Blockchain As An Enabling Technology

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Blockchain As an Enabling Technology

Distributed ledger technology and blockchain

• Distributed ledger technology (DLT) is simply a


decentralized database that is managed by
various participants
• Blockchain is simply a type of DLT
• For example, the Bitcoin blockchain is completely
different from the Ethereum blockchain or the
NEO blockchain or the EOS blockchain
• They may all achieve more or less the same goal,
but each has its own rules, coding languages,
purpose, and so on.
Characteristics
• Decentralized and transparent :
• There is no central database or central authority and each participant
maintains a copy of the ledger.
• nodes are able to check on any transaction that has taken place at any time
on the blockchain.
• The degree of decentralization varies from blockchain to blockchain.
• Consensus-driven:
• All participants share and update the ledger after reaching a consensus and
agreeing on the validity of transactions taking place.
• Immutable:
• Once data is added to the blockchain, it cannot be altered.
• This is done via the use of particular cryptographic techniques
Types of block chains
• Public blockchain: network is completely open and anyone can join
and participate.
• Anyone can become a ‘bookkeeper’, add blocks to the blockchain, and
conduct transactions.
• Bitcoin, Ethereum, or Litecoin are good examples of public blockchain
networks.
• Private blockchain: network requires an invitation and places
restrictions on who is allowed to participate wildly.
• Hyperledger Fabric (Linux Foundation), Corda (R3), or Quorum (JP
Morgan) are good examples of private blockchains
Challenges
• Anonymity: in public block chains like bitcoin block chain, every
transaction is traceable, but it is difficult to know who is behind a
given movement of funds.
• At present this is positive factor
• It can prove a challenge when it comes to complying with KYC, AML,
and other transaction-monitoring requirements
• This is why certain industries have instead opted to using private
blockchains where the identity of participants is known.
Challenges
• Quality of Information: While the data on a blockchain is immutable,
it does not necessarily mean that it is accurate. The same principle of
‘garbage in, garbage out’ applies as with any other database.
• Interoperability: The blockchain is still in its infancy and there are no
established industry standards for its technology infrastructure. Most
blockchains today operate in their standalone universe with little
interoperability with other blockchains.
• Mass Adoption: This adoption will take some time
Challenges
• Legal Uncertainty: Current regulatory frameworks particularly in
highly regulated industries like financial services or healthcare— were
not drafted with blockchain technology in mind.
Use Cases of Blockchains
• AXA has started to implement blockchain smart contracts to offer
“direct and automatic compensation to policyholders whose flights
are delayed”.
• Insurance contract—is recorded on the Ethereum blockchain.
• The smart contract is directly linked to global air traffic databases and
so, if a delay of two or more hours is recorded in air traffic systems,
policyholders will automatically receive their compensation.
Use Cases of Blockchains
• Land registrations and ownership transfer: How blockchain-based
land registries can harness smart contract technology to not only
establish land titles but also automatically transfer land ownership
and hamper fraudulent transactions. Using this technology could cut
transaction time between land buyers and sellers substantially.
Watch this video
• How block chain works
• https://youtu.be/boARRLlu5Uc

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