Blockchain: Technology Fundamentals of the Trust Machine
In a paper soon to be released in the Annals of Emerging Technologies in Computing, “Applications of Blockchain Technology beyond Cryptocurrency,” Maaruf Ali and I examine the upgrade in trust that blockchain offers over the existing internet. Despite all the blessings of the mighty internet, it is highly flawed in terms of security and privacy, especially when it comes to uses in FinTech and E-commerce. Blockchain, the technology behind cryptocurrency, is revolutionary in that it provides mechanism for Peer-to-Peer (P2P) transactions without the need for any intermediary body such as banks to establish trust. In fact, Bitcoin is just an exemplary use of blockchain. Blockchain, is the “world wide ledger”, and is considered capable in the domain of computing of enabling limitless applications beyond transactions: such as storing and verifying legal documents including deeds and various certificates, healthcare data, IoT, cloud, decentralized and/or autonomous organizations/ government services and so forth.
Blockchain, is therefore the “Trust Machine”. It validates all transactions and preserves a permanent record of them while making sure that any identity-related information of the users are kept incognito. Thus the personal information of users is sequestered while all transactions are substantiated. This is achieved by reconciling mass collaboration through cumulating all transactions in a computer-code-based digital ledger. Thus, by applying blockchain or similar ledger technology, users need neither mutual trust nor an intermediator; rather the trust is manifested within the system itself.
A blockchain comprises of two different components: A transaction, in a blockchain, represent the action triggered by the participant. A block in a blockchain is a collection of data recording the transaction and other associated details such as the correct sequence and timestamp.
Blockchain can be either public or private depending on the scope of use. A public blockchain enables all the users with read and write permissions such as Bitcoin. However, there are some public blockchains which limit the access only either to read or to write. On the contrary, a private blockchain limits access to the ledger to selected trusted participants only, with the aim to keep the users’ details concealed. This is particularly useful for government institutions and related companies within the same concern.
One of the major benefits of (most manifestations of) blockchain is that it is public. Each participating entity possesses an updated complete record of the transactions and the associated blocks. Thus the data remains unaltered as any changes will be publicly verifiable. However, the data in the blocks are encrypted by private key and hence protected against public interpretation.
Another major advantage of blockchain technology is that it is decentralized. It is decentralized in the sense that:
There is no single device that stores the data (transactions and associated blocks), rather they are distributed among the participants.
The transactions are not subject to approval of any single authority or abide by a set of specific rules, involving substantial trust as to reach a consensus.
The overall security of a Blockchain eco-system is another advantage. The system only allows new blocks to be appended. Since the previous blocks are public and distributed, there are significant impediments against them being altered or revised.
For a new transaction to be added to the existing chain, it has to be validated by all the participants of the relevant blockchain eco-system. For such validation and verification process, the participants apply a specific algorithm. The relevant blockchain eco-system defines what is perceived as “valid”, which may vary from one eco-system to another. A number of transactions, thus approved by the validation and verification process, are bundled together in a block. The newly prepared block is then communicated to all other participating nodes to be appended to the existing chain of blocks. Each succeeding block comprises a hash, a unique digital fingerprint, of the preceding one.
Mahdi H. Miraz, Salmabad