This paper concentrates on distributed ledger technology (DLT) and how BlockConvey Blockchain Protocol would work. Before we get to consensus, it is quintessential to know about three complementary ways of organizing information, as shown in Figure 1.1: (a) centralized, (b) decentralized, and (c) distributed.
A centralized system represented as a spoke model underpins most industries, for example, banking in a country, with the hub being the central bank and spokes being the individual commercial banks.
A decentralized system with several hubs and spokes is typical for cross-border banking, with each country as a hub. Finally, a distributed system characterizes direct or peer-to-peer business organizations (currently rare) and is potentially the most robust of the three.
While DLT holds great promise, it is hard to master it properly. The reason is that DLT is an interaction between 3 fields: a) cryptography, b) game theory, and c) economics. As a result, it is hard to master distributed ledgers and blockchains because the underlying concepts come from disparate fields.
The introduction of natively digital assets, achieved by asset tokenization on a distributed ledger, simplifies and automates business processes by allowing participants to access the history of past transactions and establish current ownership of the corresponding tokens. As a result, executing a smart contract can enact a change of ownership. In theory, it will eliminate a centralized intermediary and operate a marketplace or a supply chain in a decentralized fashion.
However, in practice, it is easier said than done. The profitable application of DLT requires a phased approach. First, it is necessary to standardize and digitize the internal business process by issuing digital tokens and reorganizing settlements and reporting. Secondly, businesses can start sharing digital tokens across an entire ecosystem.
This whitepaper focuses on a protocol that increases the valuable output to improve this exciting technology’s overall prospects.