Blockchain Technology

In recent years, “blockchain” technology has been gaining more attention from the mainstream press. Heralded by some as the fourth wave of computer technology with implications potentially as profound as the advent of modern property rights, blockchain represents far more than the Bitcoin cryptocurrency with which it is often confused. In its simplest form, blockchain is nothing more than a new type of data structure. But by bringing together a number of existing technologies in a novel way, blockchain technology secures the integrity of a network — essentially codifying “truth” and eliminating the need for “trust.” The implications are vast, and perhaps most important is the ability to exchange anything between two parties without the need for an intermediary. The asset can take any form — even intangible things like sensitive information — and the parties involved may not even be known to each other. Blockchain enables a nearly frictionless exchange of value, much like the internet has enabled a nearly frictionless exchange of information.

In recent years, “blockchain” technology has been gaining more attention from the mainstream press. Heralded by some as the fourth wave of computer technology with implications potentially as profound as the advent of modern property rights, blockchain represents far more than the Bitcoin cryptocurrency with which it is often confused. In its simplest form, blockchain is nothing more than a new type of data structure. But by bringing together a number of existing technologies in a novel way, blockchain technology secures the integrity of a network — essentially codifying “truth” and eliminating the need for “trust.” The implications are vast, and perhaps most important is the ability to exchange anything between two parties without the need for an intermediary. The asset can take any form — even intangible things like sensitive information — and the parties involved may not even be known to each other. Blockchain enables a nearly frictionless exchange of value, much like the internet has enabled a nearly frictionless exchange of information.

Data can act just like a physical object. Through a physical process called “tokenization,” blockchain makes it possible for a data “asset” to exist in the digital world just like a physical object does in the real world. Virtual and real become indistinguishable.

Intermediaries are not needed. All exchanges of information happen as intended. Blockchain creates an (almost) absolutely reliable method for transmitting information. Party A (who really is Party A) sends item X to Party B, who gets exactly what was expected, every time. With the exchange process inherently and verifiably valid, nobody needs to vouch for anything.

There can be a single version of truth that everyone can agree on. When using blockchain technology, once information is captured accurately it never needs to be verified. Operational processes can focus on first-time accuracy instead of ongoing validity, and there is never a need to reconcile anything.

UNDERSTANDING INTEGRITY AND TRUST

To understand the value of blockchain it’s helpful to first consider the basic concept of value exchange. If we go back to the early days, people traded goods in person through barter. Both parties were able to see and verify what they would be receiving — your banana for my apple.The certainty, or integrity, of the process was validated by the ability to see and touch the goods to be traded.

                                                                Blockchain Integrity

B L O C K C H A I N B U I L D I N G B L O C K S

Blockchain is a term that actually describes a collection of complementary technologies. Although each of these elements has existed in some form for many years, blockchain brings them together in a way that can result in significant benefits to network integrity, information security and connectivity. The building blocks vary, but they most commonly include:


4 point to understand of Building Blocks

 

 THE BLOCKCHAIN NETWORK

Before explaining how a blockchain is built, it’s important to understand exactly what makes up the network. Participating computers are called “nodes,” which are simply computers that can store the blockchain’s data, follow the rules of the blockchain’s specific protocol and communicate with the other nodes. Nodes can be physically located anywhere, and for this reason they’re called “distributed.” Each node follows the same rules and maintains an identical copy of the blockchain data set.

                                                    Encryption of Block Chain

BUILDING A BLOCKCHAIN

A number of blockchain protocols exist, but they all pretty much do the same thing and each has four basic elements: the transaction, block, chain and consensus process.

 

THE TRANSACTION The most basic component of a blockchain is a transaction. It may represent an exchange of something valuable (literally, a “transaction”) or it may be a hash file representing something as simple as a single word or as complex as a software program. Whatever it is, the submitting party digitally signs it, and when it’s received by the network, it’s time-stamped. Encrypted and firewalled data Business rules and data references

THE BLOCK The transaction is then added to a “block” that includes other new transactions. The size of the block and how fast it gets filled up depends on a number of factors, including the particular blockchain protocol.

THE CHAIN When the new block is full, it is linked to the preceding one through a clever hashing process that makes blocks more and more secure the longer they’ve been a part of the chain. Once the new block is added to the chain, it is not possible to change any of the preceding data. This makes the data immutable. Because transactions and blocks are assembled in the order they’re received, as the blockchain builds it forms a chronological record of activity. Much like a record in accounting, it forms a ledger.

TYPES OF BLOCKCHAIN NETWORKS

Blockchains can be public, private or a hybrid, and the overall purpose of a blockchain will determine which is best. But the real value of blockchain technology is realized only when the widest possible number of users are able to access data, so if all participants in a network are truly “trusted,” then blockchain may not be the best technology option. It’s likely that public blockchains will play an important role as the technology develops. For that to happen, technical and non-technical people will have to get comfortable with hashes and other references derived from their confidential data being placed on public blockchains. That will likely be no small task, and will take quite some time.



                                                Types of Blockchain


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