In this article, we are going to discuss Blockchain vs Server. Let’s compare and contrast the client-server architecture versus the P2P architecture. The client-server setup is centralized in nature. All data is centrally located and the clients contact the server to access the data or to report back with results. Every single client needs to go back to the server to get its information.
Even if you were sitting in Johannesburg and were uploading a file to your document server located in Los Angeles, and your neighbor was downloading the file, you would both have to contact the server in LA. While you upload it and store it there, he would have to contact that server and download it from there. This client-server relationship concentrates the traffic around a few nodes, making the entire worldwide web inefficient.
On the other hand, the blockchain works differently than the server. The data that is in the blockchain can be data that is either dynamic or static. But the difference between static and dynamic is not the same as the difference between static and dynamic data in a server.
Here is why. In a server, when the administrator goes in to change the data, the old data is lost forever and thereby cannot be referred to in the event of need or understanding the past. We trust the server to maintain the information we give it. We trust the server to be up when we need it. We trust the administrator to keep the information as we intend. The point is that there is a lot of trusts. You may have found yourself in a quandary more than once about whether to take an online offer and upon purchase, the price had changed. The old bait and switch. But when you went to complain about it, there seemed to be no record of the price that was on the site which you may saw.
We don’t realize it, but there is a lot of trusts that must be in place before e-commerce can take hold, and that is why intermediaries and institutions of trust found a niche. But the problem there is that the trust certificates and reputation management cost more, and that cost is passed back to the consumer. In the event we didn’t need to trust or didn’t have to trust, then there would be less cost involved in the process. Less cost betters market penetration and the overall wealth of the system.
In overall terms, servers are centralized systems and blockchains are decentralized systems. Centralized systems are susceptible to bad actors. They are also susceptible to DDOS attacks, and even government censorship. Blockchains do not have that issue. Because they are decentralized, it would be impossible to shut down all the nodes that carry the data. Even better, it would be difficult to change the data in some nodes, in a short time the nodes that have incorrect information will be erased and the correct data will be reinstalled. It is even difficult for viruses to survive in this environment.
Blockchains are being used in many areas because of this decentralized characteristic. Even the cloud is a function of the blockchain if you think about it, but the cloud architecture is a bit of a hybrid. If you expand the ability of the blockchain, you will find there are companies like Filecoin that use the blockchain to store data over their blockchain and thereby have coins to pay those who give us drive space for this purpose.
The information is encrypted and duplicated in multiple locations so that it no longer matters if your private information is in someone else’s drive or across a thousand drives. That’s because it has three features. The first is that it is a fragment of the data. Secondly, it is fully encrypted so that it will take an insane amount of computing power to decode. Finally, the information can’t be traced back to the owner even if the administrator was willing to do so. It is a trustless system so no trust is needed that your data is safe; it is safe.
In short, there is a history of the database when it is kept in the blockchain and any changes that are made in it need to be changed on a layer, meaning you would have to issue a whole new set of data while the old set of data is present. So for instance, say you were to go to a website that advertises the price of something you want is $1. Then, when you make the purchase, the website says the item is $3.
You could go back to the history of the blockchain and look at the site at the time you originally viewed it and have proof that it was indeed the price that you saw in the first place. This is of course a trivial example, but it is designed to show the power of the blockchain. The focus becomes the information itself and not the server that the information sits on.
There are numerous blockchain technologies that are emerging which look at blockchain storage. We will not go into that simply because our focus here on the blockchain is to look at the currencies that are on top of it.
There are many tokens that you could create that could sit on the blockchain, and while the token itself is not part of the security measure, it could be. But the reason that there is a coin on the blockchain is not a function of the blockchain itself, but rather a function of the app on it- in this case a cryptographic app.
Let us explain.
You see in many currencies that they limit the time it takes for new coins to be released into the market. Depending on who the issuer is, they all have different rates of coins entering the market; they are called block times. If you notice the term they use, “block times” sounds suspiciously familiar.
It should be because it is the term given to the time it takes to create a block after solving a cryptographic puzzle. When that puzzle is solved, the miner gets the block reward in the form of newly minted coins, and when they sell that into the market, there are new coins that enter circulation.
If you adjust the block times, you can adjust the rate of creation the coin inherently has. But coming back to the coin vs the blockchain; the coin itself can be anything you want it to be. Most people misunderstand the purpose of the blockchain because they think that it gives rise to the coin. It doesn’t. It only gives the coin legitimacy on its path throughout its existence. If the coin has been part of a number of transactions (the more the better) then you know that the coin is part of the network. The reason you have this is so that someone wouldn’t just make up a string of numbers and claim that it’s a valid coin. The coin comes directly from the program itself and only the bitcoin program determines how much reward is given.
In the beginning, it was 50 coins as the reward, all newly-minted coins which have never been in circulation before. After some time, that halved to 25, then that halved to 12.5, and then that halved to 6.25 – the current rate at this point. But it has nothing to do with the blockchain. Most people confuse this and the blockchain because the concept of the coin coincided with the release of the new coins with the creations of blocks in the blockchain. It has also confused people because the blockchain was part of Bitcoin when it was first released. Everyone simply took bitcoin and blockchains to be exclusive to each other. They are not.
