4 Reasons You Shouldn’t Switch to Blockchain

4 reasons you shouldn't switch to blockchain

 

Should you switch to blockchain?

The hype around blockchain and inclusion of blockchain speakers at conferences could lead you to almost feel that a switch to blockchain for everything is not only just around the corner but that it is inevitable. But is it?

 

To date, blockchain has been presented as the panacea to a myriad of industries and issues spanning:

 

  • Medical/Healthcare (improve supply chain integrity, increased transparency)
  • Charity (tracking donations, reducing fraud)
  • Refugees (streamline identity management)
  • Asset tracking (from source to end user e.g. paddock to plate, from diamond mine to retail store)
  • Energy (bypass public grids for cheaper peer-to-peer transfer)
  • Music/Media (ownership retention, anti-pirating and copyright infringements)
  • Travel (passenger identification, payment and tracking)
  • Insurance (streamline contracts and claims)
  • Legal (smart contracts)
  • Banking/Financial (payments processing, remove currency borders)
  • Cloud storage and cybersecurity (increased security in decentralised networks)

In reality, there are some circumstances where jumping on the blockchain train may not be the most effective way of addressing a situation.  Below are 4 reasons why making the switch to blockchain may not be the solution.

 

1. Legislation lags behind common practice

Many sectors falls under stringent regulatory and legislative frameworks, and history tells us that legislation falls behind common practice. With the notable exceptions of countries such as Bermuda and Estonia, the legislation has not yet caught up with blockchain technology, or even have much idea what to do with it. Moving ahead risks moving into an environment that later may be stifled or restrained by new legislation.

 

Fundamentally there is a reasonable probability that blockchain will live up to the hype about the benefits it can bring. However, a deep dive and robust debate is required: to get to the granular details, to analyse the level of fit for each sector, and to resolve any potential issues.

 

2. Not an instant solution for data storage

Significant volumes of data are gathered in all sectors, and storage (and retrieval) of that data are considerations that crop up from time to time. But if you are thinking of implementing blockchain to specifically address the question of data storage, you need to think broader, as blockchain is not your answer to solving data storage issues.

 

Blockchains are decentralised and “in the cloud”. But before we can rely on that cloud to hold our data, the issues of your sector, block mining, deciding on who forms the trusted private network and consensus around those issues needs to be addressed.

 

3. Not a replacement for your existing core and admin systems

At this stage, blockchain is not a replacement for your core platforms or administration systems. It certainly is not there to replace your SQL database or enterprise package.

 

A switch to blockchain will augment good systems with almost tamper-proof evidence. But it will not create them, and you need to have good internal practices and procedures and solid systems already in place. An understanding of your business and your business workflows is fundamental to ensure the possibilities become achievable outcomes. Then blockchain can help make your company, staff, volunteers and clients accountable to their claims.

 

4. Not a replacement for bad systems

A relatively regular occurrence is thinking that specific software systems are not working as desired or feeling frustrated by them, when in reality, the failure point may more often be internal processes and system adoption, not the software itself. Blockchain is no different and implementing it will not cure existing bad systems, poor training or inadequate system adoption.

 

In fact, a blockchain solution is likely to make your systems more complicated, so it is not a miracle cure-all.

 

Know your reasons

Blockchain is a technology with potential, but a newer technology is not always the reason to make the change. In considering the move to blockchain, if it has been evaluated as necessary move,  perhaps the first steps might be bringing on board some capability that includes blockchain, such as for management of assets. When the value is better understood, then at consider extending the implementation to other functions.

Sonja Bernhardt OAM About Sonja Bernhardt OAM

Sonja Bernhardt OAM earned her Medal of the Order of Australia, in 2011, for services to the Australian Information Technology Industry. She is an emerging technology commentator on ABC Radio and on cruise ships, throughout the world. She is a globally published author, with a new book Blockchain Technology for Global Social Change due in mid 2019.
In her real job she is a director and CEO of ThoughtWare, the software development company behind the ionMy Governance, Risk, Compliance software platform (ionmy.com.au).

ThoughtWare has started developing blockchain solutions as part of the overall governance capabilities of the ionMy platform.

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