I guess this has been brought up many times, but I'm bringing it up again!!! Anyway... In Ruby on Rails Sqlite3 is already setup and no extra picking and slicing is needed, but... after numerous readings here and other places, some say it's not scalable while others say it can actually be quite good at that. Some say MySQL is much better for bigger projects, while others think, just go with PostgreSQL. I'm interested in hearing your opinion on this. In two scenarios. One where you are starting a little website for news publishing website like CNN news, and the other scenario where you're creating a website similar to Twitter?
Highly depends on your application.
Generally spoken, any write operation into a SQLite database is slow. Even a plain :update_attribute or :create may take up to 0.5 seconds. But if your App doesn't write much (killer against SQLite: write to DB on every request!), SQlite is a solid choice for most web apps out there. It is proven to handle small to medium amounts of traffic. Also, it is a very good choice during development, since it needs zero configuration. It performs also very well in your test suite with the in-memory mode (except you have thousands of migrations, since it rebuilds from scratch every time). Also, it is mostly seamless to switch from SQLite to, eg MySQL if its performance isn't enough any longer.
MySQL is currently a rock-solid choice. Future will tell what happens to MySQL under Oracle.
PostgreSQL is the fastest one as far as I know, but I haven't used it in production yet. Maybe others can tell more.
I'd vote for Postgres, it's consistently getting better, especially performance wise if that's a concern. Taking you up on the CNN and Twitter examples, start out with as solid footing as you can. You'll be glad later on down the road.
For websites, SQLite3 will suffice and scale fine for anything up to higher middle class traffic scenarios. So, unless you start getting hit by millions of requests per hour, there's no need to worry about SQLite3's performance or scalability.
That said, SQLite3 doesn't support all those typical features that a dedicated SQL server would. Access control is limited to whatever file permissions you can set for UNIX accounts on the machine with your database file, there's no daemon to speak of and the set of built-in functions is rather small. Also, there's no stored procedures of any kind, although you could emulate those with views and triggers.
If you're worried about any of those points, you should go with PostgreSQL. MySQL has (indirectly) been bought by Oracle, and considering they also had their own database before acquiring MySQL, I wouldn't put it past them to just drop it somewhere along the line. I've also had a far smoother experience maintaining PostgreSQL in the past and - anecdotally - it always felt a bit snappier and more reliable.
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