Babbit Column | Four basic questions to answer before a blockchain project begins

Since General Secretary Xi Jinping raised the blockchain technology to a national strategic level on October 24, it is expected that more blockchain technology projects will begin later. Due to the universality of blockchain technology, it can be applied to multiple industries in the society, which will fully make up for the lack of existing centralized computing methods, increase the overall trust of society and reduce transaction costs, and therefore increase the economy. And the efficiency of social life, people will get higher income. However, it must be recognized that the application of blockchain technology has its scope of application. The blockchain technology itself is also under development. There will be a process to adopt the blockchain to transform existing business processes and adjust various related regulations and laws. So when starting a blockchain project, we must consider some basic factors, analyze the feasibility of the project and the benefits it can generate. Only in this way can we have reasonable expectations, can we make correct decisions, and we can produce reasonable returns. But so far, some of the more popular blockchain application ideas are wrong. This is why 95% of blockchain projects are not really welcomed by the market now. Projects started under the influence of these ideas cannot succeed.

Before starting any blockchain project, project staff should answer the following four basic questions.

First, is the problem to be solved suitable for solving with blockchain technology?

This is also the product market fit in product application theory. We need to see in real life which requires multi-party cooperation to achieve a win-win situation; which requires the use of immutable information that can be queried by the public to solve real-world problems; which can be directly traded between two points Without the need for an intermediary to improve efficiency. Under these circumstances, it is the best application scenario of blockchain technology.

Second, can the problem to be solved be solved in a centralized technology way?

Under the circumstances that the centralized computing method can solve the problem, do not use blockchain technology. The biggest feature of the centralized computing method is that it has developed very mature and efficient. Because various logical tests and data records are performed in only one centralized place, the number of transactions that can be processed in a unit time is very high. Examples include securities matching transactions, air and train ticket orders, and payment transactions while shopping. These scenarios require high-performance processing capabilities. Therefore, this application scenario is most suitable for adopting centralized computing technology. However, in real economic life, when multi-party cooperation is needed, a centralized calculation method is not applicable. However, blockchain technology can give full play to its advantages in this situation. A transaction can only be recorded on the chain after the relevant parties have jointly confirmed it. Often in these applications, computational efficiency is not a major issue. Such situations include cross-border remittances, settlement after securities transactions, transfer of private equity shares, transfer of ownership of houses, and trade finance. In these areas, centralized computing methods are not applicable, and these current processes usually take more than a day or even weeks. But if we apply blockchain technology to solve these problems, we will find that blockchain technology is the best technology to solve these problems. Even in the current state of development of blockchain technology, solutions based on it can improve existing processes by an order of magnitude. Therefore, blockchain technology is the best technical means to solve such problems.

A common misunderstanding of the current blockchain industry is that some blockchain technology solutions often advertise their superiority by declaring their ability to process transactions per second. But in fact, this shows the proponents' wrong understanding of blockchain technology. If a technical solution needs to focus on efficiency, then it will definitely adopt a centralized solution, and it will not need to adopt distributed accounting technology. If a business scenario is truly applicable to the use of blockchain technology, then even the processing capabilities of the current blockchain technology can achieve very good benefits.

Third, will the project generate sufficient commercial or social benefits?

Many scenarios are suitable for adopting blockchain technology, but not every application can generate good returns in the short term. Before you start a project, you need to assess the ratio of inputs to benefits. If an investment project invests too much, but the yield is too low, there is no need to start such a project. For example, the use of blockchain technology for product traceability is a very common application. But it is also a traceability application. The market places a lot of emphasis on the traceability of rice, baby milk powder and medical beauty medicine. The degree of value is different, and the value paid for it is different. The traceability of a pacemaker can sell higher prices in the market, so it is very valuable to carry out such traceability projects.

Fourth, can this project change the cooperative behavior of users?

Whether the user's cooperative behavior can be changed directly determines the success of the blockchain technology application and the value obtained. So far, the business in the business society has its own exclusive business model. So most of the success stories around us are company by company. Cooperative companies made up of members are rare. Relevant companies usually cooperate only as a last resort. The most typical representative in this regard is the sports league. A basketball team company cannot operate on its own, it must play against other basketball teams in the market. The companies of each basketball team are evenly matched. Therefore, the basketball game market can not appear to be a dominant situation in other industries. The basketball market must be operated in an alliance nature. So there are basketball leagues like the NBA and CBA. Blockchain technology requires multiple companies to conduct business cooperation on an equal basis. This is completely different from the way in which most industries have operated so far. To advance a solution based on blockchain technology, it is very difficult for related companies to change the business behavior they have been accustomed to so far, especially for those head companies that have achieved success in their respective industries.

But if companies in some industries want to develop, they must form better cooperation based on blockchain technology. The problems in these industries are most suitable for solutions based on blockchain technology. Only after these issues are resolved can the industry develop on a more healthy and stable basis. This is a very difficult change for companies that are already used to exclusive operations. However, if such changes are not made, existing problems in the industry will limit the further development of the industry. For example, the problem of dishonesty and fraud in an industry. Although everyone in the industry doesn't like this situation, because of the prisoner's dilemma, they have to act the way they are. Solutions based on blockchain technology can solve credit and fraud issues well. But this requires a common approach among industry players. Such a blockchain project should fully consider this factor before starting. If the project party has corresponding countermeasures to encourage relevant companies to really adopt this scheme, then the feasibility of this project will be greatly improved. Otherwise, you must be cautious about starting this project.

Author: Valley Yancey

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