When Is A Private Blockchain A Good Idea, And When Is It Not?
When Is a Private Blockchain a Good Idea, and When Is It Not? Exploring the questions, a recent blockchain panel also contemplated what the technology has in store for 2017. Private blockchains stand in sharp contrast to the permissionless (anonymous), public ledgers found with Bitcoin, Ethereum, and other cryptocurrency projects. This is the type of blockchain addressed by the Hyperledger Project, which was kickstarted by IBM in December 2015. Back then, IBM open-sourced its Open Blockchain work into a community effort managed by the Linux Foundation. According to Hart Montgomery of Fujitsu Labs, permissioned blockchains are great when you have some level of trust. (Hart Montgomery is also a member of Hyperledgers Technical Steering Committee.) When is blockchain a good idea, and when is it not? This question focused a recent panel discussion at a Hyperledger meetup in New York. Together with Hart Montgomery, the panel joined: Fredrik Voss, VP of Blockchain Innovation at Nasdaq Makoto Takemiya , co-creator of the Hyperledger Projects Ihora incubation and co-founder of Tokyo-based blockchain developer Soramitsu Fahad Chowdhury , AVP of Strategy and Operations for Deutsche Bank The panel was moderated by Oleg Abdrashitov , Head of Blockchain Practice for Altoros. Hart elaborated on his observation, asking do you need a distributed database (in an application or process), where the parties dont fully trust one another? If not, then maybe a more traditional database is fine for you. Hart said he often finds himself in discussions about replacing existing databases. Why do you need a blockchain to replace an internal database? Do you not trust people who have access to it? Why would you need this extra cryptographic power ? If you dont have varied trust requirements, there Continue reading >>
Is A Private Blockchain Better In Any Sense Than A Database?
Is a private blockchain better in any sense than a database? Since the banks appear to be currently looking into the idea of "blockchains" but don't want to be dealing with "Bitcoin" , it seems that there is a lot of hype for private blockchains out there like Eris or Hyperledger. However, a lot of people tend to point out that a blockchain without a currency is essentially "an SQL database". I'm wondering, does a private blockchain have any advantages over a traditional database solution, or can everything that a private blockchain does be replicated with some effort using a database application? It depends on what you mean by "private". The word private is not really associated with Eris as far as I can tell. Rather, the word "permissioned" is used instead, and therein lies all the difference and your answer. A "private" blockchain might imply a blockchain that is not shared with anyone. Such blockchains would effectively amount to slow databases and nobody would have much need for them. Eris' value proposition over traditional databases is simple: integrity through cryptographically signed history. What's stopping twitter from editing my tweets and making it seem like I said something I didn't say? Little to nothing. This is where a blockchain approach comes in. If twitter stored tweets in a blockchain that others could copy, then any modifications that twitter made to this chain would be caught. Blockchains preserve the integrity of the data within a database. They prevent people from cooking the books. This is of extraordinary importance and value. Git does not have a smart contracts system within its protocol. Git is more of a filesystem interface, whereas Eris seems more like a database interface, to be used in environments where databases are sometimes used. Gi Continue reading >>
The Argument For Private Blockchains
Gideon Greenspan is CEO of Coin Sciences. Gideon Greenspan of Coin Sciences explores the legal ramifications of public blockchains and why companies are seeking alternatives. PwC: Where are financial institutions right now in terms of their understanding of blockchain technology? Gideon Greenspan: Inside the innovation groups in financial institutions, there is already a lot of awareness. Outside those groups, an increasing number of people understand that blockchains, the technology that powers bitcoin, may be highly relevant for banks. But Im also seeing a lot of head scratching about if and where this technology can genuinely be deployed to simplify processes and save cost. I dont think many banks have a comprehensive answer to that question yet. As a result, a time window of two to three years for some level of bona fide adoption is possible, but the first phase of adoption could well take longer. Even if the technology is much better than what they have now, banks still face serious transition costs in terms of IT, training, organizational structure, regulatory and legal considerations. And we dont know yet whats going to trigger a mass transition to blockchains or other distributed ledgers. Even if the transition is inevitable, its not going to be easy, smooth or automatic. PwC: Emerging technologies sometimes disrupt or undercut the established ways that industries operate. The music industry is a prime example. How are financial sector startups trying to use blockchains to have a disruptive or disintermediating impact on the financial sector? GG: There are a whole bunch of centralized entities right nowclearing houses, custodians, settlement houses, messaging entities and the likewhich enable transactions to take place without people physically shipping bars of Continue reading >>
Blockchains Vs Centralized Databases
Four key differences between blockchains and regular databases If youve been reading my previous posts, you will know by now that blockchains are simply a new type of database . That is, a database which can be directly shared, in a write sense, by a group of non-trusting parties, without requiring a central administrator. This contrasts with traditional (SQL or NoSQL) databases that are controlled by a single entity, even if some kind of distributed architecture is used within its walls. I recently gave a talk about blockchains from the perspective of information security, in which I concluded that blockchains are more secure than regular databases in some ways, and less secure in others. Considering the leading role that centralized databases play in todays technology stack, this got me thinking more broadly about the trade-offs between these two technologies. Indeed, whenever someone asks me if MultiChain can be used for a particular purpose, my first response is always: Could you do that with a regular database? In more cases than you might think, the answer is yes, for the following simple reason: If trust and robustness arent an issue, theres nothing a blockchain can do that a regular database cannot. This is a key point on which there is so much misunderstanding. In terms of the types of data that can be stored, and the transactions that can be performed on that data, blockchains dont do anything new. And just to be clear, this observation extends to smart contracts as well, despite their sexy name and image. A smart contract is nothing more than a piece of computer code which runs on every node in a blockchain a decades-old technology called stored procedures does the same for centralized databases. (You also cannot use a blockchain if this code needs to initia Continue reading >>
Blockchains Versus Traditional Databases
To understand the difference between a blockchain and a traditional database, it is worth considering how each of these is designed and maintained. Traditional databases use client-server network architecture. Here, a user (known as a client) can modify data, which is stored on a centralized server. Control of the database remains with a designated authority, which authenticates a clients credentials before providing access to the database. Since this authority is responsible for administration of the database, if the security of the authority is compromised, the data can be altered, or even deleted. Blockchain databases consist of several decentralized nodes. Each node participates in administration: all nodes verify new additions to the blockchain, and are capable of entering new data into the database. For an addition to be made to the blockchain, the majority of nodes must reach consensus. This consensus mechanism guarantees the security of the network, making it difficult to tamper with. In Bitcoin, consensus is reached by mining (solving complex hashing puzzles), while Ethereum seeks to use proof of stake as its consensus mechanism. To learn more about the difference between these two consensus mechanisms, read my earlier post. A key property of blockchain technology, which distinguishes it from traditional database technology, is public verifiability, which is enabled by integrity and transparency. Integrity: every user can be sure that the data they are retrieving is uncorrupted and unaltered since the moment it was recorded Transparency: every user can verify how the blockchain has been appended over time A map of Dashcoin masternodes distributed across theworld. In a traditional database, a client can perform four functions on data: Create, Read, Update, and Continue reading >>
Blockchain Or Relational Database? How To Choose The Right Technology For Your Application
Blockchain vs. relational database: Which is right for your application? Suppose you've decided thatyou want to use blockchaindistributed databasetechnology in your business rather than a relational database. For what project or applicationwould you be considering its use? Because the term blockchain is not clearly defined , you couldargue that almost any IT project could be described as using ablockchain. But assuming thatyou'renot trying to bend the truth too much, you probablyhave an application that can make use of a distributed database tostore information that will support some critical business process,and updates to that database must be cryptographically protected against tampering. The blockchain that theBitcoindigital currency uses is designed foruseby a group of non-trusting parties,and requires no central administration. Those may be reasonable design goals if you need a method for transferringvalue peer-to-peer in a way that cannot be shut down by the efforts of one or more governments. But it'slessreasonable for a database that supports critical business processes. Because the requirements for the database that supports the operation of Bitcoin are probably very different from the requirements for a database that supports a typical business process, asolution that works well for Bitcoin may not be the best solution in other cases. So in what areas is a Bitcoin-like blockchain clearly better that just using a relational database? Does blockchain'sdisintermediation matter? The goal of disintermediating any third-parties may be a good one for a cryptocurrency,particularly if you are worried about avoiding interference from government agencies,butthat's not necessarilya good goal for enterprise software. The potential cost savings from using blockchainsderiv Continue reading >>
What Are The Use Cases For Private Blockchains? The Experts Weigh In
What Are the Use Cases for Private Blockchains? The Experts Weigh In Many people argue that private blockchains, run by private firms, are useless, since they make users dependent upon a third party the firm managing the blockchain. Many believe that private blockchains currently being considered are not blockchains, but rather, distributed ledger technology which has already existed. Others believe private blockchains could provide solutions to many financial enterprise problems that Bitcoin does not, such as abiding by regulations such as the Health Insurance Portability and Accountability Act (HIPAA), anti-money laundering (AML) and know-your-customer (KYC) laws. The Hyperledger project from the Linux Foundation, R3CEVs Corda , and the Gem Health network are just several of the different private blockchain projects under development. Bitcoin Magazine spoke with some well-known blockchain thinkers on their opinions of what the uses for a private blockchain might be. In general, Bloq feels it is important to build and support software that works on both public and private blockchains. This connects the private blockchain customer with public blockchain innovation, developers and new applications. I'll preface my comments with the fact that OpenBazaar is a public blockchain Bitcoin-only project, so I don't have tons of experience with private blockchains. I personally don't believe that private blockchains provide much added value above a privileged database and have yet to really see a necessary use case for them. "Private blockchains provide interesting opportunities for businesses to leverage [their] trustless and transparent foundation for internal and business-to-business use cases. With the advent of smart contracts, this technology could eventually replace many Continue reading >>
Private Blockchain Or Database?
A private blockchain is a system, commonly known as a "Distributed ledger" that has an access control layer built into the protocol [ 1 ]. This means the network participants have control over who can join the network, and who can participate in the consensus process of the blockchain. This is in contrast to a public blockchain, which is open for all to participate in as a user, as an entity that determines the validity of transactions, and the consensus process. Private blockchains, therefore have a very different level of security than public blockchains like Bitcoin [ 2 ]. Private blockchains are a class of distributed ledgers that use transactions and blocks, first described in Bitcoin. Distributed ledgers are shared databases with access protection rights, with defined rules on what types of changes can be performed by what entities. The value of distributed ledgers at the enterprise level arises from the ability to do away with the reconciliation of data among participating entities[ 3 ]. This is especially the case with financial institutions that trade with one another. A lot of effort on the back-office today is spent in the reconciliation of records among different institutions[ 4 ]. Instead, distributed ledgers allow financial institutions to maintain a structurally consistent shared database of transactions. This allows each participating institution to read data from the distributed ledger and be guaranteed that it is valid and reconciled against the data held by the other participating institutes. Difference between a Public and Private Blockchain Distributed ledgers are inspired from Bitcoin and other public blockchains. However, they differ in their fundamental characteristics of access and security promises. The security of a public blockchain like Bit Continue reading >>
Private Blockchain Vs Traditional Centralized Db [closed]
(sidenote: You can get more details from the blogpost I wrote on this topic ). The case for the public/unpermissioned/egalitarian blockchain is obvious -> Ethereum/Bitcoin. In total contrast to that, you also can have a private/permissioned/authoritarian blockchains too that totally make sense! An example for such private chains would be a consortium of banks needing a shared ledger for their business, but not trusting each other enough so that someone within the consortium can be picked for hosting it. In such cases, the consortium would traditionally found a new company, which serves as the trustworthy 3rd-party, however, with blockchain they can avoid this. The result is: saving costs, better security/integrity of data, audit trail/history for free, etc. To understand the difference between a blockchain and a traditional database, it is worth considering how each of these is designed and maintained. Traditional databases use client-server network architecture. Here, a user (known as a client) can modify data, which is stored on a centralized server. Control of the database remains with a designated authority, which authenticates a clients credentials before providing access to the database. Since this authority is responsible for administration of the database, if the security of the authority is compromised, the data can be altered, or even deleted. Blockchain databases consist of several decentralized nodes. Each node participates in administration: all nodes verify new additions to the blockchain, and are capable of entering new data into the database. For an addition to be made to the blockchain, the majority of nodes must reach consensus. This consensus mechanism guarantees the security of the network, making it difficult to tamper with. In Bitcoin, consensus i Continue reading >>
Blockchain Database: Benefits And Details
Blockchain Database: Benefits and Details A lot has been documented about blockchain database merits, which includes articles by IBMs Richard Brown.In this article, we will have a closer look at the Blockchainas a Database: pros, cons and some specific details you can expect if youll decide to use database blockchain. A private blockchain is comprised of an individual, practically closed network of nodes (blockchain participants). All nodes have a copy of the blockchain, which is a ledger that chronicles all the transactions that occurred within the network. The Blockchains advantage is that it provides transaction history (aka a transaction log), which is used by all participants, through secured cryptographic layers. This data storage is immutable. A lot has been said about the lack of trust in the model enabled by the public blockchain. This is a real innovation. That said, with regards to private blockchains, those involved are all identified since they must be on board and invited into the network of private blockchains. Therefore, being mindful about who is participating provides a trust level, and eliminates the mining requirement work activity proof that makes it troublesome for shady participants to dominate and regulate the blockchain network. The integrity of blockchain transactions is accomplished by the locked down history shown in the ledger. An individual participant cant change or rewrite the history after its been validated and locked down in the blockchain (unless 51% of the network is regulated by them). This additional trust level adds an extra value of the blockchain than conventional databases offer. The data is shared and encrypted, but the transaction log is secured to the point where it cant be changed by any single participant. It can, however Continue reading >>
Private Blockchains And How To Make Them Work
Private Blockchains And How to Make Them Work Posted by Gjermund Bjaanes on July 11, 2017 Many people are getting excited about blockchain technology, and for good reasons. Immutability, trustless sharing of data, secure transactions and much more can truly change the way we do business. However, not everybody wants to put their data on a publicly accessible data store.How can you have a private blockchain that is still secure and has all the great functionality of a public blockchain? If you are not too familiar with blockchain and want to learn more about the basics you can check out several articles about blockchain that I have written: Why would anyone not want all their data open to the public and have no ability to change the data once its out there? That might be a slightly leading question to get my point across Anyway, the point is that many people want the benefits of blockchain, but need to keep their data private or more tightly controlled for some reason. Lets study a couple of use cases to understand the reasoning behind these needs better. Property ownership is a great example.It would be less than ideal if the government or legal system was not able to enforce changes of ownership in for instance a legal dispute. If the ONLY person able to change ownership is the current owner himself, even if that ownership was acquired fraudulently, then you have big problem. Forcing changes that override some of the current restrictions of a public blockchain are needed for use cases like this.Perhaps we will figure out a good way to solve these issues at some point, and that is great, but for right now, a controlled blockchain is the best solution. Another (slightly generic) use case that you might imagine is that you might want to have data that are heavily regulat Continue reading >>
What Is The Difference Between A Blockchain And A Database?
Join 4,500+ attendees at Consensus 2018. Register Now! What is the Difference Between a Blockchain and a Database? As stated in our guide "What is Blockchain Technology?" , the difference between a traditional database and a blockchain begins with architecture, or how the technologies are orchestrated. A database running on the World Wide Web is most often using a client-server network architecture. A user (client) with permissions associated with their account can change entries that are stored on a centralized server. By changing the 'master copy', whenever a user accesses a database using their computer, they will get the updated version of the database entry. Control of the database remains with administrators, allowing for access and permissions to be maintained be a central authority. This is not at all the same as with a blockchain. For a blockchain database, each participant maintains, calculates and updates new entries into the database. All nodes work together to ensurethey are all coming to the same conclusions, providing in-built security for the network. The consequences of this difference is that blockchains are well-suited as a system of record for certain functions, while a centralized database is entirely appropriate for other functions. Blockchains allow different parties that do not trust each other to share information without requiring a central administrator. Transactions are processed by a network of users acting as a consensus mechanism so that everyone is creating the same shared system of record simultaneously. The value of decentralized control is that it eliminates the risks of centralized control. With a centralized database, anybody with sufficient access to that system can destroy or corrupt the data within. This makes users dependent on Continue reading >>
Public Vs. Private Blockchains: It Could All Prove A Bit Like The Cloud
Public vs. private blockchains: It could all prove a bit like the cloud Blockchain is one of those hot new areas which an awful lot of companies are getting interested in. Yet there is still an often misunderstood difference between a public blockchain and a private one. Put very simply a public blockchain has full open access and is associated with famous cryptocurrencies like Bitcoin. While the private variety is shut you need permission to join and acts more akin to a safe walled garden or intranet for companies. Permissionless [public] blockchains are much more disruptive and difficult to fit into existing legal and business frameworks, summarised Smith and Crown in an article around the difference and advantages of each . Their strongest argument is that blockchains are like the internet: they need to be open to benefit from innovation. This means many technology firms are working to develop saleable private blockchain services to meet specific business needs while potential customers like banks are looking to find ways to utilise them. In fact, a recent report by Infosys Finacle suggested that, out of a small sample, 69% of banks surveying blockchain were interested in private blockchains, 21% hybrid models and only 10% public blockchains. So, what does this mean for the future deployment of blockchain? Well, Brian Donegan, head of e-business operations for the Isle of Man Governments Department of Economic Development tells us that the high profile security breaches faced by public blockchain over the last year prompted a spike in interest for private permissioned Blockchain development especially from within the financial services community. He adds I see enterprises diverging away from public usage towards private usage given the greater security benefits of p Continue reading >>
Private Blockchains V Centralised Databases - What's The Difference?
Private blockchains v centralised databases - what's the difference? Ethereum recently wrote an interesting blog explaining the difference between public and private blockchains. However, I believe there is a much more fundamental question that needs to be answered what does a distributed consensus ledger (DCL), such as a blockchain, enable that cannot be achieved with commonly used technology such as a centralised database, whether open to all (public) or under private control? I have seen little that comes close to answering this question, but I am convinced it needs answering before we can be clear on which DCL use-cases will succeed. Claims that DCLs will disrupt Financial Services beyond recognition, saving tens of billions of dollars in costs while reducing risks and improving services, strike me as mere hypotheses until proven through hard evidence and analysis. I dont have an answer to this critical question, but I can take an initial step by observing differences between a centralised database with open access, and a DCL. Some of the unique features of a fully public DCL I can identify are: Control of the ledger is distributed across all those that use it, and requires consensus among its users to make changes a centralised database is under the control of a central authority Users of DCLs have full independent control over their assets/data on the ledger, those of a centralised database are dependent on the control given to them by the central authority The ledger exists in multiple copies which makes it potentially more resilient than a centralised database Data on DCLs is transparent to all you may not be able to decipher all of it, but you can check that it never changes; on a centralised database, access to data on it can be restricted through rules set b Continue reading >>
On Public And Private Blockchains
Over the last year the concept of private blockchains has become very popular in the broader blockchain technology discussion. Essentially, instead of having a fully public and uncontrolled network and state machine secured by cryptoeconomics (eg. proof of work, proof of stake), it is also possible to create a system where access permissions are more tightly controlled, with rights to modify or even read the blockchain state restricted to a few users, while still maintaining many kinds of partial guarantees of authenticity and decentralization that blockchains provide. Such systems have been a primary focus of interest from financial institutions, and have in part led to a backlash from those who see such developments as either compromising the whole point of decentralization or being a desperate act of dinosaurish middlemen trying to stay relevant (or simply committing the crime of using a blockchain other than Bitcoin ). However, for those who are in this fight simply because they want to figure out how to best serve humanity, or even pursue the more modest goal of serving their customers, what are the practical differences between the two styles? First, what exactly are the options at hand? To summarize, there are generally three categories of blockchain-like database applications: Public blockchains: a public blockchain is a blockchain that anyone in the world can read, anyone in the world can send transactions to and expect to see them included if they are valid, and anyone in the world can participate in the consensus process the process for determining what blocks get added to the chain and what the current state is. As a substitute for centralized or quasi-centralized trust, public blockchains are secured by cryptoeconomics the combination of economic incentive Continue reading >>