Be Realistic About Your Expectations

Blockchain generates strong opinions among its advocates and detractors.¹ Evangelists can make sweeping claims about its potential. Articles asserting that “blockchain will end poverty and save the world”² or that it is a “magic bullet” able to save the rainforests³ portray the technology as an unprecedented solution to global problems. Opposing pieces claim that “blockchain is dangerous”⁴ or that “blockchain is not only crappy technology but a bad vision for the future,”⁵ leaving their audience highly skeptical or dismissive. In reality, the potential of blockchain is somewhere in between.

Stakeholders need realistic expectations from the start of any project. Blockchain is not magic. It cannot solve every problem, nor should it. But the technology can broadly provide the following:

• Increased Resiliency: Centralized databases are susceptible to data loss. In a blockchain-based system, replicas of the same database are held by a number of computers. Management and maintenance of the system is also dispersed across this network. Any distributed system, including blockchain, is less likely to fail as it relies on many redundant components.⁶

• More Transparency: A central authority, such as a government, a bank, or a firm, manages a centralized database. The opaque structure of these systems can contribute to data tampering and fraud. In addition, data storage in a centralized silo may create information asymmetries among partners. A blockchain-based system ensures that every participant can view the same data and/or track processes in real time.⁷

• Greater Protection Against Hacks: A centralized system stores data in one place. These treasure troves frequently suffer security breaches, notably Equifax in 2017⁸ and Marriott in 2018.⁹ In part, a blockchain-based solution is more difficult to attack or exploit because it lacks a sensitive central point to easily target.¹⁰

• Tamper Resistance: Corrupt officials and other system participants may collude to manipulate data in a centralized database.¹¹ It is more difficult to tamper with records in a blockchain-based system for three reasons: control is distributed among many users; all users work together to verify new data through consensus; and all data is paired with a unique digital fingerprint, or hash, to ensure integrity.¹²

• Improved Workflow in a Growing Blockchain Ecosystem: Blockchain can allow multiple computers to securely view the same data in real time. Given widespread adoption of blockchain-based tools and solution compatibility—admittedly no simple tasks—a blockchain-for-land ecosystem can boost efficiency and lower costs for registries, real estate firms, and customers. Data sharing combined with smart contracts and the legal acceptance of digital signatures can help to streamline work, remove non-value-add intermediaries, and decrease transaction times.

It is critical for stakeholders to understand the limited potential of blockchain. Similar to other tools, the technology can certainly assist with a number of issues, but it is not a cure-all.