Understanding when a use case is suitable for a blockchain application
This article aims to provide a high-level analysis of the inner workings and properties of blockchain technology, using real-world examples to understand its applications. We will focus on public and open blockchains, where data is accessible to anyone for reading and writing (e.g., EVM)
Before beginning, it’s important to note that a blockchain-based solution fits a subset of use cases. For instance, consider these questions:
- Do you need high response times?
- Do you need unacceptable policies?
- Is it unacceptable for the data to be persistently accessible?
If the answer is positive, these are some discriminators for which opting for a distributed architecture is probably more convenient.
Let’s simplify what we mean by blockchain. A blockchain is a decentralized, permissionless ledger capable of persistently and immutably recording transactions, organized in concatenated blocks. By transactions, we mean the amount of information sent to the nodes of the blockchain.
A transaction could represent a currency movement or data sent to a smart contract. In any case, a transaction immutably alters the state of the blockchain towards a new state.
It follows that the consequent use cases are applications capable of recording transactions and accessing their chronological history. This intrinsic ability is very well suited to recording financial transactions, monitoring the supply chain of products, simplifying audit operations, or removing intermediaries for the ownership’s certification.
From a technical point of view, there is another interesting property. When you want to publish information on the blockchain, you pay a transaction fee for its registration in the ledger. Once the record is registered, reading its data is free.
This property opens a series of very interesting use cases. Imagine wanting to track the movement of a very precious asset that moves very slowly, like a cargo container. In this case, we will record its positioning at key points: when it was transported to the port, when it was embarked, when it disembarked, etc. At this point, its positioning can be made available without additional infrastructure costs.
Performance
As we have seen, performance is very efficient in reading. While write operations suffer from a certain latency that, as much as it can be optimized, will always be several orders of magnitude higher compared to a distributed architecture (Cloud), from a few seconds to a few minutes.
It should be noted that poor responsiveness is not a limitation as it might seem, but it is what makes the data secure and persistent in a blockchain, through their consensus algorithms.
Ultra-fast or cost-free data writing promises in blockchains are generally not credible. While Proof-of-Work (PoW) is renowned for its robust security, for many enterprise applications, Proof-of-Stake (PoS) offers a suitable alternative. PoS, eliminating the need for complex cryptographic puzzle solving, often suffices for enterprise needs, balancing security with operational efficiency.
Privacy
Privacy is a relevant issue when it comes to blockchain. Note that, when talking about blockchain addresses, we speak of pseudo-anonymity, in the sense that once the address can be associated with a personal or legal entity, it is possible to follow the entire graph of transactions involving it. A bit like it’s possible to link an identity to an IP address.
As for the information that is saved on-chain, one should always choose to publish data that can be made public without affecting confidentiality norms. Even opting for encrypted data publication is an insecure choice because no one can assure how secure cryptographic algorithms are over time (post-quantum attacks). In this case, hybrid applications can be a good solution. Transactions report keys to access reserved records in a private database.
A more ambitious solution is constituted by DID (Decentralized Identifiers). DIDs allow users to control their digital identity. Imagine wanting to track the history of a patient so that it is visible even to non-affiliated hospital structures. In this case, the patient can privately store the details of his medical record, locally, in his wallet and track the history of visits on-chain through an anonymous key. In this way, the patient will have the opportunity to privately store his data, sharing only those necessary, in turn, verified and signed by the various hospital structures.
Cost Sustainability
In the use cases analyzed, a blockchain-based solution can boast superior performance and negligible costs compared to a distributed equivalent.
This is thanks to the properties inherent in the blockchain infrastructure.
The nodes and the community provide most of the necessary infrastructure, leaving consulting firms like KChain Solutions the responsibility of realizing the domain logic.
Contact us
If you want to learn more about the feasibility of your project, do not hesitate to contact us: contact@kchain.solutions. Visit our website https://kchain.solutions and follow us on our LinkedIn page: https://www.linkedin.com/company/kchain-solutions."
