What is Blockchain, anyway? | 03/12/2018


Ask that question for dinner and you will have an empty look, or someone will tell you that it is the same as bitcoin (it is not) or that it is a machine of truth (not really) or that it will have a greater impact on the Internet (maybe, but not for quite a while). In general, however, you will find that people are short of specifics, not least because blockchain is one of those things that seem to become more complex in its details and larger in its implications, plus the study.

But here, at least, there are some facts to help you get started.

Blockchain has its roots in the financial crisis of 2008, when the global financial system approached the complete collapse. In its wake, some computer scientists, including one named Satoshi Nakamoto (who may not even be one person, but several people operating under a pseudonym), have begun to consider ways in which financial transactions could be safely done on a peer-to-peer basis, without the need for a financial intermediary. The main challenge was how to solve the problem of "double spending" in a low trust environment like a computer network; in other words, how to ensure that, once an online transaction is made, this transaction is recorded in an indelible way, without any possibility of bad actors negotiating the same financial instrument more than once. The problem of double spending has been solved for centuries by banks and other financial institutions that have canceled transactions and kept records. But in the wake of the financial crisis, people were looking for other methods. The solution proposed by Nakamoto was the blockchain.

Very simply, blockchain is what is known as a distributed ledger, ie an index of transactions in which each exchange is ratified not by a central authority but by a majority (at least 51%) of users on a network that uses something called the consent algorithm. Every ten minutes, transactions that were conducted during that time period are divided into a block, which is then encrypted by an extremely complex process of computing the calculation known as "mining" and becomes a permanent and unchanging part of the chain. A complete copy of the chain is hosted locally on all computers on the network. The distributed nature of the system, the complexity of cryptography and the permanent nature of the chain make it extremely difficult to hack and malfunction even in the absence of a traditional central authority.

The blockchain was initially used for a single purpose, the trade in a cryptocurrency known as bitcoin, which probably explains why the two are so often confused. The entities on the bitcoin network (sometimes individuals, sometimes unions that gather their computing power) earn bitcoins as compensation for the time and computing energy used to "extract" the data, ie find the cryptographic solution for protect the last block of transactions and add it to the chain (this is where IT becomes complicated). It soon became clear, however, that a greater potential advantage of blockchain technology is easy multiparty access to secure real-time data and the associated ability to generate more efficient processes, both inside and outside the company. 39; company. Blockchain data has a number of important advantages over traditional data storage options such as cloud servers. Firstly, its advanced cryptography makes it very difficult to tamper with. Secondly, its distributed nature means that there is no central point of failure, which makes it very robust. Third, the nature of the blockchain means that you have a perfect control trail that allows you to view the entire history of any part of data over time. Finally, its process integrity means that any data that a user adds to the chain is not validated until the integrity of the user is confirmed by the majority of users on the network.

All these factors ensure that the blockchain has significant implications for the distribution sector, particularly in the management of supply chains. In the next edition of MDM Premium, scheduled for December 10th, we will take a look at some of these implications. In the meantime, if Blockchain should come to any party, you're covered.

For more information on MDM Premium, click here or "MDM Premium" at the top of the MDM home page.

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