Blockchain — Easier than you think!

A blockchain is a decentralized network made up of different nodes (peers) that are distributed. In relation to data and transactions, it gives 100% percent transparency for everyone that participates in the network.

With all the hype surrounding blockchain it is easy for people to lose track of what it really is, once all the bells and whistles are stripped away it is a kind of specialized database that can be used to store information.

However, it is different to any database that came before it in a number of ways:

Distributed Computing and Decentralization

A blockchain ledger is distributed among all nodes on the network, meaning that everyone who owns a node and participates in the network has an up-to date copy of everything that has ever been recorded in the ledger.

This also avoids the situation where the database would be controlled by a single entity and from an architectural point of view, it avoids the existence of a single point of failure (SPoF). In a conventional database the opposite is true, a central database holds all the information so the data is controlled by a central organization.

Being decentralized means that it is far more secure and reliable than a conventional database solution. There is no single point of weakness for an attacker to target, meaning that an attacker does not have a central point where it can hack the system so that no one can try to tamper with the data.

Traditional centralized database architecture versus Blockchain decentralized architecture

It’s seriously untouchable?

Immutability is defined as something that cannot be changed over time. This is also a feature of blockchain, once a block with a date is inserted it is there forever.

All the data goes through a secure algorithm and produces an output of fixed length, no matter how big or small the input. The hash of this data is then included in the following block.

Any attempt to change data in one block will cause the data in the previous block to become invalid, causing a chain reaction for the rest of the chain. This is due to the way a blockchain is constructed.

This immutability gives us the traceability and increased security features of blockchain. So this new decentralized and secure way of keeping records opens up new opportunities for many different business verticals and solutions.

Blockchain networks are well known as extremely secure, considering both the way of storing small amounts of valuable data as well as the distributed aspect of their topologies.

That’s guaranteed by the underlying data structure as well as the security cryptography that’s used to compute a given block.

All of the aspects discussed above, along with other things play a key part in the security of a blockchain.

Transparency and traceability

The entire history of the blockchain and the related transactions are available to be inspected by anyone that is participating in the network. Obviously this helps to keep track of who has done what on a network with no room for anyone to dispute the authenticity of past transactions and the related data store in a given ledger.

We have the public (permissionless) and the private (permissioned) Blockchain networks.

Public blockchains allow anyone to join at any time, without the need for an invite or special security certificates. Such Blockchain networks are called permissionless Blockchains. As an example, the most common public blockchains are the crypto currencies and only a wallet is necessary to join.

Private Blockchains on the other hand do require an invite or specific security certificates to join what we call a consortium. Such Blockchains are called permissioned Blockchains. Among many different solutions for permissioned Blockchains we have the Hyperledger foundation and its several different projects and frameworks. Hyperledger Fabric is one of those projects and it’s becoming the facto standard for permissioned Blockchain solutions. Hyperledger is under the Linux Foundation umbrella and follows the same established and approved governance model aligned with the open-source philosophy. The Oracle Blockchain Cloud Service uses Hyperledger Fabric as its underlying Blockchain protocol and framework.

As you can see Blockchain is an exciting technology that has many benefits and strengths. While we’ve demystified some questions surrounding it we are only scratching the surface.

There are many areas where Blockchain is the perfect solution, but also areas where it just doesn’t quite fit.

Stay tuned for part 2 of this blog series where we’ll be discussing some business use cases and highlighting innovative ways that people are utilising this technology.

If you are looking for something to keep you satiated in the meantime, don’t forget to listen to the podcast between Jakub Gregus and Sean Patterson available on SoundCloud. The podcast gives some great explanations of blockchain as well as highlighting some interesting use cases!

Until then, have you considered how you can get on board the blockchain train?

Authors: Juarez Barbosa, Ciaran McHugh