How Data storage will Change with Blockchain

Beginner’s Guide / 10.12.2019
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 the history of this hot topic.

Originally, there was 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 isrequired. 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 fashionwhere 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). What is interesting is that 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. Although blockchains will especially benefit those whose value proposition lie in data storage, such public records, 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 industrywho permanently stores music rights, allowing the artists themselves to manage licensing on their own terms using smart contracts (removing the rent-seeking record labels form the equation).

Thirdly, it gives the individual more privacy. This is because blockchains are able to demonstrate ownership without revealing the data, which can be done using a variety of 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).

However, many challenges lie ahead before the mainstream recognition of blockchain-based data storage systems. Blockchains still have a long way to when it comes to interoperability, and this makes 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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Patrick is a third culture kid born to Brazilian parents, who enjoys reading, writing and thinking. He believes we need to be relentlessly improving models for investing in good ideas and moving them from the lab to the market, which naturally draws him to the cryptocurrency and blockchain space.