A blockchain implementation is not meant to replace existing and proven technologies in today's financial systems. The modern IT space has been effectively using databases to store and process data. These are considered as off-chain data sources. A blockchain is not meant to provide a better solution for this area. 

Databases are needed to store large capacities of data. Unfortunately, a blockchain is not that type of database. It is not ideal or even practical to use a blockchain for storing volumes of data. Storing data on a blockchain is expensive and also slower than on existing database systems.

A blockchain serves a different use case that provides novel features that can improve transparency, security and immutability in non-intermediated distributed systems.

It is decentralized to prevent control from any central authority that can manipulate or censor data. Its main purpose is thus to allow for a more censor-free way to verify data in an open system.

Open systems are a way to allow for more inclusivity using a decentralized network model. Its aim is to allow users to participate with verified ownership of their personal data and assets that are cryptographically secured by a blockchain. Since a blockchain is not controlled by anyone, it can provide a way for users to transact fairly without the need for third party services.

Blockchains provide a way for users to directly transact without intermediation. A blockchain makes this possible through cryptographic techniques that secures the data and verifies transactions in a more transparent manner (i.e. public ledger).

It can be used for applications in verifying financial data, retail purchases, birth certificate records, land titles and ownership of assets. There is no need to use a blockchain to store all the information, but only a cryptographic hash of the data that can be used for verification purposes.

It has surely found a use case with cryptocurrency. That is because it provides a non-trusted system for verifying transactions between parties who exchange value. This makes it ideal for direct peer-to-peer payments.

The end goal is to provide a digital record of proof for two non-trusting entities, which can be verified without the need for a trusted entity.  This is what helps enable Web3 and the next generation of fintech.

Disclaimer: The content of this article is for reference or informational purposes only. This is not financial advice. Please do your own research always.

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