Blockchain and AI (Part 1): What Is Blockchain?
Let's take a look at Blockchain and Artificial Intelligence and explore what Blockchain is in this first part of the series.
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With this article series, I want to deliver an in-depth understanding of not only blockchain and its applications, but also an understanding of how it interweaves with Artificial Intelligence.
Let's start with blockchain and understand its features.
"Centralized ledger system for a business is a blockchain technology."
Think of a blockchain as a shared ledger between multiple parties involved in an end-to-end business. Centralizing the ledger system for a specific community is known as a blockchain.
The Four Characteristics
A blockchain has four key characteristics.
- Consensus: For each transaction or entry in a blockchain, every involved participant must approve.
- Immutable: No transaction can be removed from the blockchain. In case of an erroneous transaction, a new transaction has to be made to reverse the effect, in which case both the transactions are recorded and visible.
- Source: All the participants in the blockchain must be able to see where each asset came from and how it's changed over time.
- Completeness: Sharing a single ledger provides a definitive place to assert information related to transactions or ownership of assets.
The Six Benefits to Business
Based on those four characteristics, blockchain delivers six key benefits to businesses.
- Time-efficient: With multiple parties involved in a business transaction, settlements and back-and-forth communication can require a lot of time. With the advent of blockchain, the process involves no central authority and becomes streamlined.
- Cost-effective: Since transactions between parties are direct, having access to the same shared ledger eliminates duplication and saves cost to the business units.
- Security: The blockchain architecture protects against fraud, tampering, and cybercrime. The network is typically permissioned and accessible only to certain users, using digital certificates to verify the authorized users.
- Privacy levels: The users can have varying privacy and permissions. Some users have access to view only certain information about the transactions while auditors can view more detail.
- Auditability: The shared ledger enhances the feasibility of a single source of information, making monitoring and auditing easier.
- Enhanced Operationality: Digitization of the ledger streamlines the transactional process and increases the pace of business.
Hope you've understood the basic concept of blockchain and its operational characteristics.
In the next article, well look into some of the applications of blockchain in businesses and how it improves efficacy.
Stay tuned to keep learning!
Published at DZone with permission of Aishwarya Srinivasan. See the original article here.
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