Part 3: Blockchain Technology - Fundamental Elements
March 29, 2018
In Part 3 of this multipart series on blockchain technology, we will learn the key attributes and functions underlying the blockchain's unique characteristics. Let's get started!
Decentralized. Blockchain technology maintains copies of its ledger across the participants or nodes of the network. The approach eliminates the need for a central repository, associated hardware and software, and without a central authority as in the case of a permissionless network. The decentralized approach makes the blockchain technology highly resilient and with no single point of failure.
Immutability. Unlike a traditional database where information can be created, updated and deleted, transaction recorded to a blockchain is append-only using a combination of asymmetric-cryptography and hash techniques. The transactions are tamper-resistant as they are cryptographically linked to the previous block on the chain. Immutability of transactions enhances the provenance and transparency of information for all participants as they can be certain that information has not been altered.
Transparent. In permissionless blockchains, the user information is not collected and not known, but is represented as blockchain addresses derived as the hash of the user’s public keys. User account and their transactions are transparent to the participants, thus the transactions can be verified before finalized, thereby reduce the ability for users to double spend (sending the same digital asset to more than one user) their digital assets. Transactions within the blockchain can be examined using explorer tools such as Block Explorer for Bitcoin or Etherscan for Ethereum.
Starting with Part 4, we will discuss the remaining fundamental elements of blockchain technology including smart contracts, consensus models, etc.