If you’re looking for a simple explanation of what a blockchain database is, you’ll have a hard time finding one that focuses on nuts and bolts. Most blockchain enthusiasts use generic terms like decentralization and distributed ledgers, but what does it all mean?
After reading this article, you will understand what a blockchain database is and why it is an amazing new technology that has the potential to transform many industries.
What is a blockchain?
The main element of the blockchain database is what is called the blockchain. If you ask most tech bloggers, they’ll answer, “Blockchain is a distributed ledger.”
But what is a “distributed ledger”?
Think of it as an identical data file that is stored on multiple computers around the world at the same time. This is a distributed ledger. It is decentralized – this means that data is not stored in one database on one server.
Instead, the entire network of nodes (computers) storing data constitutes a kind of “server”. The file stored in this ledger is cryptographically signed so that you, as a â€œmember,â€ can view the data it contains.
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However, there is no central server that stores all the information. This is why it is called â€œdecentralizedâ€.
Blockchain uses this ledger technology to store its own type of information, consisting of “blocks”. Each new “block” of data must be validated and validated by every host before it can be added. This is what makes the technology so safe.
In other words, if a hacker who tries to attach data to the blockchain with the wrong cryptographic signature, the blockchain nodes will reject him.
It’s blockchain. Historically, this technology has been used to store transactions in electronic currency (such as bitcoins). Transactions are secure and cannot be changed or manipulated.
However, the blockchain database uses blockchain technology in a very different way.
What is a blockchain database?
Blockchain database is the use of blockchain technology to store information. To imagine this, imagine how the shipping industry works today and how it could work using a blockchain database.
The cargo manifest contains a list of all cargo placed on board the ship when it departed, what is unloaded at each dock and what remains. Shipping documents like these are critical for companies that ship millions of goods a year, like Amazon or Walmart.
The manifest contains a constantly updated journal:
- Description of goods
- Consignor and consignee
- Quantity of goods
- Origin and destination
Customs agents, trucking companies and many other organizations that make up the entire transport chain depend on the accuracy of these records. Unfortunately, there is a worldwide history of fraudulent activities where goods are â€œlostâ€ and manifestos are changed without permission.
Digitizing the process helps, but the centralized database is still vulnerable to hacking and manipulation.
The ideal solution is a blockchain database. This is because once the blockchain database is updated and verified as a new block in the “ledger”, it cannot be changed or manipulated.
- At port # 1, the blockchain database is updated with records indicating the quantity and value of goods loaded onto the ship.
- In port # 2, it is updated as the goods are unloaded, and the cargo manifests are updated as they are loaded.
- When trucks arrive at the warehouse, the blockchain database is updated with the quantity and location of goods.
- When goods leave the warehouse for stores, the blockchain database is constantly updated with new information about the goods.
Since every transaction is verified and verified as authenticated and approved, any attempt to manipulate the original quantity or value in the process will fail. Checks and balances must match the strong authentication of every node in the blockchain. Wrong “leftovers” are not allowed. Human error is no longer an excuse.
When you think of a blockchain database as a “chain”, it is easy to imagine which industries are best suited for a given technology.
Typically, these are areas to which new, accurate and updated information needs to be added.
To see this in action, imagine a very simplified shipping manifest with three items. Note: this is a very simple example and does not look like real data in the delivery blockchain database. This example is used for illustrative purposes only.
The first “block” in the chain can contain the following data.
In the first port, a new block is added to the chain, in which all transactions with the offloaded goods are cryptographically confirmed by the nodes of the network as accurate compared to the original block.
If any of the transactions are invalid with respect to the first block, the new block will not be accepted as a valid blockchain transaction.
This means that the human factor cannot lead to the “loss” of goods along the route. The entire blockchain serves as an accurate record of the shipping route for all items in transit.
This process continues and the blockchain database continues to build additional blocks until the entire delivery “transaction” is completed. There is an accurate record of everything that no one can change.
Blockchain Database Applications
Is this technology useful in the real world? Walmart definitely thinks so.
In 2018, Walmart Canada officially launched its own supply chain, which tracked similar delivery operations for 70 trucking suppliers.
The Walmart blockchain contained only a few dozen nodes to perform the cryptographic verification required when trucks were transporting goods from one destination to another.
One expert said the system eliminates the possibility of disputes between trucking companies if their records do not match.
Walmart isn’t the only company using blockchain databases. All of the following applications have been launched in recent years.
- In 2020, the US Air Force is testing a blockchain database for document exchange at the Department of Defense.
- In 2017, Estonia used this technology to protect public sector data.
- In 2019, oil and gas company Dietsmann launched a blockchain pilot with Modex to deploy its own blockchain projects.
- In 2018, the FDA examined the use of blockchain database technology to protect healthcare data.
- In 2019, Depository Trust & Clearing Corp, which owns $ 48 trillion in Wall Street investment assets, launched a blockchain database. to process their records for 50,000 accounts.
As you can see, blockchain databases are not just theory. They are used in real-world applications that require trusted transactions.
It is possible that in the future any transaction in the world that requires the highest level of security will be processed by some type of blockchain database technology.