Characteristics of Blockchain Technology

Characteristics of Blockchain

1. Decentralization

• The most important one on the list is decentralization so I am going to explain it first.
• Blockchain is entirely different from traditional internet architecture where each computer or system is connected to a central server. The central server is responsible for managing data.
• In the blockchain, each system has access to the whole data with no central server controlling the operations. No organization is in charge of the data.
• The consensus mechanism in the blockchain is responsible for controlling the network.
• Each node has an updated copy of data and execution power instead of only one server having data and execution control.
• The benefits of decentralization are listed below:

Less Failure

• One benefit of decentralization is that the network and data are available always even if some server or node is not accessible.

User Control

• Users have full control of their assets and transactions.

No Intermediary

• There is no need for a central authority for verifying transactions.

Less possibility of hacking

• Attacking the system requires a lot of computing power.

Distributed Ledger

• The next feature is distributed ledger and to understand this, I will define ledger first. A ledger is a file for recording the transactions.
• An example is the ledgers in banks. All transactions of an account are listed in the ledger in an order. Each new transaction is added to it while retaining the previous record.
• Similarly, every approved transaction is added to the blockchain ledger while maintaining the previous history.
• The blockchain ledger is open to everyone as any node can view the transactions.
• Also, every node on the network is connected to other nodes of the network in many to many connections which makes it a distributed network.
• The network is maintained by all of the nodes. Each node provides computational power to this system.
• Some of the benefits of a distributed ledger are as follow:
  • Fast Response: As the network is distributed with no central power, the transactions take less time.
  • Participation: Every node participates in maintaining the record and database. Each node takes part in the validation process.
  • No Tempering in Data: Each node has a copy of data, a single node cannot temper the past data. Any malicious activity is noticed easily.
  • Equal Privileges: All nodes in the distributed network go through the same process of transaction verification.
• This was some idea of a distributed ledger in the blockchain. Next, I will talk about the Immutability feature.

Immutability

• Immutability is a core characteristic of blockchain. Immutable refers to something that cannot be changed with time.
• The data stored in the blockchain cannot be corrupted and this is a very useful and interesting feature.
• In the blockchain, immutability means that any records or transactions stored in it can never be changed or removed. Let’s explain how immutability works here.
• The data in the blockchain is added in the form of blocks. These blocks are verified by nodes and every entity of the network accepts them.
• Every node has a copy of data and changing a single copy residing on a single node cannot alter the data on the entire network.
• The data in each block is cryptographically secure and hashed. Each block is identified by its hash value and each block has the hash value of the previous block too.
• Changing the data of a block changes its hash value too and as each block contains information of the previous block the hash no longer matches with the next block of the chain.
• So, the distributed nature and cryptography make the data immutable in the blockchain.
• Once a transaction is recorded in a block, verified by nodes, and added to the blockchain, no one is able to modify or remove that from the database.

Security

• The next feature that I am going to discuss is security. The architecture of blockchain provides data security.
• Due to cryptography, all information is secure in the database and that makes it different from the existing internet structure.
• The account information is also secure and the identity of each node is hidden. Each account has a private and public key. The private key is secured and cannot be generated via public key.
• The network is controlled by a set of rules instead of any authority. So, no one is able to change the rules for themselves. The system enforces security and integrity itself.
• Now let’s talk about another important feature i.e., traceability.

Traceability

• Blockchain provides the traceability feature.
• Traceability means being able to trace and track the origin of something. Traceability allows verifying the source or origin, history, and all data of a product.
• As blockchain is an immutable database, any asset or transactional data can be traced back.
• The origin of any transaction can be traced back to the distributed ledger.
• This characteristic is very useful in a lot of applications such as in a supply chain network.

Cryptographic Hashing

• I have already given you an idea of what cryptographic hashing is in this article. The blockchain transactions are all cryptographically secured.
• The transactions in a block are hashed and thus converted to a fixed-length value. This value is stored in the block.
• Data can be converted to a hash value but a hash value cannot be converted back to input data which implies that cryptographic hashing is a one-way function.
• The pair of a public and a private key for each account also has cryptography associated with it. The public key is generated from the private key. The private key is secured and not shared on the network while the public key is open on the network. The public key can be generated via private key using cryptographic functions but the private key cannot be generated using public key due to the one-way nature of cryptographic functions.

Anonymity

• Having discussed the important features of blockchain technology, let’s not leave out another significant property that is anonymity.
• On a blockchain network, the true identity of a participant is hidden.
• Each participant of the distributed network has an address associated with it. This address is the identity of that entity instead of a true identity.
• The addresses keep the user anonymous on the network.