What Is A Valid Blockchain Use Case?

The blog post emphasizes that blockchain isn't a universal solution for all digital problems. It outlines the importance of validating use cases before adopting blockchain, considering factors like business motives, entities involved, and workflow. The article guides readers on understanding primary motives, use case types (identity, ledger, platform), and mapping use cases to blockchain building blocks, ensuring a strategic and informed approach to blockchain integration.

Blockchain is not an answer to every and any digital problem that humanity is facing. Everyone is talking about Blockchain and wants to see it as a solution to their long standing issues. Even before you take the conversation any further with anyone promising Blockchain as the solution, it is important to understand if your use case is a valid Blockchain use case or not. At PIPRA we spend time to do this exercise so that every stakeholder is absolutely clear about it and take up the next step only after the use case has passed the validation process. This article gives you an insight into how it is done.

To establish the use case validity, what is important is that you first list out the following for the use case:

  • Business motive
  • Entities involved
  • Workflow

Once you have figured out all these, it’s time for you to get into your den and mull over the use case and start to see how the solutions shall look like. You need to be very clear on the primary motives, what is the type of the use case, how it intends to use Blockchain and, finally, start mapping the use case to Blockchain building blocks. This shall eventually tell you if the use case has to be implemented using Blockchain or not. Let us look at each of these in detail.

Identify the primary motive

With reference to the Benefits section, there are multiple benefits that Blockchain offers. However, it is important to understand the business motive behind the use case. Try to categorize it in one of these four (rest are derivatives of these) :

  • Cost advantage

See if the business is looking at saving cost by offering the new use case. This will help them grow their profits.

  • Speed advantage

See if the business is looking at speeding their overall process to improve the system efficiency so that they are able to serve their customers better. This will help them maintain customers (and, indirectly, save cost and gain productivity).

  • Technology advantage

See if the business is looking at the use case to establish themselves as a technology innovator. This will help them create brand value by making their established solutions better and help them stay ahead of the competition.

  • Growth advantage

See if the business is looking at launching this as their new business line to grow revenue.

Cost and Speed advantages are generally achieved by re-engineering the existing process. This means, you have a well-defined workflow in use and, mostly, the bottlenecks are also identified. The success of the project is measured against these Cost/Speed benchmarks.

Technology advantage is about innovating an existing product or process. There may not be any evident issues with the existing product or process. The project is termed successful as long as the performance and usability of the new product or process is better or at par with the existing product or process.

Growth advantages are generally related to something new i.e new product or new workflow or both. Chances are that even the customer may not have complete idea about what they want to achieve and how they want to achieve. Measurement for the project success is not very clear and may require a long-term strategy. Make sure that you pay enough attention to chalk out a success plan with the customer.

Based on the primary motive that is driving the project, you would know what you can expect from the customer and what requires more deliberation. It is also important in your use case validation to see if Blockchain can directly address the primary motive and offer value to the business.

Use Case Type

This is also an important tool to understand what way the use case intends to use Blockchain. Broadly speaking, Blockchain can be used as:

  • A secure digital identity reference

Blockchain provides the digital identity using public/private keys. It can be used to authenticate as well as implement strong ownership control where transactions and permissions can be approved/disapproved. Every user is identified using their public key and they use their private key to express their consent about a transaction or permission request

  • A ledger/system of record

Blockchain records every valid transaction that has happened on the network in a distributed manner which is accessible to everyone on the network. Both static and dynamic data can be recorded. Static data is the registry which can have encrypted, unencrypted or hashed data depending upon whether you want anyone to have access to the data or only authorised node shall have access or make sure that the data was not tampered

  • A platform

Blockchain is used as a platform to use digital identities to foster and build digital relationships. Whether you are dealing with a digital asset or a physical asset, you can transact on Blockchain platform by creating smart contracts that are executed by Blockchain. Ethereum, Ripple are examples of Blockchain platforms.

After identifying what is your use case type, you should attempt at mapping the use case to different Blockchain building blocks. This should offer good insight into if you have everything to say it is a valid Blockchain use case and , if so, how your solution shall look like.

Mapping use case to Blockchain building blocks

By now, you should have a good understanding of the use cases, their primary motive and what way the use case intends to use Blockchain. With this understanding, start mapping the use case to Blockchain building blocks by answering the following questions:

  1. What type of Blockchain is needed? Public/Private/Permissioned?
  2. Are there any smart properties? If so, what are they?
  3. Property wise, which attribute cannot be double-spent, double-owned and double-sent?
  4. How do the nodes in the network reach consensus? What shall be the consensus protocol?
  5. What will be transacted on the network?
  6. What type of transactions will be carried out on the network?
  7. Is there a reward mechanism linked to transactions?
  8. If there is a reward mechanism, what is the mechanism to calculate value and transfer it?
  9. Do we need an internal currency? If so, what denominations are required?
  10. Do we need smart contracts? If so, what would be the unit of work for each contract?
  11. Is there a sequencing of smart contracts?
  12. Are there multisig (involving multiple signatures) scenarios? If so, is there a sequence?
  13. Is there a need to store files on the network? If so, what operations will be performed on those files?
  14. What kind of queries can be performed on the ledger?
  15. What analytics capabilities are required?
  16. Are there any DApps to be developed?
  17. If there are DApps, what is the deployment model and how the updates will be distributed?
  18. Does your DApp need to be integrated with the client application?
  19. Is there an off-chain service integration need? If so, what is it?
  20. Is there a need to support multiple Blockchain networks?

If you have a digital property that cannot be double-spent, double-owned and double- sent – Question #2 OR your 3rd party company transaction relationships can be implemented as Smart Contracts – Question #10 – then you have a valid use case for Blockchain.