Blockchain is a ground-breaking technology that has the potential to transform various industries. Its decentralized, secure, transparent, and immutable characteristics make it a highly desirable platform for various applications that go far beyond virtual money, disrupting sectors and practices as diverse as financial markets, content distribution, supply chain management, the dispersal of humanitarian aid and even voting in a general election.
Key Characteristics of Blockchain Technology
ISACA describes blockchain as “a shared transactions ledger that can be accessed by and among multiple parties, using cryptography and peer-to-peer technology to secure data into blocks and store them in an immutable chain of transactions, without any trusted central authority.” A blockchain is a distributed ledger that is completely open to anyone. One key example of this is cryptocurrency, which are a form of digital or virtual currency that run on blockchain technology. Cryptocurrencies are immune to counterfeiting, don’t require a central authority and protected by a strong and complex encryption algorithm.
Blockchains have an interesting property: once some data has been recorded inside a blockchain, it becomes very difficult to change it. Here are the key characteristics of blockchain technology.
Peer-to-peer network
A node is a point at which terminals are given access to a network (e.g. a laptop as a node is connected to a network). Unlike the client server network, there is no dependency of a server in this case. There are multiple nodes in a network and any node can connect to and send the data to any other node in the network. The block chain is copied at every node. The same copy of the data is available with everyone in the network.
Decentralized
There is no need to trust a central authority, which results in less likelihood of a single point of failure and allows the blockchain to be censure resistant. There is no central authority to control the network, data and to maintain the data. Every node has its own copy of the data.
Immutable
Data is append-only and cannot be modified; for the most part, public blockchain transactions are tamperproof. Data at one node cannot be changed or deleted as all other nodes have the same copy of the data. The data can only be read, or new data can be inserted at a node; however, the changes and deletions made in the node are not accepted by other nodes.
Security
All the records in the blockchain are individually encrypted. The use of cryptographic measures (SHA256, ECDSA) makes tampering infeasible. Every information on the blockchain is hashed cryptographically, which means that every piece of data has a unique identity on the network. All the blocks contain a unique hash of their own and the hash of the previous block. Due to this property, the blocks are cryptographically linked with each other. Any attempt to modify the data means to change all the hash IDs, which is quite impossible. There is tracking enabled to see who did what using digital signature.
Data availability / Distributed
Component failure is minimized, and transactions are encrypted and stored on multiple nodes globally. In case the data is corrupted at a node, the data can be retrieved from the other nodes thereby ensuring data availability. Since it is a worldwide network, there is no data loss in this case. Hence, data is reliable, and the system is more resilient.
Anonymous
Also known as pseudonymous, in which private information (for a public blockchain) associated with transactions are linked to wallet addresses and public keys, and no personally identifiable information is viewable.
Transparent
The blockchain ledger is public and transparent, which means that anyone can access and view the transactions on the network. This makes it a highly transparent system that is resistant to fraud and corruption. Transparency allows for transaction history to be more easily audited and offers greater accuracy and consistency.
Consensus
Consensus is a decision-making algorithm for the group of nodes active on the network to reach an agreement quickly and faster and for the smooth functioning of the system. Nodes might not trust each other but they can trust the algorithm that runs at the core of the network to make decisions. An example of consensus methodology is the Proof of Work algorithm that is used to confirm transactions and produce new blocks that are added to the chain.
Blockchains are constantly evolving. For example, one of the recent developments is the creation of smart contracts. These contracts are simple programs that are stored on the blockchain and can be used to automatically exchange coins based on certain conditions.
As blockchain technology continues to evolve and mature, we can expect to see a wave of innovative startups looking to reinvent whole economic models based on blockchain technology.
The above article is authored by Mr. Chetan Anand
About Author: Chetan Anand, CDPSE, ICBIS, CCIO, ICCP, CPEW, CPISI, OneTrust Fellow of Privacy Technology, NLSIU Privacy and Data Protection Laws, ISO 27001 LA, ISO 22301 LA, ISO 27701, ISO 31000, ISO 9001 LA, IRAM2, Lean Six Sigma Green Belt, SQAM, Agile Scrum Master, Associate Vice President – Information Security and CISO, Profinch Solutions, and ISACA Global Mentor and Volunteer
References:
ISACA Blockchain Framework and Guidance, 2020
https://www.geeksforgeeks.org/features-of-blockchain/
Features of Blockchain
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