5 key concepts for blockchain newbies

One of the little talked-about challenges in the blockchain space is the need to communicate effectively to an audience that encompasses wildly divergent needs. While entrepreneurs, developers and other early adopters are often the loudest voices in the public conversation around blockchain, there's also a vastly wider constituency of ‘blockchain curious’ beginners who require more introductory information.

Often, these groups' needs must be served simultaneously, as we discovered recently while working on a whitepaper for the World Economic Forum’s Centre for the Fourth Industrial Revolution about the deployment of distributed ledger technology (a broad category that includes blockchain) in supply chains. Our paper - the third in the series - delves specifically into whether supply-chain projects should use public or private blockchains.

This is one of the hottest areas of debate right now among start-ups and other stakeholders already active in the blockchain space. At the same time, however, we had to be cognizant that many people who might read our paper, including non-technical senior leaders within enterprises and government, might need some extra help to contextualize this public/private debate.

To that end, all the white papers in the supply chain series so far have included glossaries of basic blockhain terms, for the benefit of readers unfamiliar with the space.

Here are five key terms we thought newcomers might find particularly useful:

1) Distributed ledger technology: Software that uses a blockchain or similar data structure shared over a network of participants who distribute and verify information about transactions.

2) Cryptography: The methods of using mathematical cyphers (or codes) to protect or ‘encrypt’ transactions from third parties as the transactions are being stored or shared.

3) Token: A digital asset used in a blockchain transaction. A token can be native to the blockchain, such as a cryptocurrency, or it can be a digital representation of an off-chain asset (known as a tokenised asset), such as the title to a house.

4) Network nodes: Nodes represent agents or participants on a blockchain network, such as banks, government agencies, individuals, manufacturers or securities firms. Depending on the permissions set in the network, they may be able to approve, validate, send or receive transactions and data.

5) Consensus protocol: A set of rules and processes that determine how nodes on a blockchain network reach agreement about a set of data and whether to approve, or validate, transactions in the network.

For fuller information from the recent whitepaper series, download the individual papers for free via the World Economic Forum’s website. Part 1 of the series, covering an Introduction to inclusive deployment of blockchain for supply chains, is available here. Part 2, covering issues around trustworthy digital identity verification when deploying blockchain, is available here. And part 3, on public-versus-private chains, is available here.