Blockchain- what next?
Many debates have been raging across various industry networking groups of late. The burning question often asked is do we need to utilise Blockchain technology? My verdict is simple – if you can use a database then this may be more than suitable and probably (at this point in time at least) doesn’t need a Blockchain.
Use of the blockchain should be for applications that simply could not be accomplished without it.
What is it anyway?
At its most basic level, blockchain is a ledger for storing information. However, where a regular database is a single, centrally controlled record, a blockchain is a distributed ledger. This is a system where each computer that has access to the chain has its own copy.
The debates raging at present amongst my peers have led to many concluding Blockchain is not needed. Perhaps worryingly these are generally people that firstly get the tech but secondly work in some capacity in Blockchain. Should we take this as the demise for this nascent industry?
In this post we take a look at factors that can help you decide whether blockchain technology is truly needed in your business.
Why so much fuss about a ledger?
Businesses and individuals have used ledgers since day one. One could argue that distributed ledgers however, can also be traced back to Rai Stones. Much like the information about bitcoins, value and ownership was managed collectively.
Blockchain is a way of storing data about transactions; it can be used to store data on such activities such as property exchanges, the journey of a supply chain, voting records, medical data and much more besides.
Blockchain of course brings trust, accountability, and transparency to these digital transactions. If this level of trust is needed within your organisation, if not now, but perhaps in the future then you should at least be considering how Blockchain technology can be used.
There is no escaping that Blockchain has become something of a buzzword as proof of transparency, however if we are to force transparency onto a supply chain, you still might only get shown what the other party wants you to see, even if that information is recorded immutably.
Then of course the issue of security comes around. Are Blockchains more secure than the systems already in existence?
The whole point of using a blockchain is to let businesses and individuals share and secure data between themselves. By storing information across a network of computers the task of compromising data becomes much more difficult for hackers. The high level of security in a distributed ledger system makes them particularly attractive to say, financial institutions.
No system is perfect, of course. Although Blockchain is a security-driven measure, it can be exposed to risks. Blockchain contains potentially sensitive information, but are they truly safe? While in itself blockchain technology is considered a secure system, there are several elements of the system that present vulnerabilities.
Does your organisation need this level of security between parties to enhance trust in one another? If so, Blockchain may be a suitable solution. With the right partners, a full assessment on the suitability of Blockchain for your business, as well as code auditing are a necessity.
A waste of time, energy and money?
A common argument against the use of Blockchain is a system built on it takes a longer time to process transactions, but also requires greater resources such as processing, electricity and data transfer.
If high performance transactions are needed in your organisation, then a traditional centralized system may be all that is needed. Blockchain as a database is slow not to mention the costs for storing the data and the processing of every block. For now, the centralized data systems are faster and of course more affordable.
If it isn’t broke, don’t fix it. If speed isn’t a factor, you shouldn’t be in a rush to replace it. If you think it is needed, a feasibility study is a must offering an agnostic, unbiased assessment of your needs.
Just as it might not be the right approach for many just yet, that doesn’t mean that will be the case in the near future.
Thinking back to the internet being rolled out in a studio I worked in at the turn of the 21st Century, we had a server that stored logos, fonts and images. The dial up connection suited the single internet enabled computer and for larger files the ISBN line took some slack, whilst motorcycle couriers delivered artwork to clients across town.
That was how we worked, within the limitations of the tools we had and change was not embraced quickly and whilst the tech that services that very same studio now rely on were not available. The benefits that the internet provides for them now like cloud, high speed data transfers, instant communication etc has made their business more efficient and they have not looked back.
However the key is that these changes have to be right for the business they serve. Take a vehicle servicing garage I used then and still use now. Has the technology advances affected that business in the same way? Absolutely not, and why not? Because looking to revolutionise their service offering in the same way via digital transformation would be crazy, but that was sadly what we saw with many during the ICO boom, companies looking for slick solutions to problems that were not really there. Just because you can doesn’t mean you should!
Recently I heard someone describe the Blockchain industry as being at the Netscape stage. Unreliable, but exciting and only starting to show the potential of the technology we are working with, but it will take time. Perhaps the founders of the projects that aren’t unicorns will make it in two or even three projects time, meanwhile the technology is growing and whilst the hype of the ICO boom is far behind us, those left are the true believers and have the power and the knowledge to help move the industry and the technology forward.
Perhaps you should consider if in the future change is needed then a longer term strategy for Blockchain is needed.
Does it need a token?
Lets suppose that your investigations show that your business needs a Blockchain solution, the benefits outweigh the cost and the business case is sound. The question that remains is do you need a token?
A token is little more than a unit of value, it is a resource which you control, or allow control to someone else. Many tokens have no intrinsic value and often only designed to raise money during an ICO. These, and there are numerous, may never regain the value they once had, many will disappear in the near future and have often damaged the reputation of the companies that raised money in this way.
The use of a token within your Blockchain business must be carefully considered and if an instrument for a raise, its use case must add value. If raising money via the crowd in this way a sound regulatory environment is a must and jurisdiction should be carefully considered.
If this is something you wish to explore, consultancy may be required for your tokeneconmics to add real value to your token model.
So what next?
So as governments like China make statements that they are “all in” and jurisdictions like the Isle of Man push to encourage innovative Blockchain businesses to set up shop on there , this industry will continue to grow. There will be successes and failures, but I for one cant wait to see what is around the corner.
Is a Blockchain suitable for all businesses? Of course not, but in some cases this solution is not only credible, but could really boost your business. However before taking the plunge a true assessment of your needs is required.
The Isle of Man is committed to leading the way to encourage innovative businesses to set up and operate there. If you have a Blockchain focused business that is in need of a home, please contact us to discuss how Affinity can help you. Not only can we offer regulatory advice, and support, but can offer strategic planning, tokeneconmics and your fundraising strategy.
Original article published here: