Much has been written about blockchains and their most popular applications, cryptocurrencies and smart contracts. That does not come as a surprise as Bitcoin is already 9 years old. Yet, blockchain-adoption is not rampant and most of us still struggle to understand when and where to use a blockchain. Even worse, confidence is spreading despite misconceptions: According to Deloitte’s 2018 blockchain survey, 75% to 80% of managers across leading industries self-identify as competent in blockchain technology. Simultaneously, about 1/3 thinks that speed is one of blockchains key advantages — and that’s just not true for almost all use-cases of blockchain.

Why is blockchain so hard to grasp? Why is it not clear what its applications are? Is it just because blockchain still is fairly new and traditional industries have not yet implemented many blockchain projects? When should you actually consider a blockchain?

Blockchain never stands alone. At its core it is just a data structure, a database to store data with several interesting properties. It is a technology that enables products. I believe that blockchain is affected by the same two reasons we encounter frequently when bringing any technology to the market that. First, engineers (understanding the technicalities of blockchain well) are usually not the type of person to reason through business cases, especially in highly regulated markets such as financial services and insurance.

But on the other side, business people often do not understand the technology well enough to judge which pain can be solved by the specific properties blockchain can offer and which threats and opportunities these might offer.

Bridging this gap between the business and the technology requires to make an effort in conscious communication between both sides (or alternatively, people well-versed in both fields or able to mediate between both sides). Let’s illustrate this by a thought experiment:

Think of blockchain as a new type of engine. With a new engine (blockchain) we can build new types of vehicles (i.e. blockchain-based products). Who is impacted by this? Car-makers (i.e. people offering products as solutions to others) come to mind immediately because they can build their new cars. The question is whether anyone needs this type of car. To understand that they need a deep grasp of their customers’ needs.

But any type of businesses itself is also affected. New types of cars (blockchain-based products) can offer new opportunities or threats for their business. Think of a restaurant owner, for example. They might conclude that this new type of car offers an opportunity, because he can now purchase a new car with it and offer deliveries (cheaper, faster, better than before). But the owners could also come to the conclusion that it only affects his customers rather than themselves. A new type of car might lead to more people driving and introduce drive-thru services. Or contrary to that, the new type of car might lead to people driving further and enable customers get to competitors faster and easier, leading the restaurant owner to lose business. Yet, to play through these scenarios, the restaurant owner does not need detailed knowledge of the new type of engine. Nor do the car makers care about the restaurant owners’ business (unless they are trying to develop a car specifically for customers like them).

To conclude this thought experiment, lets ask: Do we currently have too many restaurant owners thinking about the specifics of a new kind of engine? I do think so.

So when should you consider a blockchain?

There is nothing wrong with considering a blockchain whenever you have data to store and handle. The important point to take note of is: blockchain is probably not the right tool for your problem, despite being an exciting technology. There are many alternatives to blockchain, both from a purely tech point-of-view and from a business/ecosystem point-of-view

Should you use a blockchain?

Unless you are building a blockchain product on purpose, there is no generic answer to this question. I strongly recommend to take all flow charts mentioned here, sit down with your business people as well as engineers, possibly together with a mediator, and walk through the charts. The chart structure is generally aligned along the same set of questions: Do you need to store data? Is it you, or are there others who need to read and modify the data? Do you trust each other, or do you need to enforce honesty with a technological solution?

Overall, your answer is certainly yes if blockchain offers you a solution that no simpler alternative offers.