Explaining the basics of blockchain technology
I had been working in education for quite some time when I first heard about blockchain technology. Education was facing many of the same issues that finance was when cryptocurrency was first introduced; transparency of services for users and real ownership of assets or data. In the case of continued learning, there was a real lack of clarity around course cost structure and how those courses would translate into gainful employment opportunities. Proof of education had also become a burden for students seeking to leverage their degrees and diplomas because it was challenging to verify ownership of their education records.
Blockchain isn’t a cure-all solution for the issues that face the education industry, or any other industry, but it provides an important step forward in giving the end users, students, educators and facilitators, far better control and autonomy over their experience. This is the same reason why cryptocurrency makes sense to a lot of people; they have proof of ownership of their digital assets, and they no longer have to rely on a third party for assurance.
There are a few key aspects of blockchain that are necessary to understand in order to appreciate what the technology does for autonomy and security: decentralization, chain of custody, cryptography and smart contracts.
As with any other technology that underpins a computer system, blockchain is software that supports user activity. What sets it apart, is that the software isn’t managed by a single organization or corporation, management of the system is spread across individual nodes located anywhere in the world. In this way, blockchain technology is decentralized with no one central point of authority. Each node is a computer running the necessary programs to host a blockchain’s data and add new transaction data to the chain. These computers, and the people who own them, are financially incentivized to do this, as the network pays for proof of this work -- but that’s a topic for another blog post.
A decentralized software structure removes the third party, or intermediary, from your communication and transactions. Consider what happens when you email someone using Gmail; you use Google’s communication suite to send a message to your friend. In this instance, Google is the third party, a group that has authority to charge for their services and collects pieces of your data in order to sell future products to you. With blockchain technology, this group is removed, and you can send your message or financial transaction directly to your friend, peer-to-peer.
Chain of Custody
This is a significant part of what instills trust in the blockchain architecture. Chain of custody is just as it sounds when referring to legal cases; the chain of custody provides integrity for evidence, proving where it came from and who interacted with it. The chain is the integral piece here; investigators must be able to determine a clear chain of ownership or movement, with no breakdowns in the chain. With blockchain, the chain of custody gives data its ownership and transaction history, which is transparently stored on a public blockchain for all to see.
The chain is created by the blocks of transaction data that are chronologically added; anything that happens involving interaction with that data is further recorded. As blocks of packaged data are continuously added to the chain, a history of provenance emerges, providing a story of proof of custody. Chain of custody makes data immutable because it can’t be altered or tampered with without the chain breaking. It’s the same as a historical record, events can’t be changed once the next event occurs.
But what secures the data in these blocks, and what connects the blocks? The answer is cryptography, the practice of securing information with encryption and transforming it from legible to illegible.
Before data is stored on a blockchain, it’s encrypted using cryptography. The process takes a block of transaction data and transforms it into a short string of random and illegible characters, numbers and letters that uniquely represent that data. This string, or hash of data, is connected back to the original data by way of a hash function, which is used to map encrypted data back to its original value.
Each block is represented by a hash, meaning that if any of the data in the block were tampered with, the hash would break and the block wouldn’t remain on the chain thus alerting the network to failure. The same happens with the links between the blocks. Each block’s hash is included in the block that comes after it, creating an unbreakable connection. As explained before, if anyone were to alter data in the block, then the chain would also break because it’s a reflection of that block, and the network would know that a breach of security had occurred.
Smart contracts are digital contracts that provide computers with clear instructions for actions to be performed and recorded on the blockchain. With system inputs, smart contracts allow computers to autonomously and automatically complete tasks. These inputs are often framed deliverables, meaning that when someone delivers their end of an agreement, say a financial commitment or the initiation of a transaction or communication, the smart contract involved can move the input to the next stage. This “if this, then that” capability allows smart contracts to fill the role typically filled by an intermediary like a clearing house in the financial markets, a lawyer processing legal contracts, or an education marketplace directly connecting students with educators. Smart contracts are flexible and permissionless, giving them a wide range of uses for globally distributed parties to trust in the outcome of an agreed-upon transaction.
Learn more about how ODEM leverages the Ethereum blockchain, and how these key aspects contribute to the security, verification and validation of your education records via the ODEM Marketplace. Connect with me and the team on Telegram, LinkedIn, Facebook and Twitter.