Since the world is currently riveted with the Paris climate accord, consider the following scenario: Sensors at various places collect the atmospheric carbon emission readings, and the countries who meet the emission standards are automatically credited with the carbon credits. Automatically is the operative word here. There will be no central authorization authority or a single enforcement agency, neither will there be human intervention. The entire process will be accomplished without the intervention of a third party, and with the help of a mechanism which seamlessly crosses international borders, and is not constrained by bureaucratic inertia.
This may seem far-fetched, but what you just read is a slight peek into a future enabled by Blockchain.
Blockchain, at its most abstract level, is a decentralized database with inbuilt consensus building mechanisms. Take your debit card transactions for example. Currently, they are enabled and secured by your bank. Every transaction is stored on your bank’s system, and the bank checks those transactions to update the balance of your account. You trust your bank to maintain everything. The blockchain is a total inversion of this centuries old paradigm. Rather than one ledger, in the hands of one entity, Blockchain is distributed across nodes, and each node has the record of all the transactions. Using Hashing and Public Key cryptography, it is ensured the record of transactions is immutable and available to all. Therefore, malicious agents can’t modify the transactions already done, making the system consistent, nor is there a single point of failure. The most well-known implementation of this idea is bitcoin.
This concept is truly revolutionary. Next-gen enterprises can leverage the power of blockchain to trigger actions based on automatic checks, ensure automated delivery of updated artifacts with inbuilt authentication. A Proof-Of-Concept already undertaken by Infosys utilizes blockchain in the manufacturing industry. A feature over the blockchain which is utilized in these scenarios is a smart contract. And a platform which enables this is the Ethereum project.
Ethereum comes with a programming framework, and a decentralized run-time environment called the Ethereum Virtual Machine or the EVM. To this decentralized “world machine”, folks can publish “code”. This code can encompass business logic and can contain routines to invoke other contracts. Ethereum framework charges people for the computing resources used for running those contracts on the virtual machine.The execution of these contracts will not falter in case one node goes down. Compare this with the traditional client-server architecture. If your bank’s server goes down, everything stops. Since Ethereum is decentralized, every node in the system has the copy of the contracts. Ethereum allows people to post smart contracts to its Blockchain network. Ethereum has been used to develop truly decentralized apps. The apps are not hosted on a server or connect to a hosted database, they run on a decentralized framework
Enterprises can use qualities of blockchain with some possible constraints in their solution implementations. While blockchain allows all nodes the access to the transactions, companies choose to run their blockchain networks on permission networks. Only a selected group of nodes are allowed access to transactions. Blockchains can ensure autonomous and speedy exchange of assets with minimal human interventions. We live in the age of automation, and enforcement of contracts remains one of the final remaining frontiers. Smart contracts can change that.