Blockchain and big data are expected to change ways organisations do business. Blockchain promises decentralisation, flexibility, transparency, and security. It can be understood as an underlying idea that incorporates various technologies and functions. It consists of a digital ledger that holds track of all transactions without the need for a centralised authority. Big data is used to describe huge data sets that may be analysed through a parallel IT infrastructure to reveal patterns, trends, and associations. It has helped improve productivity and decision making allowing for a more bespoke customer experience and production procedures. This blog aims to introduce both newbies and people new to bitcoin an opportunity to understand how these technologies can be used in synchronicity and how they complement each other.
What is a blockchain?
It can be said that blockchain is still in its outset. Although the general public’s interest has increased recently due to bitcoin and other alternative cryptocurrencies, such as ethereum, blockchain is yet to be implemented in organisations across sectors. The truth is that blockchain is still not fully understood by the general public; its development is still very costly, and they’re not enough successful stories innovation managers can build upon.
Building on our basic understanding that blockchain acts as a decentralised, secure database without a centralised authority primarily for storing and securing transactions we can now also familiarise ourselves with the term Distributed Ledger Technologies (DLT). Critical to understanding is that all blockchains are DLTs. But, not all DLTs are blockchains. The key thing to take with you, for now, is that distributed ledger and blockchain share the same underlying technology. Good, we made some excellent progress and understand some of the principles of DLT and blockchain a bit better.
Now, it’s time to explain two or three compelling concepts before we move on. Blockchain stands for data in a chain of blocks, while DLT is a distributed ledger dispersed across nodes. Because blockchain functions as a global digital ledger shared among computers over the internet run by no single entity, different forms of agreements and transactions can be recorded and confirmed once completed. Once these transactions are recorded on the blockchain, they can not be changed.
So, if all DLTs are blockchain and blockchain is a type of DLT, what is the difference between the two? This is an excellent question, indeed! To answer this question, it would be beneficial to understand the next four words – permissioned, permissionless, private and public. There are different types of public and private blockchain and DLTs. But, if you understand that blockchains are mostly public and DLTs primarily private, we have made excellent progress. For instance, an example of a public (permissionless) blockchain is bitcoin. A private (permissioned) DLT is something a bank would use to securely and quickly handle their data.
To conclude and wrap up our blockchain understanding, blockchain is managed by a decentralised entity. All records are approved by consensus1 and it works with a cryptographic signature. This cannot be said about DLTs.
What is Big Data?
Blockchain feels like rocket science for newcomers and nocoiners2. However, the concept of big data is relatively well understood by the masses, for instance, as a form of direct digital marketing. You probably have already been suggested a trip to the Caribbean after a Google search for something related to the tropical islands. Or, eventually, you’ve been recommended a film by Netflix or a song by Spotify based on what you or your network of friends have seen or heard so far. Following Cambridge Analytics and the press coverage associated with the election of former US President Donald Trump or the outcome of the Brexit referendum, most people have an idea what big data means and its possible impact on business and every one of us.
Nevertheless, It’s worth clarifying a couple of things before moving on to this writing’s objective: to synthesise why the two technologies complement each other. Let’s then think together about the amount of data generated by humans and machines uninterruptedly. It includes every web page you and I visit every Facebook, Twitter and Instagram post, photo or video you and I upload or view. Now, imagine every financial transaction you and I conduct or even the locations we are at when you access all these services. It’s a tremendous amount of data that have to be stored, managed and later analysed. Most importantly, they come from different sources and have various formats.
What makes big data stand out economically from previous technologies is that instead of using a powerful supercomputer big data technology makes it possible to connect an infinite amount of regular desktop computers together. Resulting in the data to be copied and distributed wherever the individual computer power is. Rather than a supercomputer single desktop computers handle the data through the software installed at a fraction of the costs.
Why do blockchain and big data complement each other?
Now, the question still remains why are they made for each other? To simplify, big data ensures variety and quantity while blockchain speed and security. To better understand how blockchain complements big data, we must first ask ourselves the challenges for big data?
When it comes to better synchronisation of data, blockchain offers a practical ecosystem to manage data securely and quickly, instead of parallel distributed. Another major challenge big data is experiencing is the quality of the data. Big data contains a great variety of data ranging from social media to medical data, making big data so attractive for many businesses because they can create a profile of potential customers if data integrity can be provided. Currently, we have more quantity than quality. Another crucial factor is the costs associated with the management and maintenance of the massive data warehouses. Blockchain promises, once ready to be, an enormous cost reduction for organisations due to its decentralised format.
To conclude, big data has shown masses of potential to be used for many purposes across sectors. Blockchain is expected to be the silver bullet for many data-intensive organisations. It can be utilised alongside big data for the secure gathering of transactional data. ‘Secure’ being the key to ensure success and instill consumers‘ confidence. Obviously, the proof will be in the pudding.
2Nocoiners is refered to someone how has never owned cryptocurrencies.
