A data structure of Blockchain

The technology under consideration records information about any actions within the system - it can be a record of the family budget or a system of accounting for property.

Database as it is

For clarity, we can consider David Birch's example of on the traditional system of transaction management in the banking system and why it is not a blockchain. In banking, there is a term called ledger, which stands for a database in the form of paper medium or a computer file which register all transactions. In fact, these are the blocks which store information and are used inside the system but the management and storage principle differs from blockchain database. Ledgers have four key components and stages of generating information:

• contract - what action we make through transactions, which ones we make, for example, to open a deposit;
• consensus - who decides that transactions are valid. The security service checks which contracts are valid and which could be committed illegitimately; 
• content - what is transaction;
• communications - these are information carriers, devices like telephones and computers. Communications ensure system stability and protection. 

Database to be

Blockchain is a complex system that simplifies everything. Blockchain allows you to encrypt data and store it in a reliable system that captures all transactions within the system. In fact, large departments that manage information lose their significance in context of such a transparent system. Transparency does not mean that everyone has access to your personal information. If you store data in a blockchain database and this system is used everywhere, then you just need to prove that you belong to a certain group of people. To do this, you have a key to accessing information and you can give access to some information to other people.

In the new database system, everything is determined by the algorithm in your phone or computer that confirms the data validity and immediately reaches consensus - this is the key to transparent and secure data storage. We do not need to trust huge organizations like banks or police that manage our data; we can prove the reliability of any information through our phone without waiting for confirmation from the guarantor.

Database what if 

To understand the blockchain technology in this context, let's imagine the situation - you want to buy something from a certain service and you must prove that the passport data you entered is yours. Some services require a photo of a passport, others require a video of a passport and some send a courier to you who confirms the data accuracy. And now imagine that they use blockchain as a legitimate tool for identifying people. In this case, once you save your personal data, you share it through an encrypted key that only you have. The process of registration becomes even shorter, just a couple of clicks and they know that you have reported the correct data

Applying new technologies can change entire systems; they will be stable and safe since they are completely transparent. Compared to the old methods of database management, blockchain technology allows you to exclude the human factor; whole departments can be replaced by an algorithm that fits in your phone or on a computer.

Dwain Ross

Financial analyst, writer, news reporter and a certified professional journalist. He was born in Liverpool in 1980. Has a great experience of managing multi-million dollar budgets while giving examination and record uphold inside item advancement divisions. Experience making quarterly gatherings dependent on patterns and anticipated costs.

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