Companies can determine whether they should invest in blockchain by focusing on specific use cases and their market position.
Disclaimer: The author has a vested interest in projects mentioned in this blog.
One size doesn’t fit all.
We recently learned that Docusign passed on a blockchain integration for protecting identities because it is too expensive and slow. The promise of Ethereum 2.0 might be alluring, but its node design indeed prevents rapid-fire transactions per account, while the execution layer bottlenecks business logic as it needs to accommodate state reversion.
Ethereum’s limited computation model and PoS consensus bring along high fees and severely bottlenecked throughput, with the network fees driven by supply and demand and gas spent to skip ahead of the line, rather than paying for the actual production cost of running a node.
What every business wants from blockchain systems is cryptographic certainty. To leverage blockchain for more agility and speed, you’d need to carefully consider all the limitations of smart contract functionality for your concrete business use case.
Just like everything else, there is no one-size-fits-all blockchain - some chains work better than the others for certain use cases. That’s why tracking and verifying documents and signatures on the Ethereum chain that was created mostly for scripting financial transactions, doesn’t sound like a very good idea.
Niche public chains purpose-built for specific applications have already proved their cost-effectiveness and immediate business value for many companies.
Solana and Algorand, with native protocol-level integration for financial instruments, target the financial use case. Flow was designed for in-game NFTs; to make the DocuSign case work there needs to be a blockchain explicitly made for auditing documents and verifying e-signatures.
Case Study: Verifying and auditing everyday business agreements.
Let’s take a quick look at network architecture choices made by Taraxa to deliver highly parallelizable, stateless audit logging.
And since audit logging is business logic, our chain has optimized the logic processing that are orders of magnitudes faster, not just coin transfers like other finance-focused chains.
Audit logging requires a massive scale.
Taraxa’s block DAG topology has sub-second inclusion latency and enables simultaneous transactions per account at a time.
Audit logs are stateless.
The use of concurrent execution takes advantage with no risk for conflicts.
Audit logs require true finality.
Taraxa never forks and has no state reversions.
Blockchain lets you look way beyond formal contracts.
Unlike commercial, legally-binding contracts that are tracked by tons of sophisticated software, informal, everyday agreements that take up to 80% of all agreements in the world remain largely uncaptured and unverified.
For the end-user, the financial loss and disputes associated with this can be drastic. This problem persists in almost every vertical - from P2P Lending to Construction change orders.
This problem can be solved by capturing off-chain transactional agreements right where they occur, using audit logs to hold stakeholders in informal, unstructured agreements accountable, thereby making the agreements themselves trustworthy.
Recording a DocuSigned agreement to the blockchain will let every party track and verify a document’s lifecycle. One-way cryptographic hashes set documents in stone so that no one could go back and tamper with the file.
For the DocuSign use case, a blockchain-based platform could add the much-needed security and auditability when dealing with sensitive commercial contracts in every e-signature transaction by keeping confidential third-party data on company premises, while hashing the e-signatures on the blockchain to verify the signee’s identity.
For DocuSign’s Trust Service Provider, distributed identity management tools will help to authenticate the signees. Cryptographically secured private keys to let the parties securely log in and authorize contracts eliminating the risk of signature forging and identity theft.