Why Use a Blockchain?

As the implications of the discovery have become understood, certain hype has emerged around blockchain technology.

This is possible, because it is very easy to imagine high-level use cases. However, the technology has also been closely scrutinized: millions of dollars have been spent researching blockchain technology over the past few years, and various tests for whether blockchain technology is appropriate or not in various scenarios have been carried out.

The Blockchain technology offers new tools for authentication and authorization in the digital world that hinder the need for many centralized administrators. As a result, this enables the creation of new digital relations.

By formalizing and securing new digital relations, the blockchain revolution was proposed to create the backbone of the internet layer for transaction and interaction values ​​(often called 'Internet of Value', as opposed to 'Internet of Information' which uses client-server, account and master copy databases which we have been using for more than the past 20 years.)

But, with all the talk of building a digital backbone from the new transactional layer to the internet, sometimes the blockchain, the key to personal cryptography and cryptocurrency is not the right way to move.

Many groups have made flowcharts to help someone or entity decide between the blockchain or master copy, the client database. The following factors are distillation from many things that have been done before:

Is the data dynamic with a history that can be audited?
Paper can be difficult to fake because of the complexity of the physical seal or appearance. Like etching something on a rock, paper documents have a certain eternity.

However, if the data is in constant flux, if the transaction occurs regularly and frequently, then the paper as a media may not be able to follow the system of records. Manual data entry also has human limitations.

So, if the data and history are important for the digital relationships they help build, the blockchain offers flexible capacity by allowing many parties to write new entries into the record system that are also held by many guards.

Should or can the data be controlled by the central authority?
There are still many reasons why third parties should be responsible for some authentication and authorization. There are times when third party control is really right and desirable. If data privacy is the most important consideration, there are several ways to secure data by not connecting it to the network.

But if existing IT infrastructure displays accounts and sign-in is not enough for digital identity security, then the problem might be solved by blockchain technology.

As Satoshi Nakamoto wrote in his seminal work, "Bitcoin: the Peer-to-Peer Electronic Money System": "Traders must be aware of their customers, bothering them for more information than they should need. A certain percentage of fraud is accepted as unavoidable. "

Private key cryptography allows push transactions, which do not require a centralized system and complicated accounts that are used to build digital relationships. If this database requires millions of dollars to secure light financial transactions, then it is possible that blockchains are the solution.

Is the transaction speed the most important consideration?
Does this database require high-performance millisecond transactions? (There is more about this in our guide: "What is the Difference Between Blockchain and Databases?").

If it is high-performance, a millisecond transaction is needed, so it is best to still use a traditional centralized system model. Blocking as a database is slow and there are costs for storing data - processing (or 'mining') every block in a chain. Centralized data systems based on the client-server model are faster and cheaper ... for now.

In short, while we still don't know the full limits and possible blockchain, we can at least say that use cases that have passed inspection are all about managing and securing digital relations as part of the record system.

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