4 Questions Your Company Should Ask Before Pursuing Blockchain Technology
Blockchain has a lot of hype. PwC released a report recently revealing that 84% of executives across 15 different countries are “actively involved” with blockchain technology.
When nearly everyone around you is looking into blockchain technology, is your company at risk of falling behind? Or is pursuing blockchain only going to leave a hole in your pocket? Finding useful information about whether or not your company should be looking into blockchain technology isn’t that easy to come by, so we’ve come up with 4 questions to help you decide whether this technology has any relevance in your company’s future.
Blockchain can be used as a security technique to improve existing business solutions across industry, but does this include your company?
Let’s being with the first question:
I. Does your company rely on software or a network of computers?
No? Then you can probably stop reading here. If you don’t rely on computers for your business at all, then blockchain is not relevant to your company.
But seeing as how even 92% of small businesses are using at least one cloud business solution, your company is likely using some sort of software or network of computers.
So let’s move on to question 2:
II. Does this software or network concern anything of high value (monetary, identity, information, assets, etc.)?
If you your computer network doesn’t concern high value, than it’s simply not worth it for you to immediately start investing resources into blockchain technology. Blockchains are slow, expensive, and still in their infancy. If there’s nothing of high value being carried in your computer network, blockchain will likely like only make your network slower and less usable.
High value doesn’t just mean the monetary value of the assets on your network. It could mean that your network has high stakes. If your legacy system fails or if there is malicious activity, would the consequences be grave? If you mishandle private information, compromise a server, or have errors in your audit trail, would the result be significantly negative? The results could include any harm to your company, a loss in money, or even legal ramifications. We’re referring to a high-value network if it contains mission-critical state with serious consequences when handled insecurely. This could be monetary value, identity information, digital or tokenized assets, sensitive data, transactional ledgers, access controls, and more.
Consider the following: If you’re a restaurant using online reservations or a brick-and-mortar store that uses a digital rewards system, it’s probably not the end of the world if you aren’t on the bleeding edge of software security technology. Traditional systems can likely provide you with everything you need. The performance penalties and added complexity simply isn’t worth it in those cases. You are most likely NOT falling behind if your company isn’t immediately looking into where they can insert blockchain systems.
Sure, maybe someday blockchain tech improves so much that its speed is top notch and the technology is nearly ubiquitous. If we get to the point where blockchains are super fast and cheap, then sure, use blockchain. In this world, it could be beneficial to have a restaurant reservation application or brick-and-mortar rewards system that used blockchain. Stronger security is always better, all else being equal. But for now, your business can likely hold off on the investment.
If you are dealing with people’s social security numbers (like equifax), medical data, or any high value digital records that it would be unacceptable for the wrong party to get their hands on (even once), you could be using blockchain so that any one single compromised server or actor would never compromise the system in whole. Put simply, if the consequences of not following the rules in a system are high, then continue reading and maybe consider blockchain.
Let’s go to question 3:
III. What is more critical for your operations: maximizing security & accuracy OR cost-savings & speed?
The desire for greater security must always be tempered by practicality. The blockchain security model relies on strong consensus and cryptographic verification, tools which may not be appropriate in contexts where throughput is king. Think about when you’re sitting in the car. If you’re an adult, chances are a seat belt is all the security you need. We could very easily construct something more constricting with added security benefits, but then we’d be way less comfortable. But when you put a baby in the car you wrap it in the most advanced car seat on the market. Are car seats expensive? Yes. Are they a pain and a hassle every time? Yes. Are they still worth it when it comes to a baby? Absolutely.
If your company cannot sacrifice on performance, flexibility, or costs, then it does not immediately need blockchain. If your company only needs seatbelts, then it probably shouldn’t invest in a car seat. This doesn’t mean your company is necessarily dealing with less value. It could be handling millions of dollars worth of transactions, but if they are happening at a high enough frequency, blockchain simply won’t be able to keep up. A good example of ‘blockchain not being fast enough’ is within the most established area of blockchain technology: cryptocurrencies. Throughput is one of the main reasons that centralized exchanges dominate decentralized exchanges even within the blockchain ecosystem. Exchanges are unwilling to sacrifice this throughout for the added benefit of security (even though exchanges are a hotbed for malicious activity). If exchanges did sacrifice speed for security, they wouldn’t be able to handle as many transactions, and thus would make significantly less money. It is important to note, however, that these exchanges would need to rely on a public blockchain which is generally going to be significantly slower than what a private blockchain is capable of. Most existing businesses are much more poised to benefit from a private chain, than a public one.
If you are unwilling to sacrifice on speed and performance, you should still be paying attention to the development of this technology. More importantly you should be watching to see how your particular industry is reacting to this technology. In fact, 20% of the executives who reported that they were “actively involved” with blockchain technology in the PwC report (mentioned at the top) are in “research mode.” It is very likely that many of those in “research mode” desire the security of blockchains but are still weighing the inherent tradeoffs. As the technology advances, it will be in your best interest to know when and where the tradeoffs become acceptable for you.
But what if you do value security and accuracy over speed? Maybe your network moves information with such great value (like medical data for instance) that “who” can do “what” within your system should absolutely never be wrong. Maybe the rules to your system do not change very frequently but still carry tremendous value (such as who has administrative privileges), so sacrificing speed isn’t the end of the world and the investment is likely worth it. But as long as your business acknowledges that there is a tradeoff, and sees this tradeoff as worth it, blockchain is definitely in your company’s future.
So we’ve established that blockchain will ultimately be a benefit to your company, but is it worth it for your company to immediately pursue blockchain or should you wait?
Let’s move on to our final question:
IV. Can your company afford to be at the bleeding edge of a young technology?
If you’ve made it this far, there’s a very good chance that some semblance of distributed ledger technology (DLT) will benefit your business in the near-future.
But can you afford the risk today? 5 years from now blockchain will be in a more mature position than today. Being at the bleeding edge of blockchain will certainly give you the competitive advantage of being an early adopter but know that this comes with a risk. The technology is imperfect, young, and ever-changing. Staying at the forefront of an emerging technology isn’t the easiest thing in the world, and the more ambitious your company’s aspiration, the greater the risk it will carry. Blockchain very well might have the potential to seriously upgrade your business.
You have to genuinely ask yourself whether your business is in a position where it can afford the costs of blockchain development as well as the risks of a young technology. That being said, when it came to the internet, it was the early movers who were able to capitalize the most. The first web page went live in August of 1991. Within 5 years you already saw the likes of AOL, IMDB, Amazon, eBay, Craigslist, and Hotmail. A year later you saw Google Search. There are definitely a fair share of later blooming and successful internet services such as Facebook and Spotify but many of the big winners took the risk of joining the internet early.
The question is: should your business afford the risk? Can your business afford the opportunity cost not to explore blockchain integration? Are you a small business looking to accept the risk and jump ahead of the curve or are you an established corporation with the resource flexibility to pursue blockchain in the immediacy?
Regardless of whether or not you can afford to try blockchain now, staying up to date with what is happening in the ever-changing landscape of blockchain technology is in your best interest. You’ll want to keep your developers primed and ready so that your company can make the smooth transition once adopting blockchain becomes more of a pressing need.
Conclusion
If you’ve made it to the end and are still unsure if your company should be actively pursuing blockchain or not, feel free to shoot me an email. We offer a free consultation and exploratory call, and if you decide you want to use blockchain systems, we’ll help you build them.
You can reach our team at contact@mimirblockchain.solutions or contact me personally at mustafa@mimirblockchain.solutions
You can also review our consulting offerings and submit a contact form directly on our website at mimirblockchain.solutions
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