- A core characteristic of a traditional database
is that it typically has a central authority
that governs it.
All rights to the database are owned
by the organization that creates it.
They can decide who has access to it
and what types of access they can actually have.
They also decide, for example, what is stored in it,
what is deleted and what is archived.
This design has at least two potential weaknesses to it.
First, if a system relies on a central database,
this can result in a single point of failure.
If either the central authority is compromised,
such as hackers getting administrator login names
and passwords, or a backdoor is exposed,
the database can be subject to all manner of risk.
The second potential weakness is that all power is held
by the central authority.
Now let's be clear, in computing
this is generally being a good thing.
For example, if you run an e-commerce website,
you probably want total control over it.
You as the central authority, perhaps as CEO or CTO,
gets to decide all aspects of that environment,
including shutting it down if that's what you decide.
However, central authority often requires
dedicated personnel with special skills.
It also requires, depending on the type of system,
many human checks and balances,
such as complex approval workflows.
These systems are sometimes prone to errors
and access delays.
Intuitively, this also means that humans remain
the final arbiter of who has authority
and whether a transaction is valid.
We see this in most contract work.
A contract between two entities completed over the internet
still requires one or more central authority validators.
For example, with a mortgage,
banks must validate available funds and approve loans.
Title companies must validate properties
and legal professionals must be required
to validate signatures and other legal requirements.
Each of these independent and historically important
central authorities has unique power
that levies considerable overhead
in a mortgage transaction.
The transactions written to the relevant databases
all take time to process.
They also impose costs.
Are vulnerable to hacking.
Provide limited opportunity for participation
from those impacted, requires special skills
and can be error prone.
Up until now, we've had to accept these overheads
and their costs.
It's been this way because of, for example,
the high human trust requirements of each transaction
and many technological limitations.
However, these overheads and limitations
become the ideal solution targets for a blockchain system.
The novelty of this technology means that sulfur code
can replace traditional human trust mechanisms.
It also means that authority over decisions
can be distributed across participants,
resulting in the elimination of the risks
and challenges of central power.
Blockchain's design also improve security
and the integrity of all types of transactions.
These qualities give blockchain technology
remarkable power in a wide range of applications.
How it does this will be the subject of an upcoming video.
But first, let's take a look at how Bitcoin,
the popular cryptocurrency gave birth
to blockchain technology.