In our previous blog we established that a blockchain is a distributed ledger which records transactions between two parties efficiently and in a verifiable and permanent manner without the need of a third party. It provides an integrity protected data storage and allows process transparency. This new technology brings solutions to a wide variety of present-day problems.
Since the technology is in such an experimental phase we can not lay out a simple checkbox utilization framework. Applications for blockchain technology are still in development. Nonetheless you should ask yourself several essential questions before getting started with blockchain. Firstly, do you need to store data for your project and are different parties involved? Blockchain is essentially similar to a shared database.
Secondly, does your project with multiple entities involve a trusted third party? One of the key benefits of a blockchain is that it creates trust in a trustless environment. If a central authority is involved you may not find the need to construct trust in this innovative way. However you should be cautious with answering this question. A blockchain may also be a great opportunity for disintermediation. Good reasons to get rid of an intermediary could be efficiency, lower costs and faster transactions.
Lastly, you should consider the consensus mechanism. Who maintains the integrity over the ledger? In other words who are the transaction validators and why do you trust them? Various consensus mechanism have been put to use so far and many more are still being developed. A relevant aspect is that you choose whether you want the transactions to be private or public. For example, Bitcoin was created to overcome the mistrust and non-transparency of financial institutions by making transaction data and validation publicly accessible.
Answering the above questions can help you identify if your project needs a blockchain.
https://www.blockchaingovernance.nl
Reference material:
https://eprint.iacr.org/2017/375.pdf
https://spectrum.ieee.org/computing/networks/do-you-need-a-blockchain
https://medium.com/@sbmeunier/when-do-you-need-blockchain-decision-models-a5c40e7c9ba1