Paperless currency next step from bitcoin

These are my thoughts & data collected from various news like BBC, TOI & Wikipedia plus a few other websites. This is for learning purpose only still a nascent stage of the Blockchain technology so could not promise a confirm architecture yet, I will say evolving than a concrete shape acquired platform for paperless currency.

Wikipedia states "Blockchain is a distributed database that maintains a continuously-growing list of data records secured from tampering and revision. It consists of blocks, holding batches of individual transactions.[6] Each block contains a timestamp and a link to a previous block."

Blockchain is a method of recording data - a digital ledger of transactions, agreements, contracts - anything that needs to be independently recorded and verified as having happened. The big difference is that this ledger isn't stored in one place, it's distributed across several, hundreds or even thousands of computers around the world. This is next step from bitcoin.

And everyone in the network can have access to an up-to-date version of the ledger, so it's very transparent. Digital records are lumped together into "blocks" then bound together cryptographically and chronologically into a "chain" using complex mathematical algorithms. 

This encryption process, known as "hashing" is carried out by lots of different computers. If they all agree on the answer, each block receives a unique digital signature.

Banks think it could be the future of financial transactions, while diamond miners hope it will help end the trade in conflict diamonds. And this week the UK's chief scientific adviser encouraged the British government to adopt the technology.

The blockchain is the main technical innovation of bitcoin, where it serves as the public ledger for bitcoin transactions. Every user is allowed to connect to the network, send new transactions to it, verify transactions, and create new blocks, making it permission less. The bitcoin/blockchain design has been the inspiration for other applications. 

In the bitcoin context, a blockchain is a digital ledger that records every bitcoin transaction that has ever occurred. It is protected by cryptography so powerful that breaking it is typically dismissed as "impossible". More importantly, the blockchain resides across a network of computers. Whenever new transactions occur, the blockchain is authenticated across this distributed network, before the transaction can be included as the next block on the chain.

"You don't store details of the transaction, just the fact that it happened and the hash of the transaction," explains Adrian Nish, head of threat intelligence at BAE Systems.

Once updated, the ledger cannot be altered or tampered with, only added to, and it is updated for everyone in the network at the same time. Well, the distributed nature of a blockchain database means that it's harder for hackers to attack it - they would have to get access to every copy of the database simultaneously to be successful.

It also keeps data secure and private because the hash cannot be converted back into the original data - it's a one-way process. So if the original document or transaction were subsequently altered, it would produce a different digital signature, alerting the network to the mismatch.

In theory then, the blockchain method makes fraud and error less likely and easier to spot. The idea has been around for a couple of decades, but came to prominence in 2008 with the invention of Bitcoin, the digital currency. Bitcoins are created by computers solving complex mathematical puzzles and this requires lots of computing power and electricity. Blockchain is the technology underpinning it.

Current Players 

Big player already started building the platform all by their thought process so this is shaping up. There isn't just one program - lots of companies, from Ethereum to Microsoft, are developing their own blockchain services. Some are open to all ("unpermissioned", in the jargon), others restrict access to a select group ("permissioned").

"Banks do very similar things to each other, even though they compete," says Simon Taylor, vice-president of blockchain research and development at Barclays.

"They basically keep our money safe and a big computer keeps track of who has what. But getting these computers to talk to each other is remarkably complex and expensive - the tech is getting a little old," he says. If banks started sharing data using a tailor-made version of blockchain it could remove the need for middlemen, a lot of manual processing, and speed up transactions, says Mr Taylor, thereby reducing costs.

 Having access to an open, transparent ledger of bank transactions would also be useful for regulators, he adds. And it could help governments tackle tax fraud.

Tech company R3 CEV has persuaded more than 40 banks around the world, including Barclays, UBS and Wells Fargo, to join a consortium exploring distributed ledger technology.

Just this week, R3 announced that 11 global financial institutions had taken part in an experiment involving the exchange of tokens across a global private network without the need for a central third party verifying the transactions.

If banks and other financial institutions are able to speed up transactions and take costs out of the system, it should mean cheaper, more efficient services for us. For example, sending money abroad could become almost instantaneous.

Last year, investment bank Goldman Sachs and Chinese investment firm IDG Capital Partners invested $50m (￡35m) in Circle Internet Financial, a start-up aiming to exploit blockchain technology to improve consumer money transfers.

Circle, co-founded by entrepreneur Jeremy Allaire, has created a digital wallet for bitcoins, but users can decide whether they send or receive money in dollars as well. The idea is to make cross-border payments as easy as sending a text or email.

It's not all about banking. Tech company Everledger is using blockchain to develop a system of warranties that enable mining companies to verify that their rough-cut diamonds are not being used by militias to fund conflicts, and that they comply with the Kimberley Process - a government and community-backed certification scheme for diamonds.

The ownership history and value of each diamond is available to anyone who wants it, and you can be confident that the information has not been tampered with or corrupted.

Current shape of technology

A blockchain implementation consists of two kinds of records: transactions and blocks. Transactions are the content to be stored in the blockchain. Transactions are created by users who wish to record information in the blockchain. In the case of cryptocurrencies, a transaction is created any time a cryptocurrency owner sends cryptocurrency to another user.

Transactions are passed from node to node on a best-effort basis. The system implementing the blockchain defines a valid transaction. In cryptocurrency applications, a valid transaction must be digitally signed, spend one or more unspent outputs of previous transactions, and ensure that the sum of transaction outputs not exceed the sum of inputs.

Blocks record one or more transactions. A transaction's presence in a block confirms when and in what sequence it occurred. Blocks are created by users known as "miners" who use specialized software or equipment designed specifically to create blocks. Miners compete with each other to see who can first complete the next block and therefore earn the reward(s) for doing so.

In a cryptocurrency system, miners collect two types of rewards: a pre-defined per-block award, and fees offered within the transactions themselves, payable to any miner who confirms the transaction.

Every node in a decentralized system has a copy of the blockchain. No centralized "official" copy exists and no user is "trusted" more than any other.Transactions are broadcast to the network using software applications. Mining nodes validate transactions, add them to the block they're creating and then broadcast the completed block to other nodes. Blockchains use various timestamping schemes, such as proof-of-work to serialize changes. 

Blockchain technology may be permissionless—"open for anyone to use"—or private: "closed off and accessible only to chosen parties". Blockchains are a technology that may be integrated into multiple areas. Examples include a payments system and store of value, facilitating crowdsales, or implementing prediction markets and generic governance tools.

The advantages

•   The ability for independent nodes to converge on a consensus of the latest version of a large data set such as a ledger, even when the nodes are run anonymously, have poor interconnectivity and have operators who are dishonest or malicious (see Sybil attack).
•  The ability for any well-connected node to determine, with reasonable certainty, whether a transaction does or does not exist in the data set (see consistency).
• The ability for any node that creates a transaction to, after a confirmation period, determine with a reasonable level of certainty whether the transaction is valid, able to take place and become final (i.e., that no conflicting transactions were confirmed into the blockchain elsewhere that would invalidate the transaction, such as the same currency units "double-spent" somewhere else).
• A prohibitively high cost to attempt to rewrite or alter transaction history.
• Automated conflict resolution that ensures that conflicting transactions (such as two or more attempts to spend the same balance in different places) never become part of the confirmed data set.

Evolution or Teething troubles

Wait everything is not green with blockchain, An ongoing debate disputes whether a private system with verifiers tasked and authorized (permissioned) by a central authority, should still be considered a blockchain.

Proponents of permissioned or private chains argue that the term "blockchain" may be applied to any data structure which batches data into blocks which are timestamped and that these blockchains serve as a distributed version of multiversion concurrency control (MVCC) in databases. Just as MVCC prevents two transactions from concurrently modifying a single object in a database, blockchains prevent two transactions from spending the same single output in a block chain.

The opponents say that the permissioned systems look like traditional corporate databases, not supporting decentralized verification of the data, and that such systems are not hardened against tampering and revision by their operators. The Harvard Business Review defines blockchain as a distributed ledger or database open to anyone.

In the era of big data and the internet of things, being able to assign a digital signature to each bit of data is also useful. So building the traciability with a text based DB crunching helping to track every transaction & with time stamp plus IP trace so this concludes who, what & when part.

And verifying and recording each stage in the development of a software program or product will help improve quality and reliability, he maintains.

Feel free to contact me at [email protected]. I would like to research for India retail markets going on Blockchain. As the market is huge , data and analytic started gathering the pace and technology platform still maturing along.