Bob Pattni, Crypto Advisor on: ‘Why Blockchain Matters’
By now, we’re all pretty well aware of Digital Currencies, and in particular the main type and indeed the original Digital Currency, Bitcoin. Bitcoin is an application that runs on The Blockchain, and for the purpose of this blog I’m going to concentrate on examining The Blockchain to show you how it works and why it’s considered to be the most important technological advance since the Internet itself.
Describing Blockchain to your everyday ‘man on the street’ is actually pretty simple. Imagine a secure transaction ledger database that is shared by all parties participating in an established, distributed network of computers. This ledger records (and stores permanently, as no transaction can ever be deleted from The Blockchain) every transaction that occurs in the network, essentially eliminating the need for “trusted” third parties such as payment processors. Blockchain proponents have gone on the record to describe the innovation as a “transfer of trust in a trustless world;” referring to the fact that the entities participating in a transaction are not necessarily known to each other, yet they exchange value with surety because of The Blockchain. For this reason, The Blockchain is an absolute game changer.
IBM’s book on Blockchain states that there are four key attributes in a blockchain network:
Consensus: For a transaction to be valid, all participants must agree on its validity.
Provenance: Participants know where the asset came from and how the ownership has changed over time.
Immutability: No participant can tamper with a transaction after it’s been recorded to the ledger. If a transaction is in error, a new transaction must be used to reverse the error, and both transactions are visible.
Finality: A single, shared ledger provides one place to go to determine the ownership of an asset or the completion of a transaction.
These unique characteristics are revolutionary because they allow individuals and/or organisations participating in Blockchain transactions to have a high level of transparency. Another advantage of The Blockchain technology is that there are likely to be significant financial savings to the main parties conducting the transactions due to less oversight, reduction of intermediaries, and an elimination of the duplication of effort because all participants have access to the ledger.
Written By Bob Pattni