Blockchain and its features

  • October 20th, 2019
  • General
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  • Robert Pardela

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In the previous post about the search for solutions for blockchain I described two most important features of this technology: immutability and decentralization. If none of these features is important for your planned IT solution then you should seriously consider whether you really need to use blockchain.

In this entry I will explain the other features of this technology. These are certainly not all of them, but the following should help you in your search for applications.

It is interesting that for some people some of the features described here will be disadvantages, while for others the same features will be advantages. It all depends on the specific needs to be met by a blockchain-based IT solution.

The blockchain type is also very important. Depending on whether it is private or public, part of the characteristics is present or not. I will try to indicate in real time in which type a given feature is present.

Blockchain features can be analyzed in individual areas:

  • organisational features
  • business features
  • legal features
  • technical features

 

Organisational features

  • All data is publicly available (hiding data is available in private blockchain)
  • No privilege model (may be available in private blockchain)
  • Possibility to take management decisions by consensus (e.g. voting in decentralised organisations)
  • Trust in the system, not in a central institution or a so-called third party
  • Resistance to censorship
  • Non-deniability (all transactions are digitally signed)
  • The management of a distributed system may be centralised or decentralised.

 

Business features

  • Reduction of costs (divestment of intermediaries and/or trusted parties)
  • Settlement speed (j/v)
  • Transparency
  • Exclusion of any intermediary from the settlement process
  • No possibility of deleting or modifying historical data
  • Transparency and trust in the system
  • Openness (may be limited in private blockchain)
  • Transaction security
  • Accountability of a transaction (it is possible to calculate the exact cost of execution of a single transaction)
  • Possibility of tokenization of assets
  • No possibility of reversal of transactions

 

Legal features

  • Proof of existence
  • Proof of authenticity
  • Proof of Identity
  • Proof of ownership
  • Proof of receipt
  • Proof of location
  • No censorship
  • No possibility of permanent deletion of personal data (lack of GDPR compliance)

 

Technical features

  • Programmability (smart contracts)
  • Cryptographically assured security
  • Possibility of building decentralised/distributed IT systems
  • Communication in the Peer to Peer model
  • Possibility to run on different operating systems
  • All data is stored in public transaction history and the data is not encrypted by default (in private blockchain you can manage it)
  • Redundancy of data and CPU resources (can be limited in private blockchain)
  • Authentication based on public key cryptography
  • Openness (open-source code, documented all algorithms)
  • High availability
  • Resistance to DDoS attacks (consensus mechanisms)
  • No central point of failure (private blockchain blocks often have such a point)
  • No support for PKI (private blockchain blocks can have such support)
  • Preservation of integrity
  • A small number of transactions per second

Finally, I would like to mention the basic benefits of blockchain technology and the disadvantages, which unfortunately are also present.

 

The benefits of blockchain technology

  • Invariability
  • High availability
  • Decentralisation
  • Reducing costs
  • Simplification of current business models
  • Transparency and trust
  • Security
  • Acceleration of operations (especially in post-trade settlements)

 

Main disadvantages of blockchain

  • No standards
  • Absence of legal regulations
  • A small number of transactions per second
  • High redundancy
  • Not suitable for storing large data sets
  • GDPR non-compliance (data cannot be permanently deleted)
  • Coordination costs
  • Communication costs
  • Network dependency
  • More software complexity

 

Summary

This time I think we managed to get a shorter form, I hope without much influence on the content 🙂 I’ve written down most of the features I’ve come across in the available literature. I also addressed the main benefits of using blockchain and its disadvantages. Knowing and understanding all the features allows you to search for new applications for blockchain, and defects can usually be imitated.

All blockchain features are very interesting and I encourage you to deepen your knowledge in this area.

As usual if there are any questions I encourage you to contact me.

Robert Pardela

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