If you are new to the cryptocurrency space then you are probably wondering, where is blockchain data stored and what are the benefits of this technology? I understand the complexity of this technology can be overwhelming.
But don’t worry. In this article, I will be covering all aspects of blockchain data storage. So without further ado, let’s jump right in.
Blockchain data is stored on a network of decentralized nodes. Each node is a computer that contains a copy of the decentralized ledger. This ledger details various cryptographic information, including the complete transaction history of the blockchain.
To understand where blockchain data is stored we first need to understand the underlying technology. Simply put, blockchain technology is a distributed ledger. This ledger stores various information including a complete history of transactions.
The network is secured by decentralized computers known as nodes. These nodes are used to secure the network by verifying transactions and storing a copy of the blockchain.
As this network is decentralized there is no central authority governing it. Instead, the consensus is achieved via multiple entities. As a result, this provides a more democratic solution that is permissionless. Ultimately, anyone can participate.
Where is blockchain data stored?
In essence, a copy of the blockchain is stored on each of the nodes. You can think of the blockchain as an online spreadsheet and the nodes as the computer.
This spreadsheet is secured by a decentralized network of computers. Cryptocurrency nodes are not geographically restricted. This leads to a vast network that covers the whole globe.
Benefits of blockchain data storage
Immutable data – one of the key benefits of blockchain data storage is that it cannot be deleted or changed. This creates an honest system that is free from manipulation.
Decentralization – as blockchain technology is secured by a decentralized network of computers it becomes extremely resilient. Ultimately, there is not a single point of failure. Moreover, there is not a single authoritative entity controlling the system. In turn, this makes it a more democratic solution to data storage.
Transparency – thanks to the open-source nature of blockchain technology the data is completely transparent. It can be verified by anyone. As a result, this highlights any malicious activity or problems with the data source.
Moreover, as there is a digital audit trail, assets can be tracked easily. This could prove extremely beneficial to supply chains and businesses.
Efficient digital documentation- thanks to the underlying technology of blockchains, documentation can be stored digitally without the need for mediation. This removes a ton of paperwork and human intervention.
Instead, smart contracts automate the process and provide complete transparency eliminating the need for a middle man. This results in less human error, improved efficiency, and a reduction in costs.
Disadvantages of blockchain data storage
Scalability- blockchain technology is less scalable when compared to its centralized counterparts. Querying the data slows down the network considerably. For instance, Bitcoin handles just 7 transactions per second, while Visa can handle over 23,000.
Expensive – as a copy of the blockchain is stored on each node and transactions cannot be deleted, huge amounts of data need to be stored. Moreover, large amounts of energy and hardware are required to secure it. This makes data storage extremely expensive.
Security – although blockchain technology is more secure than the majority of other alternatives, it is not without its weaknesses. For instance, if an entity controls over 51% of nodes then they can modify the data.
Moreover, the network can be taken down by a DDoS attack. In essence, this method involves spamming the network with a large number of transactions. This causes overwhelming congestion that the network cannot handle.
Transparency – this can be seen as both a pro and con. In essence, the open nature of blockchain technology removes privacy. This can be a deal breaker for businesses and entities that require privacy to operate.
What kind of data is stored on the blockchain?
- Time stamp – the exact time of transactions is displayed with the corresponding dates.
- Wallet address – every wallet address is stored on the blockchain. This includes the sending address and the receiving address for each transaction.
- Transaction status – this is used to determine whether transactions are pending, completed, or have failed.
- The total value stored – a complete breakdown of the total amount of cryptocurrency stored for each wallet. Including the amount sent and received.
- Contract address – this is used to identify the token that each transaction belongs to.
How to access blockchain data?
Users can access blockchain data by using a blockchain explorer. These are online tools that provide real-time smart contract information. This includes the token ID, transaction history, and wallet address. The most popular blockchain explorers are blockchain.com and etherscan.io.
How much data is stored on the blockchain?
This depends on the blockchain. But at the time of writing, the bitcoin blockchain has a size of over 250GB while the Ethereum size is over 1TB. This will only grow over time.
As you can see, blockchain technology is revolutionizing data storage. It is providing a truly transparent and permissionless solution that is improving efficiency in many regards.
However, it is not without its limitations. Security and scalability are still a concern. However, as time progresses these factors will only improve.
Overall, the technology is still in its infancy which makes me optimistic about its future. I hope you found this article useful and thanks for reading.
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