Although blockchain appears to be sophisticated, as it can be, its core notion is actually pretty simple. A database, or blockchain, is a sort of digital ledger. To apprehend blockchain, it is necessary to first apprehend what a database is.

A database is a collection or variety of data saved on a computer system in an electronic format. Database information, or data, is usually organized in table style to make searching and filtering for specific information easier. What’s the difference between a spreadsheet and a database when it comes to storing the data?

Spreadsheets are meant to store and access minimal amounts of data for a single individual or a small group of people. A database, on the other hand, is designed to hold far bigger volumes of data that can be accessed, filtered, and altered by any number of users at the same time.

Large databases accomplish this by storing information on servers comprised of sophisticated computers. To have the processing power and storage capacity required for many people to access the database at the same time, these servers can occasionally be created utilizing hundreds or thousands of computers. A spreadsheet or database can be accessed by a large number of users, but It is frequently owned by a company and controlled by a designated individual who has complete authority over its operation and data.

What’s the difference between a blockchain and a database?

Structure of Storage

The way data is structured varies significantly between a traditional database and a blockchain. A blockchain is a digital ledger that organizes data into groups called blocks, each of which contains a collection of data. Blocks have specific storage capabilities, and when they are filled, they are linked onto the previous block, establishing a data chain known as a “blockchain.” All additional information added after that newly added block is put in into a new block, which is then added to the chain after it is filled.

A database organizes information into tables, but a blockchain organizes information into chunks (blocks) that are linked together. All blockchains are databases as a result, but not all databases are blockchains. When implemented in a decentralized manner, this method creates a permanent data timeline. When a block is filled, it becomes permanent and part of the chronology. When a block is added to the chain, it is assigned a precise timestamp.


It’s helpful to think about blockchain in terms of how it’s been implemented by Bitcoin to gain a better grasp of it. Bitcoin, like a database, relies on a network of computers to store its blockchain. This blockchain is simply a form of database that contains every Bitcoin transaction ever made for Bitcoin. In the case of Bitcoin, unlike most databases, these computers are not all housed under one roof, and each computer or group of computers is run by a single person or group of people.

Consider a corporation that has a server with 10,000 machines and a database that contains all of its clients’ account information. This corporation has a warehouse that houses all of these computers under one roof and has complete control over each of them and the information they hold. Bitcoin, too, is made up of thousands of computers, However, each computer or collection of computers that holds its blockchain is located in a distinct geographic area and is run by different people or groups of people. Nodes are the machines that make up the Bitcoin network.

The blockchain of Bitcoin is used in a decentralized manner in this paradigm. Private, centralized blockchains, on the other hand, exist in which all of the machines that make up the network are owned and operated by a single company.

Each node in a blockchain contains a complete record of every data stored on the blockchain since its beginning. The data for Bitcoin is the complete history of all Bitcoin transactions or transfers. If a node’s data has an error, it can use the thousands of other nodes as a point of reference to rectify it. In this manner, no single node in the network may change the data it contains.

As a result, the history of transactions in each block of Bitcoin’s blockchain is unchangeable.

If one user tampers with Bitcoin’s transaction record, all other nodes will cross-reference each other, making it easy to find the node that has the erroneous data. This system aids in the establishment of a precise and visible sequence of occurrences. This information is a list of transactions for Bitcoin, but a blockchain can also store other types of data such as legal contracts. a company’s product inventory, or state identifications.

A majority of the decentralized network’s computing power would have to agree on the changes to modify how that system functions or the information stored within it. This ensures that any changes do take place are in the majority’s best interests.


Because of the decentralized structure of Bitcoin’s blockchain, all transactions may be transparently watched by utilizing a personal node or blockchain explorers, which lets anybody see transactions as they happen in real-time. Each node has its own copy of the chain, which is updated as new blocks are added and confirmed. This means that you could follow Bitcoin wherever it goes if you wanted to.

Exchanges, for example, have been hacked in the past, resulting in the loss of every Bitcoin held on the exchange. While the hacker may remain unidentified, the Bitcoins they stole are clearly traceable. It would be known if the Bitcoins stolen in some of these attacks were relocated or spent somewhere.

Is Blockchain a Safe Investment?

In numerous ways, blockchain technology addresses the focus of security and trust. First and foremost, new blocks are always kept in a linear and chronological order, they are always added to the blockchain’s “end.” When you look at the blockchain of Bitcoin, you’ll notice that each block has a place on the chain called a “height.” The block’s height had reached 656,197 blocks as of November 2020.

It is extremely difficult to go back and change the contents of a block once it has been appended to the end of the blockchain unless the majority agrees. That’s because each block has its own hash, as well as the hash of the block preceding it and the time stamp described before. A math function converts digital data into a string of numbers and letters, resulting in hash codes. The hash code changes if that information is changed in any way.

Here’s why that matters in terms of security. Let’s imagine a hacker wants to change the blockchain to steal Bitcoin from the rest of the world. If they changed their single copy, it would no longer match the copy of everyone else. When everyone else compares their copies, they’ll see that this one stands out, and the hacker’s version of the chain will be discarded as invalid.

To succeed with such a compromise, the hacker would have to control and alter 51 percent of the blockchain copies at the same time, ensuring that their new copy becomes the majority copy and so the agreed-upon chain. An assault like this would cost a lot of money and resources because they’d have to recreate all of the blocks. After all, the timestamps and hash codes would be different today. It’s designed this way so that participating in the network is significantly more financially rewarding than attacking it.

Blockchain vs. Bitcoin

The purpose of blockchain is to enable the recording and distribution of digital data without the ability to modify it. Stuart Haber and W. Scott Stornetta, two researchers who aimed to develop a system where document timestamps could not be manipulated, initially proposed blockchain technology in 1991. Blockchain didn’t have its first real-world application until almost two decades later, with the debut of Bitcoin in January 2009.

A blockchain is the foundation of the Bitcoin protocol. Bitcoin’s pseudonymous developer, Satoshi Nakamoto, described the digital currency as “a new electronic cash system that’s totally peer-to-peer, with no trusted third party” in a research paper introducing it.

The important thing to remember is that Bitcoin only uses blockchain to create a transparent ledger of payments; however, blockchain can theoretically be used to immutably record any amount of data items. As previously said, this might take the shape of transactions, election votes, goods inventories, state identifications, home deeds, and much more.

Currently, there is an embarrassment of blockchain-based projects seeking to use blockchain for purposes other than transaction recording. The usage of blockchain as a voting system in democratic elections is an excellent example. Because of the immutability of blockchain, fraudulent voting would become much more difficult.

A voting system, for example, maybe set up so that each citizen of a country receives a single coin or token. Each candidate would then be assigned a unique wallet address, and voters would send their tokens or crypto to the address of the candidate they wish to support.

What is the Function of Blockchain?

Blocks on Bitcoin’s blockchain, as we now know, store data about monetary transactions or dealings. However, it turns out that blockchain can also be used to store data about other types of transactions.

Banking and financial services

Banking is perhaps the industry that stands to gain the most from incorporating blockchain into its corporate operations. Financial institutions are only open five days a week during business hours. That means that if you try to deposit a check at 6 p.m. on Friday, you’ll probably have to wait until Monday morning to see the funds in your account. Even if you make your deposit during business hours, it may take one to three days for the transaction to be verified due to the high volume of transactions that banks must process. Blockchain, on the other hand, is awake all the time.

Consumers can see their transactions executed in as little as 10 minutes by integrating blockchain into banks, which is the time it takes to add a block to the blockchain, regardless of holidays or the time of day or week. Banks may now trade funds across institutions more swiftly and securely thanks to blockchain. The settlement and clearing process in the stock trading industry, for example, can take up to three days (or more if trading overseas), which means that the money and shares are frozen during that time.

Because of the large sums involved, even a few days in transit can result in considerable expenses and hazards for institutions. The potential savings, according to European bank Santander and its research partners, range from $15 billion to $20 billion each year. According to Capgemini, a French consulting firm, blockchain-based applications could save consumers up to $16 billion in banking and insurance expenses each year.


Blockchain is the basis for cryptocurrencies such as Bitcoin. The Federal Reserve is responsible for the USD dollar. A user’s data and currency are technically at the mercy of their bank or government under this central authority structure. If a user’s bank is hacked, their personal information is exposed. The value of a client’s currency may be jeopardized if their bank fails or if they live in a nation with an uncertain government. Some of the banks that went bankrupt in 2008 were partially bailed out using taxpayer money. These are the points that led to the creation and development of Bitcoin.

Blockchain lets Bitcoin and other cryptocurrencies operate without the need for a central authority by distributing their operations over a network of computers. This not only lowers risk but also removes a lot of the transaction and processing fees. It can also provide a more stable currency with more uses and a larger network of individuals and organizations with whom to do business, both domestically and globally, for those in nations with shaky currencies or financial infrastructures.

For those who do not have state identification, using cryptocurrency wallets for savings accounts or as a means of payment is very important. Some countries may be in the midst of a civil war, or their governments may lack the necessary infrastructure to offer identity. Citizens of such countries may be unable to open savings or brokerage accounts, leaving them with no means of safely storing wealth.


Health-care professionals can use blockchain to maintain their patients’ medical records safely. When a medical record is created and signed, it can be stored on the blockchain, giving patients confirmation and assurance that the record cannot be altered. These personal health records might be encrypted and saved on the blockchain using a private key, guaranteeing that only certain people have access to them.

Property Registers

If you’ve ever visited your local Recorder’s Office, you know how inefficient and time-consuming the process of documenting property rights can be. A tangible deed must now be presented to a government employee at the local recording office, who manually enters it into the county’s central database and public index. Property claims must be reconciled with the public index in the event of a property dispute.

This procedure is not only costly and time-consuming, but it is also prone to human mistakes, with each inaccuracy reducing the efficiency of property ownership tracking. Scanning documents and hunting down actual files in a local recording office could be obsolete thanks to blockchain. Property owners may trust that their deed is accurate and permanently documented if it is kept and validated on the blockchain.

It can be nearly impossible to prove ownership of a property in war-torn countries or locations with little to no government or financial infrastructure, and certainly no “Recorder’s Office.” Property ownership rates could be established transparently and clearly if a group of people living in such a region can use blockchain.

Smart Contracts

A smart contract is a piece of computer code that can be included in the blockchain to help facilitate, verify, or negotiate a contract. Users agree to a set of requirements for smart contracts to work. The terms of the agreement are automatically carried out once those circumstances are met.

Let’s say a prospective tenant wants to lease an apartment using a smart contract. When the tenant pays the security deposit, the landlord agrees to give the tenant the apartment’s door code. The smart contract would receive both the tenant’s and the landlord’s portions of the agreement.

On the first day of the lease, the door code would be kept and automatically exchanged for the security deposit. The security deposit is refunded if the landlord fails to provide the door code by the lease date. This would eliminate the fees and processes involved with using a notary, third-party mediator, or attorneys.

Chains of Distribution

Suppliers can utilize the blockchain to track the sources of materials they acquire, similar to the IBM Food Trust example. Along with typical labels like “Organic,” “Local,” and “Fair Trade,” this would allow businesses to verify the legitimacy of their products.

The food industry is increasingly using blockchain to track the path and safety of food along the farm-to-user journey, according to Forbes.


As previously said, blockchain might be utilized to aid in the development of a modern voting system. As demonstrated in the November 2018 midterm elections in West Virginia, voting using blockchain has the ability to eradicate election fraud and increase voter turnout. Using blockchain in this way would make tampering with votes nearly difficult. The blockchain protocol will also ensure electoral openness by lowering the number of people required to run an election and giving officials near-instant results. There would be no need for recounts, and there would be no real risk that the election would be tainted by fraud.

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