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Last updated: August 19, 2019 3:28 AM

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As the implications of the invention have been understood, some expectation has emerged around blockchain technology.

This is, perhaps, because it is very easy to imagine high-level use cases. But, technology has also been closely examined: millions of dollars have been spent on blockchain technology research in recent years, and numerous tests have been conducted to determine whether blockchain technology is appropriate or not in various scenarios.

Blockchain technology offers new tools for authentication and authorization in the digital world that exclude the need for many centralized administrators. As a result, it allows the creation of new digital relationships.

By formalizing and securing new digital relation, the blockchain revolution is raised to create the backbone of an Internet layer for transactions and value interactions (often called ‘Internet of value’, as opposed to the ‘Information Internet’ that it uses the client-server databases, accounts and master copy that we have been using for the past 20 years.

But, with all that is said about building the digital backbone of a new transactional layer on the Internet, sometimes blockchains, private cryptographic keys and cryptocurrencies are simply not the right path.

Many groups have created flowcharts to help a person or entity decide between a blockchain or a master copy, the client-server database. The following factors are a distillation of much of what has been done previously:

Are the data dynamic with an auditable history?

Paper can be difficult to fake due to the complexity of physical seals or appearances. Like engraving something on stone, paper documents have a certain permanence.

But, if the data is constantly changing, if it involves transactions that occur regularly and frequently, then the paper as a medium may not be able to maintain the registration system. Manual data entry also has human limitations.

So, if the data and its history are important for the digital relationships they are helping to establish, blockchains offer flexible capacity by allowing many parties to write new entries in a registration system that is also maintained by many custodians.

Data should or can be controlled by a central authority?

There are still many reasons why a third party should be in charge of some authentications and authorizations. There are times when third party control is totally appropriate and desirable. If data privacy is the most important consideration, there are ways to protect data without even connecting it to a network.

But if the existing IT infrastructure with accounts and logins is not enough for the security of digital identity, then the problem could be solved with blockchain technology.

As Satoshi Nakamoto wrote in his seminal work (“Bitcoin: a peer-to-peer electronic cash system“): “Merchants must distrust their customers, bothering them to obtain more information than they would otherwise need. A certain percentage of fraud is accepted as inevitable. ”

Private key cryptography allows push transactions, which do not require centralized systems and the elaborated accounts used to establish digital relationships. If this database requires millions of dollars to secure light financial transactions, then there is a possibility that blockchains are the solution.

Is the transaction speed most important consideration?

Does this database require high-performance millisecond transactions? (There is more about this point in our guide: “What is the difference between a blockchain and a database?“).

If high-performance millisecond transactions are required, then it is better to keep a centralized system of a traditional model. Blockchains as databases are slow and there is a cost to store the data: the processing (or “mining”) of each block in a chain. Centralized data systems based on the client-server model are vary faster and less expensive … for now.

In summary, although we still don’t know all the limits and possibilities of blockchains, we can at least say that the use cases that have passed the inspection have tried to manage and secure digital relationships as part of a registration system.

Images by Maria Kuznetsov

Article Source: http://www.coindesk.com