Lecture 7 - Blockchain Technology in SBN

Question 1

What is blockchain technology? (Williams et al, 2016)

Answer 1

a distributed ledger technology that can:
o identify participants
o automatically execute transactions, and
o provide a platform to support advanced functions and business logic known as smart contracts

a combination of established technologies in novel ways:
o Blockchain: a secure record of historical transactions, collected into blocks, chained in chronological order, and distributed across a number of different servers to create reliable provenance,
o Digital signatures: unique digital keys used to authorize and check transactions and to identify the initiator,
o Consensus mechanism: rules and techniques to ensure that participants recording and processing transactions agree on which transactions are valid, and, in some implementations,

Some offer a digital currency

It enables secure exchange of value over the Internet, without the need for a third party like banks or insurance firms. But, You still need an expensive maintenance company (Bitcoin too electricity-consuming)
- The technology works as:
o a shared ledger system where (in its classical form)
o every node possesses a complete copy of the ledger and
o agrees on changes.
- Application of Blockchain technology results in
o records (in the ledger) that are immutable (once written, they can’t be changed),
o driven by consensus, secure and a single, automated, source of truth.

Question 2

What are the types of logic in the design of a blockchain technology application?

Answer 2

Logic layer

1. Communication logic (access rights)
2. Content logic (defining goods and services)
3. Consensus logic (rules for adding blocks –> e.g. if we have 100 transactions, then we add a block containing these transactions chronologically)
4. Contract logic (smart contracts –> if i sell something for a certain amount, you will recieve this amount)

Information layer
5. Where are the data of network partners stored? in private databases? Or shared (blockchain) databases?

Physical layer
6. Which firms/actors (including intermediaries) participate in the network? (stores, warehouses, transporters, manufacturers –> they don’t all move to the blockchain)