When is Blockchain Useful?

By: Geeq

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:

  1. 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.
  2. 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.
  3. 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.
  4. The problem requires objective provability of facts or data; for example, audit trails and telemetry collected from connected industrial, medical, and infrastructure devices.
  5. 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.