Digital ledgers without Blockchain
We have learned about ancient ledgers in the need to notarize section. The digital revolution has enabled humanity to process ledgers at unprecedented speed and scale. Interestingly, despite these advancements there are major challenges. Consider the following:
- Information comes at almost no cost to copy
- It is very difficult to prove that someone has manipulated or copied the information/data
A rogue actor could be deleting or adding digits to bank balances without others noticing it. Obviously those centralized ledgers are heavily protected against unauthorized access and sophisticated firewalls. Despite all efforts, costly attacks/manipulation do happen.
Digital ledgers with Blockchain
In the year of 2008, the advent of Bitcoin 🌟, a completely different approach was taken with blockchain technology. Instead of restricting copying and keeping the ledger at one protected centralized place, the strategy takes a 180° turn and endorses copying of data. Every participating node has a copy of the ledger and the data is publicly accessible. All transactions are validated by each and every node. A consensus mechanism and protocol ensures that rules are applied in how transactions are processed that modify the ledger.
A smart contract is not to be confused with a contract in the classical sense in law, but in blockchain a smart contract is a code of any computer program and visible to all users. It is executed as part of the decentralized blockchain protocol and once started, it cannot be stopped. Each smart contract has its own storage, which is basically its own ledger. Moreover, the code can define conditions and rules under which that ledger is manipulated in a decentralized fashion. This is a real gamechanger for creating trustless environments, because instead of a 3rd party writing to the ledger, it can be outsourced to a decentralized code doing that.
Transactions in the context of Tezos includes both: moving funds between accounts and the instruction to run the code in smart contracts.
Notarization with Blockchain
The opportunity in the digital age is to use the blockchain's decentralized network and underlying technology instead of political authorities, such as notaries. One of the approaches to "blockchain notarization" is to time-stamp document fingerprints in the immutable blockchain ledger. Having said this, we will not stop with simple one-time transactions, but extend this approach by adding features that represent real world needs of notarization. In particular, we will enable multiple people to publicly sign, or conjointly agree about the document's fingerprint online and will define the rules of doing so in a smart contract.