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According to the State of Blockchain 2021 report, funding to Blockchain startups surged 713% to reach £20.33 billion. Blockchain technology has accelerated significantly in recent years. There are many reasons why companies are implementing Blockchain. The widespread use of blockchain technology in well-known cryptocurrencies is one of the factors driving its fast rise. Let’s delve deep into understanding Blockchain technology and its alternatives which will help businesses to simplify their development process.
Various Blockchain alternatives offer better performance than Blockchain. Blockchain is a public ledger recording transaction with timestamps on a vastly distributed network of computers. Blockchain is already empowering technologies that are changing our lives. Even though Blockchain Technology came into existence with Bitcoin, Blockchain has a far-reaching potential outside of cryptocurrency.
As we know, there are many limitations to Blockchain. Companies may also wish to choose these new alternative solutions and tools that will lower their expenses, make integrating systems more manageable, and streamline the development process.
Limitations of early Blockchain Technologies:
a) Relatively Slow Performance
b) Limited Transactions
c) Authenticity of Transactions
Cryptocurrencies like Bitcoin Blockchain, Dogecoin, and Ethereum Blockchain have helped Blockchain to gain popularity. In this blog, we will understand how businesses use Blockchain alternatives over old Blockchain technologies to reduce costs, simplify development and reduce integration challenges as the demand for safe and affordable storage systems rises as company data volume increases. Decentralised data storage systems that are highly secure, scalable, and economical have been made possible by blockchain technology.
So, let’s start with an overview of Blockchain Technology, followed by some of the best alternatives to Blockchain Technology.
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Table of Contents
1) Blockchain Technology- An Overview
2) Let’s Discuss in Detail About the Blockchain Alternatives
Blockchain Technology- An Overview
Blockchain is a technology that acts as a database storing digital data in blocks. Due to the change in data structuring, it still differs from the preexisting database. The block acts as a storehouse of information. The newly received data is added to a fresh block. Once the block has been filled with data, it is chained with the one before it, establishing a chain of data linked in chronological sequence. Each block in this section will be unique from the ones before it.
Blockchain is a distributed ledger which is made to record business transactions regularly. It is a decentralised database that operates on a community network, with each computer keeping a copy of the live ledger. The key advantages are data security and dependability because the data cannot be modified quickly, and data loss is uncommon due to redundant copies.
With the help of Blockchain technology, you don’t require an intermediary, for instance, a banker or broker, to execute transactions. It refers to a category of things like a database provider, distributed ledger and many more, simplifying the development process.
People in the Blockchain community have started adopting new tools and technologies. They have switched to distributed storage tools like Storj and InterPlanetary File System (IPFS). Additionally, a wide variety of distributed ledgers are emerging day by day.
While the cloud makes it simpler to share access among trustworthy users, traditional centralised ledgers have been operating fine for many years. Let’s take a quick look at why we need to switch to Blockchain alternatives:
1) Increased reliability
2) Increased speed and efficiency
3) Faster transactions
5) Instant tracking
6) Reduced costs
So, now that you know about what Blockchain is, let’s move forward with understanding the alternatives of Blockchain.
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Let’s Discuss in Detail About the Blockchain Alternatives
1) Centralised Databases
If you ask anyone in the established blockchain community why they use blockchain technology, all they will say is that it is "decentralised." Although the community would accept the decentralised database, maintaining a single, highly optimised record system in a centralised database has benefits. The performance of more recent blockchain implementations is improving, but it still needs to catch up to what an adequately run centralised database can do.
Blockchain has the potential to enhance security, but businesses should use alternatives to Blockchain. It helps secure transactions, upgrade tracking, assist with product recalls, safeguard privacy, and keep audit trails.
Centralised databases are maintained at a single location as accessing and managing data becomes more accessible. Organisations use a centralised system to manage and transform these databases. The central authority can also manage data at times, and there are chances of the system failing, leading to the actual data being destroyed.
2) Centralised Ledgers
The next alternative on the list is centralised ledgers. A centralised ledger is a ledger maintained by a single organisation for transactions. It acts as a third-party trusted source for the transacting parties. The emergence of capitalism played an essential role in shaping the concept of centralisation. It allows individuals to claim economic benefits. Centralisation helps in efficient decision-making.
Centralised Ledgers help track a company’s assets, liabilities, equity, revenue and costs. Any transaction, or perhaps anything with a financial value, must be recorded in a ledger, even if it just costs one penny. The data is transferred from all sub-ledgers, including cash management, fixed assets, purchasing, and projects, to a computerised ledger known as Enterprise resource planning (ERP) today.
A Centralised ledger is used to manage all the accounting work and helps with financial analysis and tax reporting. This method is efficient but has a drawback that makes it less popular. Any planned or unintentional errors produced by any central authority can damage the ledger. This approach can also be subject to cybersecurity hacks and data breaches.
3) Distributed Databases
Distributed ledger-based technologies are a recent innovation that helps to decentralise the record-keeping process. It removes the central authority, which could be a threat in future. Bitcoin's Blockchain is one of the most famous examples.
Distributed databases use a mix of replicating and duplicating data to ensure the data is accurate and reliable. Data is stored in different locations. A few of the primary database vendors are Oracle and Microsoft.
Two Processes in Distributed Databases:
Replication: Utilising specialised software to scan the distributive database for updates is the replication process. The replication method makes all the databases identical after discovering the changes. The size and quantity of the distributed databases will determine how complicated and time-consuming the replication procedure will be. Both time and computer resources may be needed for this operation.
Duplication: Duplication is less complicated. It recognises one database as the master and then copies it. The duplicate procedure is often carried out at a specific hour after work. In doing so, the same data will be present in all the spread locations. Users can only modify the master database during the duplicating process. This guarantees that local data won't be replaced.
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4) Cloud Storage
Blockchain stores data in a decentralised way. It depends on third parties for data security. It offers services using the Software as a Service, Platform as a Service, and Infrastructure as a Service model. Here, the data is mutable, unlike Blockchain, where one cannot change the existing data. But, with cloud storage, you can change the current data.
Enterprise data volumes, however, continue to increase considerably over time. As a result, it is impossible to replicate it across other devices because it may only be reliable for fewer volumes of data. Businesses can instead utilise highly effective and dependable cloud storage services based on top-notch data centres. Blockchain storage will be far less helpful than cloud storage.
Let’s take a look at some features of Cloud Storage:
1) Strong security features
2) Hashed blocks
3) Public/private key encryption
4) Transaction ledgers
With such security measures, a dependable and powerful protection against hackers is guaranteed.
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5) Decentralised Storage
In contrast to centralised servers run by one corporation or organisation, decentralised storage systems are networks of peer-to-peer users who own a share of the total data. This creates a robust system for sharing file storage.
Decentralised storage is getting a lot of attention from Blockchain developers due to its power to decentralise storage that can be combined with other applications. It enables the storage of webpages, information, and data by developers in a way that can lower bandwidth usage, increase resilience, and lessen the effects of censorship.
Decentralised storage helps developers to encrypt files, break them into pieces and spread them across a global cloud network. As it is directly compatible with Amazon S3 storage technologies, cloud developers find it simple to incorporate it into apps without learning new tools.
6) Other Distributed Ledger Technologies
With the DAG (Directed Acyclic Graphs) technique, an application can write data quickly compared to private blockchains, occasionally requiring authorisation to carry out specific actions. Still, it takes some time until the transaction is officially confirmed.
The DAG technique has better benefits than the Blockchain, allowing you to write data quickly.
Alternatives to Blockchain for distributed ledgers include:
2) Iota Tangle
3) R3 Corda
Let’s discuss in detail about the existing decentralised ledger technology alternatives:
Hashgraph: Hashgraph is one of the numerous distributed ledgers that helps remove the requirement for mining. Hashgraphs do not rely on miners to verify the ledger's transactions, like blockchains.
A hashgraph is a data structure that keeps track of who told whom, what, and in what order. In contrast to a blockchain, it validates transactions significantly more quickly through a shared history of gossip events where users add and share information.
Iota Tangle: An Iota Tangle is an open-source distributed ledger that provides secure communications and payments between machines on the Internet of Things. When you use Iota, your device becomes responsible for processing two or more transactions in the tangle. Iota was explicitly designed to facilitate micro-transactions.
Each vertex or node in an Iota Tangle, which holds data across a DAG, refers to a transaction. Despite being decentralised, it still requires a supervisor node to monitor and approve incoming transactions as they happen.
R3 Corda: DLT (Distributed Ledger Technology platform called R3 Corda allows developers to create apps that promote and supply digital trust between parties in regulated markets. Corda is scalable and permissioned peer-to-peer (P2P).
This method can protect transaction-related data by securing the right group of peers. One distinction between Corda and the other two is that, in contrast to DAG-based distributed ledger systems, it is simpler to create, automate, and enforce smart contracts—an essential blockchain application.
R3 Corda simplifies smart contract creation, automation and enforcement, which are the key features.
This blog serves as a guide to explain the reasons behind the shift from traditional Blockchain technology to the new alternatives of Blockchain technology. This blog will help you understand the usage and recognised benefits of the new storage technology.
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