What is blockchain?
First implemented in 2009, Blockchain technology consists of 'blocks' that hold batches of timestamped transactions, with each block linked to the previous one through cryptography, thus forming a chain.
As well as being used to create cryptocurrencies, blockchain offers the possibility of creating a fraud-proof system for transacting exchanges. This therefore gives it huge potential for use outside of the digital currency sphere, helping attract interest not just among traditional financial institutions, but in areas as diverse as Supply chain, Healthcare, Finance and many more.
A blockchain network is a distributed public database that shares responsibility between a group, rather than relying on a third party to record transactions. Within this group, parties are free to trade amongst each other, with each trade being recorded independently by the group members.
The parties mentioned in the definition are actually computers, not people, so instead of the group members agreeing to confirm trades, the system runs a “consensus mechanism” to confirm trading codes.
Blockchain applications, meanwhile, are programs built on a blockchain network that provide a variety of functions to network users. The most popular offering involves cryptocurrencies like Bitcoin.
Most developments in blockchain technology have been in applications, but as they continue to grow at meteoric rates, the blockchain networks will soon need to develop to manage them.
What are the benefits of Blockchain and can that help you?Improved traceability
If your company deals with products that are traded through a complex supply chain, You know how hard it can be to trace an item back to its origin. When exchanges of goods are recorded on a blockchain, you end up with an audit trail that shows where an asset came from and every stop it made on its journey. This historical transaction data can help to verify the authenticity of assets and prevent fraudulent activity.
Greater transparency
Transaction histories are more transparent through the use of blockchain technology. Blockchain is a type of distributed ledger, all network participants share the same documentation as instead of individual copies. A shared version can only be updated through consensus, which means everyone must agree on it. To change a single transaction record would require the alteration of all subsequent records and the collusion of the entire network. Thus, data on a blockchain is more accurate, consistent and transparent than when it is pushed through time consuming processes. It is also available to all participants who have permissioned access. To change a single transaction record would require the alteration of all subsequent records and the collusion of the entire network.
Increased speed and efficiency
When you use traditional, paper-heavy processes, trading anything is a time-consuming process that is prone to human error and often requires third-party mediation. By streamlining and automating these processes with blockchain, transactions can be completed faster and more efficiently. Since record-keeping is performed using a single digital ledger that is shared among participants, you don’t have to reconcile multiple ledgers and you end up with less clutter. And when everyone has access to the same information, it becomes easier to trust each other without the need for numerous intermediaries. Thus, clearing and settlement can occur much faster.
Cost reduction
For the majority of businesses, reducing costs is a priority. When using blockchain, you don’t need as many third parties or middlemen to make guarantees because it doesn’t matter if you can trust your trading partner. Instead, you just have to trust the data on the blockchain. You also won’t have to review so much documentation to complete a trade because everyone will have permissioned access to a single, immutable version.
Highly secure
All transactions on a blockchain are cryptographically secured and provide integrity.
Private vs Public Blockchains
Public Blockchain
The public blockchain is permissionless and open to everybody without exception. It can be downloaded to his or her computer to view
the entire history of the blockchain, send and receive money, store information, and even create smart contracts within the blockchain.
Mining is also a feature of some public blockchains; this is used to reward users for maintaining the network.
The key advantage of distributed ledger technology lies in decentralization. Since each node is equal, the blockchain is immutable,
DDoS resistant, and censorship free. There is no one point of attack and hackers cannot alter the information.
It is encrypted and stored on thousands of devices that possess a copy of the blockchain. If one node goes down the rest will continue, without recourse.
The more people join the blockchain, the more secure it is.
The public blockchain can help communities worldwide to share data securely and openly.
Some obvious applications are an insurance pool for the unbanked population and a global ledger with school diplomas of a single standard which are impossible to fake.
The public approach does carry certain disadvantages though and these are also tied to their decentralized nature.
Public blockchains set their rules at the very beginning and have few opportunities for later changes to be made.
In order to adjust the rules even slightly, the community needs to convince every single participant to make an update or accept a bug fix.
As a result, public blockchains are very slow and inefficient.
Private Blockchain
Private blockchains are the total opposite as they give full control to their owners. They have a high level of flexibility and can adjust the rules as they see fit, including but not limited to:
- Different permission levels
- The level of public exposure
- How often to implement updates
- Who can be members
- Run blockchain as a stand-alone or integrate into the existing system
- Cryptocurrency Wallet
Hence, the latter can choose among various consensus protocols and benefit from much greater blockchain speeds.
Private blockchains are usually built for corporate clients that are looking to ensure internal security for their company.
Hybrid Blockchain
At OsScopo we are working on a hybrid blockchain model where we fuse both public and private Blockchains.
An example of this would be in Healthcare. When insured and uninsured patients change payors (insurance companies) The identity is not always carried over in the claims process. If the Provider (Hospital) needed to analyze data for quality of patients healthcare for example this data could be available to the public blockchain while the private blockchain would encrypt the identity of the patient. Overall metric for quality improvement would still be able to be measured without the invasion of privacy.
