Blockchain, the technology disrupter and the decentralized shared ledger has four important points that essentially define it. They are: Consensus, Immutability, Finality, Provenance. This blog post will define these four important concepts.
Blockchain will be a game changer for the supply chain management system. The IBM business blog describes provenance as an “immutable audit trail of ownership & location as it changes over time” (Source: https://www.ibm.com/blogs/insights-on-business/government/proving-provenance-with-blockchain/) This audit trail promotes transparency that can never be achieved with traditional database systems.
Let us look at an example:
The path of a produce(such as an apple or meat) from the source to the destination is a long one. Implementing the Blockchain technology in such a situation will empower the users with absolute information regarding their produce. Imagine, scanning on an apple and knowing where it originated and seeing its path as it reaches your hands. You can be absolutely be certain that the produce that you are consuming is safe.
This is ‘Provenance’ or seeing the trail on the blockchain.
Immutability is “the” fact that differentiates Blockchain from databases. While we are used to adding records, deleting records and editing records in databases, the concept of immutability states that once a transaction is committed to the blockchain, it cannot be altered in any way. If a transaction is recorded wrongly onto the blockchain, it will stay on the blockchain. A correct transaction will re-submitted after the wrong one.
Financial institutions are at an advantage when their data on the blockchain cannot be altered via the property of ‘Immutability’ and fraud can be prevented.
Finality on the Blockchain is an extension to the concept of ‘Immutability’. All transactions made to the Blockchain are final and cannot be “rolled back” for any edits or deletions. The history of the Blockchain will be preserved.
Since Blockchain is decentralized, there is no way to determine if the information submitted to a block is true or not. The concept of ‘Consensus’ helps with this. Consensus states that a group of nodes agree that the information in a block is true. How do the nodes agree? They have different consensus algorithms which can be used. Some of the consensus algorithms are proof of work and proof of stake.
We have seen the four basic points that define Blockchain…. join me for more exciting writings…and any comments/suggestions welcome…
This post is for the A to Z Blogchatter challenge… the previous one is here…come back tomorrow for more! 🙂