Basic Principles of the Blockchain Database Concept | Ministry of Industry and Technology of Turkiye

Basic Principles of the Blockchain Database Concept  | Ministry of Industry and Technology of Turkiye

Understanding the basics is vital. The “Basic Principles of the Blockchain Database Concept” session gives the proper context moving forward. The “Basic Principles of the Blockchain Database Concept” session provides a solid foundation and context that will undoubtedly be beneficial as you progress in your understanding of blockchain technology. By grasping these fundamental principles, you’ll be better equipped to comprehend how this innovative database system functions and its potential applications across various industries.

Blockchain technology has revolutionized various aspects of society, economy, and governance. It offers a paradigm shift that can transform the way we store and manage data. In this presentation, we will look into the fundamental principles of blockchain databases, their key characteristics, and different deployment options. We will also explore the challenges involved in building blockchain databases and discuss some popular blockchain-based database solutions.

What is a Blockchain Database?
A blockchain database is a specialized type of database that utilizes blockchain technology to store and manage data. It combines the advantages of traditional databases with the immutability, transparency, and decentralization provided by blockchain.

In a blockchain database, data is organized into blocks that are interconnected using cryptographic hashes, creating a chain-like structure. Each block contains a batch of transactions or data entries, which, once added to the blockchain, become permanent and tamper-proof records.

Unlike traditional databases, where a central authority or administrator controls access and manages the data, blockchain databases are decentralized. They are typically maintained by a network of participants or nodes, who collectively validate and record transactions through consensus mechanisms.

Key Characteristics of a Blockchain Database
1. Immutability
Once a block is added to the blockchain, altering or deleting the data within it becomes extremely difficult. The cryptographic hashes linking the blocks ensure the integrity and immutability of the entire database. This feature ensures data reliability and trust.

2. Transparency
Blockchain databases offer transparency, as every participant in the network has a copy of the entire database. This enables participants to verify the transactions and data stored within it, fostering trust and accountability. Transparency is a crucial factor in sectors such as supply chain management.

3. Decentralization
Decentralization is a core characteristic of blockchain databases. No single entity has control over the database. Instead, participants collectively validate and maintain the data through consensus mechanisms. This decentralization enhances the security, reliability, and resilience of the database.

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4. Security
Blockchain databases provide a high level of security through the use of cryptographic algorithms. Transactions and data stored on the blockchain are protected from unauthorized access and tampering. This feature makes blockchain databases suitable for applications that require enhanced data security.

5. Distributed Ledger
Blockchain databases are often referred to as distributed ledgers because the database is distributed across multiple nodes. Each node maintains a copy of the database, creating redundancy and resilience against single points of failure. Distributed ledger technology ensures data availability and robustness.

Blockchain Database Deployment Options
When considering blockchain database deployment, several factors come into play. Two significant factors to consider are whether the database will be used within an enterprise or consortium and how the data will be used. Based on these factors, four possible ways to create a blockchain database emerge:

1. Centralized With Operational Data/Operational Blockchain Data Store With Enterprise
In this scenario, the blockchain database is deployed inside an enterprise. It does not require decentralization, simplifying the deployment process while leveraging the advantages of blockchain over traditional databases. The database can be used for decision-making and operational reporting, offering immutability and asset creation and transfer capabilities.

2. Centralized With Non-operational Data/Non-operational Blockchain Data Store With Enterprise
Similar to the previous scenario, this deployment is centralized within an enterprise. However, intermediaries are set up to access the data store and deliver it to clients. This approach offers better performance and privacy as the data is only accessible to a limited number of clients.

3. Decentralized With Operational Data/Operational Blockchain Data Store With Consortium
In this scenario, a consortium is formed to remove the need for a single entity to control the database. Each company within the consortium acts as an individual node responsible for maintaining the database. This decentralized approach increases data immutability and is suitable for applications like supply chain management.

4. Decentralized With Non-operational Data/Non-operational Data Store With Consortium
Multiple administrators from different consortium members control the blockchain in this scenario. Intermediaries facilitate client access to the data in the database, offering increased speed and privacy. This approach is useful for companies holding sensitive information that should be accessible only to authorized parties.

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Challenges in Building Blockchain Databases
Building blockchain databases comes with its own set of challenges. Some of the key challenges include:

1. Querying Capabilities
Blockchain databases excel at storing transactional data but lack advanced querying capabilities. This limitation makes it challenging to retrieve specific data from the database efficiently.

2. Scalability
Public blockchains often struggle with scalability as adding decentralized nodes increases network traffic, resulting in reduced transaction throughput. Finding solutions to scale blockchain databases without compromising performance is crucial.

3. Low Throughput
Due to the consensus mechanisms involved, blockchain databases have lower transaction throughput compared to traditional databases. Increasing the number of nodes required for transaction approval results in slower overall performance.

4. High Latency
Popular blockchain networks like Bitcoin and Ethereum experience high latency, causing delays in transaction processing. Improving latency is vital to enhance the usability of blockchain databases.

Top 5 Blockchain-based Database Solutions
Several blockchain-based database solutions are available in the market today. Here are five notable examples:

1. BigchainDB
BigchainDB is a decentralized database that offers immutability and tamper-proof records. It supports various types of assets and utilizes the Tendermint consensus protocol, providing high performance and reliability.

2. Cassandra
Cassandra is a distributed and fault-tolerant database that offers high availability without compromising performance. It uses the Cassandra Query Language (CQL) for data querying and is trusted by many companies for its scalability.

3. ChainifyDB
ChainifyDB is a blockchain solution for databases that allows seamless integration with existing data stores. It encrypts communication between plugged databases, ensuring data security and synchronization.

4. Modex BCDB
Modex BCDB combines traditional database and blockchain technology. It supports multiple databases and provides enhanced security while managing data. It offers a plug-and-play approach for organizations looking to integrate blockchain features.

5. Postchain
Postchain is a modular-based framework database used for implementing custom blockchains. It stores data in an SQL database and utilizes a proof-of-authority consensus algorithm. Postchain provides a reliable and customizable blockchain platform.

In conclusion, blockchain databases present a paradigm shift in the way we store and manage data. By combining the advantages of traditional databases with the immutability and decentralization of blockchain, they offer enhanced security, transparency, and reliability. However, challenges related to querying capabilities, scalability, throughput, and latency need to be addressed to fully utilize the potential of blockchain databases. Various blockchain-based database solutions like BigchainDB, Cassandra, ChainifyDB, Modex BCDB, and Postchain are available, each with its unique features and benefits.

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As I rightly said at the end of the presentation, “Blockchain databases bring the concept one step further and combine the best of both worlds.” With ongoing advancements and innovations, the future of blockchain databases looks promising in transforming industries across the globe.

This video is part of a consultation session on “Technical Expert Service on Improvement of Public Sector Efficiency Using Blockchain-based Database”. The implementing organizations include the Ministry of Industry and Technology of Turkiye and the Asian Productivity Organization. The event was held in Ankara and Bolu, Turkiye, from 4–7 July 2023.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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