Although sharing the same purpose of storing data, traditional databases and blockchain differ in so many ways. Unlike databases, blockchain is decentralized, which allows protecting data from hacking, forging, and deleting. Among other blockchain-related benefits, there are data transparency and traceability, no human errors, disintermediation, and automation of business processes.
However, switching to a blockchain-backed solution ain’t that easy. Even if you decide to use a blockchain ecosystem, like genEOS, instead of building a Dapp from zero, it still requires time and investment. That is why we put together this guide to understanding if it’s time for you to commit to blockchain.
Data Protection
Usually, databases prevent any malevolent access by requiring authorization. However, since databases are managed centrally, it is enough to hack the central server and access all the data stored there.
Blockchain assumes data decentralization, with all its nodes storing the same records. It means that hackers would need to hit all the nodes simultaneously in order to forge, delete, or leak any information. In addition, blockchain-driven data is inherently encrypted, which strengthens its protective properties.
Data Traceability
Companies using databases usually have input-output data and details of their internal transactions. However, when it comes to anything that is outside the company, the trail of such transactions goes cold. It becomes relevant, for example, in the case of tracing product provenance or while tracking a product along the supply chain.
When the same blockchain is used by all business process participants, all the records get easy to track. As the only way to add a record to a blockchain is to append the one that already exists, it becomes possible to monitor any details having only the latest transaction data.
Data Transparency
In the case of a centrally managed database, there is no guarantee that stored data is the true one. What if someone, even authorized, has forged it illegally? Sometimes, such cases can stay undetected forever.
Blockchain not only records any data alterations but requires confirmation from its witness nodes to authorize such actions. This way, the technology focuses on data integrity and transparency.
Automation of Business Processes
Databases can’t trigger any actions by themselves. If a company’s business process assumes that process B must be carried out after process A is successfully completed, it is usually done manually. Validating such a workflow can take hefty time and be affected by the human error.
With the help of blockchain-led smart contracts, this process can be fully automated. Smart contracts check the validity of all the input information and, if needed, trigger process B after process A.
Disintermediation
Databases can’t be responsible for the validity of the data they store. For instance, if you sell batches of products, you may need an intermediary who checks the product quality and only upon shipment transfers money from your customer to you.
Blockchain can disintermediate this process with the help of its smart contracts and witness nodes. Before shipping a product, blockchain checks the customer’s positive balance. Once witness nodes confirm the successful shipment and product quality, smart contracts trigger the payment.
Summary
Let’s sum up the major cases that indicate your company needs to make way for blockchain in your operations:
- It operates big datasets, and data integrity plays a vital role here. Examples: banks, insurance companies.
- It requires immediate traceability of its transactions. Examples: supply chain and product provenance tracking.
- It carries out a lot of transactions, which legitimacy is difficult to confirm. Examples: loan issuing.
- It contains processes that can be triggered automatically but currently are done manually. Example: ownership property transfer, payments.
- It relies on intermediaries confirming the validity of transactions. Example: logistics.
If after reading this you are sure you need blockchain, look for the right blockchain toolset to integrate it into your business processes. The genEOS team is here to help you and consult on how to make this road less bumpy.