What is Blockchain?
Blockchain defined
Blockchain is defined as a ledger of decentralized data that is securely shared. Blockchain technology enables a collective group of select participants to share data. With blockchain cloud services, transactional data from multiple sources can be easily collected, integrated, and shared. Data is broken up into shared blocks that are chained together with unique identifiers in the form of cryptographic hashes.
Blockchain provides data integrity with a single source of truth, eliminating data duplication and increasing security.
In a blockchain system, fraud and data tampering are prevented because data can’t be altered without the permission of a quorum of the parties. A blockchain ledger can be shared, but not altered. If someone tries to alter data, all participants will be alerted and will know who make the attempt.
How does blockchain technology work?
Think of a blockchain as a historical record of transactions. Each block is “chained” to the previous block in a sequence, and is immutably recorded across a peer-to-peer network. Cryptographic trust and assurance technology applies a unique identifier—or digital fingerprint—to each transaction.
Trust, accountability, transparency, and security are forged into the chain. This enables many types of organizations and trading partners to access and share data, a phenomenon known as third-party, consensus-based trust.
All participants maintain an encrypted record of every transaction within a decentralized, highly scalable, and resilient recording mechanism that cannot be repudiated. Blockchain does not require any additional overhead or intermediaries. Having a decentralized, single source of truth reduces the cost of executing trusted business interactions among parties that may not fully trust each other. In a permissioned blockchain, used by most enterprises, participants are authorized to participate in the network, and each participant maintains an encrypted record of every transaction.
Any company or group of companies that needs a secure, real-time, shareable record of transactions can benefit from this unique technology. There is no single location where everything is stored, leading to better security and availability, with no central point of vulnerability.
To learn more about blockchain, its underlying technology, and use cases, here are some important definitions.
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Decentralized trust:
The key reason that organizations use blockchain technology, instead of other data stores, is to provide a guarantee of data integrity without relying on a central authority. This is called decentralized trust through reliable data. -
Blockchain blocks:
The name blockchain comes from the fact that the data is stored in blocks, and each block is connected to the previous block, making up a chainlike structure. With blockchain technology, you can only add (append) new blocks to a blockchain. You can’t modify or delete any block after it gets added to the blockchain. -
Consensus algorithms:
Algorithms that enforce the rules within a blockchain system. Once the participating parties set up rules for the blockchain, the consensus algorithm ensures that those rules are followed. -
Blockchain nodes:
Blockchain blocks of data are stored on nodes—the storage units that keep the data in sync or up to date. Any node can quickly determine if any block has changed since it was added. When a new, full node joins the blockchain network, it downloads a copy of all the blocks currently on the chain. After the new node synchronizes with the other nodes and has the latest blockchain version, it can receive any new blocks, just like other nodes.
There are two main types of blockchain nodes:
- Full nodes store a complete copy of the blockchain.
- Lightweight nodes only store the most recent blocks, and can request older blocks when users need them.
Three types of blockchain
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Public blockchain.
A public, or permission-less, blockchain network is one where anyone can participate without restrictions. Most types of cryptocurrencies run on a public blockchain that is governed by rules or consensus algorithms. -
Permissioned or private blockchain.
A private, or permissioned, blockchain allows organizations to set controls on who can access blockchain data. Only users who are granted permissions can access specific sets of data. Oracle Blockchain Platform is a permissioned blockchain. -
Federated or consortium blockchain.
A blockchain network where the consensus process (mining process) is closely controlled by a preselected set of nodes or by a preselected number of stakeholders.
Benefits of blockchain—The business value
The use of blockchain technology is expected to significantly increase over the next few years. This game-changing technology is considered both innovative and disruptive because blockchain will change existing business processes with streamlined efficiency, reliability, and security.
Blockchain technology delivers specific business benefits that help companies in the following ways:
- Establishes trust among parties doing business together by offering reliable, shared data
- Eliminates siloed data by integrating data into one system through a distributed ledger shared within a network that permissioned parties can access
- Offers a high level of security for data
- Reduces the need for third-party intermediaries
- Creates real-time, tamper-evident records that can be shared among all participants
- Allows participants to ensure the authenticity and integrity of products placed into the stream of commerce
- Enables seamless tracking and tracing of goods and services across the supply chain
- Provides food safety with Oracle Blockchain Platform
Blockchain IoT partnerships
Blockchain is no longer an emerging technology. In fact, blockchain has continued to progress solutions and address business needs with other technologies, such as artificial intelligence (AI), the Internet of Things (IoT), and machine learning. These key technology partnerships help users achieve important insights from data.
In an IoT deployment, traditional IT systems are not built to handle the massive amount of data that is generated. The volume, velocity, and variety of data produced by IoT networks could overwhelm enterprise systems or severely limit the ability to trigger timely decisions against trusted data. Blockchain’s distributed ledger technology has the potential to address these scalability challenges with improved security and transparency.
What is Hyperledger?
Hyperledger is an open source project started by the Linux Foundation to advance global collaboration of blockchain technologies. The main purpose of Hyperledger is to develop open source blockchain implementations that address enterprise goals for scale, performance, and security. Hyperledger supports a neutral, open community of members who contributed code to develop Hyperledger Fabric, the software that many enterprises use as the foundation for blockchain projects.
As a key member of Hyperledger, Oracle and our Blockchain solutions are built on Hyperledger Fabric, leveraging open source and maintaining interoperability with core protocols.
