January 31, 2018
Blockchain technology nears an exciting adoption turning point as we enter 2018. In fact, 76 percent of company decision makers now believe blockchain could be ‘very useful’ or ‘quite useful,’ a mindset that’s contributing to the over half of large companies already deploying or considering the solution.
This swell in interest comes at a time where blockchain is moving from high-level theories to more practical implementations. Blockchain is no longer just a technology, but rather a movement offering companies new opportunities to advance their digital capabilities.
However, blockchain has also been over-hyped and misunderstood. The solution does share certain capabilities with age-old databases and distributed systems, but its broad applications offer value well beyond what many marketers expect. And with these emerging capabilities comes new terms that employees may not know.
A Blockchain Glossary
Imagine sitting in a room where everyone is talking about AI and having no idea what that stands for. Terrifying, right?
Don’t let that happen as your company begins discussing blockchain, and never assume that others know as much as you do. For those who have encountered blockchain before, conversations around terminology will simply serve as a helpful refresher. For those who haven’t, now is the time to invest in education.
I’ve found that it’s crucial to establish common ground around the following five terms before identifying blockchain’s best implementation scenarios.
- Asset: An intangible or tangible record that we can describe in the digital world. Assets have some form of ownership and possess unique attributes that can describe what it is at a high level. Assets may also have broader sets of attributes (more information) linked ‘off chain.’
- Smart Contract: Smart contracts make blockchain a truly extensible framework where users can view, validate, accept or deny changes to assets. This is a programmable set of rules that dictate who can alter an asset, what changes they can perform and under what circumstances. From an implementation standpoint, smart contracts are used to define an asset itself. A monetary value can be tied to this and modified, but it doesn’t have to be.
- Nodes: Nodes are the glue that hold the blockchain network together. Individual nodes are the workhorses that perform various functions such as cryptography, clearing transactions, establishing trust within the network and more. This is the required part for a participant to be involved in the network in order to view or modify the assets. Each node has a copy of all entries on the ledger.
- Ledger: The set of all transactions representing the changes of current state of an asset since the inception of a blockchain. Every transaction is recorded in real time, and this history cannot be altered. The ledger serves as the record of events around an asset, which requires permission for viewing. Every node has the ability to help accumulate the information about an event, but being able to see the specifics requires appropriate permissions. This all occurs in a decentralized way to avoid forged entries.
- Participants: Participants allow the blockchain system to securely recognize individuals to view and/or modify an asset. Participants are equivalent to a group of users within an institution or organization.
Feeling uncertain about any of these definitions? Reach out to one of our digital transformation specialists more information! Don’t hesitate – it’s nearly impossible to make use of blockchain’s full sophistication without getting everyone on the same page around these terms.