update 19 August 2021

How Data storage will Change with Blockchain

It is often forgotten that one of blockchain’s roots comes from Yuji Ijiiri’s breakthrough in 1989: triple-entry accounting. To understand what this means, let us take a step back and understand this hot topic’s history.

Originally, there was a single-entry bookkeeping. Records were documented in a central book allowing kings and queens to manage their finances and build their empires. Whoever was in charge of the book had to be trusted by their superior since they could easily cook the books for their own benefit.

Then came double entry-accounting, the system used by banks today. It involves recording a debit on one account and a credit on the other. In this case, trust is placed in an institution instead of a person.

In both these instances, however, trust in an intermediary is required. This is where triple-entry accounting comes in, relaying that trust to the network itself – no intermediaries. Instead, a single truth can be established in a distributed fashion where all ledger entries are published on the shared record (the public record being the third-entry). Trust is transferred from an institution to a network.

Bob’s credit, Alice’s debit and the blockchains record constitute the triple-entry system

Now, Bitcoin is the first mainstream application employing triple-entry accounting. Transactions between addresses are recorded on the shared ledger (blockchain). Interestingly, anything can be encrypted as a piece of data and published on the blockchain, from marriage certificates to property to music. Accordingly, a blockchain is a distributed form of data storage.

So how does data storage change on a blockchain-based system?

Firstly, there is increased security and immutability. Immutability is the feature of being unchangeable, drastically reducing the probability of data loss, theft, and manipulation. This will benefit industries across the spectrum since every organization has stores data, be it employee. However, blockchains will especially benefit those whose value proposition lies in data storage, such as public records, the internet of things, and cloud computing.

This leads to the second benefit, tracking ownership. Leveraging the property of immutability and asymmetric cryptography, blockchains will reshape the digital rights management industry. For example, UJO is an oft-quoted player in the music industry who permanently stores music rights, allowing the artists to manage licensing on their own terms using smart contracts (removing the rent-seeking record labels from the equation).

Thirdly, it gives the individual more privacy. This is because blockchains can demonstrate ownership without revealing the data, which can be done using various methods, including zero-knowledge proofs, proof-of-existence, and sharding. Not to mention that blockchains introduce innovative ways to store data in a decentralized way adding to privacy (and security).

price change

However, many challenges lie ahead before the mainstream recognition of blockchain-based data storage systems. Blockchains still have a long way to communicate interoperability, making the migration of data from one platform to another quite difficult. Moreover, blockchains are still at an early stage of development where the adoption process is slowest, and network fees still quite unpredictable.

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