Distributed Ledgers (blockchains) are emerging as the leading technology for internet-based payment and transaction systems. Blockchains have well-publicized characteristics, such as encrypted, secure transactions; smart contracts; the increasing capacity of 3rd generation blockchains to process 10’s of thousands of transactions; and the ability to eliminate intermediaries that add no value or slow down the process. Yet, there are other, less-publicized, but substantial benefits. This includes nearly unlimited scalability, fault-tolerance and reliability which will ultimately be the impetus behind blockchain adoption.
Traditional Centralized Approach
Traditional software applications are based on a centralized model where all user communication and network traffic is directed to one location, generally a network server. As more demands are placed on the system, more server hardware and bandwidth is required. This is why most high-volume transaction systems, such as, credit card processors, are still housed on expensive mainframes. At peak demand, they may need to process more than 30,000 transactions a second. In addition, maintaining a real-time, redundant copy of the system, requires a duplicate set of hardware, software and data be ready, in case of a system failure. This is typically costly and inflexible.
Blockchain’s Distributed Architecture
Blockchains work very differently by distributing the processing across multiple network servers (nodes) and not just one centralized server. Distributed architecture has proven to be far more reliable by eliminating the need for expensive central processing. Blockchains unique method of distributing processing over many nodes means the failure of single or multiple nodes does not affect the operation of the rest of the system. The more nodes on the network the more fault-tolerant the system.
Scalability
Blockchains distributed architecture provides far more benefits than fault-tolerance (network failure). Blockchains have the ability to start small and add more node as needed. Even though the blockchain may start out as a proof-of-concept or small application, it’s ability to grow and support enterprise-scale applications is nearly limitless. This is an important feature because it removes the requirement to build an expensive platform up-front in anticipation of high demand volume, before the actual requirements are known.
The blockchains distributed architecture allows administrators to increase capacity by adding nodes. In addition, there is no supplementary bandwidth requirement for existing nodes as new nodes are added, ensuring minimal impact as system capacity grows.
Reliability & Flexibility
Blockchains provide multiple levels of redundancy as each node is capable of writing to the blockchain. This eliminates single points of failure by providing a fully distributed and fully redundant system at no additional cost.
In the event of a natural disaster, the blockchain can continue to provide full functionality between connected blockchain nodes when parts of the network are down due to lack of network connectivity. As nodes come back on line or additional nodes are added, the blockchain uses auto discovery mechanisms to self-heal as node connections are reestablished without manual intervention.
Blockchains distributed system architecture provides unparalleled expandability, scalability, reliability, and resilience that is difficult to duplicate.
It’s these less-publicized features that make technologist so excited about the future of blockchain.