Blockchain

The Blockchain and validation algorithm

Blockchain is a shared and distributed transaction ledger that records all transactions. For transactions that are on the ledger, a majority of nodes running the Blockchain have to concur about the transaction’s validity. Each transaction — or parts of transactions — are validated by a network of nodes each hosting the Blockchain and validation algorithms.

The validation algorithms accomplish two things:

Firstly, it confirms that the sender has the amount of value s/he intends to transfer to the receiver, at the instant of the transaction, thus preventing double spend. Secondly, once the transaction is consummated, the transaction is stored perennially in a publicly accessible ledger through a process known as “mining”. The mined ledger called the “blockchain” associates each block of transactions in the current time period with all such blocks from previous time periods. A network of nodes each with a local copy of the Blockchain provides an alternative to a centralized firm-controlled e-commerce platform wherein each node can maintain functions of the larger platform either partially or fully.

The Blockchain provides the following functionalities:

  1. Distributed storage and listings in which a globally distributed network of nodes lists items offered on the marketplace by individual businesses and stores all transactions. This eliminates single point of failure scenarios and prevents a single controller from manipulating the centrally administered database.
  2. Transactional validity by eliminating fraudulent and duplicate transactions through timestampbased validation. This is implemented by two algorithms, which solve the Byzantine General’s problem using a proofing mechanism such as Proof of Work or Proof of Stake.
  3. Transactional immutability, i.e. the ability to store all transactions concerning any asset or service traded in the marketplace for historical purposes. This functionality is accomplished by a publicly accessible ledger, that is chronologically created each time a set of transactions occur by means of a process known as “mining”. This immutability of transactions, validated by a set of computing nodes; often is a source of context sensitive “truth” that provides a power to the transacting parties for “EVER”. This property can be used to track, verify and moderate values.
  4. Transactional privacy  hides the true identity of marketplace participants.
  5. Transactional Immediacy that provides a mechanism consummate each transaction within the shortest possible time (i.e. almost instantaneously 2 ). Many implementations of the Blockchain achieve instantaneous transactions through mechanisms such as Proof of service, a consensus mechanism , proof- of-stack etc…
  6. Turing complete computations – Blockchains can compute complex programming logic on a distributed set of nodes. The Turing completeness of Blockchains such as Ethereum maintain a “rich-statefulness”. This indicates that across all nodes on the network, it is possible to validate the logic written in any complex program using notional Turing operations. For example, in a multi-step contract, as each condition is met, a new systemic state is reached after a majority “validation”, and the conditions (or actions) pertaining to the set of rules are executed.