2.2 Key Features of Blockchain Technology
2.2.1 Decentralization
Blockchain creates a certain degree of trustworthiness among the parties concerned
which is attributable to their pseudo-anonymity. Transactions are secured and the
need to use third-party trust brokers, or other intermediaries such as banks is
eliminated. Furthermore, the removal of the intermediaries empowers and enables
entities at all social strata from the individual to the corporate to operate in frictionless and instantaneous peer-to-peer trade on a global scale.
15 In sum, blockchain
technology has the potential to advance the speed and lower the cost of doing
business by simplifying operations and reducing the need for human intervention
through automated processes, and by virtually eliminating any human error.
2.2.2 Transparency
Every transaction and its associated value are visible to anyone who has access to the
blockchain system. Each node or user on a blockchain has a unique character
alphanumeric address that identifies it. Transactions occur between the blockchain
addresses.
16 The ledger is synchronized to all nodes and all transaction information
is available to every user identified by their blockchain addresses. Regarding their
real-life identity, users can choose to remain anonymous or provide proof of their
identity to others. The system permits peer-to-peer transactions precluding the
necessity for centralized verification of the data. It can be a public system where
anyone may have access to the blockchain, or a private one, where only persons with
private “keys” may have such access.
2.2.3 Immutability
Once a transaction is entered in the ledger and the accounts are updated, the records
cannot be altered, because they are linked to every transaction record that was
entered previously which explains the term “chain”. Various computational algorithms and approaches are deployed to ensure that the recording on the database is
permanent, chronologically ordered, and available to all others on the network.
17
Each block showing all transactions appearing in the package, contains a reference to
the block preceding it denoted by the term “hash” which is the essence of immutability. If any part of the block or any transaction within it is altered, and then
subjected to the same algorithm, such action will engender a different hash and the
15 Ibid.
16 Ibid.
17 Ibid.
418
H. Liu
2.2.1 Decentralization
Blockchain creates a certain degree of trustworthiness among the parties concerned
which is attributable to their pseudo-anonymity. Transactions are secured and the
need to use third-party trust brokers, or other intermediaries such as banks is
eliminated. Furthermore, the removal of the intermediaries empowers and enables
entities at all social strata from the individual to the corporate to operate in frictionless and instantaneous peer-to-peer trade on a global scale.
15 In sum, blockchain
technology has the potential to advance the speed and lower the cost of doing
business by simplifying operations and reducing the need for human intervention
through automated processes, and by virtually eliminating any human error.
2.2.2 Transparency
Every transaction and its associated value are visible to anyone who has access to the
blockchain system. Each node or user on a blockchain has a unique character
alphanumeric address that identifies it. Transactions occur between the blockchain
addresses.
16 The ledger is synchronized to all nodes and all transaction information
is available to every user identified by their blockchain addresses. Regarding their
real-life identity, users can choose to remain anonymous or provide proof of their
identity to others. The system permits peer-to-peer transactions precluding the
necessity for centralized verification of the data. It can be a public system where
anyone may have access to the blockchain, or a private one, where only persons with
private “keys” may have such access.
2.2.3 Immutability
Once a transaction is entered in the ledger and the accounts are updated, the records
cannot be altered, because they are linked to every transaction record that was
entered previously which explains the term “chain”. Various computational algorithms and approaches are deployed to ensure that the recording on the database is
permanent, chronologically ordered, and available to all others on the network.
17
Each block showing all transactions appearing in the package, contains a reference to
the block preceding it denoted by the term “hash” which is the essence of immutability. If any part of the block or any transaction within it is altered, and then
subjected to the same algorithm, such action will engender a different hash and the
15 Ibid.
16 Ibid.
17 Ibid.
418
H. Liu