Private Blockchains: A new kind of distributed database
We know that a distributed database (or shared database) implies that the data is not stored in a single unit such as a server but are distributed all over the network.
With the blockchain technologies, specifically when talking about the Private Blockchains (Public blockchains may be similar too, but not as much as the Private ones) where the participants are not anonymous and pre-approved, we can say they are very similar to the Distributed Database, but we will enumerate some important differences.
Safety First — Security always matter
The main problem with the Shared Databases is, for example, that one of the participant entities in the shared system for some reason have some security leak (or a poor security system), this can compromise the whole network, because that entity can introduce corrupted data into the system and compromise all the distributed data.
The blockchain resolves this problem using the cryptography (ensures that our data is immutable) and the consensus protocols such as Practical Byzantine Fault Tolerance. So, if a participant entity is affected this cannot corrupt the data, because when the corrupted data is added, it won’t pass the consensus protocol and won’t be approved by the nodes.
Decentralized world
Both, shared databases and private blockchains are decentralized, and this means that they have the information distributed around the network, and this happens to the difference between them.
In the shared database all the nodes need to have trust in each other, basically because if one of the nodes tampers with the data maliciously, it can corrupt all the data in the network. This is not necessary with the Blockchain, and the nodes don’t necessarily trust each other, this is because the blockchain is immutable (nobody can update data, just add new) and the consensus protocol means that all the data needs to be approved by every node.
The shared database doesn’t have to have all the data in every single node, as the blockchain do, it can have fragments of data distributed in different places. An example of this is a huge company with departments; every department will be a node with its fragment of data.
Performing the network
Talking about performance, I think that blockchain technology needs a lot of improvements. This is because it’s slower than the shared database.
The transactions in the shared database are much faster than in a blockchain because all the nodes trust each other and the transactions are automatically approved, but the blockchain needs to sacrifice some time to pass the consensus protocol implemented in it.
But it is not as bad as the Public Blockchain like Bitcoin that uses Proof-Of-Work and take 10 minutes to approve a new block approximately. In the Private Blockchain, we have a short number of nodes and a consensus protocol that doesn’t need a lot of energy, power, and time to be resolved.
Confidence is the key
The distributed databases and the Private Blockchains are both read/write controlled; this means that the participants in the network have read and write access to it.
Probably if the confidentiality of the data is the main problem and the trust between the participating entities is not the problem, a blockchain has nothing to do with the shared database.
This is why hiding information inside a blockchain needs a lot of work (Cryptography process and computational overload in the nodes). In a shared database, if we don’t want to share a piece of that with some node, we can just expose some of the data (that node will just have a fragment of the data), simply configuring the network.
The blockchain is based on transparency between the nodes, and that is why all the nodes will have all the information.
An Economic View
The costs of a distributed database are much higher than a blockchain. The key point here is probably the immutability of the blockchain since the data cannot be updated. This means that it doesn’t require much maintenance as the distributed databases.
There are also other points that make a shared database more expensive than a blockchain:
· Firewalls configurations
· Software, databases, Operating systems
· Security
· Redundancy
· Complexity
Instead, using a Private Blockchain solution, we cover most of this point, configuring a consensus protocol that applies to our solution and distributing nodes globally.
What to choose, Distributed Database or Private Blockchain?
When should we use a shared database and when we should use a private blockchain? Well, I think the key point here is the trust.
In a solution that all the nodes are trusted in each other, like a huge company with several institutions, or maybe a bank with several branches, we should use a distributed database. The participants trust in each other, so the confidentiality is not a problem. Even if it is an expensive solution, probably a Bank or big company can afford it, and the performance won´t be an issue since the trust is established in every single node.
But in whichever use-case we can use a Private Blockchain, where the nodes don’t trust each other, well we can find several cases that this blockchain solution can be implemented.
· Bank consortium
· Assurance group
· Airlinegroup
· Medical institutions
There are probably more use cases, where we can use a Private Blockchain, but in all of those cases the participants probably have different objectives, maybe one wants to have a better profit, and the other to have a better service, we don’t know. But any of them can’t tamper with the data as they wish to have a better result, because that is the way the blockchain technology works.
Conclusion
In my opinion, the Private Blockchain is a subgroup in the Shared Database universe with very special characteristics that make it unique. We saw there have to be specific conditions to apply a Private Blockchain solution to make it works like a charm.
Private Blockchain is a new technology that takes a lot of features of the Public Blockchain like cryptography and consensus protocol and combines it with levels of security. This technology is evolving every day, adding features, removing errors, and maybe in future will leave the Shared database space, to create his new space.
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