Introduction to Blockchain for DBAs

Blockchain is a distributed, shared, permissioned ledger for recording transactions with consensus, provenance, immutability, and finality. It is the technology that drives virtual currencies like Bitcoin. But its potential spans many more industries and use cases than just virtual currencies.

But let’s back up for a minute. How does blockchain work? Think of a distributed network wherein participants contractually agree to trade goods and services. This network facilitates a market, which can be public or private and requires at least two participants but can be more.  Blockchain is the mechanism for the ledger, which is a system of record for business transactions.

Every business typically has multiple ledgers for the multiple business networks in which they participate. But each business maintains its own sets of ledgers so understanding the flow of an asset from participant to participant requires the correlation of multiple ledgers from multiple businesses. This is difficult and can be very expensive because the ledgers are proprietary and are not designed to be shared.

Blockchain solves this problem by enabling a distributed, shared, permissioned ledger to be used by all participants in the network. It provides a mechanism for adding trust to an untrusted environment. The blockchain is an irrevocable record of transactions to be used by all participants in a business network. Data is added to the blockchain in an append-only manner; once recorded, data cannot be changed or deleted.

The concept is simple. Parties agree to a transaction and that information is grouped into blocks. Each block has a timestamp and a link to chain (hence, the name) it to the previous block. The block is recorded for posterity across the peer-to-peer network. There are built-in mechanisms for security and cryptography. Once the transaction is recorded it cannot change. And it is immutably maintained in the blockchain, so the blockchain has a record of every transaction that ever occurs in its network, thereby providing built-in provenance.

The blockchain is essentially a distributed database for a specific value-chain network. It enables different parties that do not inherently trust one another to share information without central administration.