2

Blockchain Technology

1.1  INTRODUCTION

When an innovative technology grows by leaps and bounds, it also attracts an equal

amount of speculation. The buzz word “blockchain technology” – a distributed,

immutable ledger for recording transactions, tracking assets and building trust – is

no exception to this phenomenon.

Blockchain is still in its exploratory stages. It is not just limited to cryptocurrency,

contrary to popular perception, but extends beyond that. The fear factor associated

with blockchain technology has also now spread into its use in cryptocurrency.

Nevertheless, myths about distributed ledger technology (DLT) impede companies

from leveraging its far-reaching potential and limit its positive impact on change.

One cannot help but draw comparisons with the advent of cloud technology and the

myths and misconceptions around this when it was touted to be just a bubble, sus-

ceptible and volatile. And yet, slowly, it gained momentum and captured the entire

virtual world. Like the cloud process, blockchain has several positive aspects, but

there is also a great deal of misunderstanding and scepticism about its purpose.

This study contributes to a greater understanding of this impending technology,

which can no longer be kept at bay. And this chapter attempts to unravel the DNA of

the most common misconceptions that persist about blockchain, distinguishing the

myths from reality.

To achieve this objective, in Section 1.2, we give an overview of blockchain tech-

nology; in Section 1.3, we describe various myths about this technology and the facts

about the myths; finally, in Section 1.4, we point to the conclusion of the study we

have carried out.

1.2  OVERVIEW OF BLOCKCHAIN

In simple terms, blockchain is a distributed digital ledger; each transaction in the led-

ger is cryptographically signed and grouped as a block. When a new transaction hap-

pens, the new block is cryptographically connected to the previous block after proper

validation, and it will be replicated to all nodes within the network. Once the new

block is appended, we cannot modify the previous block, as shown in Figure 1.1 [1].

Since each block is cryptographically connected, it is tamper-evident, and it cre-

ates tamper resistance because we cannot modify the previous block once a new

block is added. Moreover, the blockchain technology transaction happens without a

central repository and a central authority or trusted third party such as a company,

bank, government, etc.

1.2.1  Major Benefits of Blockchain

• As the blockchain uses only an appending ledger format, therefore eas-

ily tracks the entire transactions, and cannot be modified like traditional

databases.

• Blocks in the blockchain are cryptographically secured; this ensures that

the blockchain data cannot be tampered with.

• Since the ledger is shared with all nodes within the network, it ensures

transparency, and it avoids a single point of failure.