The IoT is gaining popularity by providing smart home automation facilities to our modern societies. Undoubtedly this innovation is providing excellent convenience and smart services to homeowners. But the existing smart system has limited processing power and storage capacity giving rise to security vulnerabilities. Then what to do? The answer is ‘’Block Chain technology’’. Block chain is shifting the paradigms of our business world at a rapid rate.
You may think understanding the tech is quite easy. But we know that there’s a good chance that you came across a lot of meanings that didn’t make much sense when you search for block chain glossary online. Well, but do not worry, the real block chain definition is much easier to understand than you think. In reality, the new tech is actually changing the perspective of the digital world as block chain technology isn’t going anywhere, for now it’s time to get to know the real definition of block chain. Then what is block chain technology? Block chain technology is a distributed ledger system that promotes decentralization, transparency and data integrity.
At the very core, you could think of it as chains of blocks. But, here the words ‘’chain’’ and ‘’block’’ represent different things. In this context, the block represents digital information and the chain represents how digital data is stored in the database/ ledger. Usually, digital pieces of information make up the ‘’blocks’’ in the ledger. Block chain is a system of recording information in a way that makes it difficult or impossible to change, hack or cheat the system.
A block chain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the block chain. Each block in the chain contains a number of transactions and every time a new record of that transaction is added to every participant’s ledger. The decentralized database managed by multiple participants is known as ‘’Distributed Ledger Technology (DLT)’’. A block chain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a ‘’hash’’.
Block chain is ideal for delivering the information because it provides immediate shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members. A block chain network can track order, payments, accounts, production and much more.
And because members share a single view of the truth you can see all details of a transaction end to end, giving you greater confidence as well as new efficiencies and opportunities. Key elements of a block chain are: distributed ledger technology; immutable records; smart contracts etc.
As each transaction occurs, it is recorded as a ‘’block’ ’of data. Those transactions show the movement of an asset that can be tangible (a house, a car, land) or intangible (intellectual property, patents, copyrights, branding). The data block can record the information of your choice: who, what, when, where, how much and even the conditions-such as the temperature of a food shipment. Each block is connected to the ones before and after it, these blocks form a chain of data as an asset moves from place to place or ownership changes hands. The block confirms the exact time and sequence of transactions and the block link securely together to prevent any block from being altered or a block being inserted between two existing blocks.
Each additional block strengthens the verification of the previous block and hence the entire block chain. This renders the block chain tamper –evident, delivering the key strength of immutability. This removes the possibility of tampering by malicious actors-and builds a ledger of transactions you and other network members can trust.
Operations often waste effort on duplicate record keeping and third-party validations. Record keeping systems can be vulnerable to fraud and cyber-attacks. Limited transparency can slow data verification. And with the arrival of IoT, transaction volumes have exploded.
All of this slows business, drains the bottom line- and means we need a better way. Benefits of block chain are numerous. It provides greater trust, as a member of members- only network you can rest assured that you are receiving accurate and timely data and that your confidential block chain records will be shared only with network members to whom you have specifically granted access. It gives greater security. Consensus on data accuracy is required from all network members and all validated transactions are immutable because they are recorded permanently.
No one, not even a system administrator can delete a transaction. It is more efficient i.e. with a distributed ledger that is shown among members of a network, time-wasting record recollections are eliminated. And to speed transactions, a set of rules- called a smart contract- can be stored on the block chain and executed automatically.
There are several ways to build a block chain network. They can be public, private, and permissioned or built by a consortium. A public block chain is one that anyone can join and participate in, such as Bitcoin. Drawbacks might include substantial computational power required, little or no privacy for transactions and weak security. These are important considerations for enterprises use cases of block chain. A private block chain network, similar to a public block chain network, is a decentralised peer-to-peer network. However, one organization governs the network controlling who is allowed to participate, execute a consensus protocol and maintain the shared ledger.
Depending on the use case this can significantly boost trust and confidence between participants. A private block chain can be run behind a corporate firewall and even be hosted on premises. Businesses that set up a private block chain will generally set up permissioned block chain networks. It is important to note that public block chain networks can also be permissioned. This places restrictions on who is allowed to participate in the network and in what transaction. Participants need to obtain an invitation or permission to join. Multiple organizations can share the responsibilities of maintaining a block chain. These pre-selected organizations determine who may submit transactions or access the data.
A consortium block chain is ideal for business when all participants need to be permissioned and have a shared responsibility for the block chain. When building an enterprise, block chain application, it’s important to have a comprehensive security strategy that uses a cyber security framework, assurance services and best practices to reduce risk against attacks and fraud.
Well back in 1991, Stuart Haber and Scott Stornettqo started working on the first block chain technology. Later on, they upgraded the system and included Merkle trees. Even though many people think that the block chain technology definition first came in 2018, it actually began in 1992. A person named Satoshi Nakamoto came with a new vision for block chain, and this time it was the core of crypto currency-Bitcoin. Bitcoin changed the way our system works as it was a digital form of payment.
