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Blockchain: Unpacking Key Features

We live in an age where buzzwords like 'blockchain', 'cryptocurrency', and 'Bitcoin' abound.

This article is an attempt to demystify blockchain technology and explain its key features.

These features are central to giving blockchain technology its uniqueness, enables it to be used for multiple applications and enables it to be used to solve problems for which previously we did not have a solution. Having said that it also has some drawbacks.

So let's dive into it.


Decentralisation is a fundamental feature of blockchain technology. In a centralised system a single entity (e.g. a bank/government) controls and verifies all transactions. On the contrary, in a decentralised blockchain network, control is distributed across multiple computers or 'nodes', each holding a copy of the entire blockchain.

By eliminating the need for a central authority, the blockchain becomes more secure and less vulnerable to attacks or malfunctions at a single point. Furthermore, the public nature of the blockchain provides a high level of transparency, which builds trust and reduces fraud. This has a lot of applications - for example, ensuring the integrity of elections and voting/polls.

Decentralisation may also have its drawbacks. For instance, confirming transactions across all nodes can be slower and more energy-consuming than in a centralised system.


Every transaction made on the blockchain is visible to all participants in the network. This openness is called transparency. Transparency keeps everyone accountable and discourages dishonesty since all transactions are permanently recorded and can't be manipulated without everyone noticing.

However, the same transparency may also raise privacy concerns. Although users are represented by digital codes, their transaction history is publicly traceable, which might be uncomfortable for some. Contrary to what a lot of people think, using the blockchain does not ensure anonymity!


Immutability means that once a transaction is added to the blockchain, it can't be changed or deleted. This is ensured by complex mathematical algorithms. This feature builds trust among users, as every transaction is permanently recorded and can be audited by anyone. If an error occurs, it can't be directly corrected but must be adjusted with a new transaction, which can be complex and time-consuming.

Smart Contracts

A smart contract is a self-executing contract with the agreement terms directly written into code. It automatically carries out transactions when its pre-set conditions are met. Smart contracts can execute deals reliably without the need for a middleman, which saves time and reduces potential disputes. However, if a smart contract isn't correctly coded, it could have vulnerabilities - this is a risk that needs to be managed and the proper design of a smart contract is important to ensure it does what you need it to do.


Cryptography is a method of protecting information by transforming it into an unreadable format. Blockchain uses advanced cryptographic techniques to secure transactions and control the creation of new coins. Cryptography ensures the security of transactions and prevents counterfeiting, enhancing the overall security of the blockchain. However, the problem with this is that if a user loses their private key (like a password), they could lose access to their assets permanently, and no one can help them retrieve it.

Consensus Mechanisms

A consensus mechanism is a way for all nodes on a blockchain network to agree on the current state of the distributed ledger. It underpins the other features of the blockchain and how it works.

Two of these mechanisms are Proof of Work and Proof of Stake.

Proof of Work is a consensus algorithm where miners compete to solve complex mathematical problems; the first to solve it adds the next block to the blockchain and earns a reward.

On the other hand, Proof of Stake is a consensus model where the creator of a new block is chosen based on their stake, or ownership, of coins in the network, making it less energy-intensive than PoW. Moving away from PoW has been important lately to ensure that blockchain is sustainable and environmentally friendly.

These consensus mechanisms ensure reliability and prevent double-spending by validating transactions. Some consensus mechanisms, like Proof of Work, require massive computational power and energy. Others, like Proof of Stake, could potentially concentrate power in the hands of a few wealthy nodes, possibly contradicting the decentralised spirit of blockchain.


By design, blockchain is highly secure. Its combination of decentralisation, cryptography, and consensus mechanisms makes it resistant to fraudulent activities and cyber-attacks. Security is a major advantage of blockchain, instilling trust within the network and making it an appealing choice for sensitive financial transactions.

However, blockchain is not impervious to attacks. If a single entity controls more than 50% of the network's power, they could potentially manipulate transactions, although this is highly unlikely due to the resources required.


Disintermediation means removing intermediaries from processes. Blockchain can automate and streamline transactions, eliminating the need for middlemen. Disintermediation can make transactions more efficient, quicker, and less costly, which is particularly beneficial in fields like finance.

Permissionless vs Permissioned Blockchains

Blockchain networks can be either permissionless (public), where anyone can join and participate, or permissioned (private), where only invited participants can join. Public blockchains are inclusive and transparent. Private blockchains, while potentially less decentralised, offer more privacy and efficiency. However, public blockchains often face scalability issues due to their size, and private blockchains could potentially become centralised, defeating the purpose of using a blockchain.

Cross-chain Interoperability

Cross-chain interoperability is the ability of different blockchains to interact and share information. This feature could enable users to transact between different blockchains seamlessly.Cross-chain interoperability can create more versatile and comprehensive solutions, increasing the value of blockchain technology. Achieving interoperability between different blockchains has been technically challenging and we are still working towards this. If we can achieve this, it will enable many more use cases and increase the scalability of the technology.

Blockchain technology, with its distinct features, presents a new paradigm of transparent, decentralised transactions that could revolutionise various sectors.

As blockchain technology continues to evolve, it will be intriguing to see how these strengths and weaknesses play out - and whether we will figure out how to leverage the strengths and minimise/manage some of the weaknesses.

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