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June 8, 2020 0

Three key innovations of Blockchain – namely Consensus, Smart Contract and Distributed Ledger are the basis for the new computing paradigm that provides a game changing opportunity. First, a Distributed Ledger is a “distributed” database that is resident across all participating nodes. This distribution of databases or ledgers is unlike conventional replicated database systems, because in a Blockchain based application each node performs independent verification of each transaction prior to accepting the data. Hence each copy of this distributed ledger is independently verified and validated copy of data. This process provides autonomy to each node while operating within the controls established by all participants. This governance model ensure that each node even while working independently, must also produce the same results. This guarantees that each node, although independent, works within the rules established by the collective thereby guaranteeing that a single node cannot monopolize the data even while working independently. Second, a Smart Contract – which is the business logic for the application, is replicated across each node allowing each node to operate on the data – again independently.  This means that operations on the data are decentralized as the control is no longer resident with a single node or with a single company. Third, Consensus, a key innovation of Blockchain is the process via which, an actor such as a Data mining company, validates the data based upon the business logic and creates valid and trustworthy blocks of data. Each block of data may have one or more transactions. Once a block is created, it is chained with a previous block. Over time, each block is part of a long chain of connected blocks and a Blockchain emerges. It is important to mention that the actor who is responsible for Consensus building i.e. one who creates a block, is nominated and selected based upon a decentralized control model as well. In traditional computing paradigm, the actor who controls the business logic and operates on the data, is the company that holds the data such as the airline, the retailer, or the insurance company etc. With Blockchain, the actor may be (though not necessarily) an external organization that is democratically selected via a Consensus driven processes known as Proof of Work, Proof of Stake, Proof of Authority and few other techniques. A Consensus driven process results in identification of a leader who is then nominated to act as the creator of a Block. The creator of the Block associates its private signature (private key) to the Block thereby eliminating the possibility for any one else to alter the data (intentionally or unintentionally). Once created, the Block is immutable. This immutability is a key attribute of Blockchain that establishes verifiable trust through traceability.  It is important to note that a Blockchain can be a private blockchain or a public blockchain. A public blockchain is open to any qualified party and the consensus is typically offered with the consensus protocol commonly known as “Proof of Work”. In a private Blockchain, the consensus is established via a smaller subset of Consensus builders commonly known as “Proof of Stake” and “Proof of Authority”. The Private Blockchain is a good way for Power companies to embrace Blockchain as it provides more control to Utilities, consumes less electricity and does not allow open access to any party.

Tony Giroti