Unblocking the Blockchain: Centralized vs. Decentralized Databases - What's the difference?

While the concept of a blockchain is almost as old as cryptocurrency itself, the technology has only been in existence for about seven years now. That’s a long time to adopt such a fundamentally new and emerging form of digital currency. Even with that relatively short lifespan, blockchain-based projects have exploded in the past few months alone. How do you decide which project to get involved with? If you want to be successful in this space, you need to understand the differences between centralized and decentralized databases. Fortunately, there are many differences between the two that will help you make an informed decision when considering involvement with either type of ledger. Understanding these differences may also guide you away from scams and towards legitimate blockchain startups who share your goals and values. 

What is a Blockchain? 

A blockchain is a distributed database structure that’s able to store a huge amount of data without the significant risk of “brick walls” or other forms of data storage failure. This is because the data is replicated across many computers across the globe, and changes are verified and recorded in real-time by the entire network of participants. A blockchain is essentially a distributed database system that’s based on a consensus model for data storage and verification. That means that unlike a centralized database, where the decision-making power lies with a select few, each node in the network has the same information stored and preserved on the ledger as the rest of the network. This means that if one node in the blockchain network goes offline, the rest of the network can still process and verify the data as if it were still connected. 

Decentralized Database

A decentralized database is a type of database system that does not rely on a single central authority to manage and store data. Instead, data is distributed across multiple nodes or computers, and each node maintains a copy of the database.

Decentralized databases use consensus protocols such as blockchain technology to ensure that all nodes in the network agree on the state of the database. This makes decentralized databases resistant to tampering and ensures that the data is always up-to-date and available to all nodes in the network.

Decentralized databases have several advantages over traditional centralized databases. They are more secure, as they are not vulnerable to a single point of failure or attack. They are also more resilient, as the network can continue to function even if some nodes go offline. Additionally, decentralized databases can be more transparent, as all nodes in the network have access to the same data.

Decentralized databases are commonly used in blockchain applications, such as cryptocurrency transactions and smart contracts. However, they can also be used in other applications where data security and decentralization are important, such as healthcare, finance, and supply chain management.

Centralized Database

A centralized database is usually managed and operated by a third party. The database management system (DBMS) manages access and security for the database, data is stored in a database, and the database is managed by someone else (e.g. a database management software). A centralized database system is more expensive to operate, due to the need for a third party. That third party could be a government, an organization, or a business. If data is maintained in a central database, an attack could come from any number of angles. If a hacker breached the database management system, they could easily access the data held by the central database and hacker. If the database management system was breached, the data could easily be shared with outsiders. Because the database is central, the overall attack would have a higher success rate.

How Does a Blockchain Work?

A blockchain is a decentralized database system that uses cryptography to keep data secret and verifiable. The blockchain system relies on a distributed network of computers to store data and verify transactions. The network consists of nodes, which are the computers that process data and verify transactions. These nodes are connected by a network of links, enabling the system to scale to a massive size more effectively. The blockchain network is decentralized, with no central authority handling the oversight of the transaction records. Instead, each computer on the network holds a complete copy of the blockchain. This means that if one computer is compromised, the others on the network can easily verify data authenticity and integrity. This type of decentralized database system requires no special software or training to operate, which makes it ideal for large-scale use. Moreover, it’s highly scalable, as the network can handle very large volumes of data and provides near-perfect verification.

Benefits of Decentralised Databases

Decentralized databases are much less likely to be breached because the data is stored on many computers distributed across the globe. This means a hacker could target just a few computers and be left with very little to show for their efforts. Furthermore, centralized databases are often expensive to run, particularly when there is no third-party involved to manage the data. As such, they may not be an ideal solution for some businesses. With decentralized databases, on the other hand, data is more secure, efficient, and scalable, due to the distributed nature of the system. Moreover, the lack of a central authority makes it easier for businesses to choose the right database management system (DBMS) for their needs. Decentralized databases also enable the blockchain project to be more flexible in the approach they take. For example, a centralized blockchain may be the best choice for a company issuing digital assets. On the other hand, a decentralized blockchain may be more suitable for specific use cases such as data storage or transaction verification.

Pros of Centralised Databases

There’s no doubt that the advantages of centralized databases outweigh the cons of decentralized databases in this particular case. However, this shouldn’t stop you from considering the case for decentralization. After all, there are a variety of use cases where centralized databases may be inadequate. After all, centralized databases are not always the best solution. In some use cases, the distributed nature of a blockchain may be more suitable. Furthermore, some decentralized databases may not be as scalable as a centralized system, particularly when storing large volumes of data. For example, this may be the case if the data is stored on a single server rather than the distributed system used by a blockchain.

Conclusion

The blockchain is a category of digital currency that operates on a decentralized basis. It relies on distributed ledger technology to record transactions and verify identities. These systems are not subject to the same levels of regulation as traditional systems. Decentralized databases such as blockchain may be more secure, reliable, and efficient, especially when used in connection with various forms of cryptography. However, centralized databases are more flexible, reliable, and secure. Moreover, if the data is not needed to be public, it may be better to keep it in a centralized database. Decentralized databases also have their advantages, but they also come with disadvantages. For example, centralized databases are less scalable or flexible. However, if the data is sensitive or confidential, a centralized database may be better than a decentralized one. 

Spydra is building a next-generation API-driven Web3 platform for businesses to enable them and developers to leverage the full potential of Blockchain and the Decentralized Web Infrastructure. Our enterprise blockchain solutions support extensive use cases across various industries to cater to the needs of each unique business out there and provide them with scalability and interoperability. Spydra combines the most powerful developer tools in blockchain with helpful resources, a talented community, and prompt support. Check out our recent launch of "Hyperledger Fabric Debugger", an Extension for Visual Studio Code to help developers build and debug Chaincode right from within the IDE.