Blockchain technology is best known for its application in the finance industries. While many projects are glad to use its features without modification, other companies are looking for the promise of blockchain to solve problems not available with current software coding.
JP Morgan Chase, reports Thomas Simms in Cointelegraph, is expanding the use of its blockchain technology to help reduce the number of global payments rejected by errors.” JP Morgan Chase is adding new features, continues Simms, to its Interbank Information Network, used by over 220 banks globally; initially designed to help banks share payments data in real time, reducing processing time delays.
JPM built a new blockchain feature that can instantly verify if a payment is being moved to a valid bank account. Prior to having this instant feature, transactions can be rejected days after a transaction day due to typos in sort codes, account numbers and addresses.
— Yorke E. Rhodes III (@yorkerhodes) May 13, 2019
Before a company takes the initiative to develop new blockchain features, getting to know the basic features of blockchain technology is helpful to determining where to position it, or how you or your company can use blockchain for needed company solutions. The following is a review of six key features of blockchain.
Blockchain as a Database
Databases can be described as relational, hierarchical, networked, or object oriented. They are managed by programs like Oracle, SQL, or MySQL and various proprietary programs—all needing an administrator.
Blockchain is a database structure of records comprised of blocks of data, or virtual blocks. The records have the ability to grow as more blocks can be added to a chain of blocks of code. As the amount of data recorded on the system increases, more blocks are added. Each subsequent block is linked to a previous block. And—this continues to the original block. This structure, chain of blocks, gives this data structure its name—”blockchain”.
Immutability and Tamper Detection in Blockchain
One characteristic of a dataset is that records are defined, or addressed by a primary key, that is a unique identifier. Social Security numbers can be a primary key, or a patient’s medical record number can be a primary key for a patient’s digital medical records.
For blockchain, data stored in the blockchain is secured with cryptography. It is this cryptography that makes blockchain data immutable.
“Every block is referenced by a unique string of characters, generated by a cryptographic hash function,” and it is this function that allows the record to grow and accept as much data input as needed, while preserving a fixed-length blockchain data string as the updated data record output.
One aspect of the blockchain hash is that all blockchain children—from the original parent blockchain —store the hash of the parent blockchain. This is what makes blockchain data sets tamper proof, and immutable.
Data Protection in Blockchain
Because blockchain is decentralized—it removes the need for centralized authority and database administrators. Even though there is no central authority, no one can change any characteristic of the network for their own benefits, or nefarious intentions.
Blockchain uses encryption security, cryptography. This provides another layer of security. Cryptography—a highly complex mathematical and statistical based algorithm—acts as an impenetrable firewall.
“You could think of it as a unique identification for every data. All the blocks in the ledger come with a unique hash of its own and contain the hash of the previous block.”
Here’s an analogy: Cracking the encryption code is like finding a grain of sand on a beach, then throwing it back on the beach and asking someone to find that grain of sand.
Decentralized Ledger Technology
Perhaps the most popular attribute of blockchain, is the decentralized ledger. Servers, laptops, or mobile devices can all serve as a node on a network. The ledger can be shared in a private group of users connected by a local area network, or among thousands of nodes on the internet.
Here are some specific attributes of Distributed Ledgers.
No Malicious Changes: Distributed ledger responds well to any suspicious activity or tamper.
Ownership of Verification: Peer nodes verify the ledger. Other users verify and approve transactions.
No Extra Favors: No one on the network can have higher levels of privilege.
Peer Management: Every user on an active node has to maintain the ledger and participate in validation.
Quick Response: With no intermediary, the system response time is significantly improved; changes are updated in minutes or seconds.
Another feature of blockchain is the consensus approach to managing distributed ledgers. Blockchain is known as a shared experience. Lisk says that “consensus protocols are one of the most important and revolutionary aspects of blockchain technology.”
For the blockchain to make decisions, they need to come to a consensus using “consensus mechanisms”. Consensus mechanisms are protocols. The protocols ensure nodes on the blockchain maintain the blockchain and that transactions are synchronized. They agree on which transactions are valid and can be added to the blockchain.
“Every blockchain thrives because of the consensus algorithms. The architecture is cleverly designed, and consensus algorithms are at the core of this architecture. Every blockchain has a consensus to help the network make decisions,” writes Hasib Anwar, 101 Blockchains.
Another episode of the crypto alphabet and in this one we talk about C for Consensus, listen on @youtube here https://t.co/9C4NEBdwLN#cryptoconfidence #crypto #blockchain #cryptoeducation #cryptocurrency #consensus pic.twitter.com/s88qHVOX0B
— The Crypto Confidence Podcast (@CryptoConfPod) June 9, 2019
An allure of blockchain technology is the speed of transactions.
“Money should move at the speed of light. But it still doesn’t—just ask anyone waiting days for a check to clear or stock trade to settle. But now, a new technology called blockchain aims to finally transform the financial services industry,” writes Capital Group.
Indeed, many companies and developers are bullish when discussing the speed of blockchain to be disruptive in the fintech sector, as well as in other industries where speed is critical.
Traditional bank transactions can take days for money transfer to be completed. Blockchain offers the promise for faster settlements that can allow a customer to transfer funds faster. This is of particular interest for foreign workers living as expats in other counties. With blockchain, sending money to their families back home can now happen within seconds, especially when the family at home needs the resources from the breadwinner living abroad.
By understanding the features, a project team can be creative and innovative to create case use applications that meet current problems not previously envisioned for blockchain or the cryptocurrency sectors.
Cointelegraph, “JPMorgan Chase to Add New Features to Blockchain-Powered Network for Global Banks”
The FinTech Way, ” 6 Key Features of Blockchain : This is what makes Blockchain so exciting!”
101 Blockchains, “Introduction-to-blockchain-features”