The Beauty of the Blockchain

 


The meteoric rise in the value of bitcoins has put a spotlight on the blockchain, which is the primary public, digital ledger for bitcoin transactions. A blockchain allows digital transactions to be transparent and distributed, but not copied. It is thought to be the brainchild of an anonymous person or group operating under the pseudonym Satoshi Nakamoto.

The bitcoin network has attracted attention from almost all industries and experts due to its variable market value. These captains of industry and the experts are trying to figure out how this technology can be adapted to and integrated with their work. The dictionary definition of blockchain is, “A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.” This definition is derived from the most popular implementation of blockchain technology — the bitcoin. But blockchain is actually not bitcoin. Let’s have a look at blockchain technology, in general.

Distributed ledger technology (DLT)

Distributed ledger technology includes blockchain technologies and smart contracts. While DLT existed prior to bitcoin or blockchain, it marks the convergence of a host of technologies, including the time-stamping of transactions, peer-to-peer (P2P) networks, cryptography, shared computational power, as well as a new consensus algorithm. In short, distributed ledger technology is generally made up of three basic components:

  • A data model that captures the current state of the ledger.
  • A language of transactions that changes the ledger state.
  • A protocol used to build consensus among participants around which transactions will be accepted by the ledger and in what order.

Figure 1: Structure of a block in the chain

What is blockchain technology?

Blockchain is a specific form or sub-set of distributed ledger technologies, which constructs a chronological chain of blocks; hence the name ‘blockchain’. A block refers to a set of transactions that is bundled together and added to the chain at the same time. A blockchain is a peer-to-peer distributed ledger, forged by consensus, combined with a system for smart contracts and other assistive technologies. Together, these can be used to build a new generation of transactional applications that establish trust, accountability and transparency at their core, while streamlining business processes and legal constraints. The blockchain then tracks various assets, the transactions are grouped into blocks, and there can be any number of transactions per block. A block commonly consists of the following four pieces of metadata:

  • The reference to the previous block
  • The proof of work, also known as a nonce
  • The time-stamp
  • The Merkle tree root for the transactions included in this block

Is a blockchain similar to a database?

Blockchain technology is different from databases in some key aspects. In a relational database, data can be easily modified or deleted. Typically, there are database administrators who may make changes to any part of the data or its structure and even to relational databases. A blockchain, however, is a write-only data structure, where new entries get appended onto the end of the ledger. There are no administrator permissions within a blockchain that allow the editing or deleting of data. Also, the relational databases were originally designed for centralised applications, where a single entity controls the data. In contrast, blockchains were specifically designed for decentralised applications.

Types of blockchains

A blockchain can be both permissionless (e.g., bitcoin and Ethereum) or permissioned, like the different Hyperledger blockchain frameworks. The choice between permissionless and permissioned blockchains is driven by the particular use case.

A permissionless blockchain is also known as a public blockchain, because anyone can join the network. A permissioned blockchain, or private blockchain, requires pre-verification of the participants within the network, who are usually known to each other.

Characteristics of blockchains

Here is a list of some of the well-known properties

of blockchains.

The immutability of the data which sits on the blockchain is perhaps the most powerful and convincing reason to deploy blockchain-based solutions for a variety of socio-economic processes that are currently recorded on centralised servers. This ‘unchanging over time’ feature makes the blockchain useful for accounting and financial transactions, in identity management and in asset ownership, management and transfer, just to name a few examples. Once a transaction is written onto the blockchain, no one can change it or, at least, it would be extremely difficult to do so.

Transparency of data is embedded within the network as a whole. The blockchain network exists in a state of consensus, one that automatically checks in with itself. Due to the structure of a block, the data in a blockchain cannot be corrupted; hence altering any unit of information in it is almost impossible. Though, in theory, this can be done by using a huge amount of computing power to override the entire network, this is not possible practically.

By design, the blockchain is a decentralised technology. Anything that happens on it is a function of the network, as a whole. A global network of computers uses blockchain technology to jointly manage the database that records transactions. The consensus mechanism discussed next ensures the correctness of data stored on the blockchain.

By storing data across its network, the blockchain eliminates the risks that come with data being held centrally, and the network lacks centralised points of vulnerability that are prone to being exploited. The blockchain ensures all participants in the network use encryption technologies for the security of the data. Primarily, it uses PKI (public key infrastructure), and it is up to the participants to select other encryption technologies as per their preference.

What are consensus mechanisms and the types of consensus algorithms?

Consensus is an agreement among the network peers; it refers to a system of ensuring that participants agree to a certain state of the system as the true state. It is a process whereby the peers synchronise the data on the blockchain. There are a number of consensus mechanisms or algorithms. One is Proof of Work. Others include Proof of Stake, Proof of Elapsed Time and Simplified Byzantine Fault Tolerance. Bitcoin and Ethereum use Proof of Work, though Ethereum is moving towards Proof of Stake.

What are smart contracts?

Back in 1996, a man named Nick Szabo coined the term ‘smart contract’. You can think of it as a computer protocol used to facilitate, verify, or enforce the negotiation of a legal contract. A smart contract is a phrase used to describe computer code. Smart contracts are simply computer programs that execute predefined actions when certain conditions within the system are met. Smart contracts provide the language of transactions that allows the ledger state to be modified. They can facilitate the exchange and transfer of anything of value (e.g., shares, money, content and property).

Open source blockchain frameworks, projects and communities

Looking at the current state of research and some of the implementations of blockchain technologies, we can certainly say that most enterprise blockchain initiatives are backed by open source projects. Here’s a list of some of the popular open source blockchain projects.

  • Hyperledger is an open source effort created to advance cross-industry blockchain technologies. Hosted by the Linux Foundation, it is a global collaboration of members from various industries and organisations.
  • Quorum is a permissioned implementation of Ethereum, which supports data privacy. Quorum achieves data privacy by allowing data visibility on a need-to-know basis, using a voting-based consensus algorithm. Interestingly, Quorum was created and open sourced by J.P. Morgan.
  • Chain Core, created by chain.com, was initially designed for financial services institutions and for things like securities, bonds and currencies.
  • Corda is a distributed ledger platform designed to record, manage and automate legal agreements between businesses. It was created by the R3 Company, which is a consortium of over a hundred global financial institutions.

Originally published at opensourceforu.com on June 2, 2018.

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Event Report – Expert Talks 2017

Expert Talks 2017 was my first participation in the Expert Talks conference held in Pune. The conference started a couple of years before as an elevated form of Expert Talks Meetup series by Equal Experts, this year’s conference had a very good mix of content. It included talks on a variety of topics including BlockChain, Containers, IoT, Security to name a few. This is the first edition of the conference which had a formal CFP which witnessed 50+ submissions from different parts of the country and 9 talks were selected out of it. This year the conference was held at Novotel Hotel Pune.

 

The conference started with registration desk which was well organized for everyone registered to pick up their kit. Even for a conference scheduled on a Saturday, the attendance was quite noticeable. The event started with a welcome speech to all participants and speakers.

 

The first session delivered by Dr. Pandurang Kamat on demystifying blockchain was a very good start to the event with much anticipated and buzzed topic at the moment. He covered the ecosystem around blockchain with precise detail for everyone to understand the example of most popular blockchain application “BitCoin”. He also gave the overview of Open Source Frameworks like Project Hyperledger for blockchain implementations.

 

The following session Doveryai, no proveryai – an introduction to TLA+ delivered by Sandeep Joshi was well received by the audience as the topic was pretty unique in terms of the name as well as content. The session started a bit slowly with the audience getting the details of TLA+ and PlusCal. This was well scoped with some basic details and a hands-on demo. The model checker use case was well received after looking at the real world applications and we had the first coffee break of the day after it.

 

Mr. Lalit Bhatt started well with his session about Data Science – An Engineering Implementation Perspective which discussed the mathematical models used for building the real world data science applications and explained the current use-cases he has in the organization.

 

Swapnil Dubey and Sunil Manikani from Shlumberger gave good insight into their microservice strategy with containers with building blocks like Kubernetes, Docker and GKE. They also presented how they are using GCE capabilities to effectively reduce the operational expenses.

 

Alicja Gilderdale from Equal Experts presented some history about container technologies and how they validated different container technologies for one of their projects. She also provided some of the insights into the challenges and lessons learned throughout their journey. The end of this session gave thunder to the participants with the lunch break.

 

Neha Datt, from Equal Experts, showcased the importance of Product Owner in the overall business cycle in the current changing infrastructure world. She provided some critical thinking points to bridge the gap between business, architecture and development team and also how product manager can be the glue between them.

Piyush Verma, took the Data Science – An Engineering Implementation Perspective discussion forward with his thoughts about Distributed Data Processing. He showcased typical architectures and deployments in distributed data processing by splitting the system into layers; defining the relevance, need, & behavior of each. One of the core attraction points of the session was the drawn diagrams incorporated in his presentation which he did as a part of the homework for the same.

 

After the second official coffee break of the day, Akash Mahajan enlightened everyone with the most crucial requirement in the currently distributed workloads living on the public clouds, the security. He walked everyone with different requirements for managing secrets with a HashiCorp Vault example while explained the advantages & caveats of the approach.

 

The IoT, Smart Cities, and Digital Manufacturing discussion were well placed with providing application of most of the concepts learned throughout the day to the real world problems. Subodh Gajare provided details on the IoT architecture, its foundation with requirements related to Mobility, Analytics, Big data, Cloud and Security. He provided very useful insights into the upcoming protocol advances and the usage of Fog, Edge computing in the Smart City application of IoT.

It was a day well spent with some known faces and an opportunity to connect with many enthusiastic IT professionals in Pune.