4 Key Features of Blockchain

In earlier article, "9 important points to understand BlockChain" we have seen high level idea about blockchain. In this article we will throw some light on important features which blockchain brings as technology.

Any technology being used because of features offered by it. Below four features position blockchain at different level all together.

1. Cryptographic Algorithm :

Cryptography is associated with the process of converting ordinary plain text or data into intelligible text or data and vice-versa. It is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it.

Cryptography not only protects data from theft or alteration, but can also be used for user authentication. Best cryptography is based on being reliant on the secrecy of the key and not the algorithm for security. 

At high level, there are two basic types of cryptographic systems: Symmetric ("private key") and Asymmetric ("public key").

Hence, cryptography ensures -

(a) Confidentiality - ensure data is read only by authorized parties,

(b) Data Integrity - ensure data wasn't altered between sender and recipient,

(c) Authentication - ensure data originated from a particular party.

Blockchain uses cryptography algorithm to makes it very unique technology.

2. Decentralized Network :

Lets understand difference between centralized and decentralized network to get clear idea where blockchain is leading us.

In case of Centralized network, there is a mandatory centralized point (hardware). Such network is mostly a server as in client-server models. 

Decentralized network can be identified using peer to peer connections rather than using a single point network access. It does not have central authority.

One of the most exciting aspects of blockchain technology is that it is entirely decentralized, rather than stored in one central point. This removes the need for powerful central authorities and instead hands control back to the individual user.

In case of blockchain decentralized network, miners play an important role in the validation of transaction taking place.

3. Consensus Algorithm :

In generic term, an algorithm is a process or set of rules to be followed in calculations or other problem-solving operations - especially by a computer, whereas consensus is term used for a general agreement.

A consensus algorithm is a process used to achieve agreement on a single data value among distributed processes or systems especially in the world of computer science. Those are designed to achieve reliability in a network involving multiple unreliable nodes.

As discussed in earlier point, a blockchain concept is based on decentralized database that is managed by distributed computers on a Peer-to-Peer (P2P) network. Each peer maintains a copy of the ledger which prevents a single point of failure (SPOF). It is important to know that updates and validations are reflected in all ledger copies simultaneously. Bitcoin which is based on blockchain fundamentals also uses the proof of work algorithm (PoW) to ensure security in a trustless network, by including mechanisms that ensure that the effort of mining is represented within the block submitted by the miner. Software on the computers of miners accesses their processing capacity to solve transaction-related algorithms. The block is an encrypted hash proof of work that is created in a compute-intensive process. Although any party can submit a chain of blocks to the ledger, the amount of computing resources required to fake consensus is too great to make it worthwhile to a dishonest party.

In simple language, Miners plays important role in validating the transaction using mathematical puzzles which are placed due to consensus algorithm.

4. Distributed Ledger :

Ledgers is the foundation of accounting which are mostly used for financial or money transaction recording.

In ancient days, people were using clay, wooden tally sticks (that were a fire hazard), stone, papyrus and paper. After computer invented, many software tools helped to digitize all ledgers and process as manual and automated data entry.

In case of blockchain, ledgers store the copy of transactions that have happened. A distributed ledger is a database held and updated independently by each participant which is termed as a node in a large network. Every single person network has a Ledgers store the copy of transactions that have happened. Every single node on the network processes every transaction, coming to its own conclusions and then voting on those conclusions to make certain the majority agree with the conclusions. Once there is this consensus, the distributed ledger has been updated, and all nodes maintain their own identical copy of the ledger.

Distributed ledgers represents a revolution in how information is gathered and communicated. These applies to both static data (a registry), and dynamic data (transactions). Distributed ledgers allow users focus on how they use, manipulate and extract value from databases — less about maintaining a database, more about managing a system of record. This is a big change by blockchain.

We are sharing this article series in Blockchain area, to spread awareness about it.

For any specific requirement about blockchain or its security assessment, do contact us at contactus@grassdew.com or visit to www.GrassDew.com to know more about our different services and products. 

We, GrassDew IT Solutions Pvt Ltd, provides consulting services, software solution services, security services, digital marketing and knowledge services.

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