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:
- 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.
- 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.
- 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.
- Transactional privacy hides the true identity of marketplace participants.
- 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…
- 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.