The consensus mechanism is centralized in the hands of a single entity which mission is to verify and add all transactions to the blockchain. A network based on a private blockchain, therefore does not need to use a mechanism such as “Proof of Work” or “Proof of Stake” which are complicated to implement and expensive. The problems of security being much more simple in the case of private blockchains, it is possible to apply the mechanisms of consensus lighter, more effective and therefore easy to deploy such that the BFT.
In some cases, these advantages are unneeded, but in others they are quite powerful - powerful enough to be worth 3x longer confirmation times and paying $0.03 for a transaction (or, once scalability technology comes into play, $0.0003 for a transaction). Note that by creating privately administered smart contracts on public blockchains, or cross-chain exchange layers between public and private blockchains, one can achieve many kinds of hybrid combinations of these properties. The solution that is optimal for a particular industry depends very heavily on what your exact industry is. In some cases, public is clearly better; in others, some degree of private control is simply necessary. As is often the case in the real world, it depends.
Lisk es una plataforma open source en la que se pueden desarrollar y ejecutar smart contracts en forma de aplicaciones descentralizadas o DAPPS multiplataforma. Éstas, y como uno de los puntos fuertes de Lisk, son desarrolladas con, posiblemente, el lenguaje de programación más famoso y usado, Javascript. Aunque con un enfoque genérico, ya han empezado a aparecer algunas soluciones e interés en sectores concretos, como es el caso del Internet de las cosas que, junto a Chain of Things, están empezando a explotar.
The cheapest and most simple option is doing calculations on your local network (off-chain) and integrating with main blockchain by sending the results. It has flaws; you cannot live full advantage of blockchain as we do in bitcoin, because you will still have existing constraints of your current system. Despite all this, it is still a valid option; perhaps you won't need all the features of blockchain technology. Perhaps it is just enough to use blockchain only for your pain points. Factom can be considered under that kind of option. They used bitcoin wisely in their design. They hold the actual mass data in their network and utilize stability of bitcoin in their solution. This project is so successful that at coindesk magazine, it is saying that Factom can be used for the land titles in Honduras. http://www.coindesk.com/debate-f...
Jump up ^ Redrup, Yolanda (29 June 2016). "ANZ backs private blockchain, but won't go public". Australia Financial Review. Archived from the original on 3 July 2016. Retrieved 7 July 2016. Blockchain networks can be either public or private. Public blockchains have many users and there are no controls over who can read, upload or delete the data and there are an unknown number of pseudonymous participants. In comparison, private blockchains also have multiple data sets, but there are controls in place over who can edit data and there are a known number of participants.
Cabe destacar el papel de la gente de Blockstream, una de las compañías centradas en la búsqueda de este objetivo (con un extremeño en sus filas, Jorge Timón). Blockstream está trabajando actualmente en el desarrollo de un protocolo que permita crear sidechains. Son los responsables de uno de los papers más conocidos sobre el tema, publicado en Octubre del 2014:
State of the art public Blockchain protocols based on Proof of Work (PoW) consensus algorithms are open source and not permissioned. Anyone can participate, without permission. (1) Anyone can download the code and start running a public node on their local device, validating transactions in the network, thus participating in the consensus process – the process for determining what blocks get added to the chain and what the current state is. (2) Anyone in the world can send transactions through the network and expect to see them included in the blockchain if they are valid. (3) Anyone can read transaction on the public block explorer. Transactions are transparent, but anonymous/pseudonumous.
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A private blockchain on the other hand provides only the owner to have the rights on any changes that have to be done. This could be seen as a similar version to the existing infrastructure wherein the owner (a centralized authority) would have the power to change the rules, revert transactions, etc. based on the need. This could be a concept with huge interest from FI’s and large companies. It could find use cases to build proprietary systems and reduce the costs, while at the same time increase their efficiency. Some of the examples could be:
And now for the second clever part. The logic above is symmetric. So, at any point, whoever is holding these coins on the sidechain can send them back to the Bitcoin network by creating a special transaction on the sidechain that immobilises the bitcoins on the sidechain. They’ll disappear from the sidechain and become available again on the Bitcoin network, under the control of whoever last owned them on the sidechain.
Cabe destacar el papel de la gente de Blockstream, una de las compañías centradas en la búsqueda de este objetivo (con un extremeño en sus filas, Jorge Timón). Blockstream está trabajando actualmente en el desarrollo de un protocolo que permita crear sidechains. Son los responsables de uno de los papers más conocidos sobre el tema, publicado en Octubre del 2014:
Given all of this, it may seem like private blockchains are unquestionably a better choice for institutions. However, even in an institutional context, public blockchains still have a lot of value, and in fact this value lies to a substantial degree in the philosophical virtues that advocates of public blockchains have been promoting all along, among the chief of which are freedom, neutrality and openness. The advantages of public blockchains generally fall into two major categories:
Since 2008 when Satoshi Nakamoto published a white paper considering Bitcoin and blockchain technology, the latter gained fame as a tool for combating trust issues and bringing transparency to transactions between independent participants. Even though a decade passed, for a lay public, blockchain is still not the easiest concept to deal with. As a rule, people generalize things they don’t understand deeply in detail. Thus, when they hear “blockchain,” they tend to think there’s just one transcendental blockchain that hosts thousands of projects. But it’s a wrong perception as there are numerous blockchains and they differ.
Another promise of sidechains is the ability to have a stronger and faster mainchain, as transactions can happen on one of the sidechains. If users or developers are dissatisfied with the costs of sending a transaction and the transaction speed of the mainchain, they can use and or deploy their dapp on one of the sidechains. This leads to a more diversified network and a stronger, faster and more robust mainchain.
Similarly, a side chain is a separate blockchain that runs in parallel to the main chain. The term is usually used in relation to another currency that’s pegged to the currency of the main chain. For example, staying with the Starcraft motif, say we had an in-game currency called Minerals (oh wait, we do!). We could allow players to peg their Ether (or ETH) to purchase more Minerals in-game. So we reserve some ETH on the main chain, and peg, say 500 Minerals to 1 ETH.
A public blockchain is a platform where anyone on the platform would be able to read or write to the platform, provided they are able to show the proof of work for the same. There has been a lot of activity in this space as the number of potential users that any technology in this space could generate is high.  Also, a public blockchain is considered to be a fully decentralized blockchain. Some of the examples are:
The differences between these types of blockchains are based on the levels of trust existing among the members of the network and the resulting level of security. Indeed, the higher the level of trust between the members of the network, the lighter the consensus mechanism (which aims to add the blocks to the blockchain securely). As we will see, there is no trust between the members of a public blockchain since it is open to everyone and inversely the confidence is much stronger on the private blockchain since members are pre-selected. In networks based on a blockchain, the level of trust among the members therefore directly impacts the structure and mechanisms of the network.
Recordemos, como hemos mencionado anteriormente, que actualmente son cientos los proyectos y monedas alternativas que trabajan con su propia cadena de bloques, totalmente desconectadas de la de Bitcoin. Todas con su cotización volatil. El problema de estas monedas es que ninguna de ellas dispone del efecto red ni de la seguridad que sí tiene Bitcoin. De hecho muchas, pese a haber implementado propuestas interesantes, se quedan en nada, con miles de horas y esfuerzo “tirado a la basura”. Incluso algunas de ellas han replicado el codigo de Bitcoin, pero también los fallos que en ese momento pudiera tener y mientras que en Bitcoin si se han solucionado, en esa Altcoin no.
What if we could run heavy computations in a more centralized fashion, say on a single server, and then periodically integrate the results onto the main blockchain for posterity. We temporarily expose some vulnerability while the parallel server runs the heavy computation, but we get a massive benefit in that we don’t have to run the computation on chain, and simply need to store the results for future verification. This is the general premise behind Truebit. We won’t get into all the details of Truebit but there is a concept of challengers, who check to see the computations that were made have high fidelity.
Jump up ^ Shah, Rakesh (1 March 2018). "How Can The Banking Sector Leverage Blockchain Technology?". PostBox Communications. PostBox Communications Blog. Archived from the original on 17 March 2018. Banks preferably have a notable interest in utilizing Blockchain Technology because it is a great source to avoid fraudulent transactions. Blockchain is considered hassle free, because of the extra level of security it offers.
Mastercoin and Counterparty are embedded consensus protocols (or meta-protocols) that use the blockchain to store their transactional data. Bitcoin devs, except Peter Todd who was hired by both teams to help them find a proper solution, are very unhappy, to say mildly, about storing the data on the blockchain. Heated discussions on this topic go on for hundreds of pages on bitcointalk and Mastercoin github issue. Mining pools like Eligius started censoring Mastercoin transactions (not sure if they are continuing with this practice right now, but the operators of this pool are adamant that data do not belong to the blockchain).
It doesn’t matter if you’re moving $1bn or 0.01c across the Bitcoin network, you get the same security guarantees.   And you pay for this in fees and time.   What if you were prepared to trade safety for speed?   Today, your only real option is to send the coins to a centralized wallet provider, whom you must trust not to lose or steal your coins. You can then do all the transactions you like on their books, with their other customers and you never need touch the Bitcoin blockchain. But now you lose all the benefits of a decentralized value-transfer network.
By the end of this post, you’ll be able to freely participate in conversations like the above. This is not a coding tutorial, as we’ll just be presenting important concepts at a high level. However, we may follow up with programming tutorials on these ideas. This article will be helpful to both programmers and non-programmers alike. Let’s get going!
Bitcoin and other cryptocurrencies currently secure their blockchain by requiring new entries to include a proof of work. To prolong the blockchain, bitcoin uses Hashcash puzzles. While Hashcash was designed in 1997 by Adam Back, the original idea was first proposed by Cynthia Dwork and Moni Naor and Eli Ponyatovski in their 1992 paper "Pricing via Processing or Combatting Junk Mail".
Mastercoin and Counterparty are embedded consensus protocols (or meta-protocols) that use the blockchain to store their transactional data. Bitcoin devs, except Peter Todd who was hired by both teams to help them find a proper solution, are very unhappy, to say mildly, about storing the data on the blockchain. Heated discussions on this topic go on for hundreds of pages on bitcointalk and Mastercoin github issue. Mining pools like Eligius started censoring Mastercoin transactions (not sure if they are continuing with this practice right now, but the operators of this pool are adamant that data do not belong to the blockchain).
Security: RSK´s blockchain is secured by merge-mining, which means that they can achieve the same security as Bitcoin in terms of double-spend prevention and settlement finality. The 2way peg security will first rely in a federation holding custody of bitcoins, and later switch to an automatic peg, when the community accepts the security trade-offs of the automatic peg.
Blockstream recently released a whitepaper on “strong federations,” which is essentially their vision of a federated two-way peg system. Liquid is a sidechain created by Blockstream that uses the strong federations model. The sidechain is used to transfer bitcoins between centralized bitcoin institutions, such as exchanges, at a faster pace than the public Bitcoin blockchain.
Public blockchains provide a way to protect the users of an application from the developers, establishing that there are certain things that even the developers of an application have no authority to do. From a naive standpoint, it may be hard to understand why an application developer would want to voluntarily give up power and hamstring themselves. However, more advanced economic analysis provides two reasons why, in Thomas Schelling's words, weakness can be a strength. First, if you explicitly make it harder or impossible for yourself to do certain things, then others will be more likely to trust you and engage in interactions with you, as they are confident that those things are less likely to happen to them. Second, if you personally are being coerced or pressured by another entity, then saying "I have no power to do this even if I wanted to" is an important bargaining chip, as it discourages that entity from trying to compel you to do it. A major category of pressure or coercion that application developers are at risk of is that by governments, so "censorship resistance" ties strongly into this kind of argument.
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Our Proof of Work tutorial talks about it in depth, but the best explanation might come from Satoshi Nakamoto himself. If the camps above start receiving messages that don’t agree, they rely on executing a Proof of Work. The Proof of Work is sufficiently complicated and requires significant computing power. Once one camp solves the Proof of Work, it broadcasts the results to the other camps. This message is now accepted in a chain of messages and the competing messages are dropped by the other camps.
So if you want to create a more secure Sidechain, we would seriously need to have a look at incentivizing miners in other ways. These could include things such as the Sidechain raising outside funding from investors in order to pay the miners. Staggering mining award so miners have an incentive to keep mining as they will be paid later on rather than at the time or the Sidechain could issue its own mining award on top of the already existing transaction fees and essentially just become an Altcoin.
Forbes reports that blockchain and biometric eyeball scanning technologies underpin the systems that support food distribution in the Syrian refugee crisis. While there are many further uses of blockchain, at the core of its business functionality is the creation of transparent, stacking “ledgers” of information. This is where private blockchain can prove extremely useful.
Mastercoin and Counterparty are embedded consensus protocols (or meta-protocols) that use the blockchain to store their transactional data. Bitcoin devs, except Peter Todd who was hired by both teams to help them find a proper solution, are very unhappy, to say mildly, about storing the data on the blockchain. Heated discussions on this topic go on for hundreds of pages on bitcointalk and Mastercoin github issue. Mining pools like Eligius started censoring Mastercoin transactions (not sure if they are continuing with this practice right now, but the operators of this pool are adamant that data do not belong to the blockchain).
Blockchain technology can be used to create a permanent, public, transparent ledger system for compiling data on sales, tracking digital use and payments to content creators, such as wireless users [65] or musicians.[66] In 2017, IBM partnered with ASCAP and PRS for Music to adopt blockchain technology in music distribution.[67] Imogen Heap's Mycelia service has also been proposed as blockchain-based alternative "that gives artists more control over how their songs and associated data circulate among fans and other musicians."[68][69] Everledger is one of the inaugural clients of IBM's blockchain-based tracking service.[70]
This approach isn’t fool-proof, but it’s not by mistake that the system looks the way it does today (that’s my history degree talking). Despite best technical efforts, human problems remain within the realm of probability. From http://www.nytimes.com/2009/01/15/books/15masl.html: “…blame cannot be easily assigned: not even the most sophisticated economists of the era could accurately predict disaster, let alone guard against it. The effects of a public herd mentality at the time of the [insert catastrophe here] are depicted, all too recognizably, as unstoppable.”
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@tradles – thanks for taking the time to explain this. OK – so I get the debate around blockchain bloat and the (grudging) inclusion of OP_RETURN, etc., but what I’m missing is that I can only really see one scenario where embedding any identity data into the blockchain makes sense…. and that’s when I want to *associate* an identity with a transaction I’m performing.
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Por ello, con este escenario sobre la mesa y con el objetivo de aunar esfuerzos, algunos se han preguntado: ¿Sería posible crear blockchains que sean utilizadas para casos de usos concretos, pero conectadas en todo momento a la de Bitcoin? ¿Podemos crear piezas de software que desde una blockchain se pueda saltar a otra de manera transparente, segura y descentralizada? Esto generaría, para que te hagas una imagen mental, algo así como las ruedas dentadas interconectadas de un motor, cada rueda una blockchain, todas trabajando juntas.
Mastercoin and Counterparty are embedded consensus protocols (or meta-protocols) that use the blockchain to store their transactional data. Bitcoin devs, except Peter Todd who was hired by both teams to help them find a proper solution, are very unhappy, to say mildly, about storing the data on the blockchain. Heated discussions on this topic go on for hundreds of pages on bitcointalk and Mastercoin github issue. Mining pools like Eligius started censoring Mastercoin transactions (not sure if they are continuing with this practice right now, but the operators of this pool are adamant that data do not belong to the blockchain).
Byzantine fault tolerance (BFT) is what keeps the blockchain fundamentally secure. For simplicity, let’s say there were 100 nodes in a blockchain network (there are currently about 10,500 full Bitcoin nodes in the world). What happens when one node wants to tamper with the latest block and say other Bitcoin users sent him a whole bunch of Bitcoin when they really didn’t?

A user on the parent chain first has to send their coins to an output address, where the coins become locked so the user is unable to spend them elsewhere. Once the transaction has been completed, a confirmation is communicated across the chains followed by a waiting period for extra security. After the waiting period, the equivalent number of coins is released on the sidechain, allowing the user to access and spend them there. The reverse happens when moving back from a sidechain to the main chain.
A sidechain is a separate blockchain that is attached to its parent blockchain using a two-way peg. The two-way peg enables interchangeability of assets at a predetermined rate between the parent blockchain and the sidechain. The original blockchain is usually referred to as the ‘main chain’ and all additional blockchains are referred to as ‘sidechains’. The blockchain platform Ardor refers to its sidechains as ‘childchains’.
If one group of nodes continues to use the old software while the other nodes use the new software, a split can occur. For example, Ethereum has hard-forked to "make whole" the investors in The DAO, which had been hacked by exploiting a vulnerability in its code.[31] In this case, the fork resulted in a split creating Ethereum and Ethereum Classic chains. In 2014 the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange. The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment.[32]
The consensus mechanism is centralized in the hands of a single entity which mission is to verify and add all transactions to the blockchain. A network based on a private blockchain, therefore does not need to use a mechanism such as “Proof of Work” or “Proof of Stake” which are complicated to implement and expensive. The problems of security being much more simple in the case of private blockchains, it is possible to apply the mechanisms of consensus lighter, more effective and therefore easy to deploy such that the BFT.
By design, a blockchain is resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way".[7] For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. Although blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been claimed with a blockchain.[8]
If one group of nodes continues to use the old software while the other nodes use the new software, a split can occur. For example, Ethereum has hard-forked to "make whole" the investors in The DAO, which had been hacked by exploiting a vulnerability in its code.[31] In this case, the fork resulted in a split creating Ethereum and Ethereum Classic chains. In 2014 the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange. The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment.[32]
As you know, we at LTP have been doing a lot of research to understand other use cases of blockchain apart from Bitcoin-based payments. Recently we had released a comprehensive analysis of 50+ startups and 20 use-cases of blockchain. Though there have been news of large companies accepting bitcoin (Ex.: Amazon, Microsoft, Dell) and the overall acceptance reaching a 100,000+ merchants figure, upon deeper examination we realize that large corporations do not store the Bitcoin payments. They generally partner with a Bitcoin payment processor who converts the Bitcoins to cash as and when they receive a payment and this converted amount is what the corporates take into their account. What a bummer!
There has been tremendous interest in blockchain, the technology on which Bitcoin functions. Nakamoto developed the blockchain as an acceptable solution to the game theory puzzle – Byzantine General’s Problem. This lead to a number of firms adopting the technology in different ways to solve real world issues, wherever there was an element of trust involved. Majority of them could be relating to the ability to provide proof of ownership – for documents, software modules/licenses, voting etc.
Note: Some would argue that such a system cannot be defined as a blockchain. Also, Blockchain is still in it’s early stages. It is unclear how the technology will pan out and will be adopted. Many argue that private or federated Blockchains might suffer the fate of Intranets in the 1990’s, when private companies built their own private LANs or WANs instead of using the public Internet and all the services, but has more or less become obsolete especially with the advent of SAAS in the Web2.
Public chains to the rescue! Public chains offer public transaction data that can be verified in real-time by anybody that cares to run a node. The more independent users or institutions that take part in verification, the more secure and decentralised the chain becomes! At Iryo, we strive to have every clinic doing full validation of the global state for the relevant smart contracts (EOS based). Public blockchains are mainly useful for two things; value routing (including initial creation and distribution) and trustless timestamping of messages.
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