A shared ledger — Blockchain

Definitions of blockchain are usually quite complex and technical and therefore not easily understood by most businesses and organizations. Not just businesses, even the developers seem lost on how they should design a blockchain-based system. So I will try to break down different aspects of Blockchain in easily understandable language in an attempt to simplify understanding the concept. The phrase that I want to focus on today is “A shared ledger”.

Blockchain is a shared ledger. This simply means that the data that we put in blockchain is shared among the nodes. For now, you can understand nodes as different processes that run in the blockchain network that are responsible for storing data. So when we let Blockchain store some data, they are shared among these nodes and every node can access this data. That is why we say it as a shared ledger.

There are mainly two types of Blockchain, public and permissioned/private. In public blockchains, these data are shared among all the nodes present all over the world. While in permissioned/private blockchain these data are shared among the nodes that have been given access by the organisation/consortium in the network.

So now the question for businesses is how do they use this shared ledger? There are actually many ways this shared ledger can be used by the organisations. I will try to explain this with a B2B use case.

My father supplies goods to different wholesalers. The process that is involved in the billing of those goods is so simple. He prepares a bill for the goods. Then separately, he writes down the billing details in his personal ledger to keep track of his goods. He then sends this bill to the wholesalers with his driver. His driver delivers the goods to the wholesaler and passes him the bills, if he has not already lost it. The wholesaler confirms the billing details and writes it in his own ledger for his own records. Sometimes, to confirm the amount he even calls my dad. My dad needs to improve his writing too. Yeah! The process is easy, short and sweet. Funny thing is even the organisations which have gone digital are using the same process with the only difference being that their bills are in excel sheets or databases instead of notebooks.

What if there was a shared ledger? Like when my father updated his ledger in his office, the wholesalers ledger would be updated too. And if my father’s handwriting is neat then the problem is solved. The wholesaler just needs to verify the amount of goods. There would be no such thing called bill and my father won’t have to worry about the driver, the mere middleman, losing the bill. . The extra amount of work to prepare the bill and to keep writing it in different ledgers would be minimized. Wouldn’t that save everyone so much time and energy? Now for the question, what would my father put in this shared ledger? Would he put the bills? Yes. Would he put the information of how much the goods cost to him? Probably not.

That is what a shared ledger is and that is how people should use it; to keep the data that needs to be shared between organisations, people and any other entities. When you use public blockchains, always be aware that the data is going to be shared among all the nodes. When you use private/permissioned blockchain, you can choose what information you want to share with the consortium;like my father is choosing to share only the bills and not his cost of the goods.

Now the question will arise, what if someone misuses it? What about privacy? What about security? What if someone stole the ledger? What if someone wrote wrong information in it? What if someone erased it? And a lot more. Don’t worry. Shared ledger is just the beginning. There are many other features of Blockchain that answer your questions. For now, just grab the concept of shared ledger and think about how can this benefit you and your organisation.

Note: I will be preparing a tutorial for Blockchain developers on how they should model their data for this shared ledger in my next blog of Blockchain for professionals. I will be talking about modeling the data, use of hashes and a lot more. Let me know if there is a certain topic that you want me to write about too.