#3 – Benefits of Using Blockchain

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Who Owns a Blockchain?

The oldest and best-known approach to systems architecture is a centralized approach. In a centralized solution, there is typically one owner or small group of participants who control the solution, the data which the solution works with, and the infrastructure that delivers the solution. In other words, all layers and components of the solution are owned and managed by a central authority.

Another approach is a distributed or cloud approach – the approach used for Blockchain. In a distributed solution, centralized control, ownership of the solution and the data which makes up the solution are retained, however ownership of the infrastructure which delivers the solution is given up. Facebook is a great example of a distributed solution. Facebook owns it’s application as well as the data which goes into the application, but Facebook has largely given up ownership and management of the infrastructure that delivers the solution to hosting providers such as Microsoft, Amazon, or IBM.

A decentralized approach removes centralized ownership and control at all levels within a system. In a truly decentralized solution, the solution itself and its data is shared amongst all participants along with its infrastructure being provided by the entire community of participants.

Benefits of Blockchain

Blockchain provides many benefits, but it does have drawbacks as well. Understanding both is critical to applying the right technology to the problem set you’re addressing. Before detailing the specific benefits and drawbacks, it’s critical to understand that the benefits provided by blockchain always come at the expense of efficiency, speed, and performance.

Blockchain is, by design, an exceptionally inefficient solution. However, by embracing these inefficiencies we gain the benefits of security, redundancy, and massive fault tolerance.

Embracing such an inefficient approach can seem very odd to those who have spent a career in traditional I.T. and have been conditioned to purge inefficiency whenever possible.

The benefits of blockchain solutions include:

  • Shared software infrastructure among organizations within a business
  • Your internal line of information systems holds data that is the single source of truth for any question about your organization, but what is the single source of truth for processes that span multiple organizations in your business network? Blockchain can solve this issue.
  • It is publicly verifiable
  • Accountability and transparency to customers and end-users (a.k.a. permissionless_
  • Secure (i.e. Control who sees what data when – a.k.a. permissioned)
  • Quality assurance
  • Track the origins of all supply chains. (For example, food origin and/or safety recall.)
  • Smart contract as a replacement for middlemen operators thereby reducing costs
  • Lower Transaction Costs
  • Tokenization – Create trade-able tokens backed by real-world value
  • Fractional asset ownership and asset digitization. For example, own 1 car in 1 city, or own 100 cars in 100 cities
  • Redundant and highly fault tolerant. A distributed ledger is fault tolerant in that if a single node were to lose track of the ledger it would remain somewhere else on the network. To better understand fault tolerance, we can think of a group message where all members in a group keeps a copy of each message. Anytime a message is deleted it should be updated on everyone’s copy.
  • Brings clarity and transparency to business processes
  • No centralized authority
  • Low barrier to entry
  • Instant, global transactional capabilities with no double-spending

Learn more:

Future of Blockchain: How Will It Revolutionize The World In 2022 & Beyond! – The European Business Review

 

 

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