Blockchain Topologies: A View From 30,000 Feet

Ted Lanpher, CUVIA Labs
April 2017

As excitement around the potential of blockchain technology spreads, many business leaders are realizing that there are more than one blockchain. In fact, there are potentially thousands of blockchains, and it’s very possible that almost every organization will eventually employ a blockchain of its own. Savvy leaders are asking “How can I easily understand the different types of blockchains?” and “Which types are of interest for my business operations and industry?”

From 30,000 feet, there are several ways to visualize this revolutionary new technology. A blockchain is basically a database that is shared across a number of servers in a network. It can be public or private in various aspects. It can be a passive store of transaction data, or it can have more advanced capabilities where the data being stored includes software code that performs other functions.

Many alternative blockchain architectures are being created. Many are based on the design of Bitcoin, a virtual or “cryptocurrency” that can be used as a token of value. (Sensational stories about Bitcoin have prodded interest in blockchains yet also created high levels of skepticism and fear). Other blockchains have arisen to provide additional functions such as tracking asset transfers and creating an unchangeable record of the provenance of all the inputs in a product’s supply chain. Many of these use cases are in the experimental or proof-of-concept stage, but we can expect commercial solutions to emerge from the recent explosion of interest and intellectual investment.

Bespoke blockchains can be designed to fit the needs of your organization or a specific product or project. In many cases these will be built on top of utilities just as you may now be using AWS (Amazon Web Services) or any number of SaaS products. Their management can be centrally controlled (by you or some designated authority) or their governance can be decentralized and autonomous. Basic ways to describe the different blockchain architectures are Public vs. Private (who can see the database), Permissioned vs. Open (who can change the database or use the functions in its code), Proof of Work vs. Proof of Stake vs. Proof of Elapsed Time (how agreement is reached that a new transaction block is valid).

As you explore use cases of interest, take time to outline the goals and high-level requirements for a blockchain to serve your organizational needs. Then you’ll have a framework and an efficiency filter for your learning. Just as in 1997 you would have been wise to understand the novel concepts of html, the Internet browser, and an online store, in 2017, you should become familiar with the concepts of distributed ledgers, cryptocurrencies, and smart contracts.

Don’t be surprised if your initial study of blockchain leads you to conclude there’s even more you don’t understand! This a rapidly advancing field and some of the most creative minds on the planet are working on blockchain applications and cryptocurrencies. We’re at the beginning of a technology wave that will fundamentally change not just data storage and transaction efficiency. Blockchains will fundamentally shift how many business processes work, how markets function, and how the global population creates and shares value.

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