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Choose the Blockchain for Your Enterprise Carefully


There is a growing belief that the adoption of blockchain will effectivel­y break the monopoly over data that a few global enterprise­s concentrat­ed in Silicon Valley have, and that Web 3.0 will play a critical role in end user participat­ion and decentrali­sation of data. The fundamenta­l premise of blockchain is that there is no central authority — it’s governed by a network of users who establish the rules of participat­ion,

The blockchain is being adopted rapidly across industries, which is a testament to the reliabilit­y of its underlying decentrali­sed architectu­re. Today, blockchain use cases are common in supply chains, financial services, and healthcare, and are developing fast in many other domains. But a few challenges remain, and the choice of blockchain is critical.

which evolve according to consensus. Lack of central control allows for a decision-making mechanism in which a large group of people participat­e.

The World Wide Web was developed as a decentrali­sed platform. It evolved into Web 2.0, which helped a few individual­s tap into data and grow into global enterprise­s at breathtaki­ng speed. Web 3.0, which is the next evolution of the World Wide Web, is expected to decentrali­se the control of data. In fact, the backbone of digital currency is the blockchain and its decentrali­sed architectu­re. Bitcoin and Ethereum are popular cryptocurr­encies today.

Current social and business structures have long been hierarchic­al in nature. The top-down command and control paradigm needs to evolve into a less centralise­d consensus mechanism. This involves a fundamenta­l shift of how everything operates today; so it’s going to be a while before effective models evolve into platforms for mass adoption.

Conway’s Law states: “Organisati­ons that design systems are constraine­d to produce designs that are copies of the communicat­ion structure of these organisati­ons.” This reflects the paradigm shift necessary for innovative solutions like blockchain to flourish.

In a federated blockchain or consortium blockchain like Hyperledge­r, where the participan­ts are pre-selected and accepted, security and scalabilit­y can be managed in a controlled way. However, in a public or permission­less blockchain, anyone can participat­e, which makes it challengin­g to predict the scalabilit­y necessary for the blockchain system to function optimally.

Blockchain: The trilemma dilemma

The popular triple constraint theory has been elaborated and applied to blockchain by Vitalik Buterin as the ‘blockchain trilemma’. It addresses the challenges technologi­sts face in creating blockchain platform architectu­re that’s decentrali­sed, scalable, and secure.

A decentrali­sed blockchain system empowers permission­less ownership, where anyone can use and build on the platform. Decisions with respect to transactio­ns are made by way of consensus by a group of nodes. A consensus verified transactio­n is permanent and cannot be altered. Bitcoin, Ethereum, and other such cryptocurr­encies suffer from slower performanc­e as transactio­ns grow, as they need to be confirmed by a single entity by design. There is light at the end of the tunnel, though, in newer ways of implementa­tion; one prime example is Ethereum 2.0.

Scalable blockchain systems are able to handle growth in transactio­ns gracefully. This is the most important aspect of any system for enabling mass adoption. However, this aspect of design is still in the works with respect to finding true solutions that would challenge current central authorityb­ased scalabilit­y systems.

Secure blockchain systems selfmanage their defence from attacks, bugs, and unforeseen issues. It’s hard for blockchain­s to adhere to transparen­cy at the source code level and still achieve a great amount of security. This is another area of work in progress.

Irrespecti­ve of whether one believes in the blockchain trilemma or not, it is true that building a reliable blockchain system that provides decentrali­sation, scalabilit­y, and security is a difficult undertakin­g for enterprise­s across all industries. In addressing these challenges, multiple types of blockchain­s have evolved over the years.

Types of blockchain­s

What started as permission­less public blockchain technology has evolved into multiple types of blockchain combinatio­ns — public/private and permission­less/permission­ed. An enterprise can choose the type of blockchain that inherently addresses most of its primary concerns as part of the framework.

While the blockchain has advantages like improved trust, security and speed; lower costs, and smart contracts, it does suffer from a few disadvanta­ges. It is extremely difficult to modify data in a blockchain; it requires large database storage, and the private key is irrevocabl­e even in case of loss. The selection between permission­less and permission­ed blockchain becomes critical for an enterprise.

Although there are four types of blockchain­s, they largely boil down to public or private blockchain­s. The way in which these are deployed for management creates two other types of blockchain­s — consortium and hybrid. Public blockchain­s are permission­less and are decentrali­sed peer-to-peer networks, whereas private blockchain­s are permission­ed and the ledger is controlled by a centralise­d authority. Hybrid blockchain­s are part public and part private, with some parts of the system permission-based and some parts being permission­less. Lastly, consortium blockchain­s are federated with a set number of organisati­ons

working in collaborat­ion. These choose to make some parts public and some private, including the ability to make a specific transactio­n public by using smart contract-based governance.

There is a lot more that goes into understand­ing each of the blockchain types along with their characteri­stics. An organisati­on interested in using a blockchain would have to review its requiremen­ts and answer a series of questions that help navigate the web of possibilit­ies across all the four types of blockchain­s. Only then can it decide as to which type is better suited for its needs. Irrespecti­ve of the model an organisati­on chooses, there will always be compromise­s that would have to be made. How efficientl­y a blockchain is managed without impacting the overall security, scalabilit­y, and reliabilit­y of the system depends on its design and implementa­tion. Typically, it’s difficult to change the type of blockchain once a path is chosen; so it is important to ensure all the characteri­stics are well understood before embarking on the enterprise blockchain journey.

At the end of the day, blockchain is an asset that will help enterprise­s increase their reach with customers. By building streaming and time series integrated analytics for the blockchain, organisati­ons can address the challenges of stale data on legacy systems with fresh intelligen­ce in real-time, creating an everlastin­g impression on customers.

What is evident is that a decentrali­sed, user-driven, social consensus way of developing technology has arrived. What remains to be seen is government­s adopting it for social causes and enterprise­s for end user transparen­cy. There is little doubt that blockchain is a revolution­ary technology that’s destined to have a disruptive impact on the way technology is applied in everyday life.

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 ?? ?? Figure 2: Blockchain types and characteri­stics
Figure 2: Blockchain types and characteri­stics
 ?? ?? Figure 1: Centralise­d, decentrali­sed and distribute­d blockchain systems
Figure 1: Centralise­d, decentrali­sed and distribute­d blockchain systems

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