Creating Impact on Distributed Databases and Transaction Processing Systems with Blockchain: Benefits and Implications

By: Sidharth Quamara

Databases and Transaction-Processing Systems (TPSs) are among the top-notching inventions in the field of Computer Science, which are being utilized by millions of people from all occupations across the globe. We may be software engineers, scientists, administrators in some corporate organization, banking professionals, or law enforcement teams, all of us directly or indirectly take advantage of these systems for numerous purposes. Whether we need to book a flight ticket, borrow a book from a university library, transfer money online from our bank account to someone else’s, we need databases and TPSs. Hence, we can take the liberty to mention that in the 21st century, we cannot imagine our lives without databases and TPSs. TPSs provide an execution environment that enables the processing of transactions to support business operations, and storage and access of both the transactions and their results in the databases, as depicted in Fig.1 below [1]. The basic concept behind transaction processing databases is that these are specifically designed for optimizing the transaction processing performance and maybe physically distributed across many computers.

Transaction Processing System
Fig. 1: Transaction Processing System (TPS): Scenario depicting interaction between multiple clients and data sources.

However, despite all of their advantages and usefulness, one of the major drawbacks associated with conventional databases and transaction-processing technologies is that these systems tend to be more centralized in their core architecture. This in turn may become a cause of bottleneck and single-point-of-failure, and affect the reliability of the whole system. For example, let us suppose a person urgently needs to book a next-day flight ticket and in order to get the same, he needs to make an online booking. However, because of some reason, banking servers are down that day. Although the person may be having enough money in his account and there may be sufficient number of available tickets for the concerned destination, yet he cannot perform the booking because of the unavailability of online banking services. Another major drawback with conventional database systems is that the entities owning these, like banks or other financial institutions, should be completely trustworthy, which cannot be guaranteed always. The third major limitation associated with conventional database systems is being a single point or cluster-of-service that makes them an easy target for security attacks like Distributed Denial of Services (DDoS). In the event where a system encounters a failure, the backup-based failure recovery mechanisms cannot be invoked to prevent data loss.

To overcome all the above-mentioned limitations associated with conventional database systems and TPSs, an unknown person or group under the pseudonym Satoshi Nakamoto [2] put the concept of Bitcoin and Blockchain forward. Although Nakamoto and technology of Bitcoin are credited with bringing the concept of Blockchain into practical reality, the conceptual foundations of the technology on which Blockchain is based were laid in 1979 by cryptographer David Chaum, by proposing his thesis titled “Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups” [3]. The features of Blockchain, such as inherent resistance towards data modification, can be combined with those of distributed databases (e.g., enhanced query speed) and TPSs to get the best of both worlds and serve the business needs [4]. As a result, auditing and accounting-related activities can be conducted with consistent monitoring and by preventing fraud. This promises to bring a wave of transformation of the existing information ecosystem and business operations.

Despite this technology conceptually emerging at a rapid pace with its anticipated potential to transform the existing systems targeting various applications, the prospective realization of Blockchain in integration with conventional databases and TPSs suffers from the following challenges that demand the conceptual notions to be revisited – 

  1. Scalability: Blockchain imposes the requirement of storage and availability of transactions for validating new transactions. Consequently, the number of transactions processed per second are limited, and the resulting systems are unrealistic in terms of threshold of records and size of the block, chain, and the network [5]. Arguably, this makes scalability a concern for the sustainable adoption of the technology.
  2. Privacy: Rather relying in the use of real identity, Blockchain facilitates transaction execution via generated addresses, thereby claiming to ensure privacy to its users. However, researches show that the visibility of the public key across the network peers makes this technology vulnerable in terms of transactional privacy [6, 7], which indeed is crucial for applications involving exchange of financial or medical data.
  3. Regulations: The inherent feature of decentralization is one of the reasons for the near-absence of regulations concerning Blockchain-related activities. The sensitivity of the field (e.g., financial) of operations, raises transversal challenges and questions among the regulatory bodies that are yet to be addressed [8].
  4. Interoperability: Lack of benchmarking and standard mechanisms for the integration of Blockchain-based solutions by database providers that are nonetheless isolated, poses barriers for cohesive data sharing and interactions. In addition, there is an ongoing debate regarding how to address the trade-off between transparency of operations and confidentiality of information in alignment with interoperable Blockchain-based systems [9].


  1. Lewis, P. M., Bernstein, A., & Kifer, M. (2002). Databases and transaction processing: an application-oriented approach. ACM SIGMOD Record, 31(1), 74-75.
  2. Nakamoto, Satoshi. “Bitcoin: A peer-to-peer electronic cash system.” Decentralized Business Review (2008): 21260.
  3. D.L. Chaum, “Computer Systems established, maintained and trusted by mutually suspicious groups. Electronics Research Laboratory, University of California” 1979.
  4. Muzammal, M., Qu, Q., & Nasrulin, B. (2019). Renovating blockchain with distributed databases: An open source system. Future generation computer systems, 90, 105-117.
  5. Yang, W., Garg, S., Raza, A., Herbert, D., & Kang, B. (2018, August). Blockchain: Trends and future. In Pacific Rim Knowledge Acquisition Workshop (pp. 201-210). Springer, Cham.
  6. Monrat, A. A., Schelén, O., & Andersson, K. (2019). A survey of blockchain from the perspectives of applications, challenges, and opportunities. IEEE Access, 7, 117134-117151.
  7. Deshpande, A., Stewart, K., Lepetit, L., & Gunashekar, S. (2017). Distributed Ledger Technologies/Blockchain: Challenges, opportunities and the prospects for standards. Overview report The British Standards Institution (BSI), 40, 40.
  8. Cermeño, J. S. (2016). Blockchain in financial services: Regulatory landscape and future challenges for its commercial application. BBVA Research Paper16, 20.
  9. Wang, Y., & Kogan, A. (2018). Designing confidentiality-preserving Blockchain-based transaction processing systems. International Journal of Accounting Information Systems, 30, 1-18.

Cite this article as

Sidharth Quamara (2021), Creating Impact on Distributed Databases and Transaction Processing Systems with Blockchain: Benefits and Implications, Insights2Techinfo, pp. 1.

FAQ on this topic

What is Transaction Processing Systems?

Transaction processing systems provide an execution environment that enables the processing of transactions to support business operations, and storage and access of both the transactions and their results in the databases.

What are the types of Transaction Processing systems?

• Batch Processing: In this process, transactions are collected and updated in batches. This was the most common method in the past because of the lack of real-time processing capabilities of systems.
• Real-Time Processing: In this type of processing a large number of users can work on the same data parallelly; most of the transaction systems developed today are working on this type of transaction system.

What are the components of Transaction processing systems?

Input system, processing unit, storage devices, and output unite are the four major components of Transaction processing systems.

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