The What and Why of Blockchain: Peer-to-Peer Blockchain Revolution

Blockchain
Peer-to-peer systems are distributed software systems that consist of nodes (individual computers), which make their computational resources (e.g., processing power, storage capacity, or information distribution) directly available to another.

The Architecture of Peer-to-Peer Distributed Computing
Peer-to-peer systems are distributed computer systems by construction since they are made of individual nodes that share their computational resources. However, there are also peer-to-peer systems that still utilize elements of centralization. 

Centralized peer-to-peer systems maintain central nodes to facilitate the interaction between peers, maintain directories that describe the services offered by the peer nodes, or perform look-ups and identify the nodes. Centralized peer-to-peer systems typically utilize a hybrid architecture. Such architecture allows combining the advantages of centralized and distributed computing. 

On the other hand, purely distributed peer-to-peer systems do not have central control or coordination elements. Hence, all nodes in those systems perform the same tasks, acting both as providers and consumers of resources and services.

An example of a centralized peer-to-peer system is Napster, which maintains a central database of all nodes connected with the system and the songs available on these nodes. To learn how distributed computing works and its applications, please click here. Here, you will learn from the industry experts from UC Berkeley's computer science department via edX.

Potential of Blockchain 
The excitement about the Blockchain is based on its ability to serve as a tool for achieving and maintaining integrity in purely distributed peer-to-peer systems that have the potential to change whole industries due to disintermediation.  

Why is Blockchain Needed?
Integrity and trust are significant concerns of peer-to-peer systems. People will join and continue to contribute to a peer-to-peer system if they trust it and if the results of interacting with the system on an ongoing basis confirm and reinforce that trust. 

As soon as people lose trust in a peer-to-peer system, they will abandon it, which in turn will cause the system to terminate eventually. Major integrity threats in peer-to-peer systems are: 

• Technical failures
• Malicious peers

Achieving integrity in a peer-to-peer system depends on: 

• The knowledge about the number of peers
• The knowledge about the trustworthiness of the peers

The core problem to be solved by the Blockchain is achieving and maintaining integrity in a purely distributed peer-to-peer system that consists of an unknown number of peers with unknown reliability and trustworthiness.

The Application Area of the Blockchain
The Blockchain as a technology suite, used for managing distributed peer-to-peer systems of ledgers, can have many specific applications, such as managing ownership in digital goods or cryptographic currencies. 

To learn more about applications of Blockchain in business, click on Blockchain for business from edX and CTO of Blockchain training alliance. 

How Blockchain Solves the Double-Spending Problem
The term 'double spending’ is ambiguous; it has different meanings. Double spending can refer to:

• A problem caused by copying digital goods,
• A problem that may appear in a distributed peer-to-peer system of ledgers, or
• An example of violating the integrity of distributed peer-to-peer systems

Here, the term ‘double spending' is used to refer to a vulnerability of purely distributed peer-to-peer systems of ledgers. The Blockchain is a means to solve the double-spending problem.

The double-spending problem is a prominent example of violated integrity in distributed peer-to-peer systems of ledgers, and a blockchain technology suite is a tool used to solve it. 

How Blockchain works 

• Describing ownership
• Protecting ownership
• Storing transaction data
• Preparing ledgers to be distributed in an untrustworthy environment
• Distributing the ledgers
• Adding the new transaction to the ledgers
• Deciding which ledgers represent the truth