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In the same way a slave database can be corrupted by the master when it has a failure. If you're encrypting data on the master and replicating to the slave, improperly encrypted data may be propagated before a fail-over. This is a case where having the master fail completely and go off-line is preferable to a "working failure".

But doesn't a 'hardware failure' imply failure to a specific piece of equipment/hardware? A cascading issue with actual data isn't a hardware failure, it's a software failure.

This is why I use incremental backups, and check them regularly.

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