Decision Process

Decision-Makers Approach to Blockchain

This section assists organizational decision-makers in assessing the suitability of blockchain technology for their specific requirements. While some operational and numerous pilot applications are currently underway, many decision-makers are urging caution. This is perhaps because high-level applications are easy to imagine. But, the technology has also been closely examined; millions of dollars have been spent researching blockchain technology over the past few years; and numerous tests for whether or not blockchain technology is appropriate in various scenarios have been conducted. There are good, bad and unnecessary blockchain applications. There are operational, pilots, concepts and concerns. The following sections are intended to aid this process.

Does the application involve shareable digital information?

Blockchain technology offers new tools for authentication and authorization in the digital world that preclude the need for many centralized administrators. As a result, it enables the creation of new digital relationships. By formalizing and securing new digital relationships, the blockchain revolution is posed to create the backbone Internet layer for transactions and interactions of value, called the Internet of Value, as opposed to the Internet of Information which uses the conventional client-server, user-account, and master database models.

But, with all the talk of building the digital backbone of a new transactional layer to the Internet, sometimes blockchains, private cryptographic keys and cryptocurrencies are simply not the right way to go.

From a technology viewpoint the decision flowchart would help make the decision between a blockchain or the traditional master copy, client-server database.

Does the application require an auditable history of dynamic data?

Paper can be hard to counterfeit because of the complexity of physical seals or appearances. Like etching something in stone, paper documents have a certain permanence. But, if the data is in constant flux, if its transactions occur regularly and frequently, then paper may not be able to keep up the system of record. Manual data entry also has human limitations.

So, if the data and its history are important to the digital relationships they are helping to establish, then blockchains offer a flexible capacity by enabling many parties to write new entries into a system of record that is also held by many custodians.

Are there reasons to not use a central data authority?

There remain many reasons why a third party should be in charge of some authentications and authorizations. There are times when third-party control is totally appropriate and desirable. If privacy of the data is the most important consideration, there are ways to secure data by not even connecting it to a network.

But if existing IT infrastructure featuring accounts and log-ins is not sufficient for the security of digital identity, then the problem might be solved by blockchain technology.

Private key cryptography enables push transactions, which don't require centralized systems and the elaborate accounts used to establish digital relationships. If this database requires millions of dollars to secure lightweight financial transactions, then there's a chance blockchains are the solution.

Is the speed of the transaction important?

Does this database require high-performance millisecond transactions? If high performance, millisecond transactions are what is required, then it's best to stick with a traditional-model centralized system. Blockchains as databases are slow and there is a cost to storing the data, namely the processing (or "mining") of every block in a chain.

Centralized data systems based on the client-server model are faster and less expensive... for now.

In short, while we still don't know the full limits and possibilities of blockchains, we can at least say the applications which have passed inspection have all been about managing and securing digital relationships as part of a system of record.

Is the technology culturally acceptable to the users?

The previous blockchain decision flow diagram is focused on the technology factors in a yes or no question process to a blockchain implementation. There are other factors to be considered beyond the technology. The middle 2 phases are people and culture oriented. The American Council for Technology-Industry Advisory Council (ACT-IAC), Emerging Technology Community of Interest, Blockchain Working Group developed a process (Released April 10, 2018) to understand and determine the value of a blockchain application to a U.S Federal Government mission. The ACT-IAC Blockchain Playbook for the U.S. Federal Government proposes a five-phase process, each of which contains a set of key activities organized in functional areas that go beyond just the technical aspects of blockchain but include management, people, process, and acquisition areas.