chain. Customised to such a requirement, the blockchain still encrypts crucial data and abide by the rules of data conservation. In contrast, private chain or alliance chain, whose features do not cater to such a scenario, would impede individuals from being the data readers.

The diagram comes from a study report of Imperial College London.

At last, to think over whether an enterprise should adopt blockchain to restructure its database or maintain the status quo (including the issue of type selection among public chain, private chain and alliance chain), we also need to look into the following factors before making a synthetic conclusion.

Business throughput;

Response time;

Participant population;

Administration pattern: whether the entity follows a centralised or decentralised model.

Besides, blockchain is not a panacea. It probably works and leads a system to a better data-status synchronisation condition, especially in financial payment and logistics. However, even if blockchain magnifies its power in these industries, vicious participants may still take advantage of the blockchain’s traits and find an approach to sabotage the system’s function.

Let’s take an example in logistics. When a courier carries on the goods, he may use his micro-refrigerator that maintains the thermometer’s data within the blockchain-defined interval. However, the other part of the carrier does not remain frozen, which turns out deceptive for the clients but effective in downsizing the delivery cost.

In the field of copyright, also a focal point of the blockchain application, a plagiariser may steal other’s KYC information and submit other’s original artworks to the blockchain. If such a file goes through verification on the system, the real author will suffer in the long run.

Here’s the last thing you may as well remember: if you demand a trinity of speed, cost and trust and run your business in a multi-party district, blockchain would guarantee the transparency at its best without resorting to a third party.

Coinsuper is a cryptocurrency trading platform, support USD/Cryptocurrency trading pairs,help you to buy or sell cryptocurrency quickly and briefly.