Blockchain is being considered by more than half of the world’s fortune 500 companies according to a Juniper Market Research Survey. It is estimated that $2.3 billion was spent on blockchain by the end of 2018. What effect is this going to have? Blockchain is bringing us the “internet of value”. The uniqueness of blockchain lies in its ability to retain person-to-person transactions globally.
Blockchain today is often compared to the internet in the nineties. We are seeing the effects of blockchain that are similar to the effects that the internet brought about thirty years ago. However, we still don’t fully understand this technology and therefore cannot fully utilize its applications. Because we have the internet, we are seeing a much faster spread of blockchain, and blockchain is bringing us one step closer to web 3.0.
Bitcoin used blockchain to store financial transactions, but the data can be basically anything, from a vote in an election to an entire book. This is important when considering practical use cases for blockchain. As we know, blockchain is a distributed, immutable, highly secure database and many industries could take advantage of the transparency that blockchain provides. For example, blockchain technology could change how voting works. Blockchain would allow voters to be 100% certain their vote is being counted. A good use case will do one of two things: It will either allow for new possibilities that have never been possible before or improve certain aspects of an existing process.
However: Blockchain is not always a better alternative to a database.
Blockchain has a few drawbacks that need to be considered when attempting to implement it. Starting with how new blockchain is, to the stigma of its use originating in the Dark Web. The creation of blockchain is also a mystery that tends to put people on edge. Initial Coin Offering /Initial Token Offering scams and the misperception that blockchain is just another name for cryptocurrency are also drawbacks that aren’t technical but do impact the adoption of blockchain itself. More tangible challenges with blockchain today include the fact that blockchain technology is still changing and evolving, and best practices and recommended patterns for implementation are still being formed. There are not very many trained resources and therefore, the cost of training these resources is high. Finally, scalability is a core concern when it comes to blockchain. Blockchain prioritizes security over speed. Therefore, solutions that require high transaction speeds are not good candidates for Blockchain. Different group consensus methods beyond Proof of Work are currently being proposed to overcome current scalability limitations. Today, most miajor public blockchains can process 10-20 transactions per second worldwide.
Data Sovereignty is another factor to consider when comparing blockchain solutions versus traditional ones. In a centralized system (i.e. a non-Blockchain-based system), all data is owned by the system owner. In scenarios where one must demonstrate they own and control the data as well as demonstrate where it is and is not stored, blockchain may not be a good solution (although private blockchains can still be a viable option here). Transaction times are very high in blockchain, but solutions are being investigated. One such solution includes using off-chain transactions to lower transaction times.