According to the Founding Member of Indonesia Blockchain Network Kenneth Tali, blockchain is essentially an open, distributed ledger that can record transactions between two parties in a verifiable and permanent way. There are a few basic principles as pointed by Marco Lansiti and Karim R. Lakhani, both of whom are professors at Harvard Business School.
1. Distributed database
A database needs to be distributed, with every party having the same access to the complete database and its history, so that everyone inside the network can verify each other’s database, and nobody neither owns nor has control over the data.
All transactions should be recorded on the ledger and will be visible to all parties. Users are identified by unique alphanumeric characters. However, users can also choose to keep their privacy or to be anonymous.
3. Peer-to-peer transmission
Information is stored and transmitted by the nodes in the network. There is no central node in the system: all nodes are equal, and hence communication occurs directly between nodes.
4. Irreversibility of records
The transactions entered into blocks in the database, where each block is chronologically ordered, are linked with blocks that came before them, and hence they cannot be altered/ or modified.
5. Computational logic
The digital nature of blockchain means that blockchain transactions can be tied to computational logic, so users can program and create rules that can automatically trigger transactions. Smart contracts are one of the examples.