Blockchains Vs Databases

As blockchain becomes familiar to millions, many appear to contextualizing the technology as a database. While a useful analogy to someone entirely new to blockchain, it is not altogether accurate, as there are fundamental differences between the two that make them separate entities entirely.

Right from the outset, some come unstuck hearing blockchain described as a “distributed database.” Isn’t a database a centralized, highly secured vault? In a sense, a precious commodity that people don’t simply “distribute?”

Blockchain is a paradigm shift. And at the same time, the subtleties of blockchain lie in the distribution of trust, a change in human behavior. Admittedly, the tech feel, the storage and access and volumes look the same as a database. But blockchain is a far more enabling idea, and all the better that people can get on board by figuring it as a “sort of” database. So far so good.

What Do We Understand A Database To Be?

A database is a pooled or central ledger that is controlled by an administrator. Inputs and access are regulated or governed by protocols, all overseen either by one omnipotent administrator or a handful of them forming a team. Closed, comprehensive, controlled by a central authority and vulnerable to attack – that’s a database.

Others have access to the database with greater or lesser ease, typically part of their function as company employees. Just like blockchain, the modern database accumulates history and stores all manner of data, and others will access the database exclusively through the central authority. However, with blockchain, this access is thrown open to the world based on the immutable construct of the data-build within blockchain. Hold that thought!

Databases are both ends of the stick. If you pick up one end, you pick up the other. Databases are centralized, efficient (as we have understood things to date) and output can be intense. Maintenance is relatively simple, and security tight. However, should something contaminate the database, it can be corrupted, stolen from or even lost forever. Not so great. When the gate guard fails, looting and theft can occur, ownership can be swindled and many things, if not everything, lost.

Another fundamental difference when blockchain is compared to a database is that the latter is a “current” ledger. In other words, there is no need to maintain a complete history of data as all involved parties trust the central authority to play fair and maintain ownership, ratings, rank or anything else deemed important by interested parties.

We expect that if we have funds in our bank account today, that the bank won’t call tomorrow and inform us that the money is all gone. We trust that.

Unfortunately, real-world depictions of that fundamental trust show that it often goes awry. It’s tenuous at best, when the downside can be so life-changing. Regardless of the security protocols, databases can be hijacked by sophisticated, persistent hacks. Billions of dollars are lost each year in stolen funds, disputed transactions and double spending on pirated credit cards.

What Exactly Is A Blockchain?

We can say that a blockchain is a ledger, a database, that is not centralized, but distributed. It all began with Satoshi Nakamoto in 2009, the creator of Bitcoin, who revolutionized our thinking.

Prior to this, “blockchain” was not a term, much less a thing. The underlying platform of Bitcoin – and with greater or lesser differences, all cryptocurrencies – is the blockchain. So how is it possible to open the floodgates and trust that an “open database” like blockchain is not only safe, but an improvement on things as they stand?

A point of departure for blockchain is that it takes that (dis)trust and builds with it. Blockchain acknowledges that we don’t know or trust each other with the data contained in this “database” we have. Thus in order to bind the truth forever, you have to do some work.

Similarly, in order for it to identify you as a wholly trustworthy party, it has some work to do on the chain to validate you. This work in validating credentials or transactions is visible to the whole world and, crucially, the truth can only emerge along a single, unbreakable route.

Every snippet of validating input has to corroborate previous inputs, or no deal. No one can slip in corrupted data, spuriously attempt to corrupt existing data nor hack it. It only lines up one correct, truthful way.

The Proof of Work (PoW) protocol allows anyone to write on a blockchain. Because of this, unlike an administrator having to issue permission and oversee everything that happens on a database, anyone can add data to a blockchain. But if the data is not a match, it’s rejected.

Looking at the example of the Bitcoin blockchain, “blocks” get added via crytographic proofs and timestamps every ten minutes. Miners work on the chain for inherent rewards for such work, building a purely peer-to-peer system of confirmation. Blockchain protocols mean that this process is slow, but this is traded against the immutable, absolutely secure nature of blockchain technology.

On the Bitcoin blockchain, the origin of digital records is made simple and transparent. The entire history is available on the network, available and validated by mathematics.

Historical ownership and current status are all visible. Bitcoin users can see the origins of a virtual coin, when and where last it was transacted with and who currently owns those funds. In spite of the whole world participating, anonymity remains pronounced, as owners are identified only by wallet addresses.

The scope for business growth – not to mention the cost-savings – is limitless with blockchain. It allows two unknown parties to transact securely without trust or an escrow service necessary.

The idea that there is parity and the joy of not having to define a central (often costly) authority in these transactions, is profound, given that it has never been successfully executed before. It is not surprising that institutions like banks, who trade very heavily on centralized authority, are among the keenest blockchain adherents in 2018.

The original ethos of cryptocurrency unavoidably imagines the death of the current money suppliers. These entities, nonetheless, have massive efficiency gains and possibly even cryptocurrency avenues to explore.

Ideally, however, the world will not stand and watch while blockchain is monopolized by historical masters. It remains to be seen whether blockchain will remain the untouchably elegant beast it is, or whether vested interests will spin it back towards central control.

Database Versus Blockchain

There’s no real choice. Blockchain is a silent tsunami, and set to dominate the future interaction of humanity. That said, until blockchain speeds up and impresses millions more, databases can boast a much higher output.

Databases have an administrator and systems of access control, while blockchain has none. Only those authorized may access a database and input data, while anyone can access a blockchain and validate or input data according to what has gone before.

Databases have a limited history and often vague origins and ownership. Blockchain has every last shred of information stored forever, tamper-proof and error-free.

What To Conclude, Then? Are Databases Passe?

Not yet. A database can often be the best solution where strict confidence and high output is needed. When it’s provenance and immutability that’s needed, there is no better solution than blockchain.

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