AP/AR Data: Cloud Data Storage 2.0 = Blockchain
Written by Nick Roquefort-Villeneuve, Head of Marketing – Ondiflo
The cloud consists in moving servers offsite (or into the cloud). By migrating their data from physical servers piled up inside their facilities to the cloud, businesses have been able to expand their operations beyond the limitations inherent to hardware. Cloud stored data is indeed accessible online, which has contributed to the decentralization of the workforce. Thus, thanks to the cloud, working remotely is now greatly facilitated.
Blockchain has created networks of systems that are secure, immutable and participative. Unlike cloud computing, the decentralized Blockchain doesn’t need to be inside a server room. Cloud applications typically do carry redundancy on a handful of nodes, but nothing close to the thousands of nodes working on networks like Ethereum.
The Cloud moved servers off of enterprise campuses and centralized the processing power elsewhere. Blockchain is slicing up the processing power and scattering it all over the globe.
Cloud-Based Data Storage
As you all now, the cloud as a computing system is not up there in the sky. It is indeed somewhat different from the physical storage to which we’ve been accustomed, before cloud solutions were brought to market. I’m sure you remember the time, when your physical server lied inside the climate-controlled basement of your company’s facility, and you needed to use a good old ODBC connection to connect to the database to pull out data. Thanks to the cloud, your data is now hosted by a (public, private, or hybrid) cloud provider and you access it from a couple clicks of the mouse via a web browser. The data automatically populates dashboards and other reports, which are instantly displayed on a sexy user interface in Explorer, Firefox, or Chrome.
Moreover, the cloud provides much greater storage capacity and flexibility compared to the physical server running under the ground floor’s vending machine, where your Vegan colleagues never set foot. If your organization expands and more data must be stored, the upgrade to bigger cloud space is seamless. You actually know well in advance how much an extra terabyte of cloud storage is going to cost your organization. Those nightmares about desperately trying to lowball the server company’s sales rep on the cost of an extra piece of hardware are over.
Blockchain-Based Data Storage
Blockchain is a distributed ledger, where there is no need for a third party to secure or verify transactions. The record of transactions is verified through technology and stored across vast networks of independent computers (distributed ledger). The data, once written in the Blockchain, cannot be altered. Furthermore, since there are so many copies of a transaction (one per node or database), it means that at least 51% of those computers would need to be hacked in the same way to compromise the information stored on the Blockchain. This is a significant security feature that currently makes Blockchain networks immune to hacking. Besides data, a Blockchain network also stores smart contracts that get executed as soon as a specific data is sent to the network. All the elements (data) of the contract, once verified or validated, are then stored in the Blockchain for all stakeholders (one per node or database) to see at any time, which creates transparency and trust.
Why is Blockchain technology considered as cloud technology 2.0? First, Blockchain networks are in the cloud. Each node in the network is actually its own cloud system. So Blockchain is not drastically different in terms of structure, excepted that all the nodes (clouds) are interconnected to one another. See it as one cloud (centralized system) replicated as many times as there are stakeholders to become a decentralized architecture.
The major differences lie in the fact that:
Data stored inside Blockchain networks cannot be deleted and altered
Blockchains networks are virtually impossible to compromise
Blockchain networks are decentralized systems, which infers that no single entity has authority over the entire network
To be written in the Blockchain, data and transactions must be validated through a process called mining
Smart contracts automate transactions and store data inherent to those transactions
Since data cannot be deleted, Blockchain networks build an unaltered data history
Blockchain powers transparence and trust among the network participants, since each node stores the same data across the network
To Conclude: 2.0´s Gotta Be Better Than 1.0
Yes, logic wins. The only and certainly significant downside to storing data inside the Blockchain pertains to the costs associated to the operation. Remember, data written to the Blockchain is inalterable, therefore it cannot be deleted. Thus, the full-on data history is there to stay. Again, Blockchain is not for everybody, as important expenses are incurred. Having said that, BaaS offer cheaper alternatives but as we now know, BaaS is just kinda Blockchain-y.