Frequently Asked Questions

About Blockchain

What is Blockchain?

Blockchain is the core technology behind bitcoin. At its heart is a distributed data store. Anyone who participates in this network has their own data store that stores all of the transactions that ever happened on the network (this is also known as the distributed ledger). Entries are stored within a cryptographic chain of blocks. At every stage, the network of participants must agree about the latest block of transactions. Agreement is reached through a process of majority consensus, eliminating duplicate entries, double spending etc. This process and the cryptographic layering of the blocks makes the agreed blockchain irreversible and immutable. The ‘history’ of events within this technology cannot be modified by any one of the participants without majority consensus from the group.



What is a Smart Contract?

A Smart Contract is code that is deployed to the blockchain. Each smart contract contains code that can have a predefined set of inputs. Smart contracts can also store data. Following the distributed model of the blockchain, smart contracts run on every node in this technology, and each contract’s data is stored in every node. This data can be queried at any time. Smart Contracts can also call other smart contracts, enforce permissions, run workflow logic, perform calculations etc. Smart contract code is executed within a transaction – so the data stored as a result of running the smart contract (i.e. the state) is part of the blockchain’s immutable ledger.



What is the Ledger of the Blockchain?

In its simplest form, a distributed ledger is a database held and updated independently by each participant (or node) in a large network. The distribution is unique: records are not communicated to various nodes by a central authority, but are instead independently constructed and held by every node. That is, every single node on the network processes every transaction, coming to its own conclusions and then voting on those conclusions to make certain the majority agree with the conclusions. Once there is this consensus, the distributed ledger has been updated, and all nodes maintain their own identical copy of the ledger. This architecture allows for a new dexterity as a system of record that goes beyond being a simple database.



What is the Blockchain mining?

Mining is used a proof of work for participants in the blockchain. Whenever a block of transactions is to be agreed, every participating node attempts to ‘mine’ the block (a mathematical algorithmic process that requires extensive CPU capacity). In public blockchains successful mining is rewarded with a cryptocurrency token.



What’s the difference between permissioned and permissionless (public) Blockchain?

A permissioned blockchain is a closed ecosystem in which each participant is well defined. This type of blockchain is built to allow an organization or a consortium of organizations to efficiently exchange information and record transactions. While permissionless blockchains gained rapid popularity in the business world, enterprises are now discovering the many advantages of using blockchains to augment business systems as well, especially to instill trust, transparency, and efficiency into B2B exchanges. A permissioned blockchain is run by the members of a consortium. Stakeholders “opt-in” to form a blockchain network. Only pre-approved entities can run the nodes that validate transaction blocks and execute smart contracts on the blockchain. Permissioned blockchains make it easy to share trusted information in a secure context, and with the confidentiality that businesses need to operate effectively. Permissionless blockchains allow anybody to create an address and begin interacting with the blockchain network. The internet is a good example of a permissionless system; where anyone can create a website of their choice. In a similar way, with a permissionless blockchain, any person, thing, or entity can interact with other members or parties by creating an address on the network. Each party can choose to run a node for the blockchain and participate in transaction verifications (via the mining mechanism), as well as create smart contracts on the network. This is the ethos of bitcoin and ethereum blockchain networks. These networks employ a crypto-economic model (driven by proof-of-work consensus mechanisms) that incentivizes people to run network nodes. All network participants are duly rewarded for their contributions through tokens.



What is an ICO?

An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Ethereum.



Is Blockchain secure?

Data stored on the blockchain is considered incorruptible since decentralized computing allows the data stored to be immutable and unalterable.



About LICENS3D

What is Blockchain?

Blockchain is the core technology behind bitcoin. At its heart is a distributed data store. Anyone who participates in this network has their own data store that stores all of the transactions that ever happened on the network (this is also known as the distributed ledger). Entries are stored within a cryptographic chain of blocks. At every stage, the network of participants must agree about the latest block of transactions. Agreement is reached through a process of majority consensus, eliminating duplicate entries, double spending etc. This process and the cryptographic layering of the blocks makes the agreed blockchain irreversible and immutable. The ‘history’ of events within this technology cannot be modified by any one of the participants without majority consensus from the group.



What is a Smart Contract?

A Smart Contract is code that is deployed to the blockchain. Each smart contract contains code that can have a predefined set of inputs. Smart contracts can also store data. Following the distributed model of the blockchain, smart contracts run on every node in this technology, and each contract’s data is stored in every node. This data can be queried at any time. Smart Contracts can also call other smart contracts, enforce permissions, run workflow logic, perform calculations etc. Smart contract code is executed within a transaction – so the data stored as a result of running the smart contract (i.e. the state) is part of the blockchain’s immutable ledger.



What is the Ledger of the Blockchain?

In its simplest form, a distributed ledger is a database held and updated independently by each participant (or node) in a large network. The distribution is unique: records are not communicated to various nodes by a central authority, but are instead independently constructed and held by every node. That is, every single node on the network processes every transaction, coming to its own conclusions and then voting on those conclusions to make certain the majority agree with the conclusions. Once there is this consensus, the distributed ledger has been updated, and all nodes maintain their own identical copy of the ledger. This architecture allows for a new dexterity as a system of record that goes beyond being a simple database.



What is the Blockchain mining?

Mining is used a proof of work for participants in the blockchain. Whenever a block of transactions is to be agreed, every participating node attempts to ‘mine’ the block (a mathematical algorithmic process that requires extensive CPU capacity). In public blockchains successful mining is rewarded with a cryptocurrency token.



What’s the difference between permissioned and permissionless (public) Blockchain?

A permissioned blockchain is a closed ecosystem in which each participant is well defined. This type of blockchain is built to allow an organization or a consortium of organizations to efficiently exchange information and record transactions. While permissionless blockchains gained rapid popularity in the business world, enterprises are now discovering the many advantages of using blockchains to augment business systems as well, especially to instill trust, transparency, and efficiency into B2B exchanges. A permissioned blockchain is run by the members of a consortium. Stakeholders “opt-in” to form a blockchain network. Only pre-approved entities can run the nodes that validate transaction blocks and execute smart contracts on the blockchain. Permissioned blockchains make it easy to share trusted information in a secure context, and with the confidentiality that businesses need to operate effectively. Permissionless blockchains allow anybody to create an address and begin interacting with the blockchain network. The internet is a good example of a permissionless system; where anyone can create a website of their choice. In a similar way, with a permissionless blockchain, any person, thing, or entity can interact with other members or parties by creating an address on the network. Each party can choose to run a node for the blockchain and participate in transaction verifications (via the mining mechanism), as well as create smart contracts on the network. This is the ethos of bitcoin and ethereum blockchain networks. These networks employ a crypto-economic model (driven by proof-of-work consensus mechanisms) that incentivizes people to run network nodes. All network participants are duly rewarded for their contributions through tokens.



What is an ICO?

An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Ethereum.



Is Blockchain secure?

Data stored on the blockchain is considered incorruptible since decentralized computing allows the data stored to be immutable and unalterable.