Blog manager: Giovanni Capaccioli

Translated by: Lawlinguists

The blockchain is really affordable for businesses?

The blockchain is really affordable for businesses?

edited by: 
Dane Marciano, CEO di Affidaty S.p.A
Giovanni Capaccioli, R&D di Affidaty S.p.A

Cost-efficiency

The most famous blockchains are inspired by the basic economic principle for which to every action there has to be a corresponded a fee, proportionate to the work done. 

Even if blockchain is a revolutionary technology, it is not immune to this universal trend. The most successful ones charge users for successful transactions varying from 0.5 € up to 1 €.  It is because closing transactions are costly for miners, which require the fee mentioned above for the hashing power lent.

This kind of argumentation may look strange or out of context. However, if one thinks to the whole blockchain system as discussed above and applies it to the enterprise world, instead of a user-based logic, it’s easy to see the company point of view.

That’s why this logic leads to a simple calculation that could clarify the difficulties in the application of the mining fees in a hypothetical industrial sector.

Take, for example, a pharmaceutical company that wants to insert the production process of a drug inside the blockchain besides the package leaflet. 

The hypothetical medicine has five different key steps to track and that the daily production is of a thousand units. The operation is easy 1*5*1000*0,5=2500€ a day, for a single batch. Clearly, a company produces millions of lots, and here the economic weight becomes too much to be sustainable, and the consumer is likely to be affected. 

The alternative could be reducing the hashes. It would lower the cost but also the certified path. A possible consequence could be a decrease in terms of the precision of the data contained in the ledger, vanishing the advantages of the application of the technology, since the information would be approximative. 

In these situations, the objective for the firm is to cut the costs, working to decrease energy consumption, mining at a lower price, and becoming more competitive.

This is why there are many actors in the blockchain scenario that have the objective of spreading this technology to company profiles, without causing a short circuit and triggering a cascade effect on costs which would affect final users.

Our company has worked with the aim of reducing costs at source in order to extend the scope of this technology to industrial profiles, without causing a “short circuit” in cascade costs, which would weigh on the use of technology itself or on end users economically, or by providing incomplete data that is not very useful to guarantee the consumer as they are incomplete.

In Affidaty we created the synkrony wallet and its avatar with the aim of building a possible solution in line with current regulations and that does not compromise the effectiveness and stability of blockchain technology.