Blockchain 4 Business? - Pillar 1: Shared Ledger.

Now that we Grasped Blockchain Fundamentals through my first 2 Posts, it’s time to stop a moment and dig deeper on the last paragraph of my last post:

“What Makes a Blockchain the Next Big Thing for Business ?”

As mentioned, to further understand how a blockchain for business works, and to appreciate its potential for revolutionising business networks, you need to understand the four key concepts, or pillars, of blockchain for business:

1) Shared Ledger, 2) Permissions, 3) Consensus, 4) Smart Contracts.

This post focuses on the Shared Ledger.

Ledgers are nothing new; they’ve been used in double-entry bookkeeping since the 13th century. What is new is the concept of a shared, distributed ledger — an immutable record of all transactions on the network, a record that all network participants can access. With a shared ledger, transactions are recorded only once, eliminating the duplication of effort that’s typical of traditional business networks. The shared ledger has the following characteristics:

• Records all transactions across the business network; the shared ledger is the system of record, the single source of truth.
• Is shared among all participants in the network; through replication, each participant has a duplicate copy of the ledger.
• Is permissioned, so participants see only those transactions they’re authorised to view. Participants have identities that link them to transactions, but they can choose the transaction information that other participants are authorised to view.

As explained here, Blockchain is one type of a distributed ledger. Distributed ledgers use independent computers (referred to as nodes) to record, share and synchronise transactions in their respective electronic ledgers (instead of keeping data centralised as in a traditional ledger). Blockchain organizes data into blocks, which are chained together in an append only mode.

Blockchain/ DLT are the building block of “internet of value,” and enable recording of interactions and transfer “value” peer-to-peer, without a need for a centrally coordinating entity. “Value” refers to any record of ownership of asset — for example, money, securities, land titles — and also ownership of specific information like identity, health information and other personal data.

Distributed ledger technology (DLT) could fundamentally change the financial sector, making it more efficient, resilient and reliable. To understand how DLT can address challenges in the financial sector requires both research and real-life applications and pilots.It also requires resolving consumer protection issues, financial integrity concerns, speed of transactions, environmental footprint, legal, regulatory and technological issues that arise with the advent of new technology. DLT applications will likely be incremental, and will likely first replace processes and activities that are still manual and inefficient. Eventually, DLT could increase efficiency and lower remittance costs, and potentially improve access to finance for unbanked populations, who are currently outside the traditional financial system.

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