Blockchain is a decentralized database. The blockchain technology itself ensures the integrity of data from their modification as a result of the intervention of third parties. Conventional centralized databases to prevent changes or destruction of stored data are forced to apply complex algorithms for protecting information, distributing the roles of participants, using passwords and closed communication channels for remote access.
Unlike centralized databases, in those based on blockchain technology, the principle of data protection is initially embedded in the technology itself. Decentralization involves storing copies of the database on different network nodes, and there can be an unlimited number of such copies. If in a conventional centralized database backup is external procedures and technologies, then the technology itself ensures the preservation of database copies.
Blockchain supply chain technology is more advanced in its ability to save data in the event of its unauthorized change. This data change is not necessarily deliberate, it can also occur in the event of a software failure (code error). It is very difficult to detect such a data change error in a centralized database, as in the case of a backup. It is necessary to have procedures for checking the integrity and correctness of the data, for example, checksums. Due to the presence of a hash (key) in the technology it ensures the safety and integrity of data from changing them in any situation – both deliberate changes by third parties or database administrators, and in the event of a code error.
The importance of blockchain as a trust mechanism
Blockchain is important in areas where the participants in the process do not trust each other, they do not have time to check the counterparty – they need an understandable mechanism for implementing such trust and the reliability of transactions or information received. It is such a mechanism. Its creation was prompted by a desire to help make transactions within the online community of random participants trustworthy.
Decentralized (public) and centralized (private) blockchain
Blockchain emerged as part of Bitcoin. The development of blockchain technology was based on the principle of open source code (OSS). The most common OSS project is the UNIX — LINUX family of operating systems and the like.
Blockchain as a technology is attractive in terms of secure database storage, so many IT companies are paying close attention to this technology. The concept of a private blockchain has emerged, which is developed and operated by one company. Such development allows for faster and better development of the project, eliminating disputes between developers, has clear strategies and tactics for achieving development goals. Private development can eventually become public and be used by an unlimited number of participants. At the same time, the developer company can take on the function of maintenance and technical support of the created database.
A consortium of blockchain developers can be distinguished between public and private: a situation when companies join their efforts and create a common blockchain database for their needs. The most famous is the R3 consortium, which includes more than 60 well-known international financial and IT companies. R3 develops software called Corda. It is a platform for the banking sector that allows you to conduct banking transactions on the blockchain using smart contracts.
Highlights of blockchain technology development
- Implementation of blockchain in areas other than the creation of cryptocurrencies or payment systems. Cryptocurrencies should become one of the many uses for blockchain.
- Improving the performance of the database. Such a database should beprocess a large number of transactions (records or changes) of data. The technology should provide almost instant decision making about the transaction being carried out in the database. The number of such transactions can be in the millions per second.