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What’s the difference between blockchain and centralized databases? 

Blockchain and centralized databases differ in structure and operation. Blockchain is a good solution when immutable, transparent data is required, while centralized databases are better suited to situations where frequent data changes are essential. 

The traditional centralized database

  • Data storage: the traditional database stores and manages data on a centralized server. 
  • Data modification: stored information can be edited, modified or deleted by administrators. 
  • Data history: centralized databases generally contain only the most recent information. 
  • Data security: the entity ensures the security of its database by deploying all necessary measures to prevent attacks. Security is therefore based on trust in the efforts made by the entity to protect itself. 

 
blockchain: 

  • Data storage: data is distributed between several nodes, represented by a network of thousands of computers. Each node owns a copy of the blockchain. This blockchain is designed so that each block contains part of the previous block. How does blockchain technology work? 
  • Data modification: blocks are secured by a cryptographic hash, so when the data in a block is modified, this results in a change to its hash. However, as this hash is included in the next block, it would be necessary to recalculate all hashes in subsequent blocks to maintain consistency. As a result, modification quickly becomes impractical as the chain lengthens. The blockchain is therefore immutable, enabling true traceability of the activities carried out. What’s more, modifications to the blockchain are made by consensus, rather than by dedicated administrators. 
  • Data history: The blockchain keeps a complete history of transactions since its creation.  
  • Data security: Blockchain is highly secure thanks to several mechanisms. It avoids the risk of a single point of control, replicates data throughout the network, makes it difficult to modify, and makes the entire process public, while requiring consensus between participants to add data. These combined characteristics make blockchain a secure technology. 

Cryptocurrencies or digital currencies are terms commonly used in the crypto ecosystem. However, the terminology favored by regulators (ACPR and AMF) is crypto-assets or digital assets. This distinction arises because, although often referred to as cryptocurrencies, these assets do not qualify as currencies in the legal sense. They are virtual resources based on blockchain technology, whose value is determined solely by supply and demand.

None of the information contained in this FAQ constitutes investment advice, tax advice, legal advice, or any other type of advice, nor does it serve as an invitation to engage in any form of financial transaction.

Investing in digital assets carries risks and may not be suitable for all investors. It is the responsibility of investors to educate themselves about the risks associated with different digital assets. In particular, it is noted that digital assets can exhibit significant volatility, and investments in digital assets involve a risk of capital loss. Accordingly, it is important to remember that the past performance of digital assets, as might be indicated on Banque Delubac & Cie’s website or in documents provided to investors, is not indicative of future performance. Investors should familiarize themselves with the technologies underlying each digital asset and their associated risks, including vulnerabilities, defects, hacks, errors, protocol failures, or attacks on the protocol. Banque Delubac & Cie cannot be held liable for any misunderstanding of the risks associated with digital assets or for any losses investors may incur due to errors in wallet addresses attributable to the investor.

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