What is Blockchain and Why do I Need it?

Share this post:

The history of bartering dates back to 9000 BC in Egypt. It was introduced by Mesopotamia tribes in 6000 BC and was later adopted by Babylonian’s where goods were exchanged for a wide variety of things.

The barter system is similar to having an asset, trading it and recording that transaction on a little black book. Is it possible to codify this behavior? Is there a way to create a modern day barter system using technology? A technology that could help create a network, create assets on the network, transfer them and indelibly store that record in a tamper proof system. Could blockchain be the answer?THINK Barter Pic

To create an electronic barter system, we would need to create a network of permissioned users, create assets and a shared magical black book that could record all our transactions.

Anytime a new asset was created or transferred the shared magical black book would automatically get updated. Lets look at some of the blockchain features in detail:

Permissioned Network: We first begin with creating a network and inviting legitimate members in, thereby creating a permissioned network. In this network all the information is shared with everyone else in the network but permissions can control who has the right to view those transactions.

Assets: Assets can be created on a network using smart contracts and can be tangible or intangible such as intellectual property, art, financial assets, car leases or shipping containers full of goods.

Transactions: When an asset is transferred, a transaction is created indicating the transfer of an asset. This transaction is then hashed and multiple transactions are stored together to form a block. The transaction entry is made indelible by hashing the transactions with the previous blocks thus chaining them together.

Consensus: We need a way to tell if the transactions are legitimate or not and if the members agree to those transactions. Consensus is the way to achieve that, where members vote on the legibility of a transaction.

These key features now enable us to settle a transaction in seconds compared to days. We now have the basics of a fair system where there is no central authority. A world where people now have the ability to own their data and share as they see right. A world where we can decentralize a wide array of business transactions and make the world a little bit fairer. That is something I can live with and gives me the idea for my next project — trading lego figures using blockchain.

Global Program Manager, Cloud Communications; Managing Editor, IBM THINK Blog

More stories

Houston, We’re Live Streaming

Since people around the world first gathered around black-and-white televisions to watch the 1969 moon landing, the general public has been fascinated by space, craving more visual information about the final frontier. At NASA today, we are on a mission to find new ways to share our discoveries on Earth and in space. Before the […]

Continue reading

An Open Letter to the President-Elect

International Business Machines Corporation Office of the Chairman, President and Chief Executive Officer One New Orchard Road Armonk, New York 10504-1783 November 14, 2016 Mr. Donald J. Trump Office of the Presidential Transition 1800 G Street, NW Washington, DC 20006 Dear Mr. President-elect: Congratulations on your election as the 45th president of the United States. […]

Continue reading

How New Algorithms Are Helping to Predict Food Dangers

Thanksgiving in the United States, like other holidays around the world, places food at the center of a joyful celebration — and at the forefront of our minds. As we plan, shop, prepare, cook and share our celebratory meals, we are careful to include not only flavors that our loved ones enjoy, but also foods […]

Continue reading