Blockchains vs. Databases

Bitcoin, the first cryptocurrency, was initially conceptualized and created as a form of digital cash. It was intended to be used as a way to transact quickly and anonymously online. However, blockchain technology (the technology behind most cryptocurrencies) has since evolved to serve a variety of purposes using a public ledger to store the data.

Essentially, the difference between a blockchain and a database is that the blockchain exists across a network of computers, while a database exists on a centralized server. Each method of data storage has its own set of advantages and limitations, which we will now explore.

So Which is Best?


Information that is stored on a blockchain cannot be edited, only added to.

To edit information that is stored on a blockchain, a network-wide consensus is required. In other words, every node on the network would need to approve the change. Since there are usually hundreds or even thousands of nodes on a given blockchain network, it would be virtually impossible to make such a change. A database typically only requires the permission of its administrators or a particular piece of software to edit or remove information.

While a database often holds only the more recent information, a blockchain holds all of the information that was ever added to it. Therefore, a blockchain may be better suited to hold pieces of information which require permanence, such as marriage, birth, and death certificates and other kinds of legal records. A database is better suited to hold pieces of information which are subject to change, such as research records that may need to be updated to maintain accuracy and avoid confusion.

Because blockchain-based networks are decentralized, the data is impervious to hacking.

When a large group of data is stored on a central server, a hacker that gains access to the server can collect a lot of data at once. This can have disastrous consequences. For example, if a bank’s server is hacked, thousands of customers may be made victims of theft and identity fraud. If the server is otherwise destroyed, the data is destroyed with it. As a result of this, institutions that use centralized servers to protect large amounts of valuable data may spend huge figures on keeping them safe.

In a blockchain-based network, more than half of the nodes would have to be compromised to gain access to encrypted data that would leave users in vulnerable positions. This is called a 51% Attack, and there is no recorded instance of such an attack ever actually happening–at this moment in history, it is purely theoretical.

Because blockchains are distributed ledgers, encrypting information on them requires much computational power.

Many blockchain-based networks, like Bitcoin, are not permissioned; they are not “read-controlled” (anyone can read them) or “write-controlled” (anyone can create a new block). However, blockchains can be permissioned, meaning that only those who have been granted access can read them or create new blocks.

In any case, concealing data in a blockchain requires heavy encryption, which, in turn, needs quite a bit of computational power. Therefore, if information needs to be kept private, it may be better to store the data in an offline database.

Processing a transaction on a blockchain requires approval from the entire network. Therefore, data storage on a blockchain may take much longer than on a centralized database.

Bitcoin’s blockchain-based network has recently been the cause of a few feuds in the Bitcoin community. This is because the blockchain has become so large over time that transactions can take up to an hour to complete. There have been several ideas on how to solve this. So far, each one has resulted in the creation of a new cryptocurrency and not much in terms of improving transaction speed on the existing Bitcoin network.

Therefore, if data needs to be stored quickly and efficiently, a centralized database may be the better option. At least, for the moment. It’s possible that there will one day be a cryptocurrency powerful enough to fix the problem.

Navigating the World of Blockchain

Cryptocurrency is still in its early stages, and there is quite a bit of buzz surrounding its potential for technological advancement as well as its potential to bring investors eye-popping returns. However, knowing which cryptocurrencies are destined for success requires enough technical understanding to know which coins are “walking the walk” and not just “talking the talk.” Subscribe to our newsletter, and never miss a beat.

Have you had any experiences using blockchain as a method of data storage? What were your experiences? Please, leave a comment–we would love to hear from you!



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