For our Neighborhood project we have considered the use of blockchain to store data for the web application. But after carrying out a feasibility study we have come to realize that blockchain technology is not feasible because there is a high level of cost to implement, specifically around the issue of the cost of miners.
What is blockchain technology?
Simply put, Blockhain is “a protocol for exchanging value over the internet without an intermediary….a blockchain is just another type of database for recording transactions – one that is copied to all of the computers in a participating network. ” (Delloite).
How does blockchain work vs traditional databases?
Source: Delloite UK via BBN Times
A key aspect of blockchain is mining:
“In order for a blockchain to function and maintain its integrity, it needs a large network of independent nodes around the world to continuously maintain it. In private blockchains, a central organization owns every single node on the network. In public blockchains on the other hand, anyone can set up their computer to act as a node. The owners of these computers are called miners.”
Blockchain technology is expensive because every data point is created as a block and then added to the blockchain, but in order for data to be added it needs a miner to authenticate it. And for every data block that a miner authenticates they are rewarded for the time and effort that that they put in to authenticate.
Image source: My Blockchain blog
The reason that miners get rewarded is because they also have their own costs such as the cost of electricity and the cost of their expensive computational device (super computer) so that they can compete in authenticating competitions with other miners.
Mining is the mechanism that allows the blockchain to be a decencentralized security. It secures the bitcoin system and enable a system without a central authority.
mining is actually transaction confirmation – a mechanism which makes blockchain work
Why Neighbourhood will not launch with Blockchain
We have determined blockchain technology to be too expensive to implement for the initial launch of Neighbourhood. However we will carry out future feasibility studies to determine if and when the time is right to take up this technology.
What do we need to store the data?
- Data is unaltered
- Security of the data (unhackable)
- Support for user anonymity (use of pseudonyms)
Traditional databases fulfil the requirements needed to store the data, but the only drawback is that security might not be as secure as blockchain, due to blockchain’s use of cryptography (in other words there is a higher risk of hacking). But on the other hand the data transaction time is faster, and the cost is much cheaper than blockchain. However, considering the current political climate, regarding Facebook’s perceived violations of data privacy, we will consider implementing blockchain as part of future enhancements to Neighbourhood.