A core characteristic of a traditional database is that it typically has a central authority that governs it. All rights to the database are owned by the organization that creates it. They can decide who has access to it and what types of access they can actually have. They also decide, for example, what is stored in it, what is deleted, and what is archived. This design has at least two potential weaknesses to it.
First, if a system relies on a central database, this can result in a single point of failure. If either the central authority is compromised, such as hackers getting administrator login names and passwords, or a backdoor is exposed, the database can be subject to all manner of risks.
The second potential weakness is that all power is held by the central authority. Now let’s be clear, in computing this is generally being a good thing. For example, if you run an e-commerce website, you probably want total control over it. You as the central authority, perhaps as CEO or CTO, gets to decide all aspects of that environment, including shutting it down if that’s what you decide.
However, central authority often requires dedicated personnel with special skills. It also requires, depending on the type of system, many human checks and balances, such as complex approval workflows. These systems are sometimes prone to errors and access delays. Intuitively, this also means that humans remain the final arbiter of who has authority and whether a transaction is valid.
We see this in most contract work. A contract between two entities completed over the internet still requires one or more central authority validators. For example, with a mortgage, banks must validate available funds and approve loans. Title companies must validate properties and legal professionals must be required to validate signatures and other legal requirements.
Each of these independent and historically important central authorities has a unique power that levies considerable overhead in a mortgage transaction. The transactions written to the relevant databases all take time to process. They also impose costs. Are vulnerable to hacking. Providing a limited opportunity for participation from those impacted requires special skills and can be error-prone.
Up until now, we’ve had to accept these overheads and their costs. It’s been this way because of, for example, the high human trust requirements of each transaction and many technological limitations. However, these overheads and limitations become the ideal solution targets for a blockchain system.
The novelty of this technology means that sulfur code can replace traditional human trust mechanisms. It also means that authority over decisions can be distributed across participants, resulting in the elimination of the risks and challenges of central power.
Blockchain’s design also improves the security and integrity of all types of transactions. These qualities give blockchain technology remarkable power in a wide range of applications.