Blockchain - A New Phase Of The Internet, Demystified!
Blockchain is a new phase of the internet, and it often uses DLT, Digital Ledger Technology and its concepts. I like Antony Lewis’s description of it the best. “Blockchain is a word used to describe a bundle of technologies that allow digital assets to be created and passed from party to party with guarantees that the assets are authentic and haven’t been copied or counterfeited all without needing to trust a third party to open and maintain accounts for customers.”
Imagine 4 companies A, B, C and D working together on a project called “XYZ mining”.
They set-up a Blockchain to ensure efficient, transparent, decentralized and secure transactions. Steps involved are:
1. A, B, C and D create a blockchain on a peer-to-peer network.
2. They configure DLT’s (Digital Ledger Technology) consensus protocol, using hash functions (algorithm) to set up their validation (mining) process/instructions.
3. They also set up other project-specific hardware, software and protocols (outside the scope of this article) on their nodes.
Typical Transaction Steps:
1. A is an environmental assessment NGO. They submit an assessment report on the EIA blockchain.
2. The report is sent (broadcast) to all stakeholders, A, B, C and D.
3. The hash on the nodes of A, B, C and D validate the report as per authentication instructions setup in the consensus process of the blockchain.
4. The report is stamped and locked with a unique identification number (hash) and stored in a block.
5. If this block is validated to be correct by all computers/nodes (A, B, C and D), it becomes (chained) a part of the EIA blockchain.
6. Once a part of the blockchain, the report cannot be changed to by-pass any deviation to the environmental Act, 1986, espoused in the draft EIA-2020 proposal.
7. If A, B, C or D want to modify the contract, they will have to request A to raise a new one.
Deciding on a Consensus process for a blockchain:
A Consensus process protects data against manipulation. Using it on a network ensures data is exchanged automatically when a transaction is to be recorded. Each DLT (Digital Ledger Technology) works with its own consensus-finding mechanism.
1. If data security is the priority, use PoW – Proof of work.
2. If decentralization benefits can be compromised, use PoA – Proof of Authority.
3. If the speed of processing transactions is more important than data security use PoS- Proof of Stake.
4. If back-checking is rarely required, it can be delegated to a Second Layer protocol (second system).
In a typical DLT based Blockchain, the system does not belong to anyone company who can exploit monopoly structures, but preferably it belongs to the users of the system.
Further Reading:
Smart Contracts enable Decentralized Autonomous Organizations (DAO).
“These algorithmic contracts have predefined conditions, so they can automatically trigger actions if these conditions are fulfilled. They form the basic structure for the performance of contracts from machine to machine — and are just the beginning of a new development towards so-called Decentralized Autonomous Organizations (DAO). These are based on DLT and are autonomously performing organizations which are guided by algorithms without human supervision. The →Ethereum platform allows such projects, including for example, in the case of Bosch applications, the autonomously charging and paying EV.” Bosch Blockchain Technology explained.
(The Author is a Digital Consultant and can be reached at digitaljeevika@gmail.com)