When hearing the term "blockchain" we have been preprogrammed to think only in terms of one of the many cryptocurrencies available ( Bitcoin, Ethereum, Litecoin, Ripple etc) . The press, digital marketing,
and the cryptocoin community has done an excellent job of "brainwashing" us into believing that cryptocurrencies = blockchain and the only practical application of the blockchain is to support
the creation, tracking and exchanging of digital currency. Nothing could be farther from the truth.
In reality, because of the functionality and design of the blockchain it
just happens to be the perfect delivery platform for digital currency. However, the blockchain platform is also fully capable of
supporting not only business-to-consumer
,but also consumer-to-consumer
What is blockchain?
"A blockchain is an immutable, shared, trusted, public ledger of transactions with no single point of control. The ledger is effectively a list of blocks (blocks can store 1 to N number of transactions.)
which are added to the existing chain over time once they are validated."
Still Not clear ? Lets look at these key points one at time.
The following diagram shows the basic design of a blockchain:
A couple of interesting points:
The first block in the chain is referred to as the genesis block.
Each block can contain 1 or more transactions.
The data contained within a bloc is used to generate a hash value. This hashed value changes as the data is changed, no matter how small the change.
Each block in the chain has a record of the hash of the previous block. It therefore knows if the previous block has been tampered with.
Once blocks have been validated and added to the chain, they can not be removed.
The process of adding new blocks to the chain is referred to as mining.
The length of time needed to mine a new block (ie add a new block to the chain) varies by implementation. For example the Bitcoin block chains require 10 minutes under ideal
conditions to add new block, and Ethereum requires 15 seconds under ideal conditions to add a new block.
The hashing of data within a block, recording the hash value of the previous block and not allowing blocks to be removed
insures the integrity of the transactions and chain provenance.
Shared, Trusted and Public
The following diagram shows the architecture of a distributed ledger:
A decentralized ledger insures that no one single party controls the ledger content or accuracy. There is also no single point of failure
Since the ledger is publicly visible, increased trust is built even when the participants are not known to each other.
New block are validated before being added to the chain and each participant receives a copy of these changes.
The data is hashed so as to insure that the data has not been tampered with.
Public Blockchain or Private Blockchain ?
As with all things technical, there is never a single, simple answer to a problem. Blockchain is no exception. Although the general "public" approach to blockchain solves many trust problems between
two parties that are not known to each other, there are also a number of business scenarios where the immutability and data security of the transactions are critical but where the various participants want to
restrict who can "see, modify,and participate" in the blockchain. Private block chains provide access control list type functionality which can be applied to individual uses or groups. Already having a group of
trusted participants also has the benefit of faster transactions time since you no longer need to get a shared consensus before adding blocks.
Does blockchain even make sense ?
Blockchain is not the proverbial "silver bullet" to everything but it does solve a number of real world problems. Below are a couple of previously published decision models that may help you decide
what the right approach is for you and your organization. We encourage you to contact us directly at consultants@bCloudPartners.com so we can discuss your exact needs and help you with your blockchain project.
The blockchain decision model used by the United States Department of Homeland Security:
Or the Suichies decision Model:
What is the history of blockchain?
Blockchain has caught the world’s interest in recent years. Some believe that blockchain is a game changing technology, while others are certain that blockchain has no
real world applications, and are positive that blockchain will fail inevitably along with cryptocurrencies. Time will tell. Meanwhile, let’s understand where this technology came from.
A rudimentary blockchain concept was first introduced in 1991 in a research paper titled “How to Time-Stamp a Digital Document”
Haber and Stornetta. This paper discussed how a client could send a document to a timestamp server to be digitally timestamped. The
server would then link the document to the previous document. A reference pointer was then used to point to the specific data and not the location of the document itself.
Using this approach, if the data changed, the pointer would become invalid. This ensured no one could tamper with the data once it had passed through the server.
2008 - Bitcoin is "Born"
On October 31, 2008 Satoshi Nakamoto published his now famous white-paper titled “Bitcoin: A Peer to Peer Electronic Cash System”. This paper provided a solution to the digital
currency problem of double spending when using a peer-to-peer network. The primary goal of this paper was to describe a network of digital currency that would enable people to echange funds
without the need for a financial institution or 3rd party.
2009 - Bitcoin goes "Live"
Bitcoin goes "live" on 3 January 2009 when Satoshi Nakamoto mines the genesis block of bitcoin (block number 0), which had a reward of 50 bitcoins.
2013 - The first Crypto AltCoin and Tokens appear
Mastercoin represents the first sale of so-called tokens in July of 2013, and the first recorded ICO was that of Karmacoin in April 2014 for its Karmashares project. As of the
end of July 2017, ICO Alert reports that there are more than 60 ICO offers.
2013 - Ethereum is "Born"
A cryptocurrency researcher and programmer - Vitalik Buterin, proposes Ethereum in late 2013. Development was funded by an online crowdsale that took place between
July and August 2014. The system went live on 30 July 2015.
Here is a quick Blockchain Time-line Overview
What are some valid blockchain use cases?
The functionality provided by blockchain is not restricted only to cryptocurrencies. In fact the fundamental tenants of blockchain make it a great solution
to some common everyday problems. Here are just a few we have identified.
Provide proof of origin
Confirm freshness by viewing supply chain from grower to distributor to retailer
Allow traceability back to point of origin in case of contamination
Provide proof of storage and transport
Medical, and Healthcare Blockchain Use Cases
Drug Supply Chain Integrity
Patient Databases/Indexes on blockchain
Medical Supply Chain Management
Transparency and Automation within the patient-to-hospital or patient-to-doctor transactions
Clinical trial provenance — integrity with an auditable trail of data exchange
Efficiency, privacy, and ownership of patient health data
Real Estate Blockchain Use Cases
Transparency within agreements
Verify property information, update and decentralize records