Chapter 2
Picking a Blockchain
IN THIS CHAPTER
Discovering the right blockchain for your needs
Making a plan for your project
Uncovering obstacles to your project
Building a project road map
The blockchain industry is complex and growing in size and capabilities every day. When you understand the three core types of blockchains and their limitations, you’ll know what’s possible with this new technology.
This chapter is all about assessing blockchain technology and developing a project plan. It puts the following chapters about individual blockchain platforms and applications into context.
Here, you see how to assess the three different types of blockchain platforms, what’s being built on each type, and why. I give you a few tools that help you outline your project, predict obstacles, and overcome challenges.
Where Blockchains Add Substance
There’s a lot of buzz surrounding blockchains and the cryptocurrencies that run them. Some of this buzz just stems from the fluctuation in the value of cryptocurrencies and the fear that blockchain technology will disrupt many industry and government functions. A lot of money has poured into research and development because stakeholders don’t want to be made obsolete and entrepreneurs want to explore new business models.
When it comes to finding an opportunity for blockchain technology to add value to an organization, often the question arises, “Where do blockchains add value and how are they different from existing technologies?”
Blockchains are a special type of database. They can be utilized anywhere you would use a normal database — but it may not make sense to go through the trouble and expense of using a blockchain when a normal database can do the job.
You really see value in using some form of a blockchain when you want to share information with parties you don’t fully truest, your data needs to be audited, or your data is at risk of being compromised internally or externally. None of these questions are simple, and the correct solutions can be difficult to ascertain.
This section helps narrow down your options.
Determining your needs
Blockchains come in a lot of flavors. You’ll find one that matches your needs — the trick is finding it! Mapping your needs to the best blockchain can be overwhelming. Whenever I have lots of options and often conflicting needs, I like to utilize a weighted decision matrix.
A weighted decision matrix is an excellent tool for evaluating the needs of a project and then mapping those needs to possible solutions. The key advantage of the matrix is to help you quantify and prioritize individual needs for your project and simplify decision making. Weighted decision matrixes also prevent you from becoming overwhelmed by individual criteria. If done properly, this tool allows you to converge on single idea that is compatible with all your goals.
To create a weighted decision matrix, follow these steps:
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Brainstorm the key criteria or goals that your team needs to meet.
If you aren’t sure of the criteria you need to consider when evaluating your blockchain project, here are a few things to keep in mind:- Scale and volume
- Speed and latency
- Security and immutability
- Storage capacity and structural needs
Your team will have its own list of objects and priorities. These are just a few to consider while evaluating the correct platform to use to meet your needs.
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Reduce the list of criteria to no more than ten items.
If you’re having a hard time refining your list of needs, consider using a comparison matrix tool. - Create a table in Microsoft Excel or a similar program.
- Enter the design criteria in the first column.
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Assign a relative weight to each criterion based on how important that objective is to the success of the project.
Limit the number of points to 10 and distribute them between all your criteria — for example, 1 = low, 2 = medium, and 3 = high priority.
If you’re working in a team, have each member weight the criteria separately. - Add up the numbers for each objective and divide by the number of team members for a composite team weight.
- Make any needed adjustment to weights to make sure each criteria are weighted correctly.
Congratulations! You now have a ranked list of criteria you need to meet to be successful with your blockchain project.
Defining your goal
You can easily get lost building a blockchain project that doesn’t have a clear goal or purpose. Take the time to understand where you and your team would like to go and what the final objective is. For example, a goal might be to trade an asset with a partner company with no intermediary. This is a big goal with many stakeholders.
Build back to a small project that is a minimal viable use case for the technology that clearly articulates added value or savings for your company. Along the same lines as the earlier example, a smaller goal would be to build a private network that can exchange value between trusted parties.
Then build on that value. The next win might be building an instrument that is tradable on your new platform. Each step should demonstrate a small win and value created.
Choosing a Solution
There are three core types of blockchains: public networks like Bitcoin, permissioned networks such as Ripple, and private ones like Hijro.
Blockchains do a few straightforward things:
- They move value and trade value quickly and at a very low cost.
- They create nearly permanent data histories.
Blockchain technology also allows for a few less-straightforward solutions such as the ability to prove that you have a “thing” without revealing it to the other party. It is also possible to “prove the negative,” or prove what is missing within a dataset or system. This feature is particularly useful for auditing and proving compliance.
Table 2-1 lists common uses cases that are suited for each type of blockchain.
TABLE 2-1 Table Head
|
Primary Purpose |
Type of Blockchain |
|
Move value between untrusted parties |
Public |
|
Move value between trusted parties |
Private |
|
Trade value between unlike things |
Permissioned |
|
Trade value of the same thing |
Public |
|
Create decentralized organization |
Public or permissioned |
|
Create decentralized contract |
Public or permissioned |
|
Trade securitized assets |
Public or permissioned |
|
Build identity for people or things |
Public |
|
Publish for public recordkeeping |
Public |
|
Publish for private recordkeeping |
Public or permissioned |
|
Preform auditing of records or systems |
Public or permissioned |
|
Publish land title data |
Public |
|
Trade digital money or assets |
Public or permissioned |
|
Create systems for Internet of Things (IoT) security |
Public |
|
Build systems security |
Public |
There may be exceptions depending on your project, and it is possible to use a different type of blockchain to reach your goal. But in general, here is how to break down different types of networks and understand their strengths and weaknesses:
- Public networks are large and decentralized, anyone can participate within them at any level — this includes things like running a full node, mining cryptocurrency, trading tokens, or publishing entries. They tend to be more secure and immutable then private or permissioned networks. They’re often slower and more expensive to use. They’re are secured with a cryptocurrency and have limited storage capacity.
- Permissioned networks are viewable to the public, but participation is controlled. Many of them utilize a cryptocurrency, but they can have a lower cost for applications that are built on top of them. This feature makes it easier to scale project and increase transaction volume. Permissioned networks can be very fast with low latency and have higher storage capacity over public networks.
- Private networks are shared between trusted parties and may not be viewable to the public. They’re very fast and may have no latency. They also have a low cost to run and can be built in an industrious weekend. Most private networks do not utilize a cryptocurrency and do not have the same immutability and security of decentralized networks. Storage capacity may be unlimited.
There are also hybrids between these three core types of blockchains that seek to find the right balance of security, auditability, scalability, and data storage for applications built on top of them.
Drawing a blockchain decision tree
Some of the decisions you face while working on a blockchain project within your organization can be difficult and challenging. It pays to take time making decisions that involve
- Uncertainty: Many of the facts around blockchain technology may be unknown and untested.
- Complexity: Blockchains have many interrelated factors to consider.
- High-risk consequences: The impact of the decision may be significant to your organization.
- Alternatives: There may be alternative technologies and types of blockchains, each with its own set of uncertainties and consequences.
- Interpersonal issues: You need to understand how blockchain technology could affect different people within your organization.
A decision tree is a useful support tool that will help you uncover consequences, event outcomes, resource costs, and utility of developing a blockchain project.
You can draw decision trees on paper or use a computer application. Here are the steps to create one for uncovering other challenges around your project:
-
Get a large sheet of paper.
The more choices there are, and the more complicated the decision, the bigger the sheet of paper you’ll need. - Draw a square on the left side of the paper.
- Write a description of the core goal and criteria for your project in that square.
- Draw lines to the right of the square for each issue.
-
Write a description of each issue along each line.
Assign a probability value to encounter each issue. - Brainstorm solutions for each issue.
- Write a description of each solution along each line.
- Continue this process until you’ve explored each issue and discovered a possible solution for each.
Have teammates challenge and review all your issues and solutions before finalizing it.
Making a plan
At this point, you should have a clear understanding of your goals, obstacles, and what blockchain options you have available.
Here’s a simple road map for building your project:
- Explain the project to key stakeholders and discuss its key components and foreseen outcomes.
-
Write up a project plan.
This is a living set of documents that will change over the life of your project.
- Develop the performance measurements, scope statement, schedule, and cost baselines.
- Consider creating a risk management plan and a staffing plan.
- Get buy-in and define roles and responsibilities.
-
Hold a kickoff meeting to begin the project.
The meeting should cover the following:
- Vision for the project
- Project strategy
- Project timeline
- Roles and responsibilities
- Team-building activities
- Team commitments
- How your team will make decisions
- Key metrics the project will be measured against
After you complete your project, you aren’t done! Go back and analyze your successes and failures. Here are some questions to ask yourself:
- Are my key stakeholders happy?
- Did the project stay on schedule?
- If not, what caused it to be delayed?
- What did I learn from this project?
- What do I wish I had done differently?
- Did I actually create new value for my company or save money?
You may want to return to this chapter when you have a deeper knowledge of blockchain technology and you’re developing a plan to build a project.