Blockchain has gained traction thanks to the craze for cryptocurrencies such as Bitcoin, Ethereum and Dogecoin. Companies have also noted the promise of blockchain technology to improve the transparency and data integrity of distributed transactions.
But despite the promise, blockchain adoption has been slow beyond proof of concept. A major problem was the relatively slow performance of early blockchain technologies. The first blockchain networks were limited to a few transactions per second and it could take up to an hour to ensure the authenticity of the transactions.
Several alternatives to blockchain have emerged that offer better performance. Companies may also want to consider them to reduce costs, simplify development, and reduce integration challenges.
However, according to Derek Brink, vice president and research associate at Aberdeen Strategy & Research, the question of alternatives to blockchain is somewhat backwards. In many cases this is due to the blockchain Is the alternative.
The real problem, he said, is finding new ways to reinvent business processes by cutting out the middleman, regardless of whether blockchain is, strictly speaking, the means. In fact, the most promising alternatives to blockchain will include centralized databases, decentralized storage and other technologies that use the same distributed ledger technology as blockchain, Brink said.
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Is it blockchain or not?
Fundamentally, blockchain is a type of distributed ledger that provides a permanent, tamper-proof record of business transactions. It is essentially a decentralized database running on a peer-to-peer network, with each computer maintaining a copy of the current ledger. Data security and reliability are the main benefits as the data cannot be easily changed and the redundant copies make data loss unlikely. You don’t need a middleman like a bank or broker to carry out transactions.
One of the challenges in finding alternatives to blockchain is knowing which products and technologies use blockchain and which use other technologies to perform similar functions.
“Blockchain has become kind of like Kleenex, where it means a category of things,” said Brian Platz, co-CEO of Fluree, a blockchain database provider. “Other technologies that aren’t even distributed ledgers all come into the mix and are also called blockchains.”
For example, people in the blockchain community have started adopting distributed storage tools such as Storj and InterPlanetary File System (IPFS). Others are starting to use distributed databases like OrbitDB. In addition, a large number of distributed ledgers are emerging.
At the same time, good old-fashioned centralized ledgers have been working fine for years, and now the cloud makes it easier to share access among trusted users.
Here you can find out what the six most important alternatives to blockchain have to offer.
1. Centralized databases
One of the biggest concerns with traditional blockchains has been scalability.
Decentralization inherently increases the burden of managing multiple copies of data and ensuring consistency. Blockchains also cause significant computational overhead and energy consumption issues.
While the blockchain community is excited about database decentralization, real value lies in maintaining a highly optimized system of record in a central database.
Newer blockchain implementations are getting better, but their performance still lags compared to what is possible with a well-managed centralized database. For example, the Visa network (VisaNet) has a capacity of 65,000 transactions per second, whereas the Bitcoin network can only process a few transactions per second. Currently, VisaNet processes an average of 2,000 transactions per second, so there is plenty of room for growth.
One of the great promises of blockchain is the potential to improve security. However, VisaNet’s success suggests that companies could continue to successfully use alternatives to blockchain for things like securing transactions, improving product tracking, facilitating product recalls, protecting privacy and maintaining audit trails.
2. Centralized ledgers
Few companies have the resources to replicate VisaNet. Another option is the centralized ledgers that cloud providers offer.
Alex Paul MandersFor example, Amazon’s Quantum Ledger database simplifies the process of implementing a shared database designed for ledger-like applications, providing a cryptographically verifiable audit trail without all the overhead of a distributed ledger or blockchain. It promises the immutability and auditability of blockchain combined with the simplicity and scalability of a traditional cloud service. However, Amazon points out that a proper blockchain may be a better option in cases where untrusted parties are involved. Additionally, Amazon announced that it will end support for QLDB on July 31, 2025. It encouraged customers to do so migrate their QLDB ledgers to its Aurora PostgreSQL database, calling it an excellent alternative for common use cases.
Centralized databases and ledgers aren’t just beneficial. Both have vulnerabilities that are vulnerable to cybersecurity hacks and data breaches, said Alex-Paul Manders, partner at ISG, a technology research and consulting firm.
3. Distributed databases
Major database vendors such as Oracle and Microsoft have for years offered distributed databases that use a combination of data replication and duplication to ensure data consistency and integrity.
More recently, the OrbitDB open source project emerged to support the creation of a distributed peer-to-peer database that does not require a traditional blockchain. This allows companies to develop decentralized applications that run when not connected to the Internet and then synchronize with other database nodes when connected. It can also enable data sharing in a way that ensures privacy and creates transparency about how data is used. OrbitDB sits on a distributed file system that allows it to operate even if a node fails – another blockchain-like feature.
4. Cloud storage
Blockchain is sometimes promoted as a way to store data in a decentralized manner. However, the benefits of blockchain storage over simpler, more established alternatives are controversial.
Susel MenonSuseel Menon, practice leader at Everest Group, said the trust and security policies and governance levels of cloud services are sufficient for most enterprise applications. Additionally, multiple third-party data storage services can provide better governance and security with far less overhead than would be the case with a blockchain, he said.
5. Decentralized storage
IPFS has emerged as a promising approach for data storage in a peer-to-peer network. Fluree’s Platz said it is attracting great interest from blockchain developers due to its ability to decentralize storage that can be integrated into other applications. Technically it is not a blockchain, although Platz sometimes hears it referred to as such. IPFS allows developers to store web pages, content, and data in a way that reduces bandwidth requirements, improves resiliency, and mitigates the impact of censorship.
Storj is another promising distributed storage technology that allows developers to encrypt files, split them into parts, and then distribute them across a global cloud network. It’s directly compatible with Amazon S3 storage tools, which should make it easier for cloud developers to integrate into applications without having to learn new tools.
6. Other distributed ledger technologies
ISG’s Manders said a distributed ledger is his recommended blockchain alternative for trustless decentralized applications. He sees no particular need to build a decentralized ledger from scratch and recommends using one of the several options already available. Attractive alternatives to blockchain for distributed ledgers include Hashgraph, Iota Tangle and R3 Corda.
Both Iota and Hashgraph use directed acyclic graphs (DAGs) as an alternative data structure to maintain the ledger. DAGs have been widely used in computer languages for more than 30 years to represent the dependencies in an application, and their application to transactions is not in itself unique.
One of the main advantages of the DAG approach is that it allows an application to write data quickly, but it takes relatively longer for the transaction to be confirmed compared to private blockchains that require permission to perform certain operations. Applications must be configured to notify users when conflicts occur. Rules are often built into the protocol to help resolve these issues.
Iota Tangle
An Iota Tangle stores data through a DAG, where each node or vertex represents a transaction. It is an open source project where the network grows through transactions rather than through a computationally intensive mining process like that used in blockchain. Iota supports micropayments and transactions across IoT devices. Although it is mostly decentralized, it requires a coordinator node that monitors and confirms the addition of new transactions.
Hashgraph
Hashgraph is another DAG ledger that also eliminates the need for mining to expand the ledger. It is based on a protocol called Gossip about Gossip, which network nodes use to exchange information, reach consensus (another key process in the blockchain), and add new transactions to the DAG. As new data is added, an audit trail is also attached to the distributed ledger. The adoption of the blockchain alternative started slowly, but The momentum is increasing.
R3 Corda
Corda was designed to make it easier to capture and process financial transactions. It uses a peer-to-peer model where each peer stores data related to all transactions in which it has participated. Consequently, recreating an audit trail requires querying multiple nodes involved in a transaction chain. This approach can secure data about transactions by securing the appropriate group of peers.
One difference between Corda and the other two is that it simplifies the creation, automation and enforcement of smart contracts – a key application of blockchain – compared to DAG-based distributed ledger technologies. However, the Iota Foundation has just announced an alpha version of the Iota Smart Contracts Protocol that could offer similar features to Corda.
George Lawton is a London-based journalist. Over the past 30 years, he has written more than 3,000 stories about computers, communications, knowledge management, business, health, and other areas that interest him.