05th Jul2021

How data is stored and secured on blockchain

by James Smith

The truth is; blockchain and its functionality are a little bit complicated, however, a simple way to look at it is as a database where data is stored. Euromoney explains how data is stores and secured as;

Blockchain works by including the identifier of the last block into the identifier in the following block to create an unbreakable and immutable chain. When we talk about databases, we are talking about numerous data stored together on single digital storage. A good database is structured to allow users to navigate through the storage easily; searching and filtering for information should be easy; these features qualify Blockchain as a good database.

Since we can all agree that blockchain is a good database, how is data stored on the blockchain? The answer to this question is simple; through hashing.

What is hashing?

First, a transaction needs to be verified by nodes, then added to a block within the chain; after this process, it would then be put through a hash algorithm and converted into unique numbers and letters just the way random password generators operate. Finally, two transaction hashes come together, pass through the hash algorithm and produce a unique hash. This process continues until only one hash is left, known as the root hash.

This process explained above is the process of hashing new blocks British Bitcoin Profit App has more information about this.

Blockchain for Data Storage

There are a couple of ways of using blockchain as a distributed ledger; some of the common ways are;

  • Data can be broken down into smaller parts
  • Encrypting of data so that only one user can gain access to it
  • It offers guaranteed security
  • It is relatively fast
  • Data is distributed in a way that all data are available even if part of the network is down, users can still gain access

Suppose you want to start a project, or a company, instead of wasting resources building a central authority, you can use blockchain to create a decentralized network that can be accessed at the same time, by anyone across the globe.

With blockchain, data is shared across the community, and no single node or person can alter another node’s data. What this means is that using blockchain is more affordable, and data saved are secured without fear of alteration.

Another way to utilize blockchain is to save data as a cryptographic signature on the blockchain. Once stored, your data cannot be tampered with except if one node manages to get 51 percent power of the network (This is almost impossible).

Smart contracts can also be used alongside blockchain thanks to Ethereum. With smart contracts, transactions will be carried out after certain preset conditions are met. You can program records to change automatically after the requirement is met.


What makes blockchain different from other data storage processes is that it works only one way, making it an essential blockchain feature. Here’s what I mean; a single piece of data can continue to produce the same number of letters and numbers, but is impossible to un-hash or go backwards, i.e. using the generated letter or numbers to figure out the original data.

Blockchain made the world realize that they can transact without the help of a third party or a central authority to mediate on transactions. All data is secured with encryption so nobody can alter with blockchain without other members of the ecosystem noticing.

Over the past 12 years, blockchain has come a long way; it is gradually becoming a household name and almost part of our daily lives. To some people, it is an investment; to others, a medium of payment or earning asset. Whichever way you use blockchain, guarantees security and efficiency.

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