The Need to Know?
If I say, Lasius Niger is creeping on my hand. What do you envision??. Well, what I intended to say is a black ant is crawling on my hand, Lasius Niger is the biological name of black ant!!.
Thus if we peel all jargons and bombastic words from technology, then what prevails is a simple concept which we can implement and make our lives more enjoyable. The article that follows is an endeavour to elucidate technology.
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What is Blockchain?
Blockchain in simple expressions is nothing but “A Chain Of Series Of Blocks”, and the component blocks are digital files which store data in them. Each of the “Block” is electronically associated with all other blocks in the digital web.
Example
Ok, so how does this digital mesh help us in the commercial world?. Well to answer this, let’s consider an example, which is “ABC Ltd” has a business of “Financing Sports Car”. Mr Fast approaches ABC Ltd for giving him a loan of Rs 3 Crores which Mr Fast agrees to repay in 3 equal monthly instalments of Rs 1 Crore each.
This is a typical high-risk & high reward transaction. The risk character of the contract is that there is no security for granting of this loan and reward aspect of the contract is that if there is a failure even for one day in repayment of even a single instalment, then, the ownership of the sports car will be transferred to ABC Ltd who shall further sell the car to Mr Easy for Rs 2.75 Crores and further that the driving license of Mr X shall be cancelled.
This contract necessitates participation from ABC Ltd, Mr Fast, Mr Easy and the Driving License Governing Body.
Typically such type of transaction can entangle into several litigations since there are several areas where authenticity, legal tenability and practical execution will have to be questioned and established. Issues which may emerge range from;
- Was there definitely a delay in repayment?
- What indeed was the intention of the wordings of the agreement?
- Did the governing agency which will cancel the license of the owner partake in this contract? …..
Blockchain – Challenges
From above, you can envision how intricate it could be to honour and execute such contracts. However what if all above transactions are recorded on a “Transparent – Open And View Document”. This document is supported with below specialities:
- The document shall capture all events in the continuity in which they occur,
- Every transaction shall be validated for its actuality, authenticity, and only then, it shall be recorded,
- All the events are time-stamped,
- The document shall be tamper-proof, i.e. once recorded the transaction cannot be altered in any which way,
- The document shall be accessible to view by all.
Technology Behind Blockchain
Well, a Blockchain exactly accomplishes all above. The example that we see above is one of the applications of Blockchain, which is known as Smart Contract. The “Transparent – Open And View Document” that we referred above is nothing but a distributed ledger of the transactions on a network. The network is created by linking the constituent participants who in the example are Mr.Fast, ABC Ltd, Mr Easy and License Governing Body. This distributed ledger of transactions is secured, tamper-proof and available for viewing. Note that it is a shared record of transactions which gets emerged out of collective participation from all constituent members. Therefore the relevant data for the record generation is distributed over the network of constituent members. Thus if anyone wishes to tamper the data, then he needs to access the data from all the constituent members at the same point of time. Further, each data at every stage is time-stamped, electronically chained together and locked using the technology of cryptography (method of protecting information through the use of codes), making the alteration practically unattainable. The more are the constituent blocks; the higher is the tamper-proof capability.
Advantages of Blockchain
With the above general understanding, let us delve further into comprehending the critical features of Blockchain and to perceive as to how would these features promote impeccable execution of several commercial transactions.
1. Absence Of Centralised Authority
There is no controlling authority and no central authority. As long as the rules and functions implanted in the software protocol have adhered, there will be a complete absence of any need to authenticate. Further, each participant or the node in the network is equal to others. Therefore no individual participant can inordinately influence the process.
Thus in our above example, there is no need to have any authority to validate any fact like the occurrence of default in the payment, or concurrence of ABC Ltd to participate etc. Similarly, no participant can repudiate the fact.
2. Distributed Ledger
Note that the “Transparent – Open And View Document” is a comprehensive copy of the entire ledger which is accessible for each node in the network. Further, as the transaction strengthens on one other, each transaction gets uniqueness in the form of numeric code which cannot be repudiated. Due to this digital signalisation of each transaction, any change in any intermittent transaction will make codes for all other transactions to change completely, flagging that tampering has happened.
3. Transparency
As all transactions are time-stamped and digitally linked, therefore there is no need to install any trail. All transactions being linked, it is possible to approach any transaction hitting the digital trail. Further, as all this is transparent and apparent to participants; therefore, all participants can unambiguously determine the current and past states of the assets within the ledger.
Thus applying the above key features, to the example that we have referred above:
1) There won’t arise any ambiguity on the integrity of occurrence of any transaction,
2) There won’t be any need for any central authority to intervene or validate or mediate,
3) All facts will be visible to everyone instantly – as and when they occur,
4) If Mr Fast defaults, then the vehicle would be simply picked and handed over to Mr Easy, and instantaneously money shall flow from Mr Easy’s account to ABC Ltd. Besides, the Governing Authority shall simply block the driving licence of Mr Fast without the entanglement of any questioning or documentation.
Time Ahead for Blockchain
We have an ages-old quote which reads that “Don’t Trust Everything You See, Even Salt Looks Like Sugar.” But with the advent of Blockchain, it seems this ages-old quote is going to be tested for its verbatim continuity.
Embracing technology leads to rejoicing the journey of life.
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Q. So why block chain yet not implimented in india till now what practicle hurdels are there? please let us know asap????