Blockchain is a shared ledger technology that leverages cryptographic techniques and voting-based consensus algorithms to deliver greater degrees of trust, transparency, and speed and security across disparate stakeholders in modern business networks. The technology itself is applicable across all industry verticals (healthcare, capital markets, energy, etc…) and has the potential to radically transform countless embedded transactional and data sharing processes. Amongst other topics, this section will explore enterprise use cases and dig deeper into the core constructs of permission-based Ethereum blockchain implementations.
Blockchain is an industry-agnostic, peer-to-peer platform that enables businesses to connect via the internet to develop new business models, transform operational processes and create new revenue streams. If your business use case could benefit from a decentralized, secure, auditable network with fast transactions, blockchain may be the answer.
- Highly Transparent
- Immutable data
- Distributed ledger
- No centralized ownership of authority
- Eliminates the need for intermediaries
- Consensus-driven (ensures one participant can’t make unilateral data changes)
- Trust through enterprise identity schemes and digital signatures
- Enables asset modeling (i.e. tokenization)
- Finality in seconds
Prior to blockchain technology for business, there was no mechanism to secure and validate ownership in a digital asset or verify a transaction in a trust-less, public manner. One of the most appealing aspects of blockchain for business is the degree of transparency and privacy it offers. Blockchain shifts trust from central authorities to a decentralized consensus among all the network participants, thereby increasing trust and security.
Another major benefit of a decentralized network is that it’s very failure-resistant, as a single point of failure is removed, and even in the event of a failure of a large number of nodes, the blockchain remains available. Blockchain information is not stored in a single place; instead, data is stored, synchronized and disseminated across a variety of servers that participate in a business network.
When it comes to governance, decentralized ledgers don’t rely on a central point of control and allow for nuanced permissions. Rather than relying on a central authority to transact with other users, blockchain uses innovative consensus protocols across a network of nodes to validate transactions and record data in a manner that has a high probability of being immutable. And because the need for intermediaries is eliminated, businesses can save time and costs in the process.
Collective updates through consensus ensure that the nodes on the network agree on the same state of a blockchain, creating a self-auditing ecosystem. In private blockchains, users can take advantage of lightweight consensus algorithms that rely on voting rounds and digital signatures for protection. As a result, private chains offer greater performance and throughput while eliminating the need for expensive compute and electricity consumption. Digital signatures ensure the confidentiality and integrity of data and are used to bind an entity to digital data.
At its core, a blockchain is an append-only transaction ledger, meaning the ledger can only be written onto with new information, and the previous data stored in blocks are protected by each block appended onto the chain. This is accomplished by using cryptography and hashing algorithms to link the contents of the newly added block with each block before it, such that any change to the contents of a previous block in the chain would invalidate the data in all blocks after it. Consensus protocols are designed to make it nearly impossible for the ledger to be changed — public networks require an impractical amount of time and compute resources, whereas private consortia-based networks require the compromising of a supermajority of validating nodes' private signing keys. For private consortia-based networks, techniques such as pinning state proofs to public networks can be used to counter against potential collusion and add further assurances on the finality of committed data.
Digital Asset Modeling
Asset tokenization on the blockchain has quickly gained traction for enterprises as they seek out new ways to model both physical and digital assets and authoritatively designate ownership. Tokenization provides liquidity for otherwise illiquid assets, offers a framework for secure, real-time transfer of ownership — without reliance on intermediaries and third-parties — removing digital friction for your business to own and trade digital assets. Tokens empower businesses to create fractionalized ownership of real-world assets, such as real estate, tokenized micro-economies, and governance systems. Participants can determine their own price for an asset and establish trust through escrow smart contracts where you use atomic swaps to securely transfer ownership. Token use cases are almost as limitless; anything of value can become a digital asset that’s assigned a value and tokenized (e.g. art or commodities).