Apr 2018

A blockchain-based project is not just a word combination that attracts a lot of attention nowadays. This is a whole set of tools, technologies, and approaches combined to achieve the best results. Moreover, a team of skillful experts must devote their effort to ensure the successful launch of the blockchain-based solution. Nevertheless, even if you have time and expertise in your disposition, it is important to answer the simple question: do you need blockchain?

IT market currently sees the active implementation of blockchain techniques in tons of projects. These solutions are aimed at catering different needs but the fact is that not every project needs to be enhanced with blockchain. The hype over the topic appeared because of the concept’s uniqueness and capabilities, not because it is a universal solution.

Some entrepreneurs do not even quite understand why to use blockchain and simply chase the trend. We should mention here, that blockchain database may be useless and damaging to some projects. What is more, blockchain is not a guarantee of success. It is not a requirement to use blockchain instead of a database; it is just one of the possible options for your software solution. When not to use blockchain?

Do You Need Blockchain: Introduction to the Topic

Active discussions around blockchain create a fake impression about the whole idea of a distributed ledger. Most of the mankind watches attentively after the price of Bitcoin without the clear understanding of what it is. We decided to create this article to enrich your knowledge and answer one of the most important questions: what is blockchain used for? So let us delve into the digital world of modern technologies.

Bitcoin cryptocurrency we mentioned above uses blockchain as its foundation. You can be guided by an interesting statement, created for those who select what kind of storage to select for the project: if your project is similar to Bitcoin, there would be no better choice than blockchain. If you have a willingness to build a solution that has nothing in common with cryptocurrencies, you may want to go for another type of databases.

Let us say it again:, blockchain is simply a kind of storage for a structured data. “Nothing new”, you may think. But in comparison to other databases, this technology has a lot of unique features. The blockchain is based on the network of interconnected peer nodes storing the chain of consecutively connected data blocks. Such type of architecture is called “peer-to-peer” and is extremely useful in several main cases:

  • Participation of several authors;
  • Lack of trust between the participants;
  • The need to exclude third parties;
  • The need for a highest possible level of security.

Data in blockchain is accessible to all the users but, at the same time, no modifications can be implemented by a single party. Blockchain grows the mutual trust between the parties and allows only permitted approved transactions to take place. The information here is cryptographically protected. The process is transparent and fast: the users share the messages within the database. This is how any kind of data exchange occurs.

If you plan to build an electronic payment system based on special peer-to-peer architecture, go with the blockchain. If your project does not require such unique structure to be built, there are traditional structured data storages with which thousands of software engineers worldwide are quite familiar with.


Blockchain vs Other Databases: Briefly About the Important

The easiest way to select the right option is thorough research. We would like to present you a brief comparison of hyped blockchain and good old database types that may suit your needs better.

Blockchain vs Relational Database

One of the reasons for the discussions and arguments is the fact that there is no precise definition of what is blockchain. Without proper understanding and deep research of blockchain vs relational database topic entrepreneurs often make a wrong choice.

The blockchain is not a centralized database and it is not managed from a single defined place. This is one of the multiple reasons why blockchain may be a wrong choice for the typical business processes. The relational database may be more suitable to solve the traditional tasks.

Blockchain has possibilities to save the money in the long-term perspective. This becomes possible by excluding the intermediaries from the data exchange processes. On the other hand, the implementation of the innovative technologies is costly, just as subsequent support and maintenance are. One should be prepared that application lifecycle in some cases may be even more expensive than the development process itself. Here is when the relational database would become a good decision: the in-house employed administrator will handle routine tasks for a reasonable pay.

The software solution that solves critical business tasks needs to demonstrate the high performance. At this point, the experience shows that we cannot expect much from the blockchain-based systems. If high performance is crucial for your project, you better pick the relational database and enjoy the considerable increase in the app’s speed.

Nevertheless, blockchain is the technology that guarantees complete protection of your data. None of the other existing solutions is able to demonstrate this level of protection yet.

Both blockchain and relational database are able to enhance your project’s functionality, features, and capabilities. Long story short, blockchain can provide a robust and secure way of data storage. Relational databases show better performance.

Blockchain vs Distributed Database

One might think that these two concepts are synonyms although they need to be distinguished. In fact, blockchain is a type of a distributed database. But still, when thinking about a better choice for your future project, the blockchain vs distributed database comparison needs to be reviewed.

A distributed database is a decentralized structured data storage. Distributed databases bring amazing advantages to public businesses: with this smart technology data processing, validation and authentication processes become fast, simple and seamless. Every record stored in the database has its own signature and can be viewed by all the participants.  A distributed system is transparent; the processes within it are quite clear. One of the most important advantages is really fast processing of transactions. This is the reason distributed database finds its application in various industries and spheres of the market.

Blockchain, as it becomes clear from the name, is a chain of the subsequently connected data block. The blocks are cryptographically secured and available for everyone, from every asset. What differs blockchain from a distributed database? Well, the significant difference is that the decentralized database does not constitute a sequential chain. Thus, it has a simpler architecture and is easier to implement and support. On the other hand, features of the blockchain allow every transaction made to be traced and verified reliably.

Blockchain vs Shared Database

The blockchain vs shared database topic is full of debates and controversy. Same as with the previous point, some IT experts say that blockchain and shared database are the same. In truth, there are some differences.

How to describe the shared database in a few words?  The shared database allows multiple users to access and modify information. This is a common feature of discussed technologies: blockchain involves multiple entities as well. Everyone has the access to the information but it is not possible to change it unless a certain percentage of the participants agree to allow it. Here we come to the main point of difference: blockchain checks and validates the transactions in order to provide the highest level of protection. The regular shared database should only be chosen if the security of the data is not so crucial.

Blockchain vs Traditional Database

We are all people and IT experts are no exception. As you may have already understood, everything attributed to blockchain sparks heated discussions on the internet these days. The blockchain vs traditional database battle is among the most fervent, thousands of enthusiasts have been actively participating in it for the last couple of years.

Traditional databases are based on the client-network architecture. A user can modify data which is stored on a centralized server and managed by a precise organization, department or person. The access to the database is provided after the authorization. Here we can see the contrast between those two types of databases: blockchain is a decentralized database managed collectively by all the participants; on the other hand, the traditional database is controlled by a central entity. Thanks to this fact, blockchain is more transparent. Using traditional database, the user has 4 actions in the disposition. One can create, read, update and delete the records. In the case of the blockchain, only two actions can be performed by a single entity: reading and writing.

Traditional databases are well-studied and understandable for software developers of any level of expertise. But there is one momentous disadvantage: the security of the traditional database is completely in the hands of the administrator. This may cause fraud and corruptions. With blockchain, you will forget about such things forever.


Summing up everything said above, let us define cases when to use blockchain for your project:

  • If there is more than one entity that needs to have the access to the database modification, blockchain would be a good choice;
  • If there is an obvious lack of trust between the above-mentioned entities, blockchain will easily solve the issue;
  • If there is a requirement (or a will) to exclude the intermediaries and central management from the process, blockchain would do this task for you;
  • If the amount of data is limited, blockchain would be nice, as it is not able yet to work with Big Data effortlessly;
  • If your idea may fit into a heavy framework like blockchain, start to develop it with no doubts!

We provided you with the most important information about blockchain, created a brief comparison with other databases and defined the main reasons to use it.

There is no precise sign to understand clearly when blockchain would be the right choice. It may fit various industries and needs of various startups and products. Before making a decision, conduct a meticulous research and create a detailed analysis of your future project, its features, capabilities, and needs. Only the thorough planning will ensure the success and brilliant results.

Ilya Smyrnov

Author: Ilya Smyrnov

Position: CEO, Business analyst

Biography: Более 8 лет занимаюсь анализом бизнесов клиентов и повышаю их эффективность с помощью внедрения IT-решений.

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