An Intro to Blockchain

Blockchain can be described as a list of records, literally known as blocks, which are linked together using cryptography to form a chain. A blockchain is also a distributed software network which works as both a digital ledger and a mechanism for enabling the secure transfer of assets. Much like how the internet facilitates the digital flow of information, blockchain facilitates a secure digital flow of information.

Anything can be tokenized, stored, and exchanged on a blockchain network.

Blockchain technology first emerged in 2009 with Bitcoin’s cryptocurrency blockchain; since their chain is accessible to anyone, it is considered an open network. Today, though, there are many forms of blockchain technology with many levels of accessibility. Blockchain provides a permanent record of transactions, which means a fully transparent and real time overview of the network for its members.

Blockchain 101

Blockchain Basics

A blockchain is just what it sounds like, a chain of blocks, or more accurately, a chain of digital information stored in a public database.

Digital information blocks include:
  • The information or transaction data
  • Who is participating in the transaction or exchange of data
  • A hash, which identifies the block

Blockchain exists on a Distributed Ledger which allows designated users to view and add digital information (blocks).

Depending on the blockchain, people may be able to view previous ledger entries and/or record new ones. Although most blockchains have complex rules, the blocks and contents within them are protected by cryptography, which ensures that the previous transactions on the network cannot be forged nor destroyed. This allows a digital currency to maintain a trusted network without relying on a central authority, which is why digital currencies are decentralized.

Blockchain is famous for its role in bringing about the rise of cryptocurrencies, but there are many other uses, as well. Blockchain can be used far beyond crypto such as fintech and data integrity.

Blockchain 101

How Blockchain Works

In simple terms, a blockchain is a list of data records that works as a digital ledger.

The data is organized into blocks and are chronologically arranged. Blockchain technology is mostly used to record cryptocurrency transactions, but it does suit other kinds of digital data and can be applied to a variety of use cases.

Since the blockchain network is maintained by many computers all over the world, it can function as a decentralized database or ledger. This means that each participant may maintain a copy of the blockchain data, and they communicate with each other to ensure that they are all on the same page. Therefore, blockchain transactions occur within a peer-to-peer global network, which leads to cryptocurrencies that are borderless and resistant to tampering.

How It Works

Transaction
1. Transaction

Someone wants to make a transaction

Blockchain Block
2. Block

The required transactionis digitally representedas a block

Blockchain Network
3. P2P Network

The transaction is broadcastto a P2P network consisting of nodes

Blockchain Validation
4. Validation

Using algorithms, the node network validatesthe transaction and user’sstatus

Blockchain Blocks
5. Block

Once verified, the transaction iscombined with others tocreate a new ledger block

Blockchain
6. Blockchain

The new block is added to the "chain"in an permanently, unalterable way

Complete
7. Complete

The transaction is complete

Blockchain 101

Distributed Ledger Technology

Blockchain and distributed ledger technology are similar in many ways. See, all blockchains are distributed ledgers, but not all distributed ledgers are blockchains. Distributed ledger gives control of all its information and transactions to the users to promote transparency. They minimize transaction time and are constantly processed to help businesses save money.

When put into the context of blockchain, distributed ledgers bring transparency and efficiency to businesses while improving security benefits. These technologies can change the way we organize our businesses because of the cryptographic security.

Digital Ledger Technology
More Information About Digital Ledgers
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Blockchain 101

Stellar Blockchain

Stellar consensus protocol (SCP) is an agreement system which allows for decentralized, leaderless computing networks to efficiently reach a consensus outcome on a decision. SCP furnishes a way to reach consensus without relying on a closed system to accurately record financial transactions. SCP prioritizes safety and liveness.

A consensus algorithm is considered “safe” if it can never produce different results for different participants. Liveness means the algorithm will never fail to produce a result. Additionally, should there be any misbehavior on the network, the progress on it stops until consensus is restored.

Unlike other consensus protocols, SCP doesn’t define a system of incentives for participants.

SCP boasts 4 key qualities:

  • Decentralized control: allows anyone to validate in the network with no restrictions
  • Low latency: consensus can be reached in a matter of seconds
  • Flexible trust: participants are able to decide who the other participants in the network they trust
  • Asymptotic security: referring to digital signatures and hash families used in a way to protect the network even against very high computing power.
Blockchain 101

Blockchain Security

Data is an invaluable asset to you and your company. Your business collects a lot of information about yourselves and your customers, but the value of this data makes it attractive to hackers. And because most businesses use centralized storage for their data, they are especially vulnerable to cyberattacks. Blockchain, though, is a decentralized technology, so there is no one point of entry for hackers to target and the cryptographic keys to access the blockchain can be revoked at any time.

When it comes to blockchain as a cybersecurity measure, the key trait is this decentralization. When access control, network traffic, and data is held in varied locations, it becomes much more difficult to exploit. There are hundreds, even thousands of computers: in order to hack the system, each and every one would need to be compromised, making it impractical, even impossible, to hack a decentralized network.

Centralized Network
Centralized Network

Users connect to a central server, which is the agent for all interactions (most common).

Decentralized Network
Decentralized Network

Network configured to allow file sharing with everyone or with selected users.

Blockchain 101

System Integrity

The use of blockchain technology has been explored in various context, but the data immutability and security it provides is invaluable. Two crucial factors of blockchain are consensus and immutability. Consensus refers to the blockchain user’s ability to agree on the state of the network and the validity of transactions. Immutability is the ability of a blockchain to prevent alteration of crypto transactions that have already been confirmed, but they also refer to the record of other forms of digital data.

System Integrity

Because blockchain is a decentralized ledger, if someone tries to alter data, the system will double-check the whole chain, compare it to other data changes, and remove any changes that don’t match the ledger. Because of this, the blockchain can also manage access and identity through its IAM system, which makes it all but impossible for hackers to enter a system and leave it undetected. Further, blockchain’s immutability also means that hackers cannot erase the access record.

Learn How Blockchain Protects System Integrity

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Blockchain 101

Industry 4.0

As industrial and technological advances continue to push advancements into the future, blockchain technology is seeking out its place in the most recent industrial revolution. The fourth industrial revolution is focused on cyber physical systems. It’s an intersection between digital, biological, and physical innovations. Industry 4.0 is seeking out more robust use of automation in our day-to-day lives. The application for blockchain lies in smart contracts, which are the building blocks for all decentralized applications (dApps). Click here to learn about dApps.

How will blockchains accelerate growth of other technologies like AI and data analytics? The computing power of personal computers can be connected through technology and used to process enormous amounts of data. The decentralization of blockchain networks is also very secure, more so than a centralized structure when it comes to a field like human-machine interaction. Blockchain will undoubtedly bring value wherever there is a need for various participants within a network to interact, exchange, and share data all while maintaining a trustworthy environment.

Blockchain 101

Blockchain Use Cases

Blockchain was once almost synonymous with Bitcoin and other cryptocurrencies (learn more about how they work). Over time, though, blockchain has found other applications which makes it  a valuable asset for different people in different industries. This is because blockchains have an innate ability to create transparency and fairness while saving time and money. Blockchain technology’s impact is being felt in various sectors, which is why smart contracts could well be the way of the future.

There are myriad potential applications for blockchain beyond the narrow confines of cryptocurrencies. Other uses include:
  • Supply chain management
  • Digital identification verification
  • Healthcare
  • Notaries
  • Real estate
  • Voting mechanisms
  • Advertising insights
  • Academic curricula

The potential for blockchain and smart contracts as a whole are truly unlimited, which is why, like so many others, we’re excited to see what the future holds for the technology!


Check out some of our Use Cases Now:

USAF Using SIMBA Chain to secure Additive Manufacturing

SECURING ADDITIVE MANUFACTURING

SIMBA Chain has been chosen to help the U.S. Air Force with Additive Manufacturing efforts on the battlefield and at home.

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TRACKING SOLAR ENERGY

Blockchain can help create a system for those producing power to sell it to the utility, and for the utility to better incorporate that energy into its overall energy plan.

See the Use Case
Solar Panel
Blockchain CIF

TRACKING COST, INSURANCE, FREIGHT

Cost, Insurance, and Freight is an expense paid by a seller to cover the costs, insurance, and freight against the possibility of loss or damage to a buyer’s order while it is in transit to a port.

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MEASURING MANUFACTURING PRODUCTIVITY

Overall Equipment Effectiveness identifies the percentage of manufacturing time that is truly productive. Mōdus Automation is seeking to bring irrefutable trust to the manufacturing life cycle through blockchain.

See the Use Case
ITAMCO QuPid

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