Blockchain is not a magic bullet for all applications. (part 1)

by Lumai Mubanga

In spites of all the enthusiasm and hopes brought by blockchain, it is not a magic bullet for every type of problem or challenges. Many applications continue to be developed for different sectors but not all applications will be blockchain-based. This article looks at which applications may or may not be suitable for adoption on the blockchain technology.

There is a selection criterion that applications need to meet for a determination as to whether they need blockchain or not. The following paragraphs give specific criteria for such applications.

Database Criteria

Blockchain is a ledger, a database of transactions. It stores its transactions in a database.  This means that only applications that may involve the storage of data on a database can use blockchain as a solution. For example, if the application will require the storage, retrieval, or processing of transactions, then it can use blockchain as a solution. If not, that application will still function perfectly well without a blockchain. Take, for example, a bank providing a free service to help customers calculate interest rate on a mortgage or loan. The bank may not want to remember all the different details given by the customer in making all these calculations. There will be no need to store, retrieve and analyse such information. In this case, using a blockchain will be a waste of resources. Another example is in the auditor’s office. Tax calculations is a service that may not be used on the blockchain for similar reasons. The same applies to online internet services that help students carry out different mathematical calculations.

Decentralized Properties

Decentralised properties of the blockchain determine the type of applications that can be used on it. The absence of a decentralised authority in the system is a critical criterion. For example, does the application need a central authority to control the system? If the answer is Yes, then the application cannot use the blockchain because blockchain removes that central control in the system. Take for example immigration and passport systems. These systems rely on governmental agencies to control who comes in and out of the country as well who gets citizenship for a particular country. That control is necessary. This trusted authority i.e. government agencies are able to handle all travel and documentation records. In this case, we may not need to use blockchain.

Immutability Properties

Blockchain is immutable and this is another critical criterion to its adoption in a system. Immutability means that if you put a transaction in the Blockchain, you can never change or even delete it. This of course enhances transparency so that all the users can see the transactions. Does the system need data to be permanently stored or not? Should that data be visible and accessible to sections of society? If an application will demand some measure of privacy and without keeping that data permanent, then blockchain will not be applicable. For example, online systems that search, pair and bring dating couples together may require strict privacy of their client’s details. Such a system will instead require a central authority to safeguard that information.

In a nutshell, any application that qualifies to use the blockchain as a solution should be database-based, will not need a central authority for its operations and should endeavour to be transparent and its data or information permanently kept. Otherwise, blockchain will not suffice.