Chapter 7 – Deciding if Blockchain Technology is Right for You
The most common reasons that someone might consider an experiment with blockchain is a continuous desire to experiment with new technologies, a need for blockchain's timestamp technology or an interest in the many different ways blockchain can safeguard existing data. As with any new technology, it is essential that you look before you leap and consider if blockchain technology is really right for you and your business.
Know Who Will Be Looking at Your Data
In a majority of the traditional centralized databases, anyone with access to it has their activities stored in case they need to be reviewed later. If you need to have many individuals look at your data on a regular basis, but don't want them to have write access to the data, then you may benefit from using a blockchain.
Utilizing a blockchain in your business may help to streamline the process by providing users with read-only access in addition to a having a log in a more traditional sense when it is required.
An average user database is generally protected through a mix of usernames and passwords, as well as several levels of restricted access. You can then implement even more security measures to prevent your high-level data from being accessed when it shouldn’t. Even with all of these precautions, it is still less than the standard blockchain security protocols that make it perfectly clear who created which blocks and the time and place they created those blocks.
These measures ensure that every transaction is always completed with the full knowledge of the creator, who can then confirm, and sign off on the transaction. This, of course, assumes that the individuals aren't adding information directly to the node. The signature is then further confirmed before the block can be attached to the chain. Even if a username and password combination is not required for users to have access, the chain will still automatically log the IP address of any user who creates new blocks.
If you think that you are going to need to alter data that is being stored in a blockchain, then blockchain technology might not be right for you and your business. With a centralized database, its simple to alter data by merely tracking down the appropriate clearance, changing the required data, and having those changes saved in a log. With blockchain technology, the only way to do the same with data that has already been stored is to simultaneously change the data across 51 percent of the nodes that are available on the network. While this is a useful security feature of blockchains, in some scenarios, it will automatically disqualify blockchain databases from running in several others.
If you find yourself doing nothing but updating backup data, then you might discover blockchain technology beneficial. When you use a traditional database, you have to instigate backups manually, leaving you to worry about making sure that everything is where it needs to be. On the other hand, when it comes to a distributed database, the information in it is automatically updated across all available nodes every time new information is added to the chain. As long as all of your nodes don't catastrophically fail at the same time, then you don't have anything to worry about.
Depending on the costs that are associated with backing up and updating all of your data, you may find that the additional operating expenses associated with a decentralized database may make it the cheaper of the two alternatives.
Centralized databases are often limited concerning access, while a blockchain database can be temporarily connected to another blockchain database easily. This ability to connect to other blockchain databases makes the process of transferring information between the too, nearly painless.
The other blockchains that you are connecting to could be related to a specific department within your company, or even related to entirely different companies. If you are considering doing this, it is essential to keep in mind that when you give someone access to your blockchain, you are giving them access to your entire blockchain. This may require significant planning to effectively utilize if you deal with sensitive information.
One area where a traditional database beats a blockchain database is in the amount of data that can be comfortably stored.
When a new node is created in a decentralized database, the entirety of the blockchain is downloaded to it. This, along with the fact that nodes can be thousands and thousands of miles apart from one another, means that it is in your best interest to keep the total amount of data in your blockchain manageable. As a general point of reference, the database for bitcoin only has about 100 gigabytes, and it has been around for nearly ten years. If you need a high capacity option, you might need to look elsewhere.
If you are planning on running a private blockchain, then you don't need to worry about funding a reward for the validation of blocks. In fact, you won't even have to worry about a proof of work system at all. Instead, you will want to use a proof of stake model, because everyone in the private blockchain will have a stake in keeping the chain up-to-date and reliable. This means that the process for validating blocks can be more straightforward.
However, you will still need to factor in the amount of time it will take to process and ensure that you have the workforce to facilitate the work.
After analyzing the specifics, if you decide to take advantage of blockchain technology, it is crucial that you consider exactly how you plan to use the technology.
If you are an existing business owner, who hope to get ahead of the curve, then you’ll want to focus your attention and energy on the potential ways that blockchain and smart technology can work together to improve the ancillary aspects of your business. More specifically, you’ll want to take a long look at things that have the potential to decrease costs and improve efficiency.
This means that you will need to consider all the many ways that utilizing blockchain will make you more competitive in the eyes of your competition by allowing you to get a jump start on emerging trends in your industry.
Alternately, you will need to consider the various disruptions to the way your business works that implementing blockchain technology might bring to light.
This will require you to move things around now so that the disruptions you might experience are kept to a minimum. Being aware of what is likely to happen next will make it a lot easier to face head-on.
If you are considering forming a new business based around blockchain, then you'll want to work with as many different blockchains as possible. This will help you to improve your grasp of the technology, as well as to help to make the technology more mainstream, which is what is needed for new blockchain companies to take off.
If you hope to break into the mainstream with the help of blockchain, then you will want to do everything you can to ensure blockchain technology becomes mainstream.
You also want to keep in mind that it is, more than likely, going to be a tough road to travel. However, many of the most significant benefits of blockchain technology are only going to be available to companies who have an existing infrastructure already in place to take full advantage of them.
This means that the most realistic forecast for the rise of blockchain technology is that there will be a handful of companies that are going to come along and grab a share of the spotlight, leaving the rest of the room at the top being taken up by the members of the old guard who can get their acts together and make a move on blockchain technology before their competition.