Blockchain: Back to Basics
We are releasing a series of articles explaining the nature and mechanics behind blockchain technology. In this article, you’ll learn about the basics surrounding the underlying concept, including its main features.
A blockchain is a digital set of sequentially connected blocks that work as a ledger, recording information. There are some major differences between a blockchain and a traditional paperback ledger or Excel sheet. One of the first and most well-known use cases of blockchain technology is cryptocurrency. But what made it so popular and why are so many institutions and companies adopting it? Let’s dive into the main features of blockchain.
- Immutable — No one can modify the information saved on a blockchain. It cannot be edited or deleted. The records on a blockchain are permanent and unchangeable, meaning no one can tamper with the information — contrary to traditional ledgers.
- Distributed — Everyone with access to the network can access its information, leading to total transparency.
- Decentralized — Blockchains are accessible and managed by dispersed network participants and therefore decentralized by design. Thus, blockchains are neither governed nor controlled by a sole person or entity. Traditional systems, such as social media platforms, public and private institutions, etc., are centralized, so information (namely, transaction records) is usually controlled and managed by a single entity. This means that users have very little or no power at all over it.
- Secure — If you look at a transaction on a blockchain, the only thing you’ll find is a line of letters and numbers all mixed together. In cryptography, this is called a hash — a unique ID number, almost impossible to tamper with. Each transaction has its own unique hash.
- Dependent on consensus — Processing transactions and creating new blocks in a blockchain needs consensus from the network. Different projects use different consensus protocols. Proof-of-stake (PoS) and proof-of-work (PoW) of two of them. The latter relies on different nodes (machines, not people) communicating with each other and reaching an agreement through an algorithm. They do not necessarily have to trust each other to agree on the information provided. All they have to trust is the algorithm. PoS is based on staking: cryptocurrency owners are responsible for validating block transactions by staking tokens — which is different from just chipping in. When someone stakes tokens, it means they’re committing coins without actually losing them.
- Efficient — Take logistics, supply chain, or even broader areas such as medical aid. Time-consuming processes and hierarchic approvals are eliminated from the process because everything becomes automated. Having the information streamlined in one single centralized ledger makes processes faster, thus more efficient.
All these features are linked and powerful when combined. Blockchain will become an integral part of many future solutions as a protocol layer or technology. From transaction of goods to confidential computing, there is an on-chain world to explore — the off-chain being the real world, so to speak.
The concept of blockchain was first introduced by scientists Stuart Haber and Scott Stornetta in the early 1990s, described as a chain of blocks secured by cryptography. However, its practical implementation only happened in 2009, with Bitcoin. The world has made great progress since then, though. This is an ever-evolving universe, for it’s essential to keep growing in order to fit different narratives and use-cases. In theory, it’s possible to do almost everything with blockchain and some of those ideas are already being put into practice. From decentralized exchanges to medical aid, blockchain has countless applications.
The beauty of transparency
It’s important to grasp the concept of “auditability” to understand the ramifications of blockchain. To do an audit is to verify that something is running how it should. Audits are a common practice when money is involved, and they’re usually performed by an external party. Now, what if all members of a network were able to verify the data transactions of the said network?
This is basically what happens with blockchains. Depending on the underlying protocol and security logic, a blockchain is auditable and verifiable by nature, eliminating the need for trust — in a higher power such as an institution or enterprise.
Verifiable Privacy at Scale
It’s great that users are able to verify if their data is being managed and stored as promised. But what about confidentiality, a feature so much in demand nowadays too? Companies need access to their customers’ and clients’ data, but privacy is still something that should be respected. Integritee does exactly that: enables access and insight into important data without compromising the sensitive bits.
Our solutions put together the trust of blockchain technology — trustworthy and public by default — the confidentiality of Trusted Execution Environments (TEE) — which ensures the proper storage and management of sensitive data — and the scalability offered by sidechains. Get the best of both worlds with Integritee: the ability to still explore important data without a wide range of use-cases, without compromising the integrity of sensitive information and maintaining it safe.
Integritee enables developers and firms to unchain the value of sensitive data. By combining the trust of Polkadot with the confidentiality and speed of enterprise-grade hardware, it will power a new generation of data-driven dApps and services.