Blockchain Flashcards

Question

Explain digital ledger

Answer 1

Digital ledger: maintains a continuously-growing list of transaction records called blocks. Each block contains a timestamp and a link to a previous block.

Answer 2

Account: Sends and receives value to and from a transaction.

Answer 3

Transaction: Is an end to end mainchain transaction as depicted in the datalogical ontology

Answer 4

Journal: Is a list of transactions.

Answer 5

The information layer is where data on transactions are stored in either internal (not shared) information systems of individual firms or in (distributed) shared ledgers. Transactions between organizations used to be stored by each organization internally (data silo’s), but now also can be only stored once externally in a blockchain ledger.

Answer 6

Internal transactions within the company can be stored in a private (local) blockchain. When transactions are stored (internally or externally) in an irrevocable way in a blockchain, this not only eliminates duplications (data redundancy), but also the related inconsistencies. Another effect of the externalization of data into the shared ledger is the mitigation of data heterogeneity. Standard and data ontologies will still be needed, but their reach and effect at the network level will be much stronger, as they are not only used for exchanging data but also for storing the data.

Answer 7

Smart contract could take the orchestration role that the NBOS plays in the logic layer in the Smart Business Network Model.

Answer 8

➢ Communication logic: This logic determines the logic for communication between participants in the network. ➢ Content logic: The types of assets are distributed over the network. On a blockchain, different types of assets can be transferred, like cryptocurrencies, letters of credits or stock bonds. This means that token value can be simply information, representative of extrinsic value or have intrinsic value. It is also possible to configure multiple kinds of assets on a single blockchain. ➢ Consensus logic: To ensure that only legitimate transactions are added to the blockchain, the participating nodes in the network use voting to confirm that new transactions are valid. A new block of data will be added to the blockchain only if miners in the network reach consensus as to the validity. ➢ Contract logic: Also automation logic; the way that transactions are animated to trigger events. Using Blockchain technology, parties have the possibility to confirm that an event or condition has in fact occurred without the need for a third party.

Answer 9

Permissionless Public Blockchain (public): Distributed, anyone can read and write on the blockchain, as long as they meet certain criteria and follow the specified rules. This type of blockchain is entirely distributed, a single source of truth and has entirely trustless integrity. Permissioned Public Blockchain (hybrid): Decentralized, only permissioned entities may write the ledger, but anyone may view the content. This results in greater accountability and transparency. Permissioned Private Blockchain (private): Decentralized, only permissioned entities can read and write on the blockchain. This form is mostly used in experimental settings where R&D is the the main purpose of existence.

Answer 10

It can be concluded that the ASX case provides empirical support for the assumptions that blockchain technology enhances network performance via changes in the business operating logic, network structure and network processes. Network performance is enhanced in terms of operating costs, timeliness of information and workflow. No evidence has been found that indicates that blockchain technology enhances business flexibility.

Answer 11

➢ 1. Who starts the blockchain application (and seeds the first block) ➢ 2. Which other firms participate in the blockchain, and is the blockchain closed (private) or open to other firms (public or hybrid) ➢ 3. Which transaction data are stored in the blockchain? ➢ 4. Who (in the network?) decide(s) on the four types of logic to be applied in the blockchain? ➢ 5. How is the blockchain linked to the other (internal and inter-organizational) information systems and applications in the business network)

Answer 12

(1) distributed databases, (2) encryption, (3) consensus protocols. This combination of technologies makes it possible to build applications around a representation of a shared state.

Answer 13

Shared state is a ledger in accounting terms, a repository of data on transactions and the distribution of assets, recorded in accounts. The consensus protocol ensures that parties maintain an identical copy, without the need for a centralized administrator or data storage.

Answer 14

Blockchain consists of “blocks of data” where each block codifies a set of transactions. A block of transactions is considered valid if the transactions adhere to formal rules that can be verified automatically. The consensus protocol is used to avoid the need for a central authority. Parties called nodes verify the validity of the latest block to be added to the chain. They do so by solving cryptographic puzzles. The solution is represented by a number called a nonce. The nodes vote by submitting a nonce, and after a majority of nodes have voted a block to be valid, the block is added to the blockchain, and proof of validity (the nonce) is included in the next block. Blocks are hashed to make sure block cannot be manipulated without traced. Hashing generated for each block a unique number also called a hash. Changing a block will result in a different hash. To allow for comparison, the hash of a block is included in the next block. Nodes try to validate the latest block. To keep track of time, also a timestamp is added to the next block. So, all pieces of evidence needed to verify that block of transactions are valid and unchanged, are included on the blockchain itself.

Answer 15

Bitcoin uses the proof of work (POW) protocol. Nodes need to put quite a lot of computing power and energy into solving the cryptographic puzzle. In return, they are rewarded in the currency that is associated with the blockchain application.

Answer 16

Proof of stake (POS) lets nodes follow a voting procedure in which nodes that own more of the underlying assets have a larger voting share

Answer 17

One can distinguish permissionless and permissioned blockchain. Permissionless are open to all actors. Permissioned is only open to actors with specific permission. Some authors group these two dimensions into three forms of blockchain: ➢ Public: Permissionless, proof of work or proof of stake; ➢ Consortium: Permissioned, selected group of validators; ➢ Private: Permissioned, single authority.

Answer 18

Trust is related to transactions between buyer and seller. There are two possible perspectives. The trustor needs reasons to trust the trustee and the trustee needs to be seen as trustworthy by the trustor. Trust is a crucial factor in business relations where there is uncertainty, interdependence, and fear of opportunism, as is the case in online markets. Trust between actors has been defined as a “belief that the seller will behave in accordance with the consumer’s confident expectations by showing ability, integrity and benevolence. Trust is also characterized as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.

Answer 19

Party based trust is the belief that the other party will behave as expected. Control based trust is the belief that the procedures and protocols that monitor and control the successful performance of a transaction will function properly. It also includes the belief that transaction details remain transparent and can be checked.

Answer 20

➢ 1. Avoiding trade of so-called “conflict diamonds”, is my diamond fair and not a blood diamond? ➢ 2. Providing trust in provenance, assuring the origin, is my diamond real and where does it come from?

Answer 21

The three Blockchain applications differ in their design choices on each of the three layers. In the physical layer, we observe different numbers and types of actors who participate in the Blockchain applications; in the information layer, we observe different types of data shared; in the logic layer, we find different types of business logic.

Answer 22

We conclude from our observations that trust requirements do indeed influence the design of a Blockchain application and also, vice versa, that the design of a Blockchain application influences the trust induced.

Answer 23

➢ The success of blockchain technology depends on the way the technology is applied o Which actor(s) start the business network application? o Do other firms trust the application and the network (Risks? Gains?) ➢ Trust requirements influence the design of a blockchain application (table 2) o The focal actor -like Everledger- may change the design if needed ➢ The design of a blockchain application influences trust (table 2) o And may firms trigger to participate in the network ➢ “Trust → blockchain design → trust” leads to dynamic effects over time ➢ The six questions in table 1 can be used to analyze a -a blockchain based- business network and to predict performance and development over time.

Blockchain Flashcards

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