A blockchain is a decentralized public ledger for recording transactions and securing the network. In order to access data on a blockchain, you must first become an authorized user of that system. In order to have full access to the data stored on a particular blockchain, the reward token offered by that platform or coin must also be used. The intended purpose of this reward token is to incentivize further usage of that particular system while ensuring confidence in its integrity and security.
The reward token is a price discovery method. It’s the price you pay for trusting the network and having full access to your data. For example, if one wants to use a blockchain platform to record books, then one must pay Bitcoin or Ether to be able to add a book record to any blockchain (because the blockchain is decentralized, no entity controls it). ). If the platform increases in popularity and value as a result of the popularity, then the reward token will also increase in price, hence “price discovery”.
How does the blockchain work?
Blockchain is a decentralized, distributed, and public digital ledger. Satoshi Nakamoto first described it in 2008 as an addition to the existing peer-to-peer network that underlies all cryptocurrency transactions.
- Data is openly shared with all nodes on the network and is verified through consensus by participants called miners.
- It has features like encrypted transactions, time stamping, and proof of work.
- With Blockchain, no centralized agency or institution controls the data or guarantees its security like a bank would with a traditional database.
- This means that data on the Blockchain can only be accessed by those who have permission to do so, such as developers working with real Bitcoin addresses or users who can prove themselves using private keys from their respective cryptocurrency wallets.
Why do we need Blockchain for data storage?
Cloud storage is the traditional way of storing data. The biggest disadvantage of cloud storage is that all data is centralized and is usually not encrypted during transactions. Data is the most critical entity, storing, processing and analyzing data is important work. Therefore, there is a requirement for decentralized storage. Below are some of the reasons why blockchain is required for data storage:
- Decentralization – The decentralized nature of blockchain ensures that there is no single central entity that governs data-related decisions.
- Security: Decentralized cloud data is difficult to attack as there are multiple nodes on the network with the same copy of data and any hacker must have to change the data on most nodes on the network for the change to occur. seems legit.
- Distributed: Blockchain is a distributed ledger where transactions are recorded, shared and synchronized by independent computers rather than keeping data centralized in one location.
How to use Blockchain for data storage?
There are two different ways to store data on a blockchain:
- On-Chain Storage – This is the expensive method of storing the data on the blockchain, as the data is stored within each block of the chain. If an attack occurs, the data can be restored and used.
- Off-chain storage: In this type of storage, only the metadata is stored on-chain. The entirety is not stored on-chain, so if an attack occurs, it may not be possible to restore the data. This is a cost effective method of data storage.
Where is Blockchain data stored?
Blockchain data is stored in a decentralized public ledger. The data in the ledger is stored in chunks called blocks, which are chained together using cryptography.
- Each lock has a unique cryptographic hash as identifier along with the previous lock in the chain of locks.
Each transaction within a block is timestamped and is added to the ledger with each block. Each new block records all the transactions and adds them to the previous one. The data stored in the Blockchain cannot be modified or removed from the blockchain, as it would require modification in each subsequent block.
- The miner who finds a solution to the proof-of-work puzzle (such as solving an equation by submitting the correct answers) is rewarded with newly created bitcoins and has to add that block to the blockchain. But doing this takes time, so miners solve these puzzles using the power of computer processors, creating a competition to solve these puzzles first.
There are different storages to store data in the blockchain:
- Hashing – This is a cost effective way of storing the data on the blockchain. In this method, only the hash value of the data is stored in the blockchain. The raw data can be stored in the file system and the hash ID of the blockchain will be attached to the raw data.
- TiesDB – This is an Ethereum-based decentralized application (dApps) for storing non-financial data and searching through your documents. This allows advanced searches and document modifications.
- BigChainDB – This database allows developers and businesses to implement blockchain proof-of-concepts, platforms, and applications with a blockchain database. This offers immutable data storage, built-in asset support, low latency, powerful query functionality, and high performance, making this a blockchain-capable database.
- Distributed Database – Distributed databases such as MongoDB, Apache, and Rethink DB can be used to store data. They are fast and versatile, but they are not byzantine verified. This means that any hacker can corrupt the entire information base, since all the information centers completely trust each other.
- Decentralized cloud storage: Decentralized cloud storages allow for static data storage where the data is not stored on the company server but on tenant devices. This storage can be used online, which makes them fast and efficient, but they are also expensive.
- Interplanetary File System – This is a blockchain technology that splits data into chunks and stores them in multiple instances. It is a peer-to-peer solution where files are downloaded only if the person needs them. So this is the address dependent storage solution.
What does transaction data contain?
User-to-user transactions are the way bitcoins are transferred from one person to another. When a transaction is made, it is written to the blockchain in a certain format and transmitted to all nodes on the network. The data stored in transactions consists of multiple different fields:
- Sender Address: The address of the sender of the transaction.
- Recipient Address: The address of the recipient of the transaction.
- Transaction Amount: The amount that was transferred, including one decimal place. This is important because fractions of cents are not possible in Bitcoin. So if you send one bitcoin and two cents, it would be equal to one bitcoin and two cents in Bitcoin.
- Timestamp – This is a message that tells you which block this transaction was recorded in, as well as its timestamp. Since the blockchain is public, anyone can see all the transactions on it; therefore, this information can be used to see when payments were made or when wallets were funded during specific time periods.
Different Types of Blockchain Store Data
Blockchain technology can store data in a number of different ways. It all depends on the blockchain, but some examples include:
- Bitcoin: In bitcoin, data includes the complete history of all bitcoin transactions. If a node has an error, it uses thousands of other nodes as a reference point to correct itself.
- Ethereum: Ethereum uses a trie data structure to store data. Separate temporary data from extracted transaction data. Data is added to the proof of transaction only when the transaction is confirmed. There are three types of trie in Ethereum for data storage:
- State Trie – This global state is constantly updated and contains the key-value pair for every account that exists on the Ethereum network.
- Storage Trie: This stores the contract data. Each Ethereum account has a storage trie, and the 256-bit hash value of the root node of the storage trie is stored in the global state trie.
- Transaction Trie – Each Ethereum block has its own separate transaction tire. A block contains many transactions.
- Corda – This is the open source blockchain platform that does not use global streaming. You can reduce the cost of record keeping while streamlining business operations. Here, the communication between the peers can be verified without the need to download all the data due to the use of graphs and persistent queues.
Conclusion
The blockchain is a revolutionary system for securely recording transactions, but it still suffers from a major secrecy flaw. The main goal of using a blockchain is distributed trust and the ability to verify transactions in a trustless environment. While this sounds convincing, the reality is that it can only be used to encrypt publicly accessible data. If a user wants complete control over their data, they will need to keep it local or use an external device.