Which of the following is not one of the benefits of a blockchain database?

Maximilian Fischer says:

Apr 17, 2018 at 6:18 am GMT

A blockchain (database) only contains a record of all changes that were ever made to it. Value is ascribed to the fact of actually being able to make such changes. Value in Bitcoin is being transferred just because your business partner would accept and value bitcoins or rather the ability to make more changes to the record. If you need to transfer Dollars, an intermediary is necessary who exchanges bitcoins for Dollars and the other way around, thus taking one or both sides in the value-acceptance-scheme (sender and receiver).
Generally speaking, banks could integrate the Bitcoin blockchain and “link accounts” to it. But a bank would then always be the intermediary. This intermediary is actually made obsolete by the Bitcoin system if a partner accepts bitcoins directly. I suppose you are talking about the gateways from fiat money to bitcoins vice versa (entrance and exit). But I’m not sure to understand the last part of your question, if you might clarify?

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Every blockchain protocol, decentralized Application (dApp), Decentralized Autonomous Organization (DAO), or other blockchain-related solution adopts varying levels of decentralization. The adoption level is typically based on the maturity of the solution, the time-proven reliability of its incentive models and consensus mechanisms, and the ability of the founding team to strike the right balance. For example, many DAOs have various components at different stages of decentralization: oracles (i.e., third-party services that provide smart contracts with external information) may be partly decentralized, smart contracts might be fully centralized, while the governance process for adjusting parameters is community-driven and decentralized.

On a broader scale, decentralized blockchain solutions are being explored and adopted by organizations of every type, size, and industry. Some notable examples include applications that provide immediate foreign or emergency aid to those who need it most, without the mediation of a bank, government or third-party entity. Or applications that give people the ability to manage their own digital identities and data. Today, social media platforms, companies, and other organizations sell this information without the individual seeing any benefit. A decentralized approach would help make it equitable for all.

To understand what blockchain databases are, it is crucial to understand what a blockchain is. Blockchains are used as a digital ledger to store transactional information. The data is stored as signed blocks, which link to each other, creating a chain of immutable interconnected data entries.

To sign a new block, a node needs to find an SHA-256 signature that matches specific criteria. To do so, it will use the nonce field to brute force possible solutions. Any new block needs to be validated with the majority of the validation nodes forming the blockchain. Once the block has been validated, it is added to all the nodes of the blockchain. This way of validating new blocks is called the proof of work (PoW) and was very prevalent in the early days of blockchain technology. Nowadays, other methods for validating have emerged, such as the proof of stake (PoS).

If any of the information in the data inside the block is altered, the signature becomes invalid. To make the block valid again, this signature would need to change. To ensure that the following blocks still work, a new signature would also need to be generated for each of them. Even if a node could regenerate those signatures, the changes would need to be accepted by a majority of the nodes hosting the blockchain.

For these reasons, blockchains are immutable. No information that is included in the data of the blocks can be changed. They are also managed by a set of decentralized nodes, removing the need for a central authority to control all the transactions. This immutability is why blockchains have gained popularity in industries such as finances and real estate.

Thanks to the way that blockchains work, they are ideal for storing asset information. In a blockchain, one can create and transfer assets over to another entity. These movements are referred to as transactions.

Blockchains can seem like a great solution to store information, but they do come with a price. The main limitation is around the performance when it comes to querying the database. Any new transactions need to be validated by all the nodes, and this can be a lengthy process, depending on the size of the blockchain itself. Querying the data can also be challenging, and the speed of read operations is nowhere near that of a database. This is where blockchain databases come into play.

By combining the power of modern databases with the integrity of blockchains, blockchain databases offer a way to securely store data while still providing easy ways to query the data from the transactions.

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