BIG DATA AND BLOCKCHAIN: QUANTITY AND QUALITY

The reason why big data and blockchain can have a very fruitful relationship is that the blockchain can easily cover the blemish of big data. There are four reasons why this relationship can be fruitful:

  • • Security: Blockchain’s biggest boon is the security that it imparts to the data stockpiled inside it. Remember, all the data inside the blockchain is non-manipulative.
  • • Transparency: The transparent architecture of the blockchain can help you shred data back to its point of origin.
  • • Decentralization: All the data that is stored inside a blockchain is not owned by a single entity. So, there is no chance of loss of data if that entity gets compromised in any way.
  • • Flexibility: The blockchain can store all kinds and different types of data. If you consider all these factors, the conclusion can be drawn is that whatever data comes out of the blockchain is valuable and non-tamperable. It has already been cleaned and is fraud-proof. That is a potential bonanza that many companies are looking to exploit.

Decentralization

Before Bitcoin and bit torrent came along, we used centralized services. You have a centralized entity which stores all the data and you’d have to interact merely w'ith this entity to get the information you required.

Another example of a centralized system is banks. They stockpile all your money, and the only w'ay to pay someone is by going through the bank. The traditional client-server model is an ideal example shown in Figure 5.6.

When you Google to search for something, you send a query to the server who send the relevant information getting back to you. That is simple client-server.

Since centralized systems have treated us well for many years, they have several vulnerabilities.

  • • First, as the system is centralized, all the data is stored in one spot. This makes in easy target spots for potential hackers.
  • • If the centralized system needs to go through a software upgrade, it would halt the entire system.
Client-server model

FIGURE 5.6 Client-server model.

  • • What if the centralized entity shut down for whatever reason? In this case, nobody will be able to access the information that it possesses.
  • • Worst case scenario, what if this entity gets corrupted and vicious? In this case, all the data that is inside the blockchain will be compromised.

So, what happens if we remove this centralized entity?

In a decentralized system, the information is not stored in one single entity. In fact, everyone in the network possesses the information.

In a decentralized network, if you want to interact with your friend then you can directly interact with them without going through a third party. That’s the main ideology behind Bitcoin. You alone are in charge of your money. You can send your money to anyone you want without going to a bank (Figure 5.7).

Transparency

Transparency is one of the most important factors in blockchain technology which is somehow misunderstood. Some people say that blockchain gives you privacy whereas some say that it is transparent. Why do you think that happens? Well, a person’s identity is hidden via obscure cryptography and represented only by their

Example of data transaction

FIGURE 5.7 Example of data transaction.

public address. So, if you were to look up a person’s transaction history, you will not see “Bob sent Ю BC” instead you will see:

lMFlbhsFLkBzzz7vpFYEmvwT2TbyCt7NZJ sent 10 BC.

The person’s real identity is secure, but you will still see all the transactions that were done by their public address. This level of transparency has never existed before in a financial system. It adds the extra level of accountability which is required by some of these biggest institutions. Speaking from the point of view' of cryptocurrency, if you know' the public address of one of these big companies, you can simply pop it in an explorer and monitor all the transactions that they have engaged in. This forces those to be honest, as no one can deny their transaction.

However, that’s not the best use case. We are pretty sure that most companies don’t transact using cryptocurrencies, and even if they do, they don’t do all their transactions using cryptocurrencies. What w'ould happen if the blockchain technology was integrated, say in their supply chain? You can see why this technology can be very helpful for the finance industry?

Immutability

Immutable, in general, means data cannot be changed once entered. So, immutability, in context of the blockchain, means that once details have been entered into the blockchain, it cannot be modified.

In simple terms, if w'e talk about hashing, it means taking an input string of any length and giving out an output of a fixed length. In cryptocurrencies like Bitcoin, the transactions or records are taken as an input w'hich is then executed through a hashing algorithm (Bitcoin uses SHA-256), w'hich gives an output of a fixed length which act as a signature.

 
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