Discuss about the Blockchain and Networked Management.
Blockchain is an emerging technology that enables the storage of different transactions and records in a decentralized platform. The blockchain is therefore considered as a leading platform and the new technology that aims at building a radically better financial system. Blockchain is described as the data structure that helps in identification of tracking of the transactions in a digital platform. Blockchain make use of a distributed trust network in order to maintain a series of records. Each participant of a blockchain network are allowed the option of secure transactions by maintain the anonymity of the identity. The technology of blockchain can therefore be considered as a global ledger that is capable of undergoing a transaction without the actual need of central authority. Blockchain is mainly a digital ledger in which a transaction are made in form of bitcoin and other cryptocurrency that are recorded in a chronological order [13]. The details of each transaction are stored in the block and are linked together in form of a chain like structure. Blockchain is a decentralized technology and make use of a global network of computers for managing the database. This database of the blockchain records all sorts of bitcoin transactions. The report gives an overview of the architecture, features and challenges associated with the use of blockchain. The applications and the socio technical aspects of the application of the blockchain application are mentioned in the report.
Blockchain Architecture
Blockchain which is the foundation of bitcoin has considerably received wide attention over the years. Although blockchain is a new and emerging concept, the increasing applications of blockchain are gradually springing up covering many fields including the different financial services. Blockchain is a digital ledger of the different transactions associated with cryptocurrency [4]. Therefore, blockchain architecture consists of a shared and a decentralized architecture including a decentralized database [10]. With the emergence and increasing use of blockchain based applications, it is essential to understand the components of the blockchain architecture in order to mitigate certain risks associated with the use of blockchain. A blockchain architecture mainly consists of sequence of blocks that are linked together order to form a sequence or chain of different transactional information that is stored in a particular block. These blocks are therefore one of the most significant components of blockchain. Apart from the blocks that store a sequence of transactional records, a blockchain architecture consists of a decentralized database that records and stores all the transactional information associated with a blockchain. The picture below represents the structure of blockchain technology and the different components of blockchain.
The pictures above represent the structure of blockchain technology that consists of a sequence of blocks. These sequences of blocks are represented in figure 1. Each block of blockchain architecture definitely consists of a parent block, which is its preceding block. The block of the blockchain architecture that does not possess the parent block is termed as genesis block as it represents the first block of blockchain. The block of blockchain architecture can be further classified into a block header and body of a block. The block header has many sub parts, which are block version, time stamp, merkle tree, nBits, Nonce and parent block hash [1]. The block body has two sub parts which are transaction and transaction counter. These are the main components of a blockchain architecture [7]. There is certain scalability issues associated with the use of blockchain. This is because the size of the block and transactional size mainly determines the number of transaction that is possible in a particular blockchain transaction. In order to ensure safety in the transaction process, the technology of blockchain makes use of asymmetric cryptography mechanism for validating the transactions of blockchain [12]. A typical blockchain application can further make use of digital signatures as well in order to validate a particular transaction.
Features of Blockchain
There are certain key features of a blockchain technology which are discussed below [1]-
The challenges associated with Blockchain
Although the use of the blockchain and it applications are increasing due to the advantages of decentralized control and online transactional facility with the help of currency, it cannot be denied that there are some major challenges associated with the use of blockchain. The challenges associated with the use of blockchain are as follows [6]-
Blockchain application in Currency
Bitcoin is one the key applications of blockchain technology. Bitcoins are digital currency that is accepted worldwide [14]. One of the significant advantages or key feature of the bitcoin transaction is that it is not controlled by or backup by any central bank or government. The different digital currencies can be traded for the services with the organizations or service vendors that accept bitcoin as possible payment option [2]. Bitcoin can therefore be considered as an advanced for of digital money that can be used to participate in trade across the world. Bitcoin is therefore expected to become more famous in future and has the capability to become the key player in the market of cryptocurrency [5]. Bitcoin is one of the most advanced applications of blockchain. The transactions associated with the use and exchange of the bitcoins is mainly secured with the help of public and the private key [11]. This technology is one of the first applications of blockchain that facilitates instant payment across the world. The transactions associated with bitcoins are stored in form of blocks in the decentralised database of blockchain.
Application of Block chain in Smart Contracts
Smart contracts and ethereum is another main application of blockchain technology. Smart contracts are computer programs that executes automatically thus bypassing the need of a lawyer or any central authority for managing the clauses of a contract. This is another advanced application of blockchain technology and is one of the emerging technologies [9]. However, the self executing nature of smart contracts brings in certain risks associated with the system as the transaction associated with the smart contracts if executed once cannot be reversed. This is a major roadblock in adoption and use of smart contracts. Therefore, further researches are needed in this field to improve the use and adoption of smart contracts.
Bitcoin is basically revolutionizing the way a transaction is processed. It is one of the most advanced forms of cryptocurrency that has brought a stir in the whole world. The people across the world consider bitcoin as prized possession since this currency can be traded across the world without the needs of any central authority. Bitcoin is therefore one of the most secure forms of money and creates a personal economic power for the people who possess it. Since the transactions associated with the use of bitcoins are recorded in a decentralized architecture of blockchain it is expected to be adopted by a major number of people in recent future.
Smart contract is a considerably newer technology and posses certain risks. The use and adoption of smart contracts is therefore not as widespread as bitcoin. Further researchers are necessary to infuse the trust upon people that the use of smart contracts is actually safe.
Conclusion
The report gives an overview of the blockchain technology and its architecture. An overview and brief explanation of the different components of a blockchain architecture is provided in the report. The different challenges associated are discussed along with the key features and characteristics of blockchain technology. Two most important applications of blockchain, which are bitcoins and smart contracts, are discussed in the report. With the increasing popularity of blockchain, it is expected that bitcoins will be used by a large group of people in recent future. However, since there is certain risk associated with the use of smart contract, it may not be as popular as bitcoins.
References
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Crosby, Michael, Pradan Pattanayak, Sanjeev Verma, and Vignesh Kalyanaraman. “Blockchain technology: Beyond bitcoin.” Applied Innovation 2,2016: 6-10.
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Watanabe, Hiroki, Shigeru Fujimura, Atsushi Nakadaira, Yasuhiko Miyazaki, Akihito Akutsu, and Jay Kishigami. “Blockchain contract: Securing a blockchain applied to smart contracts.” In Consumer Electronics (ICCE), 2016 IEEE International Conference on, pp. 467-468, 2016, IEEE
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