Blockchain

[Adernal.com] Original illustration by Paul Forrest

Among emerging technology, Blockchain is probably the one that is surrounded by enigma on what exactly it is and how one can identify practical use cases for our relevant industries. When I started my quest to know more about blockchain, I found tons of information at a conceptual level that gives a fuzzy feeling of understanding but lacks a comprehensive view, the below is from an IBM whitepaper, you will find similar explanations elsewhere too.

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But, what does this mean for an average person like me? What makes up a BlockChain? Is BitCoin a blockchain? Who controls it? How can I start experimenting with BlockChain? Etc. The subsequent parts of article is an attempt to synthesize and de-mystify Blockchain enough for someone to get a jump start on this potentially disruptive technology Part 1 – The Basic Blockchain Composition 1) – a block is a record in literal sense, very similar to a database record. It can hold few or groups of information including files and other digital assets e.g. Name, Address, Contact information, your picture etc. Like in a databases, each record will need a uniquely identifiable key called the hash in block chain. 2)The figure below demonstrates a very simple block and how using the previous hash you can form a block chain. A Block Chain – Note that any change in data will invoke generation of new hash key. If we try and change the data of Block 1, the hash key will be invalidated, thus breaking the chain. Hence we hear that data in a block chain cannot be altered, there are a lot more nuances to ensure this is enforced that I will try and cover in the next section. Part 2 – The Network If you are still reading, you probably would be thinking that the concept of block and block chain is probably no different than creating an enterprise database that has a very strong referential integrity and maybe you probably did it in some form at some point of time – you are right as the basics of blockchain are very simple but what separates blockchain to an enterprise database is the network, no single enterprise controls the public blockchain network. Let’s understand the basic composition of a blockchain network. 1. 2. 3. Part 3 – Blockchain Platform If you followed thru the basics of the block, the blockchain and the network, the only thing needed to start experimenting is a blockchain platform that brings everything together. There are many out there, each has the same blockchain principal but different features list. Most offer APIs level access to interact with the platform e.g. to query, to mine, to transact, to get the latest block on the blockchain etc. It can be little overwhelming but choose a platform that you feel is easier for your level of understanding, I am currently experimenting with Ethereum. Part 4 – The Q&A I believe the above should be adequate to start drilling down deeper into blockchain technology. I am going to conclude this article with a series of preempted Q&A’s that many of you may have: 1) Is BitCoin a blockchain? – Yes, BitCoin is the largest implementation of blockchain technology, there are other implementations of Blockchain that you can google. 2) Are all Blockchain networks public? – Not necessarily, depending on your use case you can choose your blockchain implementation to use either a public or private network. Private network will have nodes that are only within your ecosystem. It is also called as a 3) Can I use an existing Blockchain technology? – Absolutely, it wouldn’t be wise and economical to develop your own blockchain platform. There are many Blockchain platforms to choose from, I am personally trying out Ethereum. It’s relatively simple to set up and start trying go to: https://www.ethereum.org/ 4) Is Blockchain secured? – Yes, The block chain is a secure system, like all digital systems it has been and will be subject to hacks but the way the system is structured it will take an enormous amount of computing power to hack a block chain network, we referenced the hashing algorithm SHA256 that has not been hacked yet, we also referred to the vast redundancy of the nodes that identify any inconsistencies and prevents any frauds. However, it is possible and maybe even easy to hack a small blockchain network e.g. if there are only 100 nodes that participate in a blockchain network, it is possible for someone to take control of 51 nodes and create a majority that can allow fraudulent nodes to be updated in the system. There are other security processes that can prevent such attacks by making the network even stronger. 5) Are Blockchain transaction really immutable? What happens if someone made a mistake? – Yes, but this is subject to controversy, in smaller networks it’s possible if all parties agree on the edit, the above point of security talks about 51% of network favoring a change, so yes it’s technically possible. 6) Can Block in a blockchain contain rules? – Yes, it’s called 7) Is Distributed Ledger a database? – Yes, in a general sense, however it is not intended to replace the enterprise database to store other data relevant to your business. It would not make sense to put everything on a block chain. The simpler the block the more efficient the network. 8) What are some of the other use cases, other than BitCoin and financial transaction for a blockchain? – There can be many use cases for blockchain across industries. For e.g. in Healthcare, Electronic Medical Records can exist in block chain and can be shared and updated by all parties in a consortium. EDI and other transactions among other Healthcare constitutions can be part of blockchain network thus eliminating the need of a clearing system etc. The Blockchain technology has the potential to drive efficiency and also trigger the next wave of disruption, this trend is in an evolutionary phase and is getting better with each implementation. I hope you find this article useful. Would love to get your views, questions or comments. adernal.com . Your block can contain rules that can be processed by the blockchain network, these rules can be per your use case e.g. only allow Member 1 from a consortium to view full content of the block or pay someone only on the last day of a month etc. Keep your contracts simple to improve network efficiency. Consortium. For e.g. there can be healthcare Consortium among healthcare constituents to exchange EMR data for example. Node responsibility – Each node is responsible to maintain the referential integrity of the blockchain network. In the previous example we saw that if one goes and changes the data of a previous node the change will be immediately identified by the network and would be rejected as it will not match with the copy of the majority of network – thus nodes have to come to a . This also gets us to another interesting term called – This topic can be an article in its own but think about it as a process to add a block to a blockchain and ensuring that all nodes verify the block for referential integrity before it being added to the block. A good blockchain platform takes care of this automatically. Mining is an expensive computing process and depending on the network size and algorithm can take time. The distributed ledger – The underlying blockchain technology is such that any block that is added to a blockchain is propagated to all the nodes in the blockchain, in literal sense if you are a node in a block chain you will have a full copy of all the blocks in that network – this is also referred to as the distributed ledger. There are other models where a node can communicate thru a transaction node if the node does not want to keep a copy of the ledger, this article will not go into further detail on that. A blockchain technology is distributed in the network. It means each party participating in a blockchain transaction becomes part of blockchain network called nodes. The network is very similar to a peer-to-peer network that we all would have used in some point of time. So what is a block chain? Simple, each block header has a field that references the previous block hash key, thus forming a contagious chain of blocks that has a strong connection to the previous block, thus a chain.

Piyush Daftary

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SDE2 at Microsoft

“It’s a shared ledger for recording the history of transactions – that cannot be altered.” The white paper further adds: “Transactions take place every second – orders, payments, account tracking. Often, each participant has his own ledger – and, thus, his own version of the truth. Having multiple ledgers is a recipe for error, fraud and inefficiencies. The goal is to see a transaction end-to-end and reduce those vulnerabilities.”

  • Hash – A hash is a unique key for the block, if you have worked with Hash functions e.g. SHA256, you know that it generates a unique cryptographic signature for data. It’s much simpler than what it sounds. E.g. Combination of First Name, Last Name, Phone number will generate a hash key that is unique to the data supplied and the Hashing algorithm will always generate that same key for the same data irrespective of the system that generates it. This becomes the foundation element of a block as even the slightest alternation of data will generate a new hash – it’s also referred to as a . This is where a Hash is different from Primary key of a database, the hash of a block is generated from the data in the block. The generated hash will be part of the block header.
  • Block header – like a database record where you have other fields along with your primary key e.g. time stamp, audit log etc. similarly a block header will have other fields I will not go into detail for the sake of simplicity. But read on to know an important field called Pervious Block Hash in point #2.
  • Data – Each block will contain the data pertaining to your use case / application e.g. address book of first and last name, a medical record or your vehicle history etc. etc.

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