Solution Design

There are 10 must-answer questions to consider when designing a blockchain-powered solution.

Question 1: Who’s accessing this data?

The most compelling use cases for blockchain adoption involve multiple uncoordinated parties seeking to interact with a specific set of data. If leaders trust those accessing a database, there’s no need for blockchain’s data verification and consensus mechanisms.

Some organizations purposefully keep data siloed to protect its integrity or differentiate access levels. In these cases, blockchain offers added value, facilitating more accessible data entry while ensuring records remain accurate; organizations can remain confident in their information regardless of who’s accessing or amending it.

However, if mutually trusted parties are adding correct information to a database, then blockchain’s main utility is rendered moot. Distributed ledger technology (DLT) allows multiple parties to read, write, and store identical ledgers, creating a single record automatically reconciled in real time—all without blockchain. Consider whether DLT may be a better solution to your challenge.

Question 2: Is this an uncoordinated system?

Does reconciling data remind you of herding cats? If so, you may benefit from blockchain. Complex marketplaces, where many actors transact simultaneously without full trust in each other, can increase costs and inhibit certain interactions. In these cases, blockchain creates previously unfeasible social and economic capital.

Blockchain is a clear solution when parties have misaligned incentives or are actively competing or attempting to sabotage one another. But even good-faith actors can incorrectly input data, thus undermining a system’s integrity. If you need to preserve data accuracy in a chaotic environment, deploying blockchain will help. If you’re operating in a trusted and well-coordinated organizational structure, consider deploying DLT instead.

Question 3: What’s the existing intermediary?

Intermediaries like banks, brokers, or governments can help coordinate and facilitate trust between unacquainted actors. Before disrupting an established system, weigh the cost and efficacy of blockchain against that of your current intermediaries.

Some questions for evaluating intermediaries:

• Are they neutral?
• Do users trust them?
• Are they functioning in a system suffering from chronic corruption or ineffectiveness? In these cases, blockchain can cut out intermediaries to maintain or improve the integrity of your system.

Sometimes, appropriate intermediaries simply cannot be found. Perhaps they’re impractical or economically prohibitive. Blockchain should be considered in these cases. For example, if an organization wants to promote financial inclusion, a blockchain allows individual borrowers to connect directly to lenders without the added burden of bank fees.

Question 4: Do the benefits justify the cost?

Even if a data challenge does have an existing solution, switching to blockchain may still meaningfully reduce costs and inefficiencies. Equally thorough cost appraisals should be done when comparing blockchain to legacy systems and confronting a problem for which there is no present solution. Some considerations:

• What are the projected savings? Savings can include not only direct costs like licensing, legal or consulting fees, and insurance premiums, but also the reduction of indirect costs such as those resulting from lower asset turnover.
• How much would it cost to design and deploy blockchain versus upgrading existing systems? How do the projected savings compare to upfront costs? Consider maintenance costs and investment repayment periods as you answer this question.
• Would the maintenance costs of blockchain be lower than that of the traditional solution? Some costs to consider: IT staffers, computing resources, server space, rent, blockchain transaction costs, etc.

Blockchain is new technology; costs of design, deployment, and maintenance today will be more expensive now than in the future. But that doesn’t necessarily mean it isn’t worth it. A thorough cost-benefit analysis will help you weigh all relevant considerations.

A blockchain allows individual borrowers to connect directly to lenders without the added burden of bank fees.

Question 5: Who needs a seat at the table?

Like most infrastructure projects, implementing blockchain is a complex process. Building a coalition of experts to assist with planning and deployment will lower costs, improve results, and distribute risk among stakeholders. By planning cooperatively, you’ll preempt pain points and avoid impasses, leading to a smoother roll-out and a higher probability of success.

Consider the following roles when building your coalition:

• Technical partner: A good technical partner will have a deep understanding of blockchain mechanisms and capabilities combined with clear communication skills so other coalition members can understand the technical boundaries of the project.
• Regulatory or legal compliance expert: Blockchain is a new technology disrupting traditional industries. This leads to legal gray areas. By engaging legal counsel, you minimize your risk of noncompliance and gain insight into future regulation of the space.
• Users and stakeholders: You can’t code people. What will motivate participants to use the blockchain as intended? Make sure you’re meeting the needs of network members by engaging potential users, whether Fortune 500 supply chain partners or smallholder farmers.
• Third-party auditors or validators: The more transparent your development process, the more likely you are to find and fix glitches before they become ingrained to the platform. Consider adopting open-source standards and including code or security auditors in your pilot. Doing so will protect your organization from liability and your users from unforeseen bugs.
• Independent guide: Members of any large coalition will invariably inject individual objectives into the planning process. But the priorities of one coalition partner may not fully align with the project objectives. It’s important to identify coalition members who can balance those priorities and course correct towards deployment goals.

By planning cooperatively, you’ll preempt pain points and avoid impasses, leading to a smoother roll-out and a higher probability of success.

Question 6: How can existing impact metrics inform project goals?

Almost as important as establishing overall objectives for a project is demarcating the metrics by which you’ll measure those objectives. By identifying short-term progress identifiers, you can begin to understand how meaningful long-term outcomes will be achieved. For example, targeting foodborne illnesses by tracing and quickly removing contaminated food sources will diminish overall deaths over time. An organization should consult impact frameworks to determine useful metrics. These include:

• The Impact Reporting and Investment Standards (IRIS) for impact investing goals
• The United Nations Sustainable Development Goals (SDGs) for international goals
• The United Nations Environment Programme (UNEP) for sustainability goals

The metrics you use depend on the impact you want to make. By picking the right ones, you can achieve not just your narrowest objectives, but the well-being of the broader community.

Make sure you’re meeting the needs of network members by engaging potential users, whether Fortune 500 supply chain partners or smallholder farmers.

Question 7: How sensitive is this data?

Ensuring the security of all data stored on a blockchain is paramount. But blockchain’s transparency can raise privacy questions for certain types of information, including sensitive personal data, trackable metadata, and data impacted by legal privacy requirements

For some organizations, data privacy can be maintained by limiting access through a private blockchain. However, if your data is most valuable when shared on a public blockchain, ensure that no combination of data searching can reconnect a piece of anonymized data back to an individual through a differential privacy¹ test.

Question 8: Does this project involve off-chain data?

Blockchain is a digital infrastructure, so goods which can be digitally expressed (e.g. ownership records, energy stores, credentials), as well as actions taken with them, integrate naturally. However real-world goods and commerce can be harder to accurately log on a blockchain.

The easiest hard assets to manage on blockchain are either completely interchangeable (like mass-produced consumer goods) or very difficult to alter or imitate (like diamonds). The easier it is to forge an item, the more difficult it will be to secure it using blockchain tech. In these cases, effective validation relies on off-chain infrastructures like trusted attestations, unique serial numbers, QR codes, and RFID tags.

A blockchain solution can de-paper supply chains and make source-to-consumer records accessible within minutes as opposed to days. However, its implementation across a supply chain would require the buy-in of every participant along the way and additional enforcement structures to ensure off-chain asset integrity. Consider running pilots of this kind in parallel with legacy systems to test objectives without jeopardizing critical functionalities.

Question 9: Who will engage with this solution?

Sympathy is a critical feature of well-made blockchain solution. If designers fail to understand the human problems they’re trying to address, their end-product will be just that: a product, not a real solution. A human-centered, multi-disciplinary approach to protocol design reduces the risk of creator biases which could limit project performance and scalability.

For example, a critical technical consideration is whether or not network members care about who is validating transactions or participating in a network. If so, a public blockchain may not be the right choice. If an organization operates in a heavily regulated industry, requires accountability for actions in off-chain settings (such as courts), or needs to verify validator identity in certain cases, it should choose between a private blockchain and a DLT.

To keep objectives aligned, it’s important to consistently engage with those affected by your blockchain solution. If that solution is successfully scaled, revisit its initial goals and expectations to ensure they’re still being met.

Question 10: How can likely challenges be mitigated?

As with any innovation, there are risks with blockchain which should be thoughtfully considered by project managers and solution designers. Take aspects such as vendor and platform lock-in, data interoperability, data quality, open-source solutions, scaling, regulatory landscapes, and backup systems into careful account as you build.

Without a strategy to identify and mitigate risk, many promising proofs of concept will fail to realize their full potential. Conversely, asking questions and anticipating pressures will help to unearth and resolve previously unidentified challenges.

After a you’ve figured out the type of blockchain solution you need, or whether a blockchain is even right for you, it’s time to move onto design considerations. To ensure that your goals are met, don’t be afraid to work alongside your technical team and take an active role in the design process. Even if you aren’t a tech expert, you’ll contribute valuable big-picture insights. Keep the following recommendations in mind as you build.

Treat software like hardware: Though blockchains are technically a type of software, blockchain governance is decentralized, making any changes subject to the agreement amongst a majority of blockchain stakeholders. This means the tech is poorly suited to the traditional, more unilateral software design process.

Blockchain design and implementation should more closely resemble the development of hardware components, which undergo extensive testing before being produced at scale. Because blockchain technology is still evolving, widely accepted design standards are not yet in place and the sustainability of today’s major protocols and platforms is uncertain. Utilize pilots to experiment and spot problems before scaling operations, and maintain flexibility by ensuring interoperability and avoiding vendor or platform lock-in.

Plan to scale: Given the complexity and cost of designing, implementing, and scaling a blockchain, all organizations should seriously consider conducting a pilot before any more extensive rollout. A controlled environment allows for effective measurement and evaluation of social impacts, facilitates experimentation, and simplifies protocol modification in the event of issues.

Avoid premature expansion—even if early results are promising—and acquire third party support to consistently audit your system. Growing pains are common with blockchain, and they won’t necessarily stem from the protocol itself. Everything from relationships with constituent parties to ecosystem growth can have an impact. These can take time to resolve.

Further, success in a small-scale pilot is insufficient evidence of the sustainability of a particular protocol. If you’re operating a legacy solution, keep it running. You can gradually transition to the blockchain as you work out bugs and gain confidence in it.

Consider user experience: It doesn’t matter how cutting-edge your backend tech is if users can’t figure out how to operate it. A quality user experience (UX) is key to the overall project viability; work with programmers and designers that are committed to providing one. A few tips to start off:

• Humanize the process by seeking the support of your coalition.
• Use existing UX patterns and keep visual distractions to a minimum.
• Be consistent, steer clear of jargon, provide guidance, and welcome user feedback.

Innovate ethically: The Beeck Center at Georgetown University has devised a framework to facilitate intentional blockchain design and deployment strategies.² Ask these questions:

• What will the governance structure be? How is it created and maintained?
• How is identity established?
• How is access to this blockchain network defined, granted, and executed?
• How are data inputs verified and transactions authenticated?
• How is ownership of data defined, granted, and executed?
• How is security set up and ensured?

It’s important to have a thorough qualitative understanding of answers to these questions, regardless of the degree to which an organization is outsourcing the design and development of its blockchain solution.

It doesn’t matter how cutting-edge your backend tech is if users can’t figure out how to operate it.