Blockchain: Is it needed?

When considering the application of blockchain in global enterprise, it is important to first understand that blockchain is not a technology layered on top of existing infrastructures to adjust or tweak the way business is done. In fact in most scenarios where we can dream up high-level use cases where the need of record keeping or automation is needed and kept within existing structures - it is often unnecessary and in many respects becomes a glorified database or excel spreadsheet.

In order to assess whether a blockchain might be a better technology candidate than a traditional relational database for a given enterprise use case, it is necessary to perform a quantitative and qualitative assessment and a cost benefit analysis of all areas in which it belongs to; and consequently to infer whether the technological peculiarities of a blockchain might give the edge over a relationational database. Such analysis are usually operational risk assessments which can be divided into:

cyber risk: cyber threat models are based on value-at-risk estimations where the potential financial loss of data corruption and the financial cost of proper cybersecurity maintenance must be carefully gauged.

compliance risk: This is an analysis of the exposure of the industry in question to financial losses and legal penalties in case it fails to be compliant with regulatory frameworks, and analysis of what the cost in terms of both monetary and time investment of meeting regulatory compliance standards.

Counter Party Risk: This requires a quantification of how much a given business model is reliant on distrusted third-parties and therefore the potential financial benefits of disintermediation. This is the most elusive aspect, as there is a lack of standard quantification models to evaluate a distrust index.

Lastly, in case of blockchain adoption over a relational database, it is important to decide which blockchain (permissioned, permissionless, consortium etc.) would be best suited to a specific use case.