Blockchain: The uncomplicated definition
Simply put, blockchain talks about applying accounting principles to the process of "information sharing" of any kind, so as to create better transparency and trust.
What accounting principles?
Creation, Maintainence of an electronic ledger that records information in a format, which cannot be tampered with. Also,any deletions in its records is not allowed, only further additions. This ledger is distributed to either all users or kept in multiple trusted servers. Either ways, all of its copies get synced real-time.
What is the end goal?
Virtually any information, transactions or assets of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.
How blockchain works?
Blockchain gets its name from the way it stores information — as blocks that are linked together to form a chain.Blocks record and confirm the time and sequence of transactions,which are then logged into the blockchain. As the number of transactions grows, so does the blockchain.
Each block contains a hash (a digital fingerprint or unique identifier),alongwith timestamped batches of recent valid transactions, and the hash of the previous block. The previous block hash links the blocks together and prevents any block from being altered or a block being inserted between two existing blocks. In this way,each block verifies the previous block and hence the entire blockchain. This method renders makes the blockchain tamper-proof.
How to decide if Blockchain will benefit your institution, system or business?
- » Does your business/institution network needs to manage contractual relationships?
- » Do you need to track transactions that involve more than two parties?
- » Is your current system overly complex or costly, possibly due to a central point of control?
- » Can the system benefit from increased trust, transparency, and accountability in recordkeeping?
- » Is the current system prone to errors due to manual processes or duplication of effort?
- » Is the current transaction system vulnerable to fraud, cyber-attack, and human error?
If the answer is “yes” to any of these questions, blockchain will benefit your industry,business, institution or system.