Blockchain vs. Database
Blockchain is a distributed ledger technology that enables a set of peers to work together to create a unified, decentralized network. The peers can communicate and share information or data with the help of the consensus algorithm. Also, there is no need for a centralized authority which makes the whole network trustworthy when compared to other networks.
Databases also exhibit unique feature including the ability to read and write. Here, only the parties with proper access can do Write and Read actions. Databases also exhibit the ability to store multiple copies of the same data and their history. This is done with the help of a trusted centralized authority who manages the server.
There are many different types of the blockchain. For example, we have private blockchain that works in a closed ecosystem. This may sound similar to what databases are about, but they are fundamentally different. Private blockchain inherits all the properties that a blockchain has to offer, but it works in a closed environment. Only people who are allowed by the administrator can participate in the blockchain. The only similarity between private blockchain and database is the centralized aspect.
With each of the term clear, it is now time for us to make the actual comparison. We will compare both the technology using important pointers where we will discuss how they compare. Each pointer will also contain examples to ensure clarity and understanding. So, without any details, let’s get started.
Blockchain vs. Centralized Database: Authority and Control
If we compare blockchain and database, the first thing that you will notice is how authority works. Blockchain is designed to work in a decentralized manner whereas the databases are always centralized. This unique feature of blockchain gives it the leverage it needs to become the next generation of technology. Decentralization brings in a lot of implementation changes to the current systems and processes used by the different industries. It empowers networks to work independently and remove any need for centralized control.
Databases, on the other hand, function completely based on the centralized aspect. No traditional database is powered by decentralization. If you are specifically looking for a decentralized database, then blockchain falls directly into the category.
An administrator is allocated to manage the database. The administrator has all the control over the database which means that he can manage, modify and control the database the way he wants. Without an administrator, the database will not function at all. He is at the top and can easily create, modify, change and delete the records. Other than that, they can also perform other tasks such as performance optimization. It is an important task as a larger database tends to get slow over time. When it comes to other users associated with the database, an admin can delegate roles to other users. Other users can manage the database according to the role that they are assigned. For example, he can assign a user to create new users. Other key functions such as backing up the database, maintenance, etc. can also be done. The basic blockchain that is introduced in bitcoin is completely decentralized, but it cannot be implemented among businesses who have private data and processes at stake. That’s why blockchain evolved, and we have a different type of blockchain. Hybrid/Federated blockchain is the most common type of blockchain out there that solves the problem of private organizations. Hybrid blockchains are permissioned which gives organizations the full ability to customize their setup according to the requirement.
Blockchain Database vs. Traditional Database: Architecture
A database is based on client/server architecture. It is a highly successful architecture that can work on both small scale and large scale environments. Here the client is receivers whereas the servers act as a centralized processing unit. The communication between client and servers are maintained through a secure connection.
Blockchain, on the other hand, uses a distributed ledger network architecture. It is a peer-to-peer enabled network where each peer can connect with another using secure cryptographic protocols. As there is no centralized node, nodes can collectively take part in the consensus algorithm. One of the most popular consensus algorithms is Proof-of-Work which requires miners to solve complex mathematical equations to validate transactions over the network.
The database doesn’t require a consensus algorithm and is completely dependent on the centralized approach. The administrator controls every aspect of the database and is highly centralized. It is also permissioned like hybrid blockchain, but not when compared to the public blockchain.
Blockchain vs. Database: Immutability and data handling
When it comes to data storage and handling, both blockchain and database work differently. In a traditional database, data can be stored and retrieved with ease. To ensure proper operation of the application, CRUD is utilized at the primary level. CRUD stands for Create, Read, Update and Delete. This also means that data can be erased and replaced with new values if needed.
Blockchain, on the other hand, works differently when it comes to data storage. Blockchain supports immutability which means that data once is written cannot be erased or replaced. Immutability means that no data tampering is possible within the network. Traditional databases don’t exhibit immutability and hence are more prone to being manipulated by a rogue administrator or third-party hacks.
In short, Blockchain only supports two operations, Read and Write.
- Read Operations: Used to read or retrieve data from the blockchain network
- Write Operations: Used to add information and data to the blockchain network
Blockchain vs. Database: Transparency
Another key property that blockchain offers is how anyone with the right tool can verify the data once written into the public blockchain. Transparency ensures that the public can trust the network.
Databases, on the other hand, being centralized, doesn’t support any form of transparency. Users cannot verify the information if they want to. However, an administrator can make a set of data public, but still, the data verification cannot be done by an individual.
Blockchain’s integrity is made possible thanks to the immutability it has to offer. Data once stored cannot be corrupted or changed in any possible way, which means that the data integrity is maintained at any cost.
Blockchain vs. Database: Cost and Talent Acquisition
When it comes to implementation cost, a traditional database is less costly when compared to the blockchain. Blockchain is a fairly new technology and hence is still evolving. This also means that a business needs to do proper planning and execution to integrate blockchain into their process. Also, any business who is already operating needs to adopt new technology. The change in approach is a serious business as blockchain requires end-to-end implementation and cannot be just integrated into an existing system as an add-on.
The traditional database is easy to set up and scale. They work with most of the existing processes and hence works out of the box on many systems. This makes it an excellent choice for business who want to quickly and cost-effectively want to set up their database systems.
However, if we look at a longer look at the cost associated with each technology, blockchain might provide a more cost-effective solution as peers mostly manage the network. Organizations don’t have to deal with the extra cost associated with handling the network, which can save a lot of costs.
The same cannot be said when it comes to talent acquisition. Blockchain is fairly a new technology which also means that there is a limited amount of talent available to deal with the practical blockchain applications. The cost of the blockchain talent is also high which can increase the cost associated with the implementation and maintenance of blockchain on the higher side.
Database related talent, on the other hand, is easy to get. They are also affordable, and even small business can afford the cost of hiring a database expert.
Blockchain vs. Database: Speed and Performance
The speed of execution is also a critical aspect which we need to compare both blockchain and database. Databases are known for faster execution time and can also handle millions of data at any given time.
Blockchain is considerably slower when compared to databases. However, it can be because blockchain is relatively new technology and still needs a lot of time to evolve and match up to the standards of well-aged technologies such as databases.
When a transaction carried out in the blockchain, it does all the things that a traditional database will do. However, it is slowed down because of carrying more operations including the following.
- Signature verification: Blockchain transaction when carried out are cryptographically signed using cryptographic algorithms. This step is needed to make sure that each transaction is valid and is originated from a valid source. As it is a complex process, it takes time to carry out the process. Even though the whole blockchain application is fast, the signature verification can bottleneck. In comparison, a centralized database doesn’t have to go through the signature verification process which makes them comparatively faster.
- Consensus mechanisms: As blockchain is decentralized, it relies heavily on consensus mechanism to validate transactions on to the blockchain. Also, the speed of consensus depends on the type of consensus method used. Some consensus method is faster than others, but overall, it adds more time before a transaction can be processed. Centralized databases don’t suffer from this kind of issues as they centralized in nature. Each transaction is verified automatically by the database and can be executed way faster using a queue.
- Redundancy: Blockchain is a complete network where each node plays a crucial role. To make sure that each node can take participation, each transaction information needs to be stored and verified by each node.
These three aspects slow down the blockchain. This means that databases are comparatively faster when it comes to performance.
Blockchain vs. Database: Best Use Cases
Now that we have understood some crucial difference between blockchain and databases, it is now time we learn the best uses cases for both of them.
The best use case for databases is enterprise solutions or networks. The reason behind it is how the database operates and bring stability to the whole network. Databases are undoubtedly user-friendly and are already supported by many popular management systems for developers and administrators. Even websites with millions of visitors rely on databases to serve content. Forbes, for example, uses database in conjunction with high-end systems. The scalability is what makes databases such a good choice for the enterprises out there. Also, systems such as stock exchange that rely on fast operations must use databases for better data flow. However, blockchain also seems to do great in enterprise networks.
The blockchain is not ideal to store a huge amount of numerical data that needs to be regularly used. Another benefit is how data is stored in a database. It doesn’t have to go through verification during the write or read process. What makes the database a great choice is how cost-effective it can be, especially if there is a need to do basic bookkeeping.
To sum it up, the best use cases for the database includes the following.
- Apps or systems that utilize the continuous flow of data.
- Storing confidential information
- Online transaction processing that needs to be fast
- Apps or systems where data verification is not needed.
- Relational data
- Standalone apps
Blockchain’s purpose is completely different. It is a peer-to-peer network that establishes two important things to its users, i.e., transparency and trust. The distributed ledger is what makes it unique. It can change how an industry works and enhance every single aspect of it. So, what are the best use cases for blockchain? Let’s explore.
Any system that requires proper verification can utilize blockchain. For example, B2B Business-to-Business transactions can benefit immensely. This includes supply chain, inventory management, and distribution. The key here is transparency as it enables businesses to follow every single movement without introducing more complexity. However, blockchain doesn’t scale that much and can slow down systems when handling large scale data records.
Another excellent use case of blockchain is permissioned networks. Permissioned networks such as voting can not only benefit from a decentralized approach but also bring trust and transparency to the whole voting system. HyperLedger is an open-source initiative that is creating frameworks for organizations so that they can implement permissioned networks without much difficulty. There are also other ways of handing consensus which makes blockchain extremely customizable to the organization’s needs. As blockchain is non-relational, it is not ideal for systems that rely heavily on relational information.
Blockchain is also ideal for automating tasks within a platform. Smart contracts are introduced in Ethereum blockchain which brings in the ability to utilize stored procedures. If a certain condition is met, the code is automatically executed. Ethereum blockchain also uses Proof of Stake(PoS) which is more efficient and less power-hungry.
To sum it up, the best use cases for blockchain include the following:
- Transfer value
- Storage value
- Monetary transactions
- Trusted data verification
- Voting systems
- Decentralized apps(dApps)
In short, choose blockchain if you are looking for trust, transparency, and verification. Database, on the other hand, is ideal for high-performance apps or services. It is also an excellent choice for apps that require scalability. So, what are you going to choose for your application? Comment below and let us know. We are listening.
Blockchains versus traditional databases
The primary difference between a blockchain and a database is centralization. While all records secured on a database are centralized, each participant on a blockchain has a secured copy of all records and all changes so each user can view the provenance of the data. The magic happens when there’s an inconsistency — since each participant maintains a copy of the records, blockchain technology will immediately identify and correct any unreliable information. Your friend’s watch would immediately self-correct for daylight saving time, even if a third person maliciously changed the time so they would be late, the time would immediately be verified against all participants and corrected.
When data can automatically identify and correct itself based on coded business logic (smart contracts) and consensus, participants are intrinsically able to trust it. When two businesses work together, they almost never share a single database with a single set of records, because the database is being maintained and updated by a database administrator (DBA). That DBA is being paid by one of the companies and thus has a stake in the success of one company but not necessarily the other. If they want to make a change that benefits their company, the other company would never know. Alternatively, on a more nefarious note, if a competitor decides to pay off the DBA, they can make any change they want to the database without either participant ever knowing.
When blockchain technology is incorporated into the data process, you remove the single point of failure, in this case the DBA, and ensure that if one of the participants makes a change it is immediately corrected by the other participants. After the data corrects itself, the unalterable record of changes will also indicate which participant tried to make the change. With the data process secured, a business can not only trust the data shared between the companies they are working with but can even trust the data shared by competitors. For example, if Samsung and Apple are sharing technology with each other, Samsung can trust that Apple has made payment for the technology and Apple can trust that Samsung has delivered it.
Trust the data
An interesting thing happens when competitors can trust the data being shared, it creates opportunities for more participants within the vertical to join the blockchain network and increase the visibility into the data. Expanding on the previous example, if Samsung and Apple are sharing technology and data on a blockchain network, and a transportation company joins the network, that data the transportation company wants to share on the network is immediately accessible to each of the other participants and then replicated to their records. Any time one of the participants makes a change, a new version of the record is validated by all participants. In this case, Apple could track the shipment from Samsung’s factory to Apple’s manufacturing center. Additionally, if a bank is added to the network, payment to the bank and to each participant after a transaction can be triggered automatically when a condition in the data is met, and because this data is secured and validated by all the participants, no single participant can fraudulently, or accidentally, alter the data to meet the conditional trigger within the data.
Databases and Blockchains, The Difference Is In Their Purpose And Design
There is much confusion as to what a blockchain is and its dichotomy with a database. A blockchain is actually a database because it is a digital ledger that stores information in data structures called blocks. A database likewise stores information in data structures called tables. However, while a blockchain is a database, a database is not a blockchain. They are not interchangeable in the sense that though they both store information, they differ in design. There is also a difference in purpose between the two, which is perhaps what is not clear to those who want to understand why blockchains are needed and why databases are better suited for storing certain data.
First, let’s look at the difference between a database and a blockchain.
A traditional database is a data structure used for storing information. This includes data that can be queried to gather insights for structured reporting used by entities to support business, financial and management decisions. Government also make use of databases to store large sets of data which scale to millions of records.
Databases started as flat file hierarchical systems which provided simple information gathering and storage. Later, databases used a relational model which allowed more complex ways of gathering data by relating information from multiple databases. The information stored in databases can be organized using a database management system. A simple database is stored in data elements called a table. Tables contain fields, which define the type of record, that store data called attributes. Each field contains columns that describe the field and rows which define a record stored in a database.
A database can be modified, managed and controlled by a single user called an administrator. The database always has a user that functions as a DB Admin and that user has complete control of the database. This user can create, delete, modify and change any record stored in a database. They can also perform administration on the database like optimizing performance and managing its size to more manageable levels. A large database tends to slow performance, so admins can run optimization methods to improve performance.
The admin can then delegate certain roles to other users that allows them to administer or manage the database. For example an admin can delegate a role to a user that allows them to create new users for the database. When something goes wrong, the admin and their delegates can restore a database from backup. In the corporate world, problems like this are common. Servers crash, and the only way to recover data is to restore a database from backup.
A database is also recursive, meaning that you can go back to repeat a task on a particular record and modify or delete it. Admins often purge old records in a database that have either been backed up already to another database or have been deemed obsolete information. An example is if you have a record for “John Smith” in a current database that needs to be updated to a new residential address. There is already a backup of previous addresses of “John Smith” in an archived database, so the record can be updated with the new address in the current database.
A database is implemented in a client/server architecture from small office/home office to enterprise environments. This is because computers need to connect to the server that hosts the database in order to get information or store data. Originally, a database client using an ODBC connection was configured by an administrator or tech on a client computer to connect to the database. The client software then runs to establish a secure connection which must then be authenticated for access.
The authentication can be using an access string configured by an admin or users are given passwords to login to the database. This is why user accounts are created, to allow access to those who are authenticated and reject those who are not. In most systems today, a web interface is used instead. It still requires authentication for private access, while a public database can be more easily accessed from a website.
We can see that a database requires plenty of control, which makes it highly centralized. It is also permissioned, meaning that it requires user accounts from an administrator who then set privileges on how users can access a database. In a production environment, a DB Admin sets read only permission for public information on a database. They must then set a different set of permissions for users who can update and write information to the database. The centralization of a traditional database sets the security and trust in the system. Many databases run in private networks behind a firewall in data centers run by big companies. Others are hosted on the cloud available to the public. They still require an administrator to control them.
In my description of a blockchain, I am going to base it on the design used in Bitcoin. There are also private blockchains for enterprise environments, but I will discuss those later. Blockchains have only been around since 2009, when Bitcoin became the first system to implement it. In Bitcoin, a blockchain is an immutable digital public ledger that is a continuously growing distributed database that is cryptographically secured.
A blockchain stores information in uniform sized blocks. Each block contains the hashed information from the previous block to provide cryptographic security. The hashing uses SHA256 which is a one way hash function. This hashed information is the data and digital signature from the previous block, and the hashes of previous blocks that goes all the way back to the very first block produced in the blockchain called a “genesis block”. That information is run through a hash function that then points to the address of the previous block. A blockchain data structure is an example of a Merkle Tree, which is used as an efficient way to verify data.
In order for blocks to be added to a blockchain, game theory is involved in the process. Computers that function as nodes in the network called “miners” must compete with one another to find a value produced from the hash function called the nonce. The miners must use their compute resources to solve this value, and this requires powerful computer hardware. A protocol built into the blockchain called a difficulty level determines how hard or easy it is to solve the value based on what is called the total hashing power in the network.
This means the more miners there are, the more the difficulty level of adjustment becomes harder. This is because with more miners, there are more computing resources available on the network that increases the hashing power, measured in hashes per second or h/s. Once a miner has validated a block, they will receive a reward as an incentive for providing their compute resources to the network. The incentives are the motivation for nodes to mine blocks since they get rewards in the form of transaction fees and coins. In the Bitcoin protocol, this is called a Proof-of-Work consensus algorithm.
As you can see, a blockchain uses a distributed network of nodes that is decentralized. Decentralization means that all nodes on the network store a copy of the blockchain. The nodes either store a full copy (full nodes) of the blockchain or perform mining operations or they can do both. There is no administrator to validate a block of transactions. Instead you have miners that perform this verification by solving cryptographic puzzles based on a difficulty level proportional to the total network hashing power available.
Once the block has been added to the blockchain, the information is immutable and transparent to all. Blockchain transactions are non-recursive, meaning they cannot be repeated once validated in a block. A blockchain is highly fault tolerant since if one or more nodes are down, there will always be other nodes available that will run the blockchain. Another advantage of decentralization is that it can be permissionless and trustless, allowing people who don’t know or trust each other to transact. What the blockchain does is provide that trust through transparency by recording the transaction and providing a cryptographically secure way to exchange value.
A blockchain uses a peer-to-peer or P2P network architecture. It does not require access to a centralized database, instead all participating nodes in the network can connect with each other. There is no “master” that controls all nodes. Each peer is equal to each other in how they access the blockchain without requiring an administrator access.
There are many other things to discuss about databases and blockchains that were not discussed due to their broad range of topics. What I present here are just some of the facts and observations, from a technical perspective. In the end it is not that databases are better than blockchains or blockchains are better than databases. They both have their purpose and how they are used depends on what you want to do with your data.