Blockchain versus any other database
We talk to many clients who have interest in exploring how they might put blockchain to use in their business. The technology that backs the cryptocurrency Bitcoin is certainly intriguing. It’s a brilliant play on distributed technology that makes the need for a central authority—the kind of institution whose weight imprints transactions with the trust required to give a market liquidity—rather moot. The trust shifts from an arbiter, usually a government or a government-regulated institution, to the network itself.
But this dynamic, where there is a need for trust between parties that can’t or won’t be facilitated through an existing institution, isn’t one that permeates a developed economy such as that of the United States. There is one key question for companies who want to employ this technology in a particular project: why will using blockchain prove more effective than using a normal database? Satisfying that query will signal that blockchain’s role will be more than a curiosity.
To be sure, a compelling case for tinkering can be made simply for tinkering’s sake—and that most certainly applies to blockchain. Understanding the tech that backs the methodology will become standard currency for engineers.
Enterprises, however, should think of why blockchain improves a process or product. If it’s enabling transactions among parties who have reason to harbor distrust of what the official record in some cases might read, then blockchain may prove ideal.
In many cases, blockchain is presented as a way to clean up messy paper documentation, such as the role it could play in real estate deed recording. The biggest challenge with this kind of application isn’t implementing blockchain, but it is the same as with any move to electronic records: moving people out of their old paper-driven processes and into one where everything can be captured electronically.
There was a fantastic chart published by scientists at the National Institute of Standards and Technology that can help answer the question, “Do you need a blockchain?” It can be seen in the image linked below, or on page 42 of this paper linked below that:
Do you need a blockchain – decision tree
Full paper from NIST
Databases give us the wonderful ability to effortlessly scale the amount of data we can store, index and search. In short, databases allow for the scaling of information. Blockchain, as a form of database, does this too, but it also allows for the scaling of trust, a unique property in the world of off-the-shelf technology, but not one that’s typically required.
About Liberty Advisor Group
Liberty Advisor Group is a goal-oriented, client-focused and results-driven consulting firm. We are a lean, hand-picked team of strategists, technologists and entrepreneurs – battle-tested experts with a steadfast, start-up attitude. A team with an average experience of 15+ years, that has delivered over $1 billion in operating income improvement and over 300 M&A deals for our clients. Liberty has a proven track record in Business and Technology Strategy, Transformation and Assurance, Data Analytics, Business Threat Intelligence, and Mergers and Acquisitions. We collaborate, integrate and ideate in real-time with our clients to deliver situation-specific solutions that work.
This year, Liberty has been named to the 2019 Best Places to Work in Chicago and to FORTUNE’s list of Best Workplaces in Consulting and Professional Services.
