- The arenas of cryptocurrencies, banking, supply chains and fintech have all benefited from blockchain technology but it is not the same for every other industry or organization
- Businesses should not ignore the limitations of blockchain that make the applications of the technology impractical for many organizations
Blockchain became a buzzword ever since its obscure beginnings as the foundation of cryptocurrency. Today, businesses across the world, regardless of the industry or economy, are exploring new solutions by leveraging the capabilities of blockchain technology to improve their offerings and performance.
Theoretically, blockchain can be used for applications where there is a need for decentralization, transparency, and immutability of records. For that, it becomes a good fit for areas like banking and finance, where there is an increasing need for transparency. However, it may not be the best solution for every industry or organization that may require transparency or decentralization.
Businesses should understand that blockchain is not an all-powerful panacea that can provide solutions a business may need. Many problems can be solved using existing alternatives to blockchain technology, and often with greater efficacy and at lower costs. That said, businesses besides cryptocurrency-related applications may consider blockchain alternatives to ensure that their investment pays off.
Especially, small and medium enterprises (SMEs) that use technology to help them solve their biggest challenges, should avoid getting caught up in the exuberance and adopting blockchain-driven purely by hype.
Other distributed ledgers
When distributed ledger technology is what businesses actually need, it can consider those other than blockchain. An example of such distributed ledgers is Hashgraph. Hashgraph can give businesses the benefits that are promised by blockchain, i.e., decentralization, security, and network transparency. The upside is that it does not have the scalability issue and can potentially process enormous volumes of transactions in seconds, making it a superior alternative to blockchain for businesses that require such functionality.
Another way to build redundant data storage systems is blockchain, that too due to the “backup” of data being stored on multiple nodes. It is alright for small volumes of data, but large volumes of enterprise data that keeps growing with time cannot possibly be replicated across multiple devices. So businesses can opt for high-capacity and high-speed cloud storage services that are hosted in high-tier data centers. This will be a much feasible option for storing data than relying on a blockchain.
As much as how “decentralization” is trending among the business and tech community, it isn’t necessarily the answer to all problems. Especially when the decentralization is done by replicating the same information across multiple devices. Decentralizing only makes the entire network of devices inefficient and slow, which ultimately leads to the scalability problem and unsustainably high energy consumption. That is why businesses should not attempt to shift to decentralization through blockchain unless specifically required by their situation.