Many proposed blockchain applications could use a traditional database hosted by a trusted central party and would provide nearly identical results. If blockchain is something your business wants to explore, you will need to take time to assess where to use it to gain the biggest benefit.

Four ‘fitness factors’ for blockchain projects

When thinking about where blockchain can be applied, examine the problem against the following four criteria:

1. Real-time transfer of assets or payments
   
   Blockchain can eliminate the lag in payment cycles and asset transfer, which can help reduce cost, improve accuracy and provide compliance efficiency. The transparency of blockchain can also help streamline trade finance or supply-chain financing in a multi-party network setting.
   
   If you don’t need, or are already getting, near real-time payment transfer and instant recording of transactions, blockchain may not provide any new or additional benefit.
   
   
2. Multiple parties engaged in commerce or trade
   
   Blockchain technologies are an excellent solution when multiple participants are involved, such as suppliers, customers, service providers, transportation providers and regulators. It can also be an effective solution for processing intercompany transactions between multiple trading parties inside of a single parent company.
   
   The technology doesn’t make sense when there is no need for multiple parties to share in creating or maintaining a transaction record.
   
   
3. Long-term record keeping and regulatory compliance
   
   When many parties need to access, create and maintain records over an extended timeframe (for example, decades-long asset lifecycle or the entire lifetime of a patient) blockchain offers a good solution. Also, for many regulatory considerations, blockchain is a reliable way to document and manage compliance.
   
   However, blockchain is overkill when there is little or no need for long-term records.
   
   
4. Broad set of complex business purposes
   
   Groups of companies facing a broad set of complex purposes can benefit greatly from setting up blockchains across their trading ecosystems. Blockchains enable the management of things like asset purchases, financing, warranties, insurance, regulatory compliance and public safety in an integrated manner.
   
   When the business purpose is narrowly focused on a single process or transaction, blockchain may not be practical.