What is the blockchain technology?

[hatshepsut93]

I believe I have a decent understanding of how Bitcoin works, but sometimes when I read news I stumble upon "the blockchain technology" - blockchain for banks, blockchain for medical records, blockchain for real estate and so on. From my understanding, most of them are private blockchains (correct me if I'm wrong), but when I tried to find some info on how those private blockchains work, I didn't get much. So, I have some questions:

1. How do they work? How blocks are organized?  Are there any miners? Are they at least slightly more decentralized than traditional solutions?

2. Why blockchain? Does it solve any problems? Is this more efficient than traditional solutions? Are there any benefits for customers?

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[aleksej996]

I believe I have a decent understanding of how Bitcoin works, but sometimes when I read news I stumble upon "the blockchain technology" - blockchain for banks, blockchain for medical records, blockchain for real estate and so on. From my understanding, most of them are private blockchains (correct me if I'm wrong), but when I tried to find some info on how they work, I didn't get much So, I have some questions:

1. How do they work? How blocks are organized?  Are there any miners? Are they at least slightly more decentralized than traditional solutions?

2. Why blockchain? Does it solve any problems? Is this more efficient than traditional solutions? Are there any benefits for customers?

They are probably either PoS coins or using Ethereum blockchain. I doubt there are any miners. Otherwise the blocks are organized in a linked list, that is what blockchain is, a chain of blocks. But for the decentralization part, I guess it depends, but there will be no benefit if they are not. Blockchain really just solves the problem of trust, it works for the decentralized systems. It is a way of keeping some data in a decentralized and secure manner, in some cases where there are many institutions that need to have a type of ledger or in other words, just some data that they all agree on, then it helps.

[achow101]

1. How do they work? How blocks are organized?  Are there any miners?

Generally private blockchains are based off of the existing blockchains that cryptocurrencies used. They use some form of PoS or PoW which means that there may be miners or stakers. Private blockchains may also be permissioned which means that blocks and transactions need to be signed by specific parties.

Are they at least slightly more decentralized than traditional solutions?

Perhaps. Some ideas for private blockchains seem just like a traditional solution but way more inefficient (i.e. using a blockchain as a central database that requires central authority to read and write from it). Others are more decentralized where the parties using the blockchain need permission to use it, but those who are allowed to use it do so in a decentralized manner like with Bitcoin.

2. Why blockchain? Does it solve any problems?

Blockchains are best used when there are multiple parties that wish to do something together but don't necessarily trust each other. Private blockchains can be used for doing things between businesses (that may be competitors so they don't trust each other). It can solve some problems that rely on trusting some middleman and potentially reduce fraud.

Is this more efficient than traditional solutions?

Generally, no. Centralized solutions are generally far more efficient than decentralized solutions. However that requires trusting someone and usually involves a trusted third party. Businesses may opt to use a private blockchain because it cuts out that trusted third party reducing the need to trust others and also reducing costs.

Are there any benefits for customers?

Probably not.

[nicosey]

Its more a reaction to the hype generated by bitcoin.   At one back i know they just replace the gas part with some internal value.  So it runs like POS.  One of the main reason I know that banks go for private blockchain is fear about maintaining there data private.  Should look at BIP175 that addresses some of these concerns.

[BenOnceAgain]

Blockchain is all a-buzz in some of the government contracting circles I haunt.  Honestly, some of the concepts I see pitched for distributed ledger applications are missing the mark as far as I'm concerned.  Just throwing in the buzzword to try to get an edge on funding.

Like achow101 said, "blockchain" mostly provides a solution to data sharing without trust.  Besides the actual data being shared among parties without trust, metadata that is often just as important to data transactions (such as the timestamp) is often part of a distributed ledger.  In addition, there is some recognition that when properly implemented, blockchains "just work" -- there's no need to have layers of high availability and clustering, something that sadly many systems that run critically important parts of at least the U.S. government are sorely lacking.  Other, centralized or "more conventional" technology exists that can do many of these things.

Lots of the U.S. government systems are stone age and held together with patches and hacks.  Blockchain, on the other hand, inherently has redundancy and clustering built into its model, which enables related technologies such as consensus and resiliency.

Plus I think there is a bit of a "what is blockchain" factor, followed by a "lightbulb" when they understand the technology.  For some time, they can believe it is the answer to every problem, even though that is not so.  It does have enormous potential to decentralize many things that go beyond currencies, however.

When you think about "trust" in a macro sense, much about our world has evolved to low trust models.  The world is an extremely complicated system, and technology adds exponentially to its complexity -- for better and worse.  Many biologists believe that our brains were not evolved to absorb the volume of information we now must to exist as a competent member of society.  In such a society, trust can often be hard to establish.  To say nothing of "trust in capitalism", hah.

[hatshepsut93]

~snip

Thank you for a great reply!

I'm still very curious to learn more about different private blockchains so if anyone has some links that explain how they work in-depth, I would be very grateful if you post it here.

I also have some more questions:

1. Are all private blockchains permissioned or what makes a blockchain private?

2. If a private blockchain has only one permissioned entity that can append new blocks ("miner") and it doesn't do any PoW or PoS, how close this entity becomes to a traditional middleman? I understand that they can't alter transactions is they are signed by digital signatures, but what they can possibly do?

3. Are they vulnerable to some attacks that don't exist in decentralized blockchains?

[achow101]

1. Are all private blockchains permissioned or what makes a blockchain private?

A private blockchain could be one which is simply not available to the general public, e.g. a piece of software that is only distributed to a certain number of people. Of course, to keep the blockchain private, a permissioning system would probably have to be in place.

2. If a private blockchain has only one permissioned entity that can append new blocks ("miner") and it doesn't do any PoW or PoS, how close this entity becomes to a traditional middleman? I understand that they can't alter transactions is they are signed by digital signatures, but what they can possibly do?

It is no different from a traditional middleman. That single entity can alter the transaction history and censor transactions because the PoW is what makes the Bitcoin blockchain immutable. Such a private blockchain would be centralized and no better than a central SQL database. In fact, it is worse than a central SQL database because it is more inefficient than such a database.

3. Are they vulnerable to some attacks that don't exist in decentralized blockchains?

Certainly. Permissioned blockchains require using different cryptography and have completely different security models, so is vulnerable to different attacks than a decentralized blockchain.

[artras]

From a cruising altitude, a blockchain might not look that different from things you're familiar with, say Wikipedia.

With a blockchain, many people can write entries into a record of information, and a community of users can control how the record of information is amended and updated. Likewise, Wikipedia entries are not the product of a single publisher. No one person controls the information.

Descending to ground level, however, the differences that make blockchain technology unique become more clear. While both run on distributed networks (the internet), Wikipedia is built into the World Wide Web (WWW) using a client-server network model.

A user (client) with permissions associated with its account is able to change Wikipedia entries stored on a centralized server.

Whenever a user accesses the Wikipedia page, they will get the updated version of the 'master copy' of the Wikipedia entry. Control of the database remains with Wikipedia administrators allowing for access and permissions to be maintained by a central authority.

[bubble1]

Can I suggest a free e-book that I found most helpful.

It's called Mastering Bitcoins and can be accessed here:

http://chimera.labs.oreilly.com/books/1234000001802

[3piecechickendinner]

I believe I have a decent understanding of how Bitcoin works, but sometimes when I read news I stumble upon "the blockchain technology" - blockchain for banks, blockchain for medical records, blockchain for real estate and so on. From my understanding, most of them are private blockchains (correct me if I'm wrong), but when I tried to find some info on how those private blockchains work, I didn't get much. So, I have some questions:

1. How do they work? How blocks are organized?  Are there any miners? Are they at least slightly more decentralized than traditional solutions?

2. Why blockchain? Does it solve any problems? Is this more efficient than traditional solutions? Are there any benefits for customers?

Private blockchains have a similar concept technically with public blockchains with slight differences.  One of those differences is the consensus algorithm.  Ethereum the public blockchain uses Proof of work while Hyperledger Fabric the private blockchain uses Practical Byzantine Fault Tolerance.  Ethereum has miners that are anon and Fabric has no miners but nodes and you are aware who the nodes are in your network.  In a sense Hyperledger Fabric would be considered a centralized network and not decentralized like Ethereum.  Most Enterprises who are interested in Blockchain lean towards the Hyperledger project because its backed by the Linux foundation and heavyweights like IBM and Oracle are adopting it and they dont want their data in a public blockchain.

Blocks are organized the same way where transactions are added to the blocks, the blocks are replicated to the participants that need to validate the transactions, once all network parties validate the transaction the block is added to the chain.  You can use Smart Contracts on the private blockchains, but they are called Chain codes and you can have Oracles feed data from outside sources to them.

Why Blockchain?  Well..no Intermediaries, transparency, less fraud, better processing, better visibility, protecting your consumer data...

"Is this more efficient than traditional solutions?"  Honestly its hard to say if its better than your traditional solution, because if you tell me you want a blockchain solution to host all your image files then blockchain is not for you.  So it really depends on your specific use case

[BattleZeo]

I believe I have a decent understanding of how Bitcoin works, but sometimes when I read news I stumble upon "the blockchain technology" - blockchain for banks, blockchain for medical records, blockchain for real estate and so on. From my understanding, most of them are private blockchains

Permissioned blockchains use an access control layer to govern who has access to the network.[59] In contrast to public blockchain networks, validators on private blockchain networks are vetted by the network owner. They do not rely on anonymous nodes to validate transactions nor do they benefit from the network effect.

[Ranly123]

In my understanding about blockchain, its is a system that is used by parties without undergoing the process of merging the files that they do and having blockchain make them secured in there tansactions.

[monkeydominicorobin]

I believe I have a decent understanding of how Bitcoin works, but sometimes when I read news I stumble upon "the blockchain technology" - blockchain for banks, blockchain for medical records, blockchain for real estate and so on. From my understanding, most of them are private blockchains (correct me if I'm wrong), but when I tried to find some info on how those private blockchains work, I didn't get much. So, I have some questions:

1. How do they work? How blocks are organized?  Are there any miners? Are they at least slightly more decentralized than traditional solutions?

2. Why blockchain? Does it solve any problems? Is this more efficient than traditional solutions? Are there any benefits for customers?

The point here is simple. There is no such thing as private blockchain. It is a scam. It is just a simple DBMS. They cannot afford the structure that is required and needed to maintain a real blockchain. Bitcoin blockchain was built by the world community. Pooling all the needed resources to keep it running for eight straight years. The private sector is not going to do that. It is expensive. Again private blockchain is a scam. You cannot find answers because if they answer your question the scam will be uncovered immediately.

[mashort]

From a cruising altitude, a blockchain might not look that different from things you're familiar with, say Wikipedia.

With a blockchain, many people can write entries into a record of information, and a community of users can control how the record of information is amended and updated. Likewise, Wikipedia entries are not the product of a single publisher. No one person controls the information.

Descending to ground level, however, the differences that make blockchain technology unique become more clear. While both run on distributed networks (the internet), Wikipedia is built into the World Wide Web (WWW) using a client-server network model.

A user (client) with permissions associated with its account is able to change Wikipedia entries stored on a centralized server.

Whenever a user accesses the Wikipedia page, they will get the updated version of the 'master copy' of the Wikipedia entry. Control of the database remains with Wikipedia administrators allowing for access and permissions to be maintained by a central authority.

i have been looking at this angle for a while, so let me ask, what is the relationship between blockchain and other peer -to-peer service such as bit torrent?

[BitzonBen]

I believe I have a decent understanding of how Bitcoin works, but sometimes when I read news I stumble upon "the blockchain technology" - blockchain for banks, blockchain for medical records, blockchain for real estate and so on. From my understanding, most of them are private blockchains (correct me if I'm wrong), but when I tried to find some info on how those private blockchains work, I didn't get much. So, I have some questions:

1. How do they work? How blocks are organized?  Are there any miners? Are they at least slightly more decentralized than traditional solutions?

2. Why blockchain? Does it solve any problems? Is this more efficient than traditional solutions? Are there any benefits for customers?

Blockchain works for Bitcoin and other Cryptos simply because it is a secure and irrefutable way to record data. In Bitcoins case, it's the recording of p2p transactions right? So, when it comes to the future of "blockchain technology", entrepreneurs and alike are trying to figure out what other data can be stored on a blockchain, because it is secure and irrefutable.

So naturally, the sensitive and often scattered health records come to mind. Also, I have heard ideas of the government replacing physical SS cards and blockchain could be a great replacement. Everyone would have their own "Blockchain SS!" Isn't that awesome?

[achow101]

This thread is attracting a lot of spam and a lot of people are apparently incapable of reading the OP's question which is in the post not the title, I am locking this thread.