Blockchain technology is a hot new trend, with almost 60% of the world’s largest companies now considering it as a way to improve the security of their data. What is Blockchain?
By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet. Originally devised for the digital currency, Bitcoin, the tech community is now finding other potential uses for the technology.
Bitcoin has been called “digital gold,” and for a good reason. To date, the total value of the currency is close to $9 billion US. And blockchains can make other types of digital value. Like the internet (or your car), you don’t need to know how the blockchain works to use it.
Relational databases are today’s gold standard. They depend on a few trusted entities to store and update entries in tables—and to control the data’s security. Blockchain technology changes the way data is managed. Blockchains are replicated across a peer-to-peer network, making their data hard to corrupt. They don’t rely on trusted entities. Instead, strangers work together to store, curate, and secure a growing data set.
Public blockchains typically work well because the miners, who add new data to the blockchain, are paid (for example Bitcoin and Ethereum). Public blockchains are excellent if you want to avoid censorship and provide universal access. However, they are slower and less private than databases. The costs to import data are unpredictable. So is the software, because no one entity updates it.
In a permissioned ledger, only known entities can amend the database, thus keeping them accountable. Governance is not an issue, because the same people update both the blockchain and the code. Permissioned ledgers are faster, with larger storage capacity, than public blockchains that rely on miners to add data. This approach is also more private than public blockchains. While those within your network can see your data, permissioned ledgers are good for applications where only the public should not see the data.
Consider the pros and cons of blockchain technology carefully. If it works for you to have someone in charge of your database, a traditional database will be the most efficient approach for you. “Do You Need a Blockchain?“, an article in IEEE Spectrum presents the pros and cons and includes an interactive tool to help you determine if this new approach is appropriate for you.