siliconindia | | November 20199With cryptography, the secure exchange of digital assets or `tokens' became possiblea fundamental way for individuals to collaborate to exchange `value'di-rectly; hence reducing costs, enabling open, free and unhindered access ­ in other words `true democratization'. Secure DistributionThe digital assets are in the form of information. It can be financial, intel-lectual-property, media, access-codes etc. This information needs to be protected while stored or being exchanged. Cryptography makes sure of:1. Confidentiality ­ The asset is kept private using encryption.2. Integrity ­ The asset is verifiable using hashing or other techniques3. Authentication ­ The sender or re-ceivers' identities are confirmed. 4. Non-repudiation ­ Undeniability of contract or communication With cryptography, the secure ex-change of digital assets or `tokens' became possible. The assets can be transferred securely by encrypting. The integrity or the errors during transmission can be caught by testing against a hash. Digital signing by the sender makes sure that the asset was transferred by the genuine owner. Show me the moneySince digital tokens are nothing but encoded information, these can be copied to create as many instances. This becomes problematic if money is involved. This is generally referred to as `double spending problem'. Money needs to follow a singleton pattern i.e. only one instance or ver-sion should exist. This was being ad-dressed in the digital world by using a centralized gate keeper or a third party who will queue the transec-tions and process sequentially based on the timestamp. If the third par-ty is also keeping a record of trans-actions that can be audited to tally the records of issuer and receiver, then this arrangement is termed as `Triple-Entry accounting'.There was no easy way to manage the `Triple-Entry accounting' in the P2P network with decentralized ap-proach. One can create multiple cop-ies of digital money and transect with no way to confirm or verify his or her actual status during the transaction. In 2005, Ian Grigg published a paper titled, `Triple Entry Accounting' spe-cifically addressing this issue in con-text of Digital Transactions. Also, in 2008 Satoshi Nakamoto published a paper titled, `Bitcoin: A Peer-to-Peer Electronic Cash System' that went further and gave details on how such a system can be implemented. This paper focused on digital money trans-action in a decentralized scenario over P2P network. While the cryptog-raphy took care of security, authen-tication etc. for transaction between two parties, the paper focused more on how to reach a consistent state us-ing `Proof of Work' and `Consensus' to accept a transection as valid in the wider network. This required main-taining a log of transactions that are hard to manipulate or modify over time. This implementation referred to linking of blocks that encapsulated transactions as chaining, it led to the creation of the term `Blockchains'. Blockchain is the pioneer of the field of Distributed Ledger Technol-ogy (DLT). Since then multiple ap-proaches and implementation of Dis-tributed Ledger have come into being that tried to address the issues and limitation that impacted the usage and adoption of original blockchain technology like scalability, high cost of processing transaction (mining cost), consensus algorithms that are more efficient as well as effective in handing forking. Two other notable approaches that have come up in the Distributed Ledger Technology field are Directed Acyclic Graphs (DAG) and Hashgraph. We already have evo-lution of blockchain to blockchain2.0 and blockchain 3.0 where block-chain is being used interchangeably with DLT. What Next?As the DLT matures, a lot of new use cases for value creation, distribution and monetization will come to fore. Already Smart contracts and the au-tomation and ease they bring in trans-acting across organization boundaries looks very promising. While there is a lot of hype and unrealistic expec-tations and flawed use-cases being touted as a next big thing in relation to DLT, there is need to understand the context and the basic premise to use these technologies judiciously.
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