First, I am not a BitCoin investor or miner (perhaps in the future)…but it’s been a while I had been following BitCoin’s underlying technology called “Blockchain”! In fact, Bitcoins value hangs on the trust provided by Blockchain technology! Quite fascinating – Blockchain facilitates a way where multiple parties who remain anonymous can trust and collaborate each other using a consensus-based protocol and without using a central authority. Certainly, it introduces us to a brave new IT world relying on programmable transactions on a network using distributed ledgers built using PKI based cryptographic mechanisms! The distributed ledger fabric assures a shared system of trusted record keeping for a business process where multiple business stakeholders can participate and the ledger is shared between the members and each maintains their own copy of the ledger. As it is a distributed ledger over the network, there are no intermediaries or central authority, and the process is very transparent, auditable, tamper-resistant and there is no risk of ledger tampering and fraud.
In a typical scenario, when a transaction occurs, each transaction is added to a block. Each block is connected to one before and after in the ledger as a chain. This means groups of transactions blocked together and fingerprinted using hashing mechanisms and appended to the ledger as part of the chain. The blocks are irreversible. More importantly, no transactions can be added to the chain without the participating members’ consensus. The consensus is built using a set of policy checks that provide full-circle validation including identity verification, versioning and endorsement for the correctness of the transaction flow since the beginning of the transaction and till its commitment. Once committed to the ledgers, blockchain provides a single system of record for the business.
Not just Cryptocurrencies…Blockchain can have other deployment Models!
Blockchain is usually deployed in one of the following three different deployment models —
- Permissionless Public Blockchain – Deployed over Internet accessible by anonymous entities (ex. Bitcoin world)
- Permissioned Private Blockchain – Members trusted based on Identity management process within or a group of organizations or a consortium of legal entities using their Federated Identities over Trusted networks.
- Private Blockchain – Typically deployed within an organization’s Intranet
Just not because I am passionate about its cryptographic underpinnings, by design the data exchanged and stored in Blockchain network remains trusted and tamper-resistant by distributing them with a shared set of business processes and rules using smart contracts and a consensus protocol that builds on endorsement policies and correctness of committed transactions, assuring they are authenticated, authorized and cryptographically signed and verified using hashing and multi-signatures.
We may think now that Blockchain may not solve all the problems for all IT business models…however, it is NOT a hype as there are many viable use cases for this technology, where trust of business transactions and data are deemed critical. Indeed, sooner in the blockchain we all trust!
Before I get started, I found the BBC story on “Bitcoin and Blockchain” very helpful: