The Blockchain Industry

For those who don’t know what blockchain means or stands for, they might be tempted to ask these questions, what is blockchain? Can blockchain bring something amazing to industries such as health care, finance? And can it be used to manage music rights?

Blockchain is a linked list of blocks and a block is a group of ordered transactions. One can also think of a blockchain as a subset of a database, with a few additional properties.
The main distinguishing factor of a blockchain from a normal database is that there are specific rules about how to put data into the database. That is, it cannot conflict with some other data that’s already in the database and the data itself is locked to an owner, it’s replicable and available.

In blockchain decentralization is very attractive because it implies there is no single point of failure . That is, no single authority will be able to take away your asset or change history to suit their needs. This audit trail where you don’t have to trust anyone is the benefit that everyone that’s playing with this technology is looking for. There is a lot of benefit attached to this but at a great cost though. There are many issues or problems encountered in creating such a system, which includes:

• Costly maintenance
  In dealing with traditional centralized system the database only needs to be written to once but in a blockchain it needs to be written to thousands of times. The centralized database needs to transmit the data for storage only once while blockchain needs to transmit the data thousands of times. Centralized database needs to only checks the data once while blockchain needs to check the data thousands of times.

• Upgrades are not mandatory
  The point of a blockchain is that it’s not under the control of a single entity and this is violated with a forced upgrade. Upgrades have to be backwards-compatible, this is difficult, especially if you want to add new features. Each version of the software adds a lot to the test matrix and lengthens the time to release. In a centralized system, this would be very easy to correct by no longer servicing older systems. However this can be done in a decentralized system as you cannot force anyone to upgrade.

• Development is stricter and slower
  To create or develop consist system is not an easy one. A bug could corrupt the entire database or cause some databases to malfunction. Here, a corrupted or split database no longer has any consistency guarantees. For the system to be consistent, it has to be designed from the onset.
  It’s not easy to start from the scratch in decentralized system but it would be easy enough to do that in a centralized system. The blockchain has to be a public resource that’s not under the control of a single entity.

• It is easier in Centralized system
  Decentralized systems are very difficult to work with, expensive to maintain, hard to upgrade and a pain to scale. A centralized database is much faster, less expensive, easier to maintain and easier to upgrade than a blockchain. There are lots of infrastructure upgrades that cost hundreds of millions and end up being rolled back, blockchain is a way to sell these IT infrastructure upgrades and make them a bit more appetizing.
  blockchain is a way to look like you’re on the leading edge of technology. Like it or not, the word “blockchain” has taken on a life of its own. A lot of people are excited about this new technology promises without actually understanding the issues or costs that comes with it.

• Users are sovereign
  Companies don’t like the liability of having user data now a days. Incentive structures have to be designed very well in that a user that figures out an exploit is not likely to give that up, especially if there’s profit for the user. In decentralized system refusing service is difficult because no single entity has the authority to kick anyone out. The blockchain has to be impartial and enforce the rules defined by the software.

• Incentive structures are difficult to design
  There should be an incentive structures so that all actors in the system cannot abuse or corrupt the database . A blockchain may be consistent, but that’s not very useful if it’s got a lot of useless data in it because the costs of putting data into it are very low. Neither is a consistent blockchain useful if it has almost no data because the costs of putting data into it are very high. Fixing broken incentive is very possible and easy in a centralized system, but in a decentralized one, where you cannot change anything without consensus. So in this case everyone has to agree.

• Scaling is really hard
  In a traditional centralized system scaling is harder, the same data has to live in hundreds or thousands of places than in a single place. There is enormous overhead of transmission, verification and storage as every single copy of the database must pay them instead of those costs being paid just once in a traditional, centralized database.

Blockchain has come to stay as it’s a popular term these days and it won’t go away. If you are a centralized service, a blockchain doesn’t get you anything that you can’t do a thousand times cheaper with a centralized database.