Many people still do not understand the differences and similarities between traditional databases, and more recent innovative blockchains.
Two storage solutions
One likely source of this confusion is the fact that a block chain is a type of database, as it is used to store information in data structures called blocks. A traditional database also stores information, but does so in structures called tables.
Even though a block chain is a database, a database is not a block chain. They are not interchangeable, because although both are used to store information, they differ in design and purpose. Understanding this difference between the two allows you to understand why blockchains are needed and why databases are better suited for some data storage cases.
- Traditional database
A traditional database is designed to use a client-server architecture. In this design, the user can change the data that is stored in the database on a centralized server. Each database has a designated single authority to authenticate each user before allowing them to access the database.
Because access to the database is controlled by a single administrator, you can change or delete the data if the administrator or their account is compromised. In most cases, if someone can access the database, they can also extract the data and use it for criminal purposes.
- Blockchain database
The blockchain database is not located on a centralized server. Instead, it is designed to be hosted on decentralized nodes, which can number in the thousands or even millions. Each node is part of the administration of the blockchain. All nodes can enter new information into the block chain, and all nodes check for additions to the block chain.
Client / server relationship with databases
Most nodes must reach a consensus to verify the addition of any new information. This consensus is what keeps the network secure, and it is very difficult to change or delete information once it is added to the block chain. Moreover, blockchains are protected by advanced cryptography which makes it much more difficult to change data.
The positive side of these differences is that traditional databases are good enough to store data for certain purposes, while blockchains are suitable for a different set of uses. Let’s look at some of the differences between them, as well as the advantages and disadvantages of each.
One of the main functions of the blockchain is the ability to exchange information between two parties that do not trust each other, without the need for a central administrator. Each transaction is processed by the entire network using a consensus mechanism. This creates a shared record for all users at the same time.
Decentralized control is valuable because it avoids the risks inherent in centralized control. If you have to work with a centralized traditional database, there is always a risk that someone with sufficient privileges can change or delete important data in the system. Administrators limit this, but even administrators can become bad contributors to the system.
Advantages of decentralization
It is true that some administrators have earned their trust. For example, banks record transactions and store them in centralized databases, but people don’t see their money disappearing from the banks.
Of course, this also means that banks spend huge amounts of money (which is a resource) to secure these databases from hackers and data thieves. As long as the administrators behave properly, we remain safe, but there is always a chance that the administrator can undermine our trust.
Traditional databases store their information in a state that is up-to-date at a certain point in time. They are not in real time, but exist as a snapshot of a certain point in time.
Bloackchain databases are updated in real time, and store all the information that has ever been stored in them. This means that they tell their story while remaining relevant for the moment. This makes blockchains more than just a database, they are also a record system.
Blockchain databases have been called immutable, and it is precisely because of the costs associated with changing or compromising the blockchain that they make it immutable.
Blockchains are excellent as recording systems and as a platform for conducting transactions, but in terms of performance they are extremely slow compared to modern databases, such as those used in banking or payment systems such as Visa.
Perhaps this is why performance has been one of the top priorities for blockchain developers. The goal is higher speed and larger blockchains, but the blockchain will always have to sacrifice some speed to maintain security. In fact, it is often referred to as the”blockchain trilemma”.
Problems with the speed of the blockchain
This performance problem arises from the fact that thousands of nodes in the blockchain network do not share or increase their computing power. Instead, each is an independent entity that works to validate transactions, with comparison results across the network until a consensus is reached that something has happened.
In the case of centralized traditional databases, there is an increase in performance in accordance with Moore’s law. After decades of performance improvements, modern databases have become quite fast and can scale to huge sizes.
Blockchain databases, such as Bitcoin, are not controlled by both writing and reading. This means that there is no privacy, as anyone can write a new block, and anyone can read existing blocks.
There are also allowed blockchains that can have controls on the read and write aspects of the blockchain. This means that the block chain can be designed so that only those participants who have permission can read and write to the block chain. These private, permissive blockchains are more like traditional centralized databases.
If privacy is the only desired feature and there are no trust issues, then there are no advantages to using blockchain technology over centralized database technology.
Those who want to hide information about the blockchain find that a large amount of cryptography is required. This creates an additional computational load on the network nodes. In this case, it is much more efficient to hide the data in a private database that does not even require a network connection.
- Advantages of each system
There are several clear advantages to using a traditional database, which include transaction speed and scalability, system stability, and the extent to which the database can be configured to make it more user-friendly.
Blockchains have a different set of benefits, including security, transparency, immutability, and decentralization.
- Vulnerabilities of each system
Problems associated with using a traditional database for data storage include security concerns, the need for a centralized administrator account, and a single point of failure for such a system. This is especially true in today’s environment, given the extensive list of high-profile data breaches that have occurred over the past few years.
Blockchains are not without their own set of problems, including lack of interoperability, high transaction fees, ever-increasing blockchain size, scalability issues, and the high power consumption of Proof of Work blockchains.
Blockchains are also not ideal for those who are concerned about the confidentiality of information. Public blockchains are by their very nature open to the public. At the same time, there are a number of blockchain-based storage projects that have developed distributed and encrypted storage options. However, this is only the beginning of this path.
The stability and usability of databases make them the best for large enterprises. Databases are also necessary for systems that deal with huge amounts of data, and that need to process thousands of transactions per second. If trust is not an issue, a database is an adequate solution, and because of the private nature, the information is best stored in a database.
Blockchains exist to build trust and ensure transparency. This makes it useful for supply chain, distribution, and inventory use cases. Transparency can help fight fraud in many industries. Although blockchains are not suitable for large-scale data storage, they are ideal for verifying information. Blockchains work well as notaries and can be used in applications such as polling stations.
There are many other aspects of databases and blockchains that can be explored, but I think you’ve started to understand how they differ and where each can be used best.