Get a short explanation of how Internet databases function.
- In order to understand the blockchain and how, for example, it enables Bitcoin, we first need to cover the basics of a database. If you already know what a traditional relational database is, you might consider skipping this video. However, I think everyone might enjoy a primer on the topic. Fundamentally, a database is a place where we store and manage many aspects of data for a computer system. We can store data in a structured way or an unstructured way. Let's first look at a structured database.
Let's use the example of a contacts database, a place where we might store people's names and phone numbers. To find a person and their phone number in this database, we would use solver code to search the database, so that it finds and returns the right result to us. A well-designed database powered by good hardware is very efficient, being able to search among millions of records and return a correct result, often in less than a second. In a traditional database, the data is stored in an organized and structured way.
Imagine for a moment, columns and rows. In each row is a different person's first and last name and their phone number, with each distinct piece of data in its own column, respectively. A traditional telephone book might be easiest to visualize, but in a tabular format, much like a spreadsheet you're likely already familiar with. In technical terms, we call this a database table. Entries in one table in a database may reference another table or even another database.
This is powerful because it enables us to do things like reduce duplication of data. It's much more efficient to only include a person's name and phone number once in a system and simply refer to it, rather than creating that data every time there is a need for it or it has to be updated. Imagine a database that stores invoices. Each time an invoice is generated for the same person, it simply references the name, rather than recreating it many times. It might seem trivial on the surface, but it creates real efficiencies when there are high volumes of transactions.
Let's now look at an unstructured database. It's basically the opposite of a structured database in that no structure exists. Remarkably, most of the data in the world, just in sheer scale, is now in an unstructured format. Some say it's as high as 80% of all data. Think of the data that is collected and stored in social media or an email or online documents. Unlike the predictability of a structured contact database with first name, last name, and phone number in rows and columns, these unstructured systems have to manage people's online posts, for example in Facebook, which are undefined in length and can contain more than just text, such as photos and music.
Fortunately, a healthy ecosystem of providers has created tools for managing unstructured data really well. Both structured and unstructured databases are the foundation of almost all servers and online systems in place today. Whether it's the internal systems of a business for say, financial accounting, email, or customer contact information, and for popular commercial services like Amazon, Google, and Facebook, or even your online banking, it's databases that store and manage all the content for each one of these.
Now let's talk about access and security with these databases. The databases I've described typically reside on a server computer, one that lives in a data center at a business or a systems provider. Now I'm going to illustrate that with some blocks today. I'm going to take these blue blocks, which are going to represent data on a server at the center here in a database. And these other blocks here, they're not this color for any particular reason, just random colors, these are the clients, these are the computers that access this database here in the center.
These could be PCs or Apple computers, they could be smartphones or tablets, and they access this database in the center. This is a centralized database structure. Now a decentralized structure is different in that the data then is removed from the center and is distributed among lots of computers on the network. This can improve performance really well and for the users of the system, they are not aware that this is actually physically designed differently.
It's just a different design. In all instances, there are one or more mechanisms for allowing certain people to have access privileges. For example, one type of user might be able to just look up information in the database, while another user might be able to have the right to add or delete data. In every instance where rights are granted to a user, there is an authority that provides those rights. Now this is an essential point that I want you to make special note of.
Someone or something has to provide rights to a user. In many organizations, this is a designated system administrator. This person has been authorized with the right to grant certain rights. In some cases, a system can provide rights if certain conditions are met. However, in all instances there remains some overall governance to administer those rights. This simplified explanation of security generally serves organizations well, but has some limitations.
For example, what happens if someone who is not authorized attains certain rights and gains access to a database? What happens if someone is able to bypass security measures and alter the data in the database? The traditional databases I've described in this video are generally serving our organizations well and providing enormous value across the global economy. But, as I've also described, they have clear limitations that have created and maintained risks for organizations. These challenges continue to be difficult to resolve, perhaps, until now.
The blockchain is a new type of database and it just might offer some solutions to today's challenges, while also providing radical new opportunities. It's time to rethink the traditional database.
Jonathan begins by describing some of the current challenges with the Internet, including existing risks and security problems such as identity management. Next, he describes how traditional online databases function, so that you have a basis for how the blockchain redesigns this function. He then describes how the blockchain becomes a potential solution for many of the existing limitations of online databases. Since the blockchain has its genesis in Bitcoin—the digital currency—he provides some background on that too. He also discusses how blockchain technology actually offers new capabilities beyond simply solving old problems. To wrap up the course, Jonathan shares steps you can take in your organization to understand the implications of the blockchain.
- Risk and security challenges
- Rethinking the traditional database
- What is the blockchain?
- What problems does the blockchain solve?
- Transforming transactions
- Examples of the blockchain in action
- Obstacles to blockchain adoption
- Risks to existing solutions and enterprises