It’s not a database, it’s a lot of things not. It’s a decentralized software mechanism that results in a trusted source of information
This single source of truth can contain almost everything. Think houses, rental rights, contracts, money, votes and so on. Everything of value (can also be non-value but doesn’t make sense)
We need to represent the value in a digital way. We do this by converting the information we have into a unique string of information called a digest. This process is known as hashing. For example paper money has a unique serial number which could be translated into a digest.
This value is stored in a ledger that is distributed. As you see in the first picture the ledger is stored on all nodes in the network resulting in fast read-only access to all transactions in the past
Value can be transacted. These transaction are received by the nearest node. When received, it checks the transaction an accepts or rejects it. Transactions are broadcasted throughout the blockchain network, using peer 2 peer technology. First introduced by Napster in 1999.
Each transaction is digitally signed by the sender. This means its contents cannot be forged. It’s much like a cheque. You delvier the cheque to any bank and it magically find its way to the correct account-holder bank.
Aside from the digital signature other checks are run such as if the sender owns the funds he/she wants to transact
All nodes in the network run these same checks and store their conclusions, when a majority of the network reaches the same conclusions the rest of the network follows their lead.
What results is 1 shared ledger that all nodes agree on. This ledger stores the value as defined
It is also possible to store computer code in a blockchain. This is done by Ethereum. A blockchain that can execute this code. The code is referred to as a smart contract.
Smart contracts can do a lot of tasks. They can verify if a signature was placed before a specific date, make automated payments, or run an entire organisation.
Storing value safely in the cloud: Frictionless transfers at lower costs (currency, energy) Immutability: The distributed ledger as proof: voting, reference data: server uptime Disruption: Creating new business models: automatic payment for services depending on availability
Today we can’t electronically sign a contract without being dependent on a 3rd party server to validate signatures.
To report you’ll need acccess to the rich transaction data which was lost when only the balance of that transaction was stored. We do this because 30 yrs ago, we didn’t have the computing power to store all transactions
Store all invoice data as immutable transactions
Want to realtime compare a balance? Just add/subtract all transactions in the blockchain.
Need a realtime report? Just get the data from the blockchain
Global trade is a paper trail blazed with legacy. It takes days to exchange goods vs. payment.
A smart contract is programmed to validate all the conditions of a trade. When complete it can release payment.
By decentralizing decision-making there is a (much) higher change that this is the right decision.
Blockchain - CIO City Workshop
SANDER VAN LOOSBROEK
JUNE 28, 2016