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If you are looking for a simple explanation of what a blockchain database is, it will be difficult to find one that focuses on the nuts and bolts. Most blockchain enthusiasts use broad terms like decentralization and distributed ledgers, but what does this all mean?

When you finish reading this article, you will understand what a blockchain database is and why it represents an amazing new technology that could transform many industries.

What is a blockchain?

The fundamental part of a blockchain database is something called a blockchain. If you ask most tech bloggers, they will say “a blockchain is a distributed ledger”.

But what is a “distributed ledger”?

Think of it as an identical data file stored simultaneously on a number of computers around the world. That’s a distributed ledger. It is decentralized – meaning the data is not stored in a single database on a single server.

Instead, the whole network of nodes (computers) that hold the data forms the sort of “server”. The file stored in that ledger is provided with a cryptographic signature so that you as a “participant” can view the data contained therein.

However, there is no central server that stores all the information. This is why it is called “decentralized”.

A blockchain uses this ledger technology to store its own type of information made up of “blocks”. Each new “block” of data must be acknowledged and validated by every node on the network before it can be added. This is what makes the technology so secure.

In other words, if a hacker tries to link data to the blockchain with the wrong cryptographic signature, the blockchain nodes will reject it.

This is a blockchain. Historically, the technology has been used to store electronic currency (such as Bitcoin) transactions. Transactions are secure and cannot be changed or manipulated.

However, a blockchain database uses blockchain technology in a very different way.

What is a Blockchain Database?

A blockchain database is the use of blockchain technology to store information. To visualize this, imagine how the shipping industry works today versus how it could work using a blockchain database.

A shipping manifest lists all the cargo placed on board a ship when it departed, what is unloaded at each dock, and what is left over. Such shipping documents are critical for companies that ship millions of goods per year, such as Amazon or Walmart.

A manifest contains a constantly updated log of:

  • Description of goods
  • Sender and consignee
  • Quantity of goods
  • Origin and destination
  • Where the

Customs agents, shipping companies and many other organizations that are part of the entire shipping chain depend on the accuracy of this data. Unfortunately, there is a history of fraud all over the world, where goods are ‘lost’ and manifests are altered without permission.

Digitizing the process helps, but a centralized database is still susceptible to hacking and manipulation.

The perfect solution is a blockchain database. This is because once a blockchain database has been updated and verified as a new block in the “ledger”, it is impossible to change or manipulate it.

  1. In port #1, the blockchain database is updated with records showing the quantity and value of goods loaded onto the ship.
  2. On port #2 it is updated when goods are unloaded and truck manifests are updated when they are loaded.
  3. When trucks arrive at the warehouse, the blockchain database is updated with the quantity and location of the goods.
  4. When the goods leave the warehouse to the stores, the blockchain database is constantly updated with new information about the goods.

Since every transaction is validated and verified as verified and approved, any attempt to manipulate the original amount or value along the way will fail. Checks and balances must comply with the strict authentication of every node in the blockchain. Incorrect “balances” are not allowed. Human errors are no longer a valid excuse.

A “chain” database

When you think of the blockchain database in terms of a “chain”, it’s easy to imagine which industries are best for the technology.

Usually it is those areas where a record needs to be supplemented with new, accurate and updated information.

To see this in action, imagine a very simplified shipping manifest, with three goods. Note: This is a very simple example and looks nothing like actual data in a blockchain database for transmission. This example is used for illustrative purposes only.

The first “block” in the chain may contain the following data.

At the first port, a new block is added to the chain with all transactions on unloaded goods cryptographically proven by the network nodes to be accurate in relation to the original block.

If any of the transactions are invalid with respect to the first block, the new block will not be accepted as a valid blockchain transaction.

This means that human error cannot cause a “loss” of goods along the route. The entire blockchain serves as an accurate record of the shipping route for all goods in transit.

This process continues and the blockchain database continues to build additional blocks until the entire send “transaction” is completed. There is an accurate record of everything that no one can change.

Blockchain Database Applications

Is this technology useful in the real world? Walmart thinks so.

In 2018, Walmart’s Canadian division officially launched its own blockchain supply chain that tracks these types of shipping transactions for its 70 trucking company suppliers.

Walmart’s blockchain contained only a few dozen nodes to perform the cryptographic validation needed to move trucks from one destination to another.

An expert said the system eliminates the possibility of disputes between transport companies when their data does not match.

Walmart isn’t the only company taking advantage of blockchain databases. All the following applications have been launched in recent years.

  • In 2020, the US Air Force is testing a blockchain database to share documents with the entire Department of Defense.
  • In 2017, the country of Estonia used the technology to protect government data.
  • In 2019, oil and gas company Dietsmann launched a blockchain pilot with Modex to deploy its own blockchain projects.
  • In 2018, the Food and Drug Administration investigated the use of blockchain database technology to protect health data.
  • In 2019, Depository Trust & Clearing Corp, which owns $48 trillion in Wall Street investment assets, launched a blockchain database to manage its records for 50,000 accounts.

As you can see, blockchain databases are not just theoretical. They are applied to very real-world applications that require trusted transactions.

It could very well be that in the future every transaction in the world that requires the highest levels of security will be handled by some kind of blockchain database technology.

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