I have been in the technology space for the better part of 20 years.
From my childhood, technology has always fascinated me.
I am especially intrigued by its dynamic, progressive evolution – today’s established, is tomorrow’s archaic.
Over the past couple of years we at Savannah (CryptoSavannah) have advocated for the use of blockchain in businesses, governments and all types of organizations.
We do this because we believe that distributed ledger technology is revolutionary, not only because of its novelty but in its simplicity.
Blockchains improve on what databases have been doing for ages and its appearance today is by demand, demand for better more accurate systems, demand for more secure systems, demand for better privacy, demand for better efficiency.
A question we get a lot is why blockchain?
Can’t a normal database do that?
Can’t normal software (with cryptography) do that?
And the answer in most cases is, YES, a database can do what blockchains do, but they are inefficient and expensive in comparison.
I liken this to the early days of the automobile, the established horse and carriage was ubiquitous and had entire economies around it, from the businesses making carriages and horse shoes to the people cleaning horse dung from the streets.
A gasoline powered automobile was noisy, smoky and untested.
Yes horse could do what the car did, just slower and less efficient.
But conversely there are things the horse simply couldn’t do.
So what is the difference between a blockchain and a database? What’s all the fuss about?
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.
When data can automatically identify and correct itself based on coded business logic (smart contracts) and common agreement (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.
It’s this weakness that makes databases expensive, for the two businesses to work together they need to invest in Application Interfaces or a common database that they both have visibility into, couples with frequent audits and checks to gain the same level of trust that blockchains do inherently.
This is very common in the sectors like financial services, so much so that its the norm.
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.
Blockchain technology introduces something that was previously very difficult or impossible to do, trusting the data!
When competitors can trust the data being shared between them, it creates opportunities for more participants within the vertical to join the network and increase the visibility into the data.
Any time one of the participants makes a change, a new version of the record is validated by all participants.
We gain security not just because of the cryptography employed by the blockchain but also by its transparency; no single participant can fraudulently, or accidentally, alter the data to meet the conditional trigger within the data – this is what the hype is about!
This is where a blockchain shines in comparison to centralized software or databases.
This phenomenon plays out its benefits in many different expressions depending on the industry, whether its supply chain, manufacturing, agriculture, healthcare or finance.
It’s this inherent feature of blockchain to improve on the efficiency and security of traditional software that we promote and encourage organizations to explore.
That said, i will also agree that, yes, blockchains are not a silver bullet, they do have weaknesses and areas for improvement.
Like in the early automobile days, the road networks were not ready for cars, cars caused accidents, they were complicated to maintain and had a chaotic coexistence with the carriages.
However, that didn’t deter us from improving on them, increasing their efficiency, adjusting our road networks to accommodate them to get the best out of the new technology.
The same approach needs to be taken as we look at blockchains and their potential.
They have great promise, but it’s still a young technology and has a way to go. But it definitely improves on what we are running currently.
The writer is head of strategy at Cryptosavannah