You’re ready to start integrating the financial industry’s buzzing blockchain technology to scale your busines, but with all the options – public, private, permissioned, Bitcoin, Ethereum protocols, and more – it might seem really daunting to decide which is the right blockchain to choose for your business.
Blockchain presents huge benefits in data management with Distributed Ledger Technology (DLT) bringing about increased security, lower cost, and higher efficiencies. Blockchain technology has great capacity to be a disrupter when integrated into businesses, bringing about transparency and efficiency, moving beyond the hype of just Bitcoin to a multitude of applications in many sectors. From financial services to record keeping, remittance, and asset tokenization, blockchain can bring much-needed efficiency, transparency and decentralization to many industries. Medical health records can be seamlessly accessed in case of emergencies; cross-border payments can be made without hefty exchange fees; supply chains can be tracked and authenticated; and the applications are endless.
Maturing Perceptions on Distributed Ledger Technology
More businesses are seeing past the initial hype and recognizing its benefits. What was once seen as a disruptive technology is now seen as a more mature and pragmatic solution to business problems. Deloitte reported that its 2019 Global Blockchain Survey include the increasing perception of blockchain as a top-five strategic priority, sustained levels of blockchain investment, and improved sentiments measured across an array of attitude statements, including the share of respondents who agree that blockchain offers compelling use cases. Research shows that top use cases include 43% for Data Validation and 40% for Data Access/Sharing.
In 2020, we can see that the prevailing question among executives is no longer, “Will the technology work?” but rather, “How can we make technology work for us?”
Why Put Your Business Data on Blockchain
- Business Scalability: Faster processing with a decentralized administration
- Risk Mitigation: Enhanced security through distributed database and multiple nodes
- Cross-Agency Communication: Easier facilitation through tiered, sophisticated access control
- Operational Efficiency: Removal of manual redundancies through automated smart contracts
- Record Traceability: Audit trails that are technologically impossible to be altered, erased or falsified
Factors to Consider When Choosing the Right Blockchain for Your Business
Blockchain networks require an exorbitant amount of energy, and thus money, to maintain. Many businesses and projects want a private blockchain, shunning public blockchains yet do not realize the resources needed to single-handedly keep it going.
The cost is highly-dependent on the blockchain protocol’s consensus algorithms. From Proof of Work (PoW) to Proof of Stake (PoS), to more complex methods such as Delegated Byzantine Fault Tolerance. Of all the different consensus methods, PoW is the most costly, but PoS is not without its flaws either.
Bitcoin utilizes PoW. The net effect of the Bitcoin mining industry is that it is consuming $3.6 billion annually to produce approximately $5 billion of economic gains. For PoW, miners compete against each other to do these confirmations, which involves a complicated mathematical puzzle and computing power and get crypto rewards. PoS doesn’t require miners to solve complex mathematical puzzles in order to secure transactions. Instead, it uses a staking mechanism in the form of economic incentives to secure network security, and thus is more energy-efficient way to achieve consensus.
You should ensure that you have the resources required to maintain the consensus mechanism you design for your blockchain network.
Consensus methods also affect the speed of transaction confirmation for your blockchain network. Bitcoin processes 4.6 transactions per second due to how energy-intensive it is. It is necessary to decide for your business if you need a high-speed transactions, or a slower but less costly and energy consuming method, to ensure it is not bottlenecked by scalability. If your project is not transaction-intensive, perhaps you could only restrict participants and network decisions to cost, quality, access, and ease of use, and properly assess total network transaction speed and fees.
How public or private your blockchain is depends on your need to balance security and privacy.
A public blockchain is a distributed, transparent ledger. It is decentralised, with encrypted information stored on multiple devices. This makes it immutable and almost impossible to hack a public blockchain. It is extremely secure due to the number of members it has, they are more resistant to distributed denial-of-service – DDoS – attacks.
A private blockchain controls users’ access to information, and thus keep your information private but is less secure than a public blockchain. It can be altered by its owner and is vulnerable to hacking.
A contract is a script that is executed and that can interact with the blockchain that hosts it and can store data in this blockchain. These platforms make it possible to build Dapps (Decentralized Apps) that can interact with these contracts to offer features or services to users.
You will also need to decide if your business needs require smart contracts. Bitcoin, Bitcoin Cash, Litecoin are blockchain protocols that cryptocurrency-focused, intended to allow money transfers very quickly, but do not support smart contracts. Ethereum, NEO and Hyperledger are examples of blockchains that are possible to create smart contracts.
Public Vs Private Vs Permissioned Blockchains Compared
A public blockchain is an open-sourced network where anyone can download the protocol and read, write or participate in the network. All transactions are public, and all nodes are equal. Benefits of a public blockchain is that it is highly decentralized and thus immutable – once verified, data cannot be altered. It inspires trust and transparency for its participants, but also sacrifices efficiency and cost due to its long and energy-intensive confirmation process.
Participants in a private blockchain require permission to read, write or audit the blockchain. They are invited to the network and governed and controlled by a single entity. Private blockchains allow companies to employ distributed ledger technology without making data public, allowing different levels of access to information to protect commercial confidentiality.
However, this also lacks the decentralization and trustless nature of blockchain. Private blockchains are centralised databases. This also makes private blockchains faster, more efficient and more cost-effective than public blockchains.
Permissioned blockchains offer the middle ground, supporting customization and different business needs. Such blockchains allow participants to join the network after suitable verification of their identity, and orgnizations can allocate designated roles and grant special permissions for different users. Ripple is one of the blockchain networks that supports permission-based roles for its participants.
Businesses are increasingly opting for permissioned-based blockchain networks, as this gives them the freedom to control and balance privacy and decentralization, with the ability to restrict and manage user roles and activity.
Developing the Right Blockchain for Your Business Needs
As every business requires a different level of security, privacy and efficiency, it is important to choose a solutions provider that can customize to your business needs.
With this, companies are increasingly seeing Blockchain-as-a-Service (BaaS) becoming highly in-demand. One such example is Broctagon Fintech Group, one of the pioneers to identify the need for BaaS in the industry. Our Blockchain-in-a-Box (BIB) helps businesses address the issues with implementing blockchain for businesses, such as the lack of technological expertise and a team to create a blockchain protocol and uncertainty about the viability of blockchain solutions on the business.
BIB is a quick-start solutions kit for businesses to experience the advantages of data implementation on blockchain before embarking on a hefty development. It is industry-agnostic, and our experts will guide you in understanding your business needs, with a choice of putting your data on a Public Chain or Permissioned Enterprise Chain. Your data will be seamlessly integrated on a chosen type of blockchain, aligned with your business goals, set up in just a matter of weeks.
Schedule a free assessment from our blockchain experts to evaluate how blockchain can suit your business needs. Leave your contact here: https://broctagon.com/contact/