How is the “Blockchain different from a database?” is a question that often pops up and it’s an important question.
In a typical Excel database one person enters data. That person may even share that database with someone else who can then add additional data, edit the data, or delete the data.And that is one of the biggest differences between the Blockchain and a database: Different parties can create, read, update, and delete data in a database.
In the Blockchain, on the other hand, data can only be written to a block, it cannot be updated or deleted. The Blockchain is, as they say, immutable. And, depending on whether the Blockchain you’re working with is public (permissionless), private, or permissioned, not everyone can always even read the block.
Let’s walk through an example:
Let’s say smartData contracts ABC Delivery to pick up a package in Sydney . While negotiating the contract smartData and ABCD agree on what data to track. They agree on the following data points; the date the package is picked up, the time it’s picked up, a scan of the package to confirm receipt, and a price for picking it up. ABCD delivery service scans the package when they pick it up. The scan serves to verify that the first part of the job has been performed on a certain date and time. This data is recorded and funds from smartData account are withdrawn to pay ABCD for the service.
Some of this could be done on a database. A database could keep track of the four agreed upon parameters. A database can even pull data from an API. A database might even be able to withdraw funds from a dedicated account.
Here’s what a database cannot do: A database cannot make sure that its data is not changed in any way. A database cannot exist in a distributed network adding to the security and verity of the data. A database cannot exist along a larger chain of transactions with an encrypted hash number to further heighten its security. And if a database cannot be trusted or remain immutable, would you want to use it to withdraw or deposit funds?
Lastly, if a database can be shared it can be read by anyone who gets their hands on it. On the other hand, if smartData and ABCD use a private Blockchain, only smartData and ABCD can read what they put on their Blockchain. Databases do have a certain level of security, but nowhere near the cryptography that the Blockchain does.
This is not an argument that the Blockchain is superior to a database. That’s like arguing that a hammer is superior to a screwdriver. They are different tools. Sometimes you need a hammer, sometimes a screwdriver. Sometimes all you need is a database, sometimes you need the Blockchain.