>>>The perils of centralized databases
The perils of centralized databases2019-09-11T17:11:29+00:00

Centralization is the concentration of control of an activity or organization under a single authority. This can include internal decision-making, planning, and data collection within the organization, traditionally led by head executives or relevant departmental commands. In this discussion, we will be focusing on the perils of centralized databases.

The year of the data breach

On September 2017, global data analytics and technology firm, Equifax, fell victim to a system breach where hackers stole the personal data of over 147.7 million Americans (Ng, 2018). Other data breaches at Facebook, Yahoo, and many other big names show that centralized databases are a prime target for hackers who view them as a one-stop-shop for our valuable personal data. 

Data breaches became so regular in 2018 that it was dubbed as the year of the ‘data breach tsunami’ by American Internet security company, Malwarebytes (Strain, 2018). Centralized databases were no longer considered secure and a push to a new, more secure, database management system was required, enter the decentralized database. 

The recurring problems

Data leaks occur when there is an unauthorized transmission of data from an organization to an external destination or recipient. This can occur either electronically or physically (Forcepoint, 2019). This is a major vulnerability as it exposes data such as personal information, bank statements, or medical records to hackers. A popular example would be the data leak that hit social media giant, Facebook, where more than 540 million user records were publicly exposed on Amazon’s cloud computing service (Silverstein, 2019). Losing control of your own personal, and sensitive information such as bank records, location data, and email addresses can result in harassment from hackers or any other party that sells your stolen data.

Centralizing databases also increases the risk of data loss, especially in cases where there is a failure to back up the information elsewhere. Having only ONE singular point to collect something exposes the risk of solely losing that point from human error or malicious activity. This was evident when the CEO of Quadriga Exchange suddenly died, taking with him the exchange’s private keys. Cotten’s death resulted in the loss of $145 million of their customer’s bitcoin and other digital assets (Shane, 2019). Cases like Quadriga are rare but show that centralizing simple information such as Private Keys can have a huge impact, which is why decentralized storage options such as Multisignature Wallets are becoming more and more popular. By using a multisig wallet, users are able to prevent the problems caused by the loss or theft of a private key, so even if one of the keys are compromised, the funds are still safe (Binance, 2019).


There are many other dangers in centralizing databases, and these examples are the few common ones that pose great risks in centralizing information in one spot. Today, emerging markets such as the blockchain industry are becoming more attractive as a decentralized option for securing data in a distributed public ledger.

Decentralization is the key to a safer, more secure data storage and management as it minimizes the risk that you see when a central database exists as a single point of failure (Petkanics,2016). The use of distributed ledger technology in key areas such as identity management, documentation and signing, blockchain-based two-factor authentication, peer-to-peer capabilities, and digital tokenization of assets is essential if we are going to fix the issues associated with centralization. Fortunately, projects such as Hydro exist as builders of an open-source, trustless, and permissionless ecosystem of smart contracts that anyone can use to secure their data in a decentralized way.


Ng, A. (2018). How the Equifax hack happened, and what still needs to be done. CNET. Retrieved from https://www.cnet.com/news/equifaxs-hack-one-year-later-a-look-back-at-how-it-happened-and-whats-changed/.


Forcepoint. (2019). What is Data Leakage? Data Leakage Defined, Explained, and Explored. Retrieve from https://www.forcepoint.com/cyber-edu/data-leakage.


Silverstein, J. (2019).  Hundreds of millions of Facebook user records were exposed on Amazon cloud server. Retrieved from https://www.cbsnews.com/news/millions-facebook-user-records-exposed-amazon-cloud-server/.


Shane, D. (2019). A crypto exchange may have lost $145 million after its CEO suddenly died. Retrieved from https://edition.cnn.com/2019/02/05/tech/quadriga-gerald-cotten-cryptocurrency/index.html.


Brewster, T. (2019). How Facebook Was Hacked And Why It’s A Disaster For Internet Security. Retrieved from https://www.forbes.com/sites/thomasbrewster/2018/09/29/how-facebook-was-hacked-and-why-its-a-disaster-for-internet-security/#7a303c502033


Larson, S. (2017). Every single Yahoo account was hacked – 3 billion in all. Retrieved from https://money.cnn.com/2017/10/03/technology/business/yahoo-breach-3-billion-accounts/index.html


Strain, L. (2018). 2018: The year of the data breach tsunami. Malwarebytes Lab Blog. Retrieved from https://blog.malwarebytes.com/101/2018/12/2018-the-year-of-the-data-breach-tsunami/


Petkanics, D. (2016). The Benefits of Decentralization. Retrieved from https://medium.com/@petkanics/the-benefits-of-decentralization-88a0b5d0fd39


Binance. (2019). What Is a Multisig Wallet?. Binance Academy. Retrieved from https://www.binance.vision/security/what-is-a-multisig-wallet


Vector Image. (2019). Retrieved from https://www.freepik.com/free-vector/big-data-center-server-room-rack-engineering-process-teamwork-computer-technology-cloud-storage_4103163.htm


Background thumbnail image by Markus Spiske on Unsplash. Retrieved from https://unsplash.com/photos/70Rir5vB96U


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