These days I have been reading and thinking a lot about where to apply blockchain technology that makes most sense. That is, what are some of the user cases where it is natural, or better, to use blockchain instead of the traditional databases?

I have argued that supply chains are great places to deploy blockchains, and that, I do not think many people will disagree with me. But where else? Or a better question to ask is, what kinds of situations give rise to the calling for a blockchain-based solution?

Again, I found my answers in Gary Gensler’s class (at the end of this article is a video. He starts to talk about the best user cases towards the end starting around the 1:10 mark). So here are a few questions to ask:

(1) How much do you want to get rid of the central control?

Not all central control is bad, but in some situations you either do not need it, or a central intermediary is too expensive. In those situations blockchains are applicable. But where you a need a central administration, stick with the traditional data structure (i.e., traditional databases).

(2) Do you need public verifiability?

If you do, then blockchains, either public or private ones, are good for you. But if you can trust a private party, then go with the traditional route.

(3) What kinds of write capability do you need? Do you need an immutable record (i.e. final settlement)?

Do you need Append-only, or do you need Create-Read-Update-Delete? If the former, go with the blockchain solution. Public blockchains have public write capability, i.e., everyone can write to it via a consensus mechanism, whereas private blockchains allow designated parties to write (i.e., private write capability) which are subject to public verifiability.

(4) Do you need peer-to-peer transactions?

If so, blockchains are the way to go.

(5) Do you need to have tokens?

If so, blockchain.

So the whole spectrum of access control can be visualized as follows:

For more details – great discussion in this class, by the way – please watch the video below. A bonus: At around 53th minute, the class discusses the application of blockchain in the real estate sector for about 4 minutes also.