On August 10, 2017, Microsoft announced their enterprise-ready blockchain network, Coco Framework.
Blockchain technology is now not an unknown technology anymore, with each day passing the number of enterprises supporting and investing in blockchain is increasing. There are lots of short coming in existing software like latency, performance, governance, etc.
When we talk about the blockchain, the first thing that came up in our mind is the security and the security because of the blockchain consensus algorithm. Those who know about the blockchain know that we keep the ledger transactions synchronized across the network to ensure that ledgers only update when the appropriate participants approve transactions and that when ledgers do update, they update with the same transactions in the same order is called consensus. Here we will discuss the three different consensus algorithms.
In Simple words Quorum is an Ethereum-based distributed ledger protocol that supports transaction and contract privacy.
The primary features of Quorum.
Transaction and contract privacy
Voting-based consensus mechanism
Network/Peer permissions management
Apart from these feature Quorum includes one of the powerful feature that is support of Private and Public Transactions.
Private Transaction :- are those Transactions whose payload is only visible to the network participants whose public keys are specified in the privateFor parameter of the Transaction . privatefor can take multiple addresses in a comma separated list.
Public Transaction :- These are those Transactions whose payload is visible to all participants of the same Quorum network. These are created as standard Ethereum Transactions in the usual way.
The treatment of both type of transaction is different for Public Transaction it is sent to an Account that holds Contract code, each participant will execute the same code and their underlying StateDBs will be updated accordingly. But For Private Transaction it replaces the original Transaction Payload with a hash of the encrypted Payload that it receives from Constellation. Participants that are party to the Transaction will be able to replace the hash with the actual payload via their Constellation instance, whilst those Participants that are not party will only see the hash.
Now let see how Quorum works Internally.
The process of a Transaction in Quorum is describe in the image.including Private Transaction Happening between A and B and there are 3 member in the network [A, B and C] :-
In First step the request of Transaction is send to corresponding Quorum Node i.e. A -> Quorum Node A. [Including Transaction A to B]
A’s Quorum Node passes the Transaction on to its paired Transaction Manager, [Transaction Manager A] requesting for it to store the Transaction payload.
A’s Transaction Manager makes a call to its associated Enclave to validate the sender and encrypt the payload.
A’s Enclave checks the private key for Party A and, once validated, performs the Transaction conversion.
Party A’s Transaction manager then stores the encrypted payload and encrypted symmetric key and then securely transfers (via HTTPS) the hash, encrypted payload, and encrypted symmetric key that has been encrypted with Party B’s public key to Party B’s Transaction Manager. Party B’s Transaction Manager responds with an Ack/Nack response.
A’s Transaction Manager returns the hash to the Quorum Node which then replaces the Transaction’s original payload with that hash.
In Seventh Step Transaction is propagated to the rest of the network using the standard Ethereum P2P Protocol.
A block containing Transaction AB is created and distributed to each Party on the network.
In this step all Parties will attempt to process the Transaction.
In this step A and B make a call to its Enclave, passing in the Encrypted Payload, Encrypted symmetric key and Signature. But C will receive NotARecipient message.
The Enclave validates the signature and then decrypts the symmetric key using the Party’s private key that is held in The Enclave, decrypts the Transaction Payload using the now-revealed symmetric key and returns the decrypted payload to the Transaction Manager
The Transaction Managers for Parties A and B then send the decrypted payload to the EVM for contract code execution. This execution will update the state in the Quorum Node’s Private StateDB only.
A distributed register to store static records and/or dynamic transaction data without central coordination by using a consensus-based mechanism to check the validity of transactions. A blockchain is a distributed database that maintains a continuously growing list of data records that cannot be tampered.
Blockchain is a public ledger of all transaction made with Bitcoin. Blockchain’s intent is to replace an external, trusted third party certificate authorities, and also prevent anyone from being able to go backward and cover their tracks if they corrupted an entry.
The technology works on the following properties:
1) Log replication – To create resiliency, log-based replication is increasingly used for distributed systems to replicate logs to all peers in the network.
2) Provable Value Chain – The values stored in the blockchain can be digital currency (such as the widely known Bitcoin), data, documents, and other assets. Hash chains are kept for each block providing a history of changes, which helps protect data integrity of the block asset.
3) Public-key Cryptography – Blockchain uses different types of cryptography including ECDSA and elliptic curve to authenticate transactions.
4) Decentralized transaction ledger – The ledger is blockchain and is maintained without a central authority, and acts as a decentralized reconciliation system.
Blockchain with Digital signatures have become a key control in many organizations security strategy, relying on the use of certificates and complex mathematical algorithms to provide authenticity of the data and protection against forgery.
But, suppose a company wants to accept Bitcoins for its trades. Now, because of security reasons, the company would not want that only a single employee will have access to the company’s Bitcoin wallet’s password. Any transaction should need approval from more than one employees of the company. A multisignature address is created for that purpose.
A multisignature address is an address associated with more than one ECDSA private keys. So, in an m-of-n address, when a Bitcoin address is generated, it is associated with n private keys. And, at least m private keys will be required to make a transaction possible.
And this concept can be used in making digital signatures. One can create a multisignature m-of-n address using n private keys and use that to record digital signature of documents in a blockchain. Anyone can verify the digital signature using public keys, but to make the digital signature one would need at least m private keys, out of n private keys associated with the multisignature address. By using private keys between the signer and the recipient, data transactions can be maintained by only approved parties.
“Blockchain is more than just ICT innovation, but facilitates new types of economic organization and governance. Suggests two approaches to economics of blockchain: innovation-centred and governance-centred. Argues that the governance approach—based in new institutional economics and public choice economics—is most promising, because it models blockchain as a new technology for creating spontaneous organizations, ie new types of economies.”
– Primavera De Fillippi, Academic, researcher, author and thought leader
Sometimes people consider bitcoin and blockchain as one but the bitcoins are digital crypto-currency and blockchain are the technology that enables digital currency from one individual to another. Blockchains solves the problem in money transfer. Today if a person wants to transfer his or her money to another person then it is done through a third trusted party which takes time and fees for the transferring money.
The blockchain was conceptualized by Satoshi Nakamoto in 2008 and implemented as a core component of bitcoin but now it is also used for other crypto-currency, online signature services and many other applications.
Blockchain is a peer to peer technology that protects the integrity of a digital piece of information. It is a form of distributed public ledger or database that maintains a list of blocks. Each block contains a hash(A hash algorithm turns an arbitrarily-large amount of data into a fixed-length hash) of previous block hence creates a chronological order. Every node gets a copy of the ledger and each time any transaction occurs it is broadcast over the blockchain network. Whenever any node connects with the network it gets automatically downloaded.
Blockchain has two main concepts:
A decentralized peer-to-peer architecture
Every node in decentralized system has a copy of the blockchain.
Database shared across network.
It is open for public.
Secure as it is public.
There are also few problems with blockchain like storage and synchronization, everytime a new block appends into blockchain very quickly but on the other hand it also has various advantages like faster transaction, transparency, lower transaction cost and much more.
In an interesting discussion that we were having with our banking client, their insurance department kept bragging about the state of the art technology that they were building. Head of Insurance was eager enough to call it InsurTech enabled and very sophisticated. However, surprisingly when I mentioned IoT and Blockchain and how it could impact the sector, the person drew a blank ( Well, to be fair, he did mention that he had heard it before, but isn’t that what you see when you are in-front of several peers)
I was curios to see how the sector in general thinks and this report from PWC does confirm to the bias that i had.
As you would see, Blockchain does find a mention even though it is a much much lower than what you would expect. Insurers, like banks, are intermediaries and, at first glance, there is great potential for insurers to use blockchain technology to streamline payments of premiums and claims.
Aso of today, Actuaries and underwriters are now heavily dependent on the data. This data can be brought to them from a lot of sensors now. For example in telematics, insurers are using data from sensors to price motor risk more accurately, reducing the premiums of young safe drivers, and this technology is spreading to other types of cover, such as home insurance.
Till date, Insurance sector, amongst other similar sectors is ridden by huge unaccountable losses in light of fraudulent claims.
As Deloitte mentioned,
In a typical motor insurance scam, for example, drivers deliberately stage or cause an accident or even pretend to have had an accident, and
claims are then made by the various criminals involved. These so-called ‘crash for cash’ scams cost the industry around £400 million a year. 4 Where claims are made against multiple policies held by different insurers, it becomes difficult to detect the fraud unless cross-industry data is shared.
We have been setting the stage a lot for blockchains but how does it help?
Now the way to get around this with blockchains is by building Smart Contracts. These contracts can manage claims in transparent and immutable manner. Both the contracts and claims would be the part of a blockchain. If there is one accident and the claim for that has already been raised then it cannot be claimed again because the chain would have a record of that. Again since this is a decentralised chain, nobody can just goto a central authority and make a change to the claim and re-trigger it. (Haven’t you heard of that friendly claims agent who tells you to file the claim and that he would take care of it or that friendly bank agent who assures that he has access to the main frames to fix your credit history?)
Smart contracts with IoT is a huge win for the insurance and the financial industry in general. With identity management being embedded in the smart contracts the situations for Crash for Cash would be long gone. Further this would be a blockchain which would be public (ideally) or private but shared within the insurance sector then all this information of a person who would jump from one insurance company to the next and not share all the information would be a distant past.
According to PWC,
Reinsurance expense ratios are typically 5%-10% of premiums. Our analysis of the potential for both more efficient data processing and reductions in claims leakage and fraud indicates that blockchain solutions could remove 15% to 25% of expenses, so delivering an industry-wide saving of $5-10 billion. And faster placement and settlement opens the way for a significant boost in client satisfaction and retention.
With blockchains, there would be a win in terms of processing, opportunities for new business lines and immense transparency which has been a thing of the past for now amongst insurance companies. With all companies sharing their information on the blockchain, it would be a different world in which legitimate insurance claims would help bring the cost of insurance down and add value to everyone.
If this sounds interesting then get in touch with us and we would show you how your company can win with blockchains.
Size, Version, Bits and Height in the chain as to where it belongs
Number of transactions
Link to the previous block
And a list of all the transactions in the block.
Again, each transaction has the following format
Again as per the details in the earlier post, amongst the technical information, it contains the size, mine time and the block that it is a part of , along with the details of the coinbase in input and output.