WEEK 3 THEORY Flashcards
blockchain technology
an open, decentralized network that not one person owns. it operates as a distributed ledger meaning that multiple participants maintain and verify transactions
the ledger is stored in a database that is protected from data deletion and data tempering
data deletion: This refers to the removal or erasure of stored information from a database or system.
data tempering: This means altering or modifying stored data without authorization.
What type of technology is blockchain, and why?
Blockchain is a FOUNDATIONAL technology (acts as a base for other technologies to build upon), not a disruptive technology.
What are the key benefits of Business Networks in blockchain technology?
- CONNECTIVITY between customers, suppliers, banks, and partners
- Ability to OPERATE across geographical and regulatory boundaries efficiently
How is Wealth generated in blockchain-based business networks?
Wealth is created through the flow of goods and services across a connected business network, ensuring efficient transactions and secure record-keeping.
What role do Markets play in blockchain technology?
Markets are central to blockchain-based transactions
two types of market
- Public Markets (fruit markets, car auctions).
- Private Markets (supply chain financing, bonds), not everyone can interact
Who are the Participants in a blockchain business network?
Customers, Suppliers, Government, and Regulators
What is a Transaction in blockchain technology?
A transaction is an asset transfer between parties.
What is a Contract in blockchain transactions?
A contract defines the conditions for a transaction to occur.
What is the key benefit of Blockchain Technology?
Blockchain is a shared ledger technology that allows any participant in a business network to see the system of record. improves TRUST, TRANSPARENCY, CONNECTIVITY, INFORMATION FLOW
Why is blockchain called a shared ledger?
Blockchain is a shared ledger because:
- All participants can view the system of record.
- Transactions are immutable (cannot be changed or deleted).
- It creates a decentralized and transparent business network.
What is a Shared Ledger in blockchain for BUSINESS?
- Records all transactions across the business network.
- Shared between participants, with each having a replicated copy.
- Permissioned access – participants can see only appropriate transactions.
- Acts as THE shared system of record.
What is a Smart Contract in blockchain?
- It runs automatically when conditions are met
- Encoded in a programming language
What is Validation in blockchain?
a way to check if transactions are real and trustworthy before they are added to the blockchain.
- Transaction verification and commitment process.
- When participants are anonymous, validation is expensive:
Proof of Work (mining) verifies transactions but at high computational cost. - When participants are known and trusted, validation is cheaper.
- Multiple alternatives exist for validation (e.g., Proof of Stake, Byzantine Fault Tolerance).
How does blockchain ensure Privacy?
- The ledger is shared, but participants require privacy.
Ensures that: - Transactions remain private.
- Identities are not linked to transactions.
- Transactions need authentication.
- Cryptography is central to privacy protection.
proof of work (table)
this is used by crypto. they use complex puzzles to add a block to the chain.
advantages of proof of work (poW)
- strong competition: increases security
- miners get rewards
- decentralized
- high security: difficult to hack or cheat
disadvantages of proof of work (poW)
- expensive equipment needed
- high energy usage
- slow transactions
- high fees
proof of stake (poS)
instead of mining, people “stake” their coins to get a chance to validate transactions.
advantages of PoS
- no expensive equipment
- faster transaction
- energy efficient
disadvantages of PoS
- coin hoarding (rich have more to say)
- not fully tested at large scale
- big investors have more control
- requires a big initial investment
when is blockchain NOT a good choice for a business
- not fast enough for systems that need transactions to be completed in milliseconds
2.useful for big networks, not small businesses - is NOT the same as a traditional database.
4.NOT meant for messaging or communication
5.not a better version of traditional payment systems (Traditional payment processing (like credit card systems) is faster and more efficient than blockchain for everyday transactions).
