Factors to Consider before Adopting Blockchain
Adopting the blockchain technology is akin to business process re-engineering which might incur heavy costs. Besides that, an organization might face certain new risks. Therefore, businesses and other organizations must evaluate many factors before adopting the blockchain technology. They need to carry out an inventory analysis by asking the following questions like,
- How many participants are in the system?
- What is the geographical distribution of the participants?
- What sort of performance requirements do they have?
On top of that, they need to specify the rules, risks, and responsibilities of each party in your blockchain ecosystem
- There is a need for a shared common database
- The parties involved with the process have conflicting incentives in a trustless environment.
- There are multiple parties involved in the environment.
- There are uniform rules governing participants in the system
- Decision making of the parties is transparent, rather than confidential
- There is a need for an objective, immutable history or log of facts for parties’ reference
- Transaction frequency does not exceed 10,000 transactions per second.
When Not to Use Blockchain
Although blockchain is a powerful tool, it is not always the right tool. If a business is contemplating using blockchain technology, it needs to evaluate the issues fully. The following conditions are not currently well suited to blockchain-based solutions:
- The process involves confidential data
- The process stores a lot of static data, or the data is quite large
- Rules of transactions change frequently
- The use of external services to gather/store data