We use them every day. Every time we request a download, or a free report—we provide data to the service we are using. We complete forms requesting our name and email address. Whether we browse our favorite shopping site, or use an app to book our travel plans, we are interacting with a site that is collecting and storing data.
Companies and government agencies use databases every day. The database can be a relational database, or hierarchical. They can use SQL, MySQL (structured query language), or they can use Oracle, Access, or Cache’—just to name a few.
Blockchain is touted as the next generation for database technology. But—when should one choose to use blockchain over a database? In this article, I unpack key differences in a way that sheds light on the advantages of blockchain for a database use case, and in some ways, their disadvantages.
The Basics of Databases
Most databases are centralized, and are managed by a database administrator who hold the keys to all the database records. When a manager or a researcher needs to access the database, they must be authorized to do so. In most corporate cases, the analyst or interested party of the data will often make a request of the data by starting a ticket through an enterprise wide system like Clarity, SAP, or Remedy.
Data is stored in a centralized location. Larger firms with resources will have back up systems. They may have a server farm located across the country. The database may be copied and distributed among a limited number of data centers. The greater the sensitivity of the data, the more controls, security, and mirroring of the databases will take place. And it becomes costly to maintain the data centers and database manager salaries.
Clearly, the old but true axiom of database management and analysis—GIGO, that is “garbage in, garbage out”—still applies. As with any database technology, someone has to input the data; that is, the data has to be entered. Thus, database management systems will need to use authentication and validation points. However, people will continue to enter misspelled names, product numbers, or enter a wrong address. Moreover, nefarious actors can modify the data if they gain access to a database. This results in the need to always be vigilant about validating one’s dataset.
The promise of blockchain is to overcome the constraints and limitations of the traditional centralized database, while providing data integrity and access to a wider user base than the current systems allows.
Blockchain for Databases
Key attributes of blockchain is the distributed ledger technology. The foundation of blockchain is that it employs a network of nodes, that is a network of devices on a blockchain network. It is what allows it to function and survive. They are distributed across a “widespread network and carry out a variety of tasks.” (Lisk)
Blockchain technology data is immutable. That is, the probability of the data getting corrupted from data entry error, or intentionally from hackers is extremely low to nonexistent. A blockchain is designed to be immutable: “once a piece of information goes in there, you can depend on it never changing.” (Very) That is the user can trust that the data on the blockchain is accurate and it’s been validated.
Blockchain vs. Database
There may not be clear winners for database storage, however, a basic understanding of blockchain and database technology will help to steer the conversation.
Authority and Control
Unlike non-blockchain database technology, blockchain ledgers are decentralized. It is this feature that gives blockchain the leverage to become the next generation of technology. In short, it empowers networks to work independently—thereby removing a need for centralized control.
If a company needs to provide users with access to the data without an administrator, then a decentralized database may well be the solution. Blockchain falls directly into the category. But not any blockchain technology will work. In this case, when you plan for a use case on blockchain to be used with your database, look at Hybrid/Federated blockchain. It “is the most common type of blockchain out there that solves the problem of private organizations.” (101 Blockchains)
“Hybrid blockchains are permissioned which gives organizations the full ability to customize their setup according to the requirement.” (ibid.)
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Blockchain technology is seen as transparent technology. That is, someone with the right tools can validate the data after it’s been written on a public blockchain. This transparency builds the trust of the public in the network.
As we can see from centralized databases, by design, they do not support transparency. Blockchain’s integrity is made possible thanks to the immutability it has to offer. Data, once stored, cannot be changed.
Putting it Together
Nitish Singh, writing for 101 Blockchains, offers an excellent side by side comparison.
Authority: Blockchain is decentralized. Private blockchains may utilize some form of centralization.
Architecture: Blockchain uses a distributed ledger network architecture.
Data handling: While database supports “create, read, update and delete”; blockchain uses “read and write” operations.
Integrity: Blockchain data supports integrity. It removes the risk of corrupted data.
Transparency: Public blockchain offers transparency, while only database administrators decide which data the public can access.
Cost: Blockchains are comparatively harder to implement and maintain. Because traditional databases are a legacy technology, it is easy to implement and maintain.
Performance: Databases are fast and offer scalability. Blockchain, on the other hand, is “bobbed down by the verification and consensus methods”.
Depending on a company’s need to provide unfettered access to data for their users, blockchain may present an option. The key advantage? Ability to access the data anywhere, anytime. And—the data is highly reliable, which is critical when it comes to making high risk, high valued decisions based on the data.
The trade-offs for the benefits are the higher costs to implement and maintain, and the slowed-down access to highly trusted data due to its verification and consensus methods.