Is Blockchain Right for Your Application?
Blockchain is currently a hot technology. Unfortunately, many blockchain technology pilots have been for applications that have not been a good fit for the technology. Traditional databases work just as well or even better.
How do you know if blockchain is right for your application? You need to understand the fundamentals, benefits and drawbacks of blockchain technology to properly consider the right criteria to identify projects that are suitable for blockchain technology.
Curb the Blockchain Enthusiasm
There are thousands public blockchains, including Bitcoin and Ethereum, and the number is growing rapidly. However, these public blockchains do not scale, are not fully decentralized and do not benefit from distributed computing. They are called Distributed Ledger Technology, but are really replicated ledgers.
Efficient Distributed computing is not a new thing, but it assumes all computers are fully secured and operated properly.
The Perils of joining the Digital Currency Gold Rush outlines the over-enthusiasm in blockchain in a humorous and a serious manner.
Jon Evans has made the following insights on TechCrunch:
“What concerns me is that it remains at best highly unclear whether a decentralized solution is better in any of these areas than a centralized one, for anything more than a small minority of users. … when it comes to consumer apps, blockchains are the new Linux, not the new Internet.”
“They talk of value being shared among all users of the network, instead of accruing to a single company … but they tend to elide the fact that such a network would be slower, more complex, and harder to use, in exchange for very little end-user value.”
“Imagine that Facebook was a decentralized social network that returned fully half of its revenue (not profits, revenue) to its users. That means the average Facebook user would receive… a whole US$1 a month. That is not enough to make people want to use a clumsier, slower Facebook that innovates far less rapidly. It isn’t enough for decentralized networks to be more equitable. They have to be better. Or they have to do something that centralized networks cannot.”
The Code is Not the Law
There are initiatives trying to give the force of law to Ethereum’s smart contracts – computer code that operates to perform transactions depending on certain criteria.
However, the smart contract blockchain enthusiast’s expression that “code is law” is meaningless without the ability to convince a judge as to what the parties to an agreement actually agreed.
Therefore, specific human-readable contracts are necessary. The contracts must be agreed to by all the parties and authorize in a clear manner all the rules that are implemented in the code.
Those readable contracts will be much like contracts that exist today – but probably with more equations, logic diagrams and workflow charts.