Every startup inevitably faces the dilemma – do you want to use blockchain distributed database technology in your business rather than a relational database? While blockchains and relational databases are both useful tools for storing information that supports critical business processes, each technology excels in different areas. While traditional DBs are known entities in terms of how they work and what major vendors provide storage services, let’s focus on the blockchain database concept and what it brings to the table.
A blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a merkle tree root hash). For more background information on the blockchain, you can go to our definitive guide on the technology. In the meantime, here’s a brief intro to the structure of blockchain and it’s main elements.
Block – a container that records transactions not yet entered in any prior blocks. This is most relatable to a ledger page in a traditional sense. Each time a block is completed, it gives way to the next block in the blockchain.
Transaction – a transfer of value that is broadcast to the network and collected into blocks. They are not encrypted, so it is possible to browse and view every transaction ever collected into a block by any member of the network (or with permission). Once transactions pass enough confirmation points they become immutable
Hash – a function that converts an input of letters and numbers into an encrypted output of a fixed length. A hash is created using an algorithm and is essential to blockchain management.
Implementing The Blockchain DB
While innovative individuals and companies attempt to overcome the current limitations of purely blockchain-based databases, the current consensus among the majority of business owners is to use a mixed system of traditional and blockchain databases. One of the companies leading the way with this combined distributed/blockchain database model is BigchainDB. We’ll discuss some of their use cases later in the blog, but for now, let’s focus on popular hybrid DB models you might consider implementing in your business.
Operational Blockchain Data Store With Enterprise
An operational data store (ODS) is used for operational reporting and decision-making. To incorporate decentralization, the database needs to be run by several administrators.
These administrators would then be responsible for monitoring the database and reviewing transactions where necessary. Part of the data would be stored on the blockchain, however, preventing outside clients from accessing the data.
Non-Operational Blockchain Data With Enterprise
In turn, a non-operational approach facilitates client access to the database. This requires setting up intermediaries who can access the information held on the blockchain database and send it to clients. While clients would not be able to access the database itself, they would still be able to get the information contained in the DB.
Operational Blockchain Data With Consortium
The consortium approach is more in line with traditional blockchain ideology. A consortium is formed of any number of individuals or companies. This would ensure complete decentralization – no single entity maintains control in this setup. All the companies would act as individual nodes and therefore be required to maintain the DB.
Non-Operational Blockchain Data With Consortium
This approach also involves intermediaries that allow clients to access the data held in the database. Companies that hold personal data or sales information that might be required by outside parties and affiliate organizations, who are not authorized to access the database directly, would benefit from such a database implementation model.
Understanding the data flows and building direct connections between blockchain ecosystem participants is crucial since blockchain architecture’s focus is on technology and business logic – you need to be good at both. We run over these skills and requirements for those who develop a blockchain DB themselves as well as businesses looking to hire someone who would do it for them.
Distributed ledger expertise
You have to understand the fundamentals and the toolkit. Learn to explain how a blockchain-based solution is more efficient, secure, and cheaper than any of the available alternatives. Using alternative architecture skills, review the technical designs of your blockchain partners and assist in the selection and planning processes.
Selecting the right blockchain platform is crucial since there are so many of them out there. Deep understanding of options like Hyperledger, Ethereum, or Ripple will enable you to identify the right use case for the right blockchain platform and articulate their differences.
Security skills such as public and private key cryptography, cryptographic hashing, Merkle proofs are great assets – especially when your blockchain database contains highly confidential and valuable collateral.
Deep background in standards and ecosystems
Develop standards around terminology and concepts, security risks and vulnerabilities. Be sure to partner with blockchain consortiums, and academic institutions to advocate blockchain principles for a progressive ecosystem.
Blockchain Database Use Cases
BigchainDB is one of the primary vendors of blockchain databases. With an initial release in February 2016, BigchainDB currently stands at version 2.0. Its developers made significant improvements over time, picking up an impressive list of clients and creating a host of new use cases along the way. We’ll take a couple of examples to highlight some of the challenges and solutions BigchainDB helped their customers overcome by replacing traditional DBs with their software.
Resonate (Intellectual Property Rights Management)
Blockchain technology has certain benefits when it comes to providing immutability to artist claims. IP rights management and provenance is a particularly stingy issue and one that’s solved by way of court orders and lengthy trials quite often. Resonate is a music streaming cooperative owned by music makers which solves these problems with blockchain technology, and BigchainDB is a major part of their product.
The initial bottlenecks boiled down to three challenge areas:
- Streaming and downloading business models don’t reward content creators;
- Corporations and labels enforce rigid contracts that don’t benefit the artists;
- Musicians and fans have zero ideas how platforms run, operate and function.
Using BigchainDB, Resonate built a database of artists and songs, set up cost-effective micropayment channels so that artists were rewarded, and enabled listeners to show appreciation to their favorite artists.
Here’s how BigchainDB enhances the Resonate experience:
- Provides a globally accessible database to store artists, songs, licensing terms and royalty payout rules;
- Extremely cost-effective micropayment technology that lets artists keep most of the streaming proceeds;
- Supports the COALA IP protocol, a community-driven standard for licensing intellectual property;
- Supports Envoke, a consortium of music industry stakeholders.
- Provides transparent and auditable usage reports.
Innogy (Supply Chain)
The major challenge faced by supply chain providers is the security and management of shared information. In a typical supply chain ecosystem, there are several parties collaborating with each other, sharing assets that contain info about the processes of tracking goods being manufactured until they complete the supply chain cycle. innogy enables a future where we know the exact provenance and authenticity of everything we touch, see, feel and taste – and in the process, solve many of the problems in today’s global supply chains.
Innogy’s main challenges:
- Legacy processes designed to manage supply flows are generally manual, paper-based, error-prone and vulnerable to fraud;
- No way for customers to trace the history, check provenance or verify the authenticity of products that they buy.
Using blockchain technology provided by BigchainDB, innogy built a database of products to store it’s entire history, enabling verification of provenance, authenticity, and ownership. BigchainDB underpins the Digital Product Memory in several ways:
- Provides a globally accessible database to store a digital history of all products;
- High capacity and throughput for millions of sensors and products;
- Data immutability that brings trust and security to the records;
- Micropayment channels to enable machine-to-machine commerce.
Looking at the high-level picture, the traditional DBs have an upper hand over blockchain databases in performance. Blockchain technology, however, uses decentralized data storage to sidestep the issue of security, thereby building security into its very structure. If you and your business need a truly immutable and fault-resistant database – blockchain would be the way to go. Check out other DataRoot blog entries and don’t hesitate to contact us if you need an in-depth look at blockchain.