It’s staggering to think just how much data is out there in the world and it’s up to each business to not only keep it safe and secure but they also need to be able to access that information almost instantaneously to have an efficient business because people don’t want to wait around for conformation of something when they have a client in front of them. In a future episode I’ll cover the security aspects of storing information but in this article I’m going to cover the scalability of blockchains and issues that businesses tend to have with data on both their Web2 database systems as well as scalability of blockchains.
Now a blockchain isn’t the correct solution for every situation, you wouldn’t give grandma an armoured personnel carrier if all she does is drive to the shops when a little car with a key and maybe an alarm system might just work perfectly. Migrating to a blockchain is no quick exercise and there is good reason why companies take their time to road map and architect solutions before implementing large changes but there are a lot of advantages that come with the switch. We are arguably still in the early days of blockchain and I don’t blame IT administrators for not actively looking at migrating to a blockchain solution yet because they tend to be risk averse and unless they have done it before they will tend to shy away from it. Look at AWS (Amazon Web Services) they have only just hit 1M users, they started their server offerings in 2006, and people are still migrating to the cloud from their legacy physical on premise servers.
As a business grows it needs scalable IT infrastructure to grow with it, cloud ticks a lot of boxes for this because you just pay for what you use and you don’t have to worry about purchasing and installing expensive hardware that is especially handy if there is a surge in demand for the resources. But moving to the cloud is still just a Web2 solution and still has some downsides like still being vulnerable to attacks.
Normally when people talk about scalability with blockchain they are referring to the “blockchain trilemma’’ where you have to trade off one of these three items: scalability, decentralisation or security. The Bitcoin blockchain is extremely decentralised & secure so the tradeoff is scalability where you may have to wait 15 minutes for a transaction to finalise. Ethereum blockchain is also extremely decentralised & secure with the trade off being each transaction is expensive ranging from $15–250 in the last year. But why would you use one of these blockchains if they are so slow or so expensive? You wouldn’t, instead you would use one of the many other blockchains because there are different blockchains to suit your needs and there are also different layers of blockchains that we will touch on in other articles.
Sticking to the armoured personnel carrier analogy, choosing a blockchain is also like choosing a mode of transport. There are fast & slow systems, expensive & inexpensive systems, public & private systems so choosing the right system isn’t a quick choice but you can easily migrate if you do choose the wrong system. Bitcoin & Ethereum are the blockchains that get a lot of publicity but neither of these were ever designed to be scalable and unfortunately scalability gets baked in from day one so people still use these as examples of why not to switch over. The blockchain trilemma isn’t as pronounced as it use to be when the first blockchains were in their infancy, thankfully they have heavily improved so much so that some blockchains are now so scalable that some can handle twice as many transactions per second that Visa processes while being extremely secure & decentralised. In fact Visa has a large amount of blockchain developers in house and are aleady implementing Web3 solutions into their business.
So why would you want to move to using a blockchain as a database? IBM says it “Increases trust, security, transparency, and the traceability of data shared across a business network”. Sounds like a system where you are much less likely to have a data breach or be hacked with perfect regulatory compliance and scalability as you grow. Did I mention you can also do smart contracts? We will be covering smart contracts in another article.
The cost of a data breach can cripple businesses due to a raft of reasons including ransome’s, bad publicity or fines. At the moment, it’s not a quick switch to using blockchain but it is inevitable so the question isn’t “if” but “when” are you going to move to Web3?
