By Miguel Ángel Pérez – CEO of iCommunity Labs.
The Digital Transformation is assuming the 4th industrial revolution, through the implementation of technologies such as Big Data, Machine Learning, IoT or Artificial Intelligence. A n + new technology has recently been added to this cast, and it is none other than Blockchain.
By now, almost everyone has heard about Blockchain and what it is probably going to assume (or is already assuming) in the way things are done (processes), both in companies and in people. Not in vain is the new technological revolution of the 21st century considered, at the height of what the massive implantation of Internet in companies and in people’s lives meant. For about two years now there have been the first initiatives to implement traditional business models, democratizing access to users and decentralizing these businesses, with the consequent cost and time savings that this implies, as well as an expansion of the possibilities of business before unattainable.
The development of platforms and applications based on Blockchain and looking to break into the world of the company is growing very fast. However, the knowledge of the technology or the evaluation capacity of the proposals is still incipient, giving rise to a real boom of possible “use cases” in which many times more than applying this technology, what is sought is to impose it. a forced form, without reaching a true differential value with it. That is why at iCommunity we have developed an analysis and estimation methodology that can be useful for both businessmen and investors when determining the feasibility, validity and interest of a certain use case or Blockchain application project. acting as a “due diligence” and serving to make important decisions about whether to address a Blockchain application project, and by extension if it is worth investing in the investor.
Methodology for estimation of applicability of Blockchain: iBS-BlockchainDD®
There are several decision models to estimate the viability, suitability and applicability of Blockchain in a specific use case. The problem is that each of them is based on a few specific aspects:
- Distributed ledger, (DLT): Birch-Brown-Parulava model
- public vs. Private: model B. Suichies
- Market focus: IBM model
- Could it be solved without Blockchain ?: model A. Lewis
- other hybrid models: Karl Wüstl and Arthur Gervais, Morgen E. Peck, DHS, Cathy Mulligan, Gardner, T. Koens & E. Poll
We see then that there are already different models, each with its advantages and shortcomings. However, most of these models are reduced to presenting a decision algorithm that, through questions about the analyzed use case, leads us finally to see if we should apply blockchain or not, but without having a detailed analysis of the decision process .
That is why in iCommunity we have chosen to make a methodology based on a mix of the most representative models, creating in this way the most complete methodology possible through which we can have a thorough analysis of the entire decision process, so that we can serve at the same time to generate a report that we can present to the address that must take the final decision on the application of Blockchain to our proposed use case. This methodology is composed of 3 phases, in each of which different aspects are analyzed to be taken into account when concluding if the application of blockchain is convenient, is fully justified and provides differential value.
First phase: use analysis
First, the use to which the use case in question is addressed must be studied, ie: identify if the proposed use case corresponds to some of the generic use cases previously identified as of interest and where it has been shown that Blockhain can add value. From the consideration of the characteristics of the block chain and its properties as a generic store for all kinds of data, the experts of the Blockchain community have established the following 7 types of generic use cases:
- Proof of existence. Here its use is limited to saving the data with the sole intention of proving its existence. This means that other capabilities are not used, such as those used to determine the order or time of the records. From this functionality arise applications related to the unique registration of trademarks, patents, licenses of use or email addresses and Internet.
- Proof of nonexistence This property is the opposite of the previous one. Provides the way to verify that certain elements or annotations do not exist in the chain. It is useful to rule out the existence of complaints, fines or convictions.
- Temporary test Here, it does not matter only the existence of a specific record but also the moment in which it occurred. This technology responds to this need because every block added to the chain stores the time at which this process took place. This feature is useful for applications that need to establish the moment in which certain events occur, such as tracking and delivery of products or notifications, payments, the order of opening of tenders in public tenders, etc.
- Proof of order This use is based on the sequentiality characteristic of the block chain. Interested in those applications that need to determine the relative order of events, regardless of the time, for example, in custody services, follow-up of the application process (admission to universities, patent applications), auditing of public procurement competitions, or intellectual property rights.
- Proof of identity This is a particular case of the proof of existence, in which it is a matter of determining if a specific identity already exists. Here the blockchain makes sense since it not only stores the data that serve to establish the identity but also responds to the need for secure authentication and identification. The applications that can benefit from these properties include those that are based on the digital identification of people, animals or things. In particular, public administrations could incorporate this technology for the management of citizens’ identity documents, driving licenses and passports.
- Proof of authorship. This is about demonstrating that a specific person or institution has been responsible for incorporating certain data into the chain of blocks. This technology can respond to this need because it not only stores data that can be used to identify the author by its cryptographic footprint, but also provides security elements related to identification, authentication and authorization. The first two are necessary to recognize and verify the author. Authorization is necessary to prevent anyone from adding information to the chain without having the right to do so. Applications that can benefit from these properties include the certification of university degrees, electronic publications, the monitoring of changes in the content of a document, the delivery of content or the protection of intellectual property.
- Proof of ownership. Reference is made here to the use of the blockchain to manage and clarify property rights. It relies on some properties mentioned above as proof of existence, order, identity and authorship, along with the three basic security concepts: identification, authentication and authorization. Applications that rely on these features include systems for registering real estate or vehicle ownership, stocks and bonds of companies, or virtual currencies.
With this first phase we will be able to analyze whether the business or institutional activity under analysis can benefit or not from one or more of the properties listed above. And what is more decisive in deciding when to incorporate this technology: what effects would it generate not being among the first to apply it?
Second phase: analysis of nature and feasibility
The second phase consists of studying 11 different areas of analysis for the case of use in question, as well as the measures to be considered in each of them. This will allow us to have a total of 77 metrics that will allow us to get a very accurate idea of the nature and viability of each project. Below, each of the areas subject to evaluation is briefly mentioned:
- Are the requirements for use of the chain met? The chain of blocks is a system distributed among an unknown number of pairs, whose reliability and truthfulness we ignore. Hence, the first point to consider is to determine if its architecture meets the requirements of that technology.
- What type of chain is used? Not all distributed systems are open to everyone and guarantee read and write access to all their nodes. These differences condition the architecture and the distributed nature of the system, as well as the purpose of the chain.
- What is the added value of using a system distributed among pairs? Both centralized and distributed systems have their own advantages and disadvantages. The centralized are not intrinsically deficient, but opt for a different architectural concept that gives good service to a large number of applications and can be maintained in this way.
- What is the utility of the application? It refers to the idea of the application and how the system is supposed to create value for its users. It must be borne in mind that even a very sophisticated system architecture can never compensate for a weak or bad application idea.
- What is the economic model (tokenomics)? This analysis of the application is an important element since many products or technological innovations fail due to errors in the economic and commercial aspects.
- How are the nodes compensated for the resources they bring to the platform and the maintenance of their integrity? The integrity of the block chain is maintained through the use of incentive systems based on income from fees and proof of work done. The knowledge and understanding of such compensation to ensure integrity is a crucial aspect of the analysis.
- Does your consolidation depend on the existence of a community of developers? Certain projects that support the development of a new chain depend for their implementation on the support received from an open community that supports them. Its existence, number and activity are relevant elements to evaluate its viability.
- Economic role of tokens? In projects in which the solution includes the launch of an ICO / STO, it is necessary to determine if the use of these is really necessary or is not more than a source of financing for the company or has a mainly speculative character.
- Degree of business development? At present, many projects are proposed only from an idea; others are backed by a proof of concept and others are ready to be marketed and have a more or less established market.
- Equipment qualification? It is necessary to know everything about the promoter team, the developers and advisors. They have to establish their experience, recognition in the sector, mastery of technology, if they have participated in other projects and what their impact has been.
- How are marketing and marketing activities? These activities are crucial to establish a good customer base and users, as well as how to communicate with potential investors. They are the best way to publicize the brand and the objectives of the project.
Third phase: evaluation of potential and interest
Finally, the analysis concludes with an evaluation of the projects in 9 dimensions that allow a quick and clear idea of the potential and interest of the analyzed initiatives:
- Justification. It establishes to what extent the proposal solves a real and significant problem for the sector and its companies.
- Opportunity. Determine if the proposal appears at the right time and place to be able to develop successfully.
- Attractive. Evaluate the breadth of the customer market for the services provided.
- Scalability Analyze the ability of the solution to reach more functions and customers in the same sector.
- Conviction. Describes the ease of understanding and acceptance of the application or platform among potential customers,
- Economy. It specifies the way in which the proposal is affordable and profitable for the clients to whom it is directed.
- Extrapolable It indicates the capacity of the solution to be implemented in other sectors.
- Consistency. Identify the adequacy and quality of the team’s professionals and the developed code.
- Community. It defines the dependence of having to have a community of developers or users to be able to root the solution.
Thanks to this methodology, in iCommunity we have a tool of evaluation and deep understanding of the cases of use that are intended to be implemented with Blockchain technology, and complements the economic and financial analyzes already known and commonly used by investors and financial directors. It allows for a prior opinion or “due diligence” of a specific use case that aims to be implemented through blockchain, thus avoiding subsequent failures and thus saving investments that would result in products and services that would not provide value to customers or the investors.
This methodology is part of a continuous work that we will be completing from iCommunity in the same measure in which it is updated and consolidating the Blockchain technology and its applications.