What are Databases?
Most of the world’s data exists in database servers – giant computers that are built with the express purpose of hosting large amounts of information. Many of these servers are hosted in hyperscale data centers – multi-hectare facilities that can host thousands of computers.
Map of Microsoft, Amazon and Google’s Data Centers
Given that our modern economy runs off of data, that makes them some of the most important -- if not the most important – assets in the world.
While they are generally little more than glorified excel spreadsheets with a few columns, databases form the backbone of our modern digital economy because they store our health records, mortgage deeds, insurance records, virtually all the content we consume online and – perhaps most importantly –over 90% of our money.
☝️ Your money is little more than a collection of 1s and 0s in a database owned by Bank of America (or whomever you bank with)
Today, we access the internet through what is known as a client-server-database architecture.
The Client – Server – Database Architecture
As the name suggests, there are three major components to this structure:
Clients: Your PC or laptop is known as a “client”, when you visit websites on a browser such a Google Chrome, it makes requests to servers
Servers: Servers are responsible for routing your request to the correct database and then sending the information from the database back to you
Databases: Almost all of the information that you find on the internet is stored somewhere in a database
So when you open your iPhone to check your balance at Bank of America, your phone sends a request to one of Bank of America’s servers, which then sends a request to one of Bank of America’s databases that then tells you that you have $X in your account.
As stated previously, the vast majority of these databases are owned by centralized companies. For instance, Microsoft, Google and Amazon own over 50% of the world’s largest data centers.
Cryptocurrencies simply swap the existing, centralized, storage layer with decentralized and distributed databases. These new databases contain both the current balance of everyone’s cryptocurrency as well as the entire transaction history.
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