Blockchain glossary: Lesson No.2 – Asking the right questions

We’ve been talking about blockchain for quite some time; we discussed its facets, uses, future, shortcomings, and growth, to name a few. We got down to the heart of the matter and answered questions such as: Is the blockchain over-hyped? Can it transform the world? How can we measure its performance? Should we list it as a skill? What’s in it for us?

What we haven’t done so far is focus on what this technology can and can’t do, what it is and what it isn’t. Therefore, we have to go back to basics and explore the fundamentals in order to eliminate all misconceptions about blockchain. This series is meant to clear the air by answering the most fundamental questions.

In the first part of this interview series, we invited seven blockchain experts and Blockchain Technology Conference speakers to weigh in on the difference between blockchain and distributed ledger technology.

Now it’s time to sit back and allow the experts to ask the right questions and also provide the answers. Just to give you an idea of what’s included in the second part of this interview series, here are some of the questions you need to ask yourself before using blockchain: 

• Does my use case support or require decentralization between peers?
• Once you have a database, does the blockchain add anything technically?
• Who are the participants in my network?
• Why is the blockchain technology valuable for a certain project?

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Meet the experts

Ingo Rammer (@ingorammer) is co-founder and managing director of Thinktecture AG.

Peter Lawrey (@PeterLawrey) is a Java Champion with the most Java & JVM answers on Stackoverflow.

Arnaud Le Hors (@lehors) is Senior Technical Staff Member of Web & Blockchain Open Technologies at IBM.

Vinita Rathi (@VinitaKRathi) is the CEO and Founder of Systango.

Svetlin Nakov (@svetlinnakov) is a passionate blockchain engineer, trainer and experienced developer in a broad range of technologies.

Jana Petkanic (@JeanneDeBit) is a blockchain consultant and founder of Blockchain Talks.

Christian Junger (@ChristianJunger) is CEO and co-founder of the German blockchain start-up MADANA.

Ingo Rammer:  I think the most important question is: Does my use case support or require decentralization between peers? If it doesn’t (for example if you have a commercially powerful entity who controls, say, a supply chain as a buyer and forces suppliers into certain ways of handling data), you might be better off using a central database with an HTTPS API in front.

Yes, you can implement centralized use cases with a blockchain – but doing so usually just increases complexity without providing tangible benefits. Yes, today, companies might also see a marketing/sales/recruiting- benefit when implementing blockchains, but I truly believe that this shouldn’t be the main driver.

Peter Lawrey: Even if you need a blockchain, you will still need a database to support queries. Once you have a database, does the blockchain add anything technically? If so, what do you need it to do and this will help you choose the best blockchain solution for your needs.

SEE ALSO: “People cannot just adopt blockchain on their own”

Arnaud Le Hors: Who are the participants in my network? Blockchain isn’t a one player game. It is a system which only makes sense when there are several participants so it is crucial to determine who the participants are.

Blockchain isn’t a one player game.

One doesn’t necessarily need to have them all be part of the development process but it is wise to have at least one representative of every type of participant you expect to have in the network.

Vinita Rathi: Blockchain, despite its potential, is not an ideal fit for all problems. The most important question that I always ask my clients is why do you want to use Blockchain, what is the purpose and what you are looking to achieve by using Blockchain. If there are advantages to the use of technology it also brings a lot of unknown risks to the system.

Some of the key questions I ask:

Does the system need to be immutable? Immutability ensures that no particular individual in the ecosystem changes/modifies historical data (records). If the solution we are looking for has no need for immutability, using Blockchain could actually complicate things. Similarly, Blockchain by nature is append-only, hence will not allow to remove/delete a record or correct them. This feature is directly in conflict with GDPR and its “Right To Be Forgotten” principle. Hence, Blockchain (within EU) will make it impossible to store personal data at least in its current form.

Is the solution for global reach or controlled reach? If you are looking to implement a solution for a particular organization or pre-defined user base (closed group), there is no need to implement Blockchain as trust already exists within the organization.  

Blockchain can never be good enough for real-time needs at least in its current shape and form.

How does real-time system need to be?

By virtue of what Blockchain technology is, it can never be good enough for real-time needs at least in its current shape and form. If the system expectations are to have sub-second performance throughput, Blockchain in most case is not going to fit in the architecture.

Svetlin Nakov: I always ask whether the system can be implemented without blockchain and why the blockchain is valuable for a certain project. If I get a valid answer, I ask about why decentralization is important for this project. If it is not important, blockchain should not be used.

Next, I ask if the project needs to have its own token economy and why. If I get a valid answer, I continue asking. If I don’t get a valid answer, then the project should not be based on blockchain, but on traditional centralized software architecture.

Blockchain should not be used in every project. Many people try to use DLT and blockchain technologies just because they are “modern” but soon fail. The true application of blockchain is for building a decentralized system, serving a decentralized organization with decentralized processes, where no single point of control exists. Most businesses do not match this scenario.

Some businesses may partially use the blockchain, e.g. for immutable storage of document hashes or asset tracking. Others use the cryptocurrencies as an additional payment method. Others use smart contracts to ensure that some logic is executed in a fair and decentralized way. Such scenarios are valid and are emerging along with the entire blockchain ecosystem. These organizations have good reasons to use blockchain and most probably will be successful.

SEE ALSO: Blockchain: Learning and unlearning the misconceptions

Jana Petkanic: What benefit does blockchain bring me and am I capable to involve an entire ecosystem of stakeholders? Simply put: if you cannot invite parties outside of your organization to participate in blockchain solution and/or you use blockchain as a gimmick with no cost reduction or efficiency improvement – you might not likely need blockchain in the long-term. Also, when you struggle with specifying which assets can you digitize (due to regulatory issues), tokenized blockchain might be too early or too redundant for you.

Christian Junger: This is a rather difficult question since there are plenty of questions a business should ask themselves before making use of blockchain technology. However, in my opinion, the most important question is to what extent your business model/product can actually make use of blockchain. For example, if your company doesn’t rely on software or a computer network, you most definitely do not need blockchain. In other words, don’t just try to implement blockchain out of FOMO.

We don’t want to keep you waiting so the final part of the series will be published tomorrow.

All the blockchain experts who participated in this series are also speakers at the Blockchain Technology Conference, which started yesterday.

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