Blockchain: The Future

By Stephen B. Young Ph.D.

Most economic progress can be traced to some changes in technologies such as team engine, electric power, computers and internet, robotics, artificial intelligence, big data, and others. Technology moves fast! So fast that often times we miss opportunities; look at companies that went bankrupt because of not upgrading technology—Toys “R” Us, Kodak, Polaroid, Tower Records, Blockbuster, Compaq, and others. How many of you missed Microsoft, Apple, Facebook, and the many new technologies that are being developed now. You need to take a step ahead and walk with the revolutionary technologies where Blockchain is one among the leaders. Do not miss Blockchain. Learn Blockchain technology while it is still in its infancy. Participate in the development and rewards of this technology.

Business is about transactions. Blockchain makes business transactions safer, easier, and less expensive. Blockchain will allow you to participate in the growth of all economies by allowing you to be compensated for all their personal activities (generating personal data) that have value. Blockchain is a universal infrastructure that can store or transfer information anywhere in the world. Blockchain integrates smoothly with existing systems and processes, making the technology viable for global implementation. This technology will have the greatest impact on businesses than any new technology that is being developed. Read, learn, and reward yourself with knowledge that has value. With over 200 percent year-on-year job growth in blockchain since 2015, now is the time to advance into blockchain-enabled businesses.

• Language: English
• Publisher: Page Publishing, Inc.
• Release date: Aug 1, 2022
• ISBN: 9781662474606

Book preview

The Origin of Blockchain

Satoshi Nakamoto released the first Bitcoin whitepaper on October 31, 2008. In it, he envisioned a purely peer-to-peer version of electronic cash (that) would allow online payments to be sent directly from one party to another without going through a financial institution.

The first blockchain application was started by Satoshi Nakamoto on January 3, 2009, with the creation of the first block of the chain. While we do not know the actual identity of Nakamoto, we do know the blockchain application known as Bitcoin. Nakamoto built on the foundations laid by those who came before him. Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who wanted to implement a system where document time stamps could not be tampered with. In the pre-Bitcoin years, Stuart Haber and W. Scott Stornetta had already begun working on a cryptographically secured chain of blocks, but the first blockchain wouldn’t be truly conceptualized until Nakamoto’s invention in 2008.

Stuart Haber and W. Scott Stornetta started work on the first cryptographically secured chain. They wanted to create a system that would create time stamps for documents that could not be tampered with. This is the basis of the decentralized blockchain. Blocks in a blockchain hold information on the chain. For Bitcoin, the block holds a version descriptor, the previous block’s unique hash, the transaction details, the current time, and a target value. This complete block is then hashed with an arbitrary number, finishing with a hash that is lower than the target value and thus is added to the chain and verified by the nodes on the network.

When blockchains first started with Bitcoin, the technology was not taken seriously. Now that the technology has been vetted and verified, companies have started using blockchains for uses other than cryptocurrencies. We now have decentralized online file sharing applications from this technology, for instance, which provide numerous backups of files that are inaccessible without your private key. Blockchain provided the answer to digital trust because it records important information in a public space and doesn’t allow anyone to remove it. It’s transparent, time-stamped, and decentralized.

The blockchain is regarded by some as the most revolutionary technological innovation since the dawn of the internet; the foundation of Web 3.0, here to usher in the future of the internet. Blockchain itself is a decentralized, distributed ledger designed to record transactions permanently without third-party authentication. This makes it useful for any exchanges that could benefit from increased transparency, speed, and decentralization.

Big financial services companies, including JPMorgan and the Depository Trust and Clearing Corporation, are experimenting with blockchains and blockchain-like technologies to improve the efficiency of trading stocks and other assets. Traders buy and sell stocks rapidly using current technology, of course, but the behind-the-scenes process of transferring ownership of those assets can take days. Some technologists believe blockchains could help with that.

A brief history of blockchain:

Year 1991—A cryptographically secured chain of blocks is described for the first time by Stuart Haber and W Scott Stornetta

Year 1998—Computer scientist Nick Szabo works on bit gold, a decentralized digital currency

Year 2000—Stefan Konst publishes his theory of cryptographic secured chains, plus ideas for implementation

Year 2008—Developer(s) working under the pseudonym Satoshi Nakamoto release a white paper establishing the model for a blockchain

Year 2009—Nakamoto implements the first blockchain as the public ledger for transactions made using bitcoin

Year 2014—Blockchain technology is separated from the currency and its potential for other financial, interorganizational transactions is explored. Blockchain 2.0 is born, referring to applications beyond currency

The Ethereum blockchain system introduces computer programs into the blocks, representing financial instruments such as bonds. These become known as smart contracts.

Bitcoin’s role

Posting their seminal whitepaper in 2008 and launching the initial code in 2009, Nakamoto created Bitcoin to be a form of cash that could be sent peer to peer without the need for a central bank or other authority to operate and maintain the ledger, much as how physical cash can be.

While it wasn’t the first online currency to be proposed, the Bitcoin proposal solved several problems in the field and has been by far the most successful version.

The engine that runs the Bitcoin ledger that Nakamoto designed is called the blockchain; the original and largest blockchain is the one that still orchestrates Bitcoin transactions today.

The second generation

Other blockchains include those that run the several hundred altcoins—other similar currency projects with different rules—as well as truly different applications, such as:

Ethereum: the second-largest blockchain implementation after Bitcoin. Ethereum distributes a currency called ether, but also allows for the storage and operation of computer code, allowing for smart contracts.

Ripple: a real-time gross settlement system, currency exchange, and remittance network based on a public ledger.

Blockchain is a real technology—it’s just a database we can all access that’s kept up-to-date (Jamie Dimon, CEO of JPMorgan Chase).

What is Blockchain

The blockchain is a chain of blocks that contain specific information (database) but in a secure and genuine way that is grouped together in a network (peer-to-peer). In other words, blockchain is a combination of computers linked to each other instead of a central server, meaning that the whole network is decentralized.

Many enthusiasts believe that the future lies with the blockchain. Objectively, we will see the real impact across the industries with time. On the other hand, the chances that the domains of finance, insurance, and healthcare will utilize blockchain technology are pretty high.

The traditional architecture of the World Wide Web uses a client-server network that is centralized. In this case, the server keeps all the required information in one place so that it is easy to update and controlled by a number of administrators.

In the case of the distributed blockchain network, each participant within the network maintains, approves, and updates new entries on client-servers network decentralized. Data servers are in several places.

The structure of blockchain technology is represented by a list of blocks with transactions in a particular order. Two vital data structures used in blockchain include the following:

Pointers—variables that keep information about the location of another variable.

Linked lists—a sequence of blocks where each block has specific data and links to the following block with the help of a pointer.

Blockchain can serve the following purposes for organizations and enterprises:

Cost reduction

History of data

Data validity and security

Types of blockchain explained

All blockchain structures fall into three or four categories:

Public blockchain—everyone has access

Private blockchain—selected few have access

Permission blockchain—selected few have access with conditions

Consortium blockchain—groups of selected few having access

These are the core blockchain architecture components:

Node—user or computer within the blockchain

Transaction—smallest building block of a blockchain system

Block—a data structure used for keeping a set of transactions that is distributed to all nodes in the network

Chain—a sequence of blocks in a specific order

Miners—specific nodes which perform the block verification process

Consensus—a set of rules and arrangements to carry out blockchain operations

Each blockchain block consists of the following:

certain data—date, time, name, stored data, transaction, smart contract

the hash of the block—fingerprint, numerical code

the hash from the previous block—fingerprint, numerical code

The hash of each block is generated based on both the data contained within that block and the hash of the previous block. These hash identifiers play a major role in ensuring blockchain security and immutability. Hashing is also leveraged in the consensus algorithms used to validate transactions.

Combined, consensus, and immutability provide the framework for data security in blockchain networks. While consensus algorithms ensure that the rules of the system are being followed and that all parties involved agree on the current state of the network, immutability guarantees the integrity of data and transaction records after each new block of data is confirmed to be valid.

Blockchain network refers to the application’s infrastructure placed within a particular environment inside one, or a few, organizations.

Blockchain code refers to the tasks and goals this blockchain solution has been developed to perform.

There are a few open-source solutions used to build a private blockchain architecture. The most popular among them is Hyperledger by Linux Foundation. This project is also widely used by IBM and other famous tech organizations. Hyperledger Composer provides a set of tools for building blockchain.

Blockchain possesses a lot of benefits for businesses. Here are several embedded characteristics:

Cryptography

Immutability

Provenance

Decentralization

Anonymity

Transparency

Blockchains rely heavily on cryptography to achieve their data security. In this context, the so-called cryptographic hashing functions are of fundamental importance. Hashing is a process whereby an algorithm (hash function) receives an input of data of any size and returns an output (hash) that contains a predictable and fixed size (or length).

In addition to cryptography, a relatively new concept known as crypto economics also plays a role in maintaining the security of blockchain networks. It is related to a field of study known as game theory, which mathematically models decision-making by rational actors in situations with predefined rules and rewards. While traditional game theory can be broadly applied to a range of cases, crypt economics specifically models and describes the behavior of nodes on distributed blockchain systems.

Decentralization is one of the most critical components of blockchain technology which is the cause of all their benefits like trust-lessness, censorship resistance, and immutability. At its core, blockchains have enabled people to come up with systems that do not rely on a centralized third party to keep money safe. Due to the decentralized nature of blockchains, no central database can be taken down by a government or terrorist outfit for personal gain.

Blockchain technology enables organizations and companies in the following ways:

Possibility to complete transactions much more quickly and with trust

Cost reduction for businesses or cross-enterprise processes while removing intermediaries, inefficiencies, and duplications

Introduction of modern digital interaction

Opportunity to keep detailed control over business processes and transactions without a central control point

Remove cheating, cyberattacks, or other electronic crimes

Blockchain’s most significant appeal perhaps lies in the fact that it is decentralized. That is to say that there is no third party that users have to rely on in order to keep their funds safe. The decentralized peer-to-peer network of miners protects the network by what’s called proof of work, thereby eliminating the need to trust any middlemen.

A block in a blockchain is a collection of data. The data is added to the block in the blockchain by connecting it with other blocks in chronological others creating a chain of blocks linked together. The first block in the blockchain is called Genesis Block.

The four main components of any blockchain ecosystem are as follows:

A node application. Each internet-connected computer needs to install and run a computer application specific to the ecosystem they wish to participate in.

A shared ledger. Once you have the node application running, everyone on the blockchain can view the respective ledger (or blockchain) contents for that ecosystem.

A consensus algorithm. part of the node application where a majority agrees to the rules of the game for how the ecosystem will arrive at adding a block to a single view of the ledger. Validates Blocks. Updates ledger. Common Agreement Protocol.

A virtual machine is a representation of a machine (real or imaginary) created by a computer program and operated with instructions embodied in a language. It is an abstraction of a machine held inside a machine.

Blockchain is a distributed ledger, which simply means that a ledger is spread across the network among all peers in the network, and each peer holds a copy of the complete ledger.

Some key attributes of blockchain are which proves that blockchain is better than traditional systems of ledger information keeping:

Peer-to-peer: No central authority to control or manipulate it. All participants talk to each other directly. This allows for data exchange to be made directly with third-parties involvement.

Distributed Ledger Technology (DLT): The ledger is spread across the whole network which makes tampering not so easy.

Cryptographically secured: Cryptography is used for the security services to make the ledger tamperproof.

Add-only: Data can only be added in the blockchain with time-sequential order. This property implies that once data is added to the blockchain, it is almost impossible to change that data and can be considered practically immutable. We can say it does not have the right to be forgotten or right to erasure defined here.

Consensus. This is the most critical attribute of all. This gives blockchain the ability to update the ledger via consensus. This is what gives it the power of decentralization. No central authority is in control of updating the ledger. Instead, any update made to the blockchain is validated against strict criteria defined by the blockchain protocol and added to the blockchain only after a consensus has been reached among all participating peers/nodes on the network.

The term blockchain was first described back in 1991. A group of researchers wanted to create a tool to time-stamp digital documents so that they could not be backdated or changed. Further, the technique was adapted and reinvented by Satoshi Nakamoto. In 2008, Nakamoto created the first cryptocurrency, the blockchain-based project called Bitcoin.

"Over the next decade, there will be disruption as significant as the internet was for publishing, where blockchain