1、OutlinesOutlines123Blockchain Technology Definition Key Elements of a BlockchainFive Principles for Blockchain ApplicationIntroductionIf you have been following banking,investing,or cryptocurrency over the last ten years,you may be familiar with“blockchain,”the record-keeping technology behind the B
2、itcoin network.And theres a good chance that it only makes so much sense.What is Blockchain Technology?vBlockchain is literally just a chain of blocks,but not in the traditional sense of those words.When we say the words“block”and“chain”in this context,we are actually talking about digital informati
3、on(the“block”)stored in a public database(the“chain”).vBlockchain is an open,distributed ledger for recording transactions,tracking assets and building trust between two parties efficiently and in a verifiable and permanent way.(P113)“Blocks”on the blockchain are made up of digital pieces of informa
4、tion.Specifically,they have three parts:1.Blocks store information about transactions like the date,time,and dollar amount of your most recent purchase 2.Blocks store information about who is participating in transactions.3.Blocks store information that distinguishes them from other blocks.Much like
5、 you and I have names to distinguish us from one another,each block stores a unique code called a“hash”that allows us to tell it apart from every other block.Three Parts of the“Blocks”CASE:A,Inc.vBlocks store information about transactions like the date,time,and dollar amount of your most recent pur
6、chase from Amazon.(NOTE:This Amazon example is for illustrative purchases;Amazon retail does not work on a blockchain principle as of this writing)vA block for your splurge purchase from Amazon would record your name along with A,Inc.(AMZN).Instead of using your actual name,your purchase is recorded
7、 without any identifying information using a unique“digital signature,”sort of like a username.vHashes are cryptographic codes created by special algorithms.Lets say you made your splurge purchase on Amazon,but while its in transit,you decide you just cant resist and need a second one.Even though th
8、e details of your new transaction would look nearly identical to your earlier purchase,we can still tell the blocks apart because of their unique codes.Key Elements of a BlockchainDistributed ledger TechnologyAll network participants have access to the distributed ledger and its immutable record of
9、transactions.With this shared ledger,transactions are recorded only once,eliminating the duplication of effort thats typical of traditional business networks.Records are immutableNo participant can change or tamper with a transaction after its been recorded to the shared ledger.If a transaction reco
10、rd includes an error,a new transaction must be added to reverse the error,and both transactions are then visible.Smart contractsTo speed transactions,a set of rules called a smart contract is stored on the blockchain and executed automatically.A smart contract can define conditions for corporate bon
11、d transfers,include terms for travel insurance to be paid and much more.How Does Blockchain Work?Blockchain Processing DiagramFive Principles Underlying Blockchain TechnologyTransparency with PseudonymityIrreversibility of RecordsComputational LogicDistributed DatabasePeer to Peer TransmissionBlockc
12、hain FAQvWhats the difference between blockchain and bitcoin?Bitcoin is an unregulated,digital currency.Bitcoin uses blockchain technology as its transaction ledger.vWhat are smart contracts?Smart contracts are an integral part of blockchain technology.They automatically execute transactions and rec
13、ord information onto the ledger without human intervention.Conditions of smart contracts are mutually agreed on by network members.Theyre a key component for establishing trust and efficiency between parties.Smart contracts eliminate essentially all the paperwork,streamlining the entire process and
14、saving time and money.vHow can blockchain impact an entire industry?Blockchain enables businesses to rethink the way they work.In the diamond industry,for example,each party can access:High-resolution photosImmutable payment recordsCertificates of authenticity and more.Blockchain FAQvWhats the diffe
15、rence between blockchain and bitcoin?Bitcoin is an unregulated,digital currency.Bitcoin uses blockchain technology as its transaction ledger.vWhat are smart contracts?Smart contracts are an integral part of blockchain technology.They automatically execute transactions and record information onto the
16、 ledger without human intervention.Conditions of smart contracts are mutually agreed on by network members.Theyre a key component for establishing trust and efficiency between parties.Smart contracts eliminate essentially all the paperwork,streamlining the entire process and saving time and money.vH
17、ow can blockchain impact an entire industry?Blockchain enables businesses to rethink the way they work.In the diamond industry,for example,each party can access:High-resolution photosImmutable payment recordsCertificates of authenticity and more.Text 2 A Framework for Blockchain AdoptionText 2 A Fra
18、mework for Blockchain Adoption123Contextual Dimensions for Blockchain Applications How Foundational Technologies take holdAdvantages and Disadvantages of BlockchainBlockchain vs.Bitcoinp Blockchain technology was first outlined in 1991 by Stuart Haber and W.Scott Stornetta,two researchers who wanted
19、 to implement a system where document timestamps could not be tampered with.But it wasnt until almost two decades later,with the launch of Bitcoin in January 2009,that blockchain had its first real-world application.p The Bitcoin protocol is built on the blockchain.In a research paper introducing th
20、e digital currency,Bitcoins pseudonymous creator Satoshi Nakamoto referred to it as“a new electronic cash system thats fully peer-to-peer,with no trusted third party.Contextual Dimensions for Blockchain Applications Noveltythe degree to which an application is new to the worldComplexitythe level of
21、ecosystem coordination involvedThere have been two dimensions affect how a foundational technology and its business use cases evolve.How Foundational Technologies Take HoldThe adoption of foundational technologies typically happens in four phases.Each phase is defined by the novelty of the applicati
22、ons and the complexity of the coordination efforts needed to make them workable.Applications low in novelty and complexity gain acceptance first.Applications high in novelty and complexity take decades to evolve but can transform the economy.TCP/IP technology,introduced on ARPAnet in 1972,has alread
23、y reached the transformation phase,but blockchain applications(in red)are in their early days.How Foundational Technologies Take HoldvSingle use-low-novelty and low-coordination applications that create better,less costly,highly focused solutions.E-mail,a cheap alternative to phone calls,faxes,and s
24、nail mail,was a single-use application for TCP/IP.vLocalization-relatively high in novelty but need only a limited number of users to create immediate value,so its still relatively easy to promote their adoption.vSubstitution-this quadrant contains applications that are relatively low in novelty bec
25、ause they build on existing single-use and localized applications,but are high in coordination needs because they involve broader and increasingly public uses.vTransformation-this quadrant fall completely novel applications that,if successful,could change the very nature of economic,social,and polit
26、ical systems.Advantages and Disadvantages of BlockchainFor all its complexity,blockchains potential as a decentralized form of record-keeping is almost without limit.From greater user privacy and heightened security to lower processing fees and fewer errors,blockchain technology may very well see ap
27、plications beyond those outlined above.Pros Improved accuracy by removing human involvement in verification Cost reductions by eliminating third-party verification Decentralization makes it harder to tamper with Transactions are secure,private and efficient Transparent technologyConsxSignificant tec
28、hnology cost associated with mining bitcoinxLow transactions per secondxHistory of use in illicit activitiesxSusceptibility to being hackedMore selling points of blockchain for the business worldvAccuracy of the Chain Transactions on the blockchain network are approved by a network of thousands or m
29、illions of computers.This removes almost all human involvement in the verification process,resulting in less human error and a more accurate record of information.vCost Reductions Typically,consumers pay a bank to verify a transaction,a notary to sign a document,or a minister to perform a marriage.B
30、lockchain eliminates the need for third-party verification and,with it,their associated costs.vDecentralization Blockchain does not store any of its information in a central location.Instead,the blockchain is copied and spread across a network of computers.vEfficient TransactionsvPrivate Transaction
31、s Many blockchain networks operate as public databases,meaning that anyone with an internet connection can view a list of the networks transaction history.vSecure Transactions Once a transaction is recorded,its authenticity must be verified by the blockchain network.vTransparencySmart contractsStaff Role ChangingEffective Operations“We are decades away from the widespread adoption of smart contracts.A tremendous degree of coordination and clarity on how smart contracts are designed,verified,implemented,and enforced will be required.”Whats Next for Blockchain?
