What is the difference between a blockchain and a regular database?

Blockchain technology has been heralded as one of the major disruptions of our time. Following the devastating effects of the 2008 global financial crisis, blockchains have grown in popularity across industries such as Web3 as an open source, decentralized, immutable ledger technology. However, despite the demand for both the technology and blockchain developers increasing by over 6000% since 2018, there is still plenty of confusion surrounding the term.

If the confusingly interchangeable use of phrases like network, distributed database and blockchain network have got you wondering what exactly the differences are, don’t worry — you’re not alone. Although there are similarities, blockchains often differ from regular databases in terms of their authority structure, architecture, operating costs, functions, and even the way decisions are made.

At VINCI, we are committed to leveling the playing field in the creative industries using Web3 technology. We want creators to earn a fair share of the value they create, and ultimately be able to make a living off of their hard work.

So today we’re walking through some similarities and differences between blockchains and databases, before exploring why the VINCI ecosystem relies on blockchain technology.

Differences between a database & blockchain

Let’s first explore some of the major differences between regular databases like the internet, or Web 2.0, and a blockchain in terms of configuration, function, and purpose. But before we get into the technical details, we must begin by defining the two concepts.

What is a database? Databases are centralized ledgers run by an administrator. So under the control of a central governing body (administrator) a database can perform read and write functions by adding or recalling data that is stored on the ledger. In practical terms, we can add information, or data, to the database as well as finding information previously added to the database, but only if the administrator approves.

What is a blockchain? A blockchain is a type of database because it is a digital ledger that stores information in data structures called blocks. However, a blockchain differs from regular databases in that blockchains are decentralized ledgers. That is to say that blockchains don’t have a central administrator. In practical terms, if data is added to the blockchain by trusted sources, everyone can access this publicly available information without the approval of a centralized administrator.

What sort of database does Web3 require? Blockchains are the preferred technology to power Web3 because they enable permissionless, decentralized and censorship resistant databases that no single entity or nation state can manipulate or control.

Let’s now explore some technical differences in more detail.

Technical differences between a blockchain & regular database

Authority: Blockchain is a peer-to-peer decentralized distributed ledger technology first popularized in 2009. This means no single entity owns and controls decentralized blockchains such as Ethereum. Regular databases, as we read above, are controlled by an administrator and are therefore controlled by a centralized authority.

Architecture: Blockchains run on distributed ledger technology which enables a set of “peers” to work together, creating a unified, decentralized network. These peers share information (data) with the help of a consensus algorithm, meaning the entire system depends on code, rather than people, to make important decisions. Another important architectural element is that each of the thousands or millions of peers running the blockchain software keep a copy of the entire database. Once approved by the consensus algorithm, data can only be added and not removed. Overall, this helps to create a more trustworthy system compared to regular networks which can be prone to human error made by administrators.

Transparency & Integrity: Public blockchains are fundamentally transparent because anyone with a computer & internet connection can access the data stored on the blockchain. Databases, on the other hand, are not transparent because only the administrator can decide which data or datasets can be accessed by the public. In that sense, blockchains also support data integrity because the decentralized nature of the data being stored means malicious actors would have to compromise more than half of the nodes in a blockchain to change the information. This is called a 51% attack, and although extremely difficult (and mind-blowingly expensive), it is not impossible to execute. With regular databases, however, malicious actors only have to breach a single security system (the administrator’s) to alter the database.

Performance & Cost: Nothing in life is free, and the increased security offered by blockchains (distributed ledgers) unfortunately comes at a cost as well. Blockchains can get bogged down by the complex cryptographic consensus mechanisms and verification methods which require many nodes to run simultaneously to sustain operational integrity. This difference in performance also has cost implications, and regular databases which rely on old technology are comparatively easier to implement and maintain because they can run on a single server located in a single location. Overall this can result in lower energy costs for regular databases.

Advantages of blockchains

Although we can easily deduce the pros and cons of blockchain over their technological predecessors by comparing the two as we have done above, delineating some of the advantages and disadvantages of distributed ledger technology will help us get a better grip of the use cases.

Security & resilience to fraud: When blockchains have a sufficient number of users and validator nodes to verify the data being processed, the risk of fraud is reduced to an almost negligible level. Because creating a fake entry would require the breach of at least half the computers, the cost rarely justifies the reward. Blockchains are therefore becoming the infrastructure of choice in sectors where database integrity is critical, such as finance.

Complete history (immutability): An immutable blockchain keeps a record of every transaction ever made on it, allowing us to view the state of the database at any point in time, without being susceptible to change. This is extremely beneficial for audits and transparency.

Availability: Because blockchains are distributed across many computers, the likelihood of the entire network going down is reduced significantly. Perhaps more interestingly this means that no single government or entity can ban a blockchain as long as servers outside that government’s jurisdiction continue running the software.

Disadvantages of blockchains

Cost and speed: As we saw earlier, a blockchain’s resilience and security comes at a higher energy cost compared to regular database management.

Editability: Fixing a bug, adding or updating features in a regular database is a piece of cake compared to updating an entire blockchain. Once a blockchain has been established, if a major change is proposed, a majority of validators running the blockchain must approve it for the change to occur.

Use cases of blockchain compared to regular databases

Following our exploration of the high level differences between blockchains and regular databases, we have a solid grasp of how regular databases differ from blockchains (or distributed ledgers). We can now explore the notable use cases of each, ranging from private and public sector uses to powering the next iteration of the internet, which we call Web3.

Blockchain use cases can broadly be divided into a few categories such as enterprise blockchain use cases and public sector, or governmental use cases of blockchain. On a government, or state level; Austria, Estonia, and the UK are among the countries with ongoing blockchain integration into a variety of services such as land registration, education, healthcare, and logistics & supply chain management.

Regular databases are often used in apps or systems that require the continuous flow of data, and generally where data verification is not a top priority. Private databases are often where confidential information is stored within organizations, but they can also be used to store relational data because they allow transaction processing to occur at higher speeds compared to most decentralized blockchains. This discrepancy in transaction processing speed can be attributed to the decentralized configuration of most blockchains.

Distributed ledgers therefore require higher computational power to process the larger transaction data across a greater number of nodes. In simpler words, because the system relies on many nodes (or validators) to confirm a new entry, more work has to be done to ensure consensus can be reached.

VINCI & Web3

VINCI applies Web3 and blockchain technology to bring fair and transparent solutions to help artists and culture creators earn their fair share from the creative industry.

The foundational services that shaped VINCI’s vision were focused on ticketing and digital marketplace solutions for artists and culture creators.

Through Web3-based ticketing, artists and event organizers can choose monetization settings from their ticket, as well as buyer and attendee data received from ticket transitions. Perhaps most importantly, they can control secondary markets through their tickets, avoiding counterfeiting and scalping practices.

By developing comprehensive marketplace solutions, VINCI gives artists better methods of engagement (hand-in-hand with our ticketing’s buyer data tools) via digital tokens that unlock exclusive airdrops and perks available to fans. This form of community engagement helps artists communicate to fans directly, while also allowing them to reciprocate with an organic and loyal following.

In this article, you can read more about how VINCI uses Web to help artists and creators.

Conclusion

After exploring the ins and outs of the blockchain vs. regular network discussion, we can conclude that regular networks & databases like the internet are information machines, while a blockchain is a truth machine. Both types of networks have notable use cases in the private and public sectors, but blockchains clearly prevail in their ability to reduce risk by distributing the network. Although this distributed ledger can be more costly to operate, when we consider the requirements of Web3, the benefits outweigh the costs given a blockchain’s ability to create systems of trust.

With the slew of fraudulent activity across financial institutions over the past decades it has become abundantly clear that no amount of regulation can entirely eliminate fraud, but immutable code certainly can. Blockchain technology, as a system of trust, offers us a pathway through Web3 to achieving this goal.