A Blockchain is a computer program that stores encrypted data and runs on a decentralized network of computers. All participants on this network are anonymous (or pseudo-anonymous) and each carries a record, or ledger, of all transactions that have occurred on the network. Once the participants come to a consensus on the validity of each transaction on the network, a “block” is created. Each Block is a permanent record of a validated segment of the ledger. The aggregate of these blocks creates a “chain” linked together using cryptography. It is helpful to think of the Blockchain as a decentralized cloud, which lives on millions of computers rather than a single server.
Data is currently being generated at a dramatically increasing rate. The storage, management, and transfer of this data poses many daunting challenges. These attributes lend value to this data. Blockchain, and other Distributed Ledger Technologies (DLT), offers an elegant solution to many problems associated with data management, thus creating inherent value for the blockchain. To better understand the value of blockchain, we examine the evolution of data storage, management, and transfer in the information age.
1980’s - Data Integration: The internet was first used primarily for Electronic Data Interchange (EDI.) EDI allowed individuals to push documents between connected machines, sharing data and standards through a common database. This exchange occurred as batch jobs and not in real-time, which disallowed for consensus of data and data formats.
1990’s - Functionality Integration: Here we see the emergence of the World Wide Web and middleware, software that allowed for services beyond the operating systems of a single machine(1), as well as standardized data management and operability between connected machines. Examples of middleware include: Object Request Broker (ORB) promoting interoperability of distributed object systems(2), Remote Procedure Call (RPC) allowing for one machine to execute a subroutine on another machine of a shared network(3), and Message Oriented Middleware (MOM), an infrastructure of software and/or hardware that facilitates the transfer of data between distributed systems. MOM provides for API’s extending over different networks and platforms in a distributed system(4).
2000’s - Service Integration: Service-Oriented (internet) Architecture (SOA) model is introduced allowing machines to share applications in real-time(5)(6). A more specific example of an SOA is the Enterprise Service Bus (ESB), a variant of the client-server internet model. The Business Service Bus (BSB) was designed to allow for transactions and integration among corporations and organizations. SOA uses of protocols like XML and HTTP.
2010’s - Microservices Integration: SOA yields to the Representational State Transfer (REST) model. REST is a set of guidelines for creating and implementing stateless contracts and API’s. The goal of REST is to increase performance, scalability, simplicity, modifiability, visibility, portability, and reliability(7). REST breaks up services into smaller more manageable fragments that do one specific task well. Microservices are also a way to program software and are often created in the cloud. Contracts are well specified In REST architecture, but business processes and state are not shared.
2020’s - Blockchain Integration: The limitations of previous architectures may be breached using blockchain technologies characterized by smart contracts and data legacy. Smart contracts create a trustless system of agreed upon measures. An immutable ledger, often public, stores data, the truth value of which is guaranteed by consensus on the network. Blockchain architecture works on a distributed system of machines in a decentralized network. This system allows for more security, speed, reliability, and agility.