400
X. Liu et al.
interactions and message exchanges among participants. Every transaction is
tagged with a signature and a timestamp so that data ownership is auditable and
traceable. Transactions can be traced back to its origin. Transaction history can
be used to verify data authenticity and prevent fraud. This eliminates backdoor
transactions and possible disputes and prevents data tampering.
4. Transparency is another benefit of blockchain technology. In a public blockchain,
transactions, once they are made, are accurate and consistent among participants.
All changes to a public blockchain are accessible to all participants. Users have
full visibility of transaction information in the system. Anyone can verify the
correctness of the system. Using a single public ledger avoids the complications
of multiple ledgers. Transparency increases trust among participants too. This is
particularly important in scenarios such as fair disbursement of funds or benefits.
Everyone can maintain a copy of the ledger and verify its correctness. This
provides resiliency and trust among participants.
5. Decentralization in blockchains leads to high availability. A blockchain is based
on a large number of nodes working in a peer-to-peer manner. Data is replicated
and updated on all nodes. Being inaccessible to a single node will not cause the
system to stop functioning. Therefore, a system based on blockchains is highly
available.
6. Blockchains have enhanced security and integrity over traditional database
systems. Transactions will not be recorded before they are agreed upon by
participants. Approved transactions are encrypted and linked as a chain. Together
with the distributed copies, a blockchain is very difficult for hackers to break.
7. Blockchains can lead to reduced transaction costs. Transactions can be completed in a peer-to-peer or business-to-business manner. No third-party intermediaries are required. This avoids the cost induced by using a third party such as a
bank. Cost that can be saved includes overhead, governance, auditing, and other
fees.
8. Blockchains make transactions faster. In a blockchain, transaction time can be
even reduced to just a few minutes. However, current interbank transfers and final
settlement could take days. Transaction time is extremely important for industries
such as transportation and energy. Time reduction could potentially save billions
of dollars. The situation is similar in the financial industry. Blockchains can save
time because they eliminate verification, reconciliation, and clearance which are
usually lengthy processes. The reason is that a single version of data already
agreed upon by participating financial institutions is available on the shared
ledger of the blockchain.
9. The other benefit of blockchains is smart contracts. A blockchain such as
Ethereum not only stores data, but also provides a programming logic called
smart contracts. Smart contracts can execute business logic. They are programs
that execute agreements and manage the transfers of digital assets between
participants under specified conditions in a blockchain. They can be considered
a digital version of traditional contracts written in a programming language.
Because smart contracts are deployed and executed on blockchains, they are
X. Liu et al.
interactions and message exchanges among participants. Every transaction is
tagged with a signature and a timestamp so that data ownership is auditable and
traceable. Transactions can be traced back to its origin. Transaction history can
be used to verify data authenticity and prevent fraud. This eliminates backdoor
transactions and possible disputes and prevents data tampering.
4. Transparency is another benefit of blockchain technology. In a public blockchain,
transactions, once they are made, are accurate and consistent among participants.
All changes to a public blockchain are accessible to all participants. Users have
full visibility of transaction information in the system. Anyone can verify the
correctness of the system. Using a single public ledger avoids the complications
of multiple ledgers. Transparency increases trust among participants too. This is
particularly important in scenarios such as fair disbursement of funds or benefits.
Everyone can maintain a copy of the ledger and verify its correctness. This
provides resiliency and trust among participants.
5. Decentralization in blockchains leads to high availability. A blockchain is based
on a large number of nodes working in a peer-to-peer manner. Data is replicated
and updated on all nodes. Being inaccessible to a single node will not cause the
system to stop functioning. Therefore, a system based on blockchains is highly
available.
6. Blockchains have enhanced security and integrity over traditional database
systems. Transactions will not be recorded before they are agreed upon by
participants. Approved transactions are encrypted and linked as a chain. Together
with the distributed copies, a blockchain is very difficult for hackers to break.
7. Blockchains can lead to reduced transaction costs. Transactions can be completed in a peer-to-peer or business-to-business manner. No third-party intermediaries are required. This avoids the cost induced by using a third party such as a
bank. Cost that can be saved includes overhead, governance, auditing, and other
fees.
8. Blockchains make transactions faster. In a blockchain, transaction time can be
even reduced to just a few minutes. However, current interbank transfers and final
settlement could take days. Transaction time is extremely important for industries
such as transportation and energy. Time reduction could potentially save billions
of dollars. The situation is similar in the financial industry. Blockchains can save
time because they eliminate verification, reconciliation, and clearance which are
usually lengthy processes. The reason is that a single version of data already
agreed upon by participating financial institutions is available on the shared
ledger of the blockchain.
9. The other benefit of blockchains is smart contracts. A blockchain such as
Ethereum not only stores data, but also provides a programming logic called
smart contracts. Smart contracts can execute business logic. They are programs
that execute agreements and manage the transfers of digital assets between
participants under specified conditions in a blockchain. They can be considered
a digital version of traditional contracts written in a programming language.
Because smart contracts are deployed and executed on blockchains, they are