There are five key criteria that make it likely that blockchain is a better approach to addressing a problem than conventional distributed data systems or a cloud-based Software-as-a-Service (SaaS) solution:
- The problem requires secure transfer of value, possibly in very small increments; for example, micropayments for content or web services and machine to machine markets, and person to person payments such as small charitable contributions or sharing the cost of a meal among a group of friends.
- The problem involves agents who do not know or do not trust each other; for example, peer to peer markets for goods and services, escrows, and providing proof that all parties are what they say and behaved honestly.
- The problem involves many different actors from different organizations whose interests do not align; for example, logistics or chain of custody applications that transfer responsibilities from party to party.
- The problem requires objective provability of facts or data; for example, audit trails and telemetry collected from connected industrial, medical, and infrastructure devices.
- The problem involves agents who might wish to censor, alter, or hide data; for example, securities, land title, and financial transactions where theft and fraud are real possibilities.
For blockchain to offer a viable solution to these problems it must be secure, inexpensive and scalable. For Blockchain as a Service (BaaS) to become a realistic alternative to private databases, it needs to be flexible, upgradable, environmentally sustainable, and protect users from unreasonable volatility in token value.