A blockchain is as an immutable, append-only (no updates, no deletes) database, where any new data cannot conflict with older data in the database. Also, each piece of data has an owner, is replicated many times and is always available. Finally, everyone agrees on the state of the database, though there is no central authority.
Technically speaking, a blockchain is a linked list or chain of blocks, and a block is a group of ordered transactions. Each transaction has a transaction ID and is digitally signed by the owner. All transactions are broadcast, so everyone can maintain a copy of the blockchain. Miners verify transactions and do work necessary to add a new block of transactions to the blockchain. They run a consensus mechanism to agree on the next block to add to the blockchain. A blockchain is also often called a distributed ledger.
In a public or permissionless blockchain, anyone can write to the blockchain, and anyone can read from the blockchain. In a private or permissioned blockchain, only identified participants are allowed to read and write.
Key Advantages Of Blockchain
A blockchain allows entities who do not know each other to agree on the state of the database without the need for any intermediary or central authority. Put another way, it can establish trust between strangers. No one entity can bring the network down or censor parts of it.
The key advantages of a blockchain are the fact that it is immutable, and the fact that it allows trust between parties without a central authority.
Types Of Solutions Where Blockchains Can Help
Blockchain POCs are being used for asset tracking, payments and settlements, smart contracts, trading, voting, shared record-keeping, digital tokens, claims, provenance, and loyalty/rewards programs.
Enterprise Use Cases
According to Gartner (via PwC), 82% of use cases for blockchain were in the financial industry in 2017, but 2018 has seen a broadening out of use cases, with only 46% related to financial services. Other big verticals where blockchain experimentation is going on include transportation, retail, utilities, manufacturing, insurance, health care and government.
The biggest use cases are asset tracking in transportation and government; record-keeping in utilities, health care and insurance; provenance in retail; and securities trading.
When To Use A Blockchain
Because of the hype surrounding blockchain, we are increasingly seeing it being used in situations where better or simpler methods may suffice, such as a database with application logic.
Brian Scriber's recent paper in issue No. 4 of IEEE Software gives a great framework for evaluating if a blockchain is applicable in a given situation. View More
