Blockchain is a distributed ledger system. Its core element is network consensus, which is used to record and execute transactions. It is the platform on which the web currency bitcoin is based.
One important feature is that no single agent is able to exercise control over or alter the activity of the whole system. When a transaction is carried out and a new block is connected to the chain of transactions in the ledger, it can never be altered. Furthermore, the whole ledger is distributed and all the participants possess their own copy of it.
This means that a single individual virtually cannot engage in fraud since all copies of the ledger would have to be changed. A false entry would have to be approved by a majority of the individual actors in the network.
Is blockchain game-changing systems architecture?
The building of IT systems may be revolutionised by this technology since it can erase many opportunities for hacking and fraud activities, according to an article on the management-issues.com website.
Today, data is stored in centralised systems. With any breach, a hacker can gain complete access to all the information. If a hacker breaches in blockchain, they still need the cooperation of a majority of other participants to gain any influence – which obviously they will not get.
Smart contracts
Blockchain has one more interesting feature, namely the capacity to create smart contracts. Usually expectations and agreements are kept as written contracts. Smart contracts eliminate the possibility of breaches.
The basis here is no longer trust but another basic attribute of blockchain systems. The terms of a smart contract are practically impossible to breach because the contract is self-fulfilling.
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