This is the first of many brain dumps of Crypto technologies.
- A book of financial accounts
- Shared amongst a number of recipients
- The art of writing or solving secret codes
- Not changing or unable to change over time
- Distributed Ledger where data is structured in a particular way
- A Distributed Ledger including the ways the ledger state can been modified
- A method of chaining together transactions based on time and cryptography, with a method of verification by peers
- A many-to-many way of obtaining data, as opposed to client-server where the relationship is many-to-one
- A system ensuring parties agree the true state
- Smart contract
- A computer program that runs when specified conditions exist
- The subject of production, consumption, and distribution (or lack of) of wealth
- Economic incentives
In current banking systems for example, there is one and only one Ledger (even though there is a double entry bookkeeping system where there are two ledgers that need to correspond with each other, these ledgers exist within the same single entity).
When you do any banking, purchasing etc, these transactions all end up in the one single source of truth, your bank.
A comparison in computing could be the early mainframe computer. This computer had many terminals connecting to it, and interacting with the internal state of the mainframe.
Then came the rise of the personal computer. Now you had access to computing power from your own home. These computers could be connected to form networks. They could also connect to a mainframe via the network.
The blockchain is a network of computers with the same records stored in blocks, using cryptography to link these blocks, and an algorithm for nodes to verify that all nodes agree that the state of the ledger is correct.
The need for trust
The human psyche is not understood. It does not know itself. We do not know each other. Why individuals need to dominate, discriminate, oppress, suppress, hate and kill is not fully known and ways of detecting the intent to do the above is not known. Therefore we need a method to enforce trust. If one organisation has a ledger, who knows the havoc that could be wreaked. It may not even be the head of the organisation but subordinates within.
DLT is where the entire community agrees that things are the way they are.
Some of the consensus algorithms in use are: Proof of Work, Proof of Stake, Proof of Deposit, Proof of Burn, Proof of Capacity, Proof of Elapsed Time.
Public vs Private
DLTs and Blockchains such as Bitcoin and Ethereum are public. Uses cases arise for the need of private blockchains. This is when a particular community (such as importers, exporters etc) need their business transactions not to be exposed publicly, but only exposed to peers.
Blockchains such as Bitcoin and Ethereum are public, meaning anyone can perform a transaction the system needs to protect itself of misuse. There are several categories of attack: escalated attack, collusion. The system protects itself from these by making types of attacks such as denial of service particularly expensive.