Blockchain – A forward step to secure transaction

What is Blockchain Security is paramount in financial transactions. Software outsourcing companies h

What is Blockchain

Security is paramount in financial transactions. Software outsourcing companies have witnessed that cyber breaches are advancing at higher rate than technology advancements. Blockchain is seen as a next big thing for safe and secured financial transactions. Blockchain is known as a backbone technology of bitcoin, a digital currency revolution. Blockchain allows making and verifying transactions on network instantaneously without any central authority.

Blockchain is a data structure that maintains growing list of records called blocks and each block contains a link to previous block similar to Linked-list and a timestamp thus creating a digital ledger. Blocks are secured from revision and tampering.  Cryptography is used to allow each participant on the network for ledger manipulation in a secured way without any help from central authority.

A blockchain consists of blocks that hold batches of valid transactions. Each block includes the hash of the prior block in the blockchain, linking the two.  Following diagram is an overview of underlining technology and architecture.

 

 

 

Blockchain not only provides a way for secure transaction but also makes it easy to recover corrupt data as every node inside a blockchain has copy of data/block. Data loss chances are also minimal as every node has copy of data. Blockchain is a technology that can be integrated into multiple areas. Some of areas where Blockchain is useful are payment system and digital currency, cryptocurrency, permission distribution like distributed voting system and share power of voting system.

Security feature in blockchain

There is no centralized “official” block copy that exists. If any person wants to change its own database copy, it will be reflected until it is verified by verifier. This reduces the chances of hacking or security breaches.  

Blockchain uses public key and private for encryption. Private key are known only to user and it is not stored anywhere.  During transaction, only scriptpubkey is shared. Scriptpubkey contains a public key and network address in encrypted format. So sender does not know about public key and network address making it highly secured way of transaction compared to other technologies. Following diagram depicts the transaction flow.

                                                      

 

Workflow Of Blockchain

Let us understand how blockchain technology works with an example. Person A wants to send some bitcoin (digital currency) to person B.  Person A requires wallet account and also should know digital address of Person B. Following are the steps involved in this transaction.

 

 

 

Step 1: Person A initiates a transaction and includes digital signature inside transaction

Step 2: Transaction is sent to miner. Miner is one type of verifier that verifies all transaction of connected nodes

Step 3: Miner broadcasts transaction as block to all connected nodes if transaction is valid

Step 4: Node inside network accepts block if all transaction inside it are valid and not already spent. After ownership of block inside network and transaction is transferred into target account inside block is sent to person B

Step 5: Person B gets money (digital currency)

Disadvantages of Blockchain

There is tradeoff for using Blockchain technology. It does offer additional security however one should consider following disadvantages.

  • Blockchain requires more storage space as it stores all transactions.
  • Complete transaction takes more time compared to other technologies as transaction verification process is longer and we are dependent on Miner for verification. On verification by Miner, transaction is broadcast to all node as Block
  • This is comparatively costly technology. Miner charges per transaction for verification

Conclusion

Blockchain technology is gaining popularity among financial institutions as this is highly secured way of doing transactions. Software outsourcing companies in India are experimenting the usage of Blockchain technologies in various ways through various vendors.

Top ten questions to ask to software outsourcing companies in India

Have you made up your mind to outsource some of your IT operations, functions or projects to softwar

 

Have you made up your mind to outsource some of your IT operations, functions or projects to software outsourcing companies in India to reap the economic and competitive benefits? Beware, your wrong decision can put your organization in trouble. Quantification of process to choose software outsourcing company can help you choose the best organization that fits the best to your requirements.  A set of questions follow to help you in this process.

1. How is your financial health?

Financial stability is vital before outsourcing your projects to software outsourcing companies. Financial stability would induce stability and timely delivery of your projects. It would also ensure that it can cope up with economic fluctuations in the market. Financial health should be given very high importance while quantifying candidate qualification. Organization can use financial rations like Debt-to-Equity Ratio, Current Ratio, Quick Ratio, Return on Equity (ROE) and Net Profit Margin. This is indicative list and not an exhaustive one. There are many other financial parameters that one should consider to determine the financial health of a software outsourcing company.

2. How is your physical health?

Company profile with sound physical statistics like employee count, office locations, running project counts, successful projects executed, year of experience etc. helps you to decide company capabilities and competencies.

3. What is your relevant experience to my domain?

Proven track record of service commitment and delivery is very vital but Industry knowledge is even more important.  A company can be sound technically but if it fails to understand business requirements, it lays the foundation of unsuccessful product or project.  User acceptance heavily depends on this factor. Even if a project is technically good, it may fail if user acceptance is not given due consideration. Industry and subject knowledge play crucial role for successful project.

4. Do you have any quality assurance certifications?

Certification alone cannot help to judge a company in terms of quality and timely delivery. However this provides an organization additional surety that the company follows specific processes that leads to quality and timely service delivery to customers. This also reflects company’s commitment and dedication to service quality.

5. How would you protect our confidential information?

Concepts, ideas and trade secrets are king in business. It floats the organization and misuse of this has ability to sink the organization as well. IP protection and confidential information are the key factors that were hindering revolution in software outsourcing for ages. However software outsourcing companies in India have started respecting the importance of Intellectual property ownership and confidential information. Companies have taken required actions to ensure that IP remains with outsourcing company and confidential information are protected.

6. What is your project management methodology?

The success of project execution is highly dependent on selecting the right software development life cycle and its project management methodologies. Project management methodologies controls the project scope, time and cost creeps. It also puts required checks on project quality and deliverables. Software companies in India have started using AGILE Project management methodologies like SCRUM for better and effective project managmenet. Right project management methodologies provide sustainable benefits at tactical, operation and strategic level.

7. How would you fit to my requirements?

Every organization has different business needs. It is important to ensure that the company that you choose is flexible and scalable enough to meet your needs and service offerings. It should be flexible and ready to go beyond a service call to ensure that your business runs smoothly.

8. How is your business model and contracts structured?

Conflicts are unavoidable and can emerge any time during or after the service delivery.  It can be due to any reason foreseen or unforeseen. Contracts and agreements are vital to mitigate legal and contractual risks. It is important that contracts and agreements are structured considering all software outsourcing risks, business needs and geopolitical boundaries and protects the organization from legal issues and conflicts.

9. What is your SWOT analysis?

SWOT analysis would help an organization to understand strengths, weaknesses, opportunities and threats of the software outsourcing company in question. A closer frequency match of SWOT analysis, ensures better sync of organizations in terms of company culture, values and work ethics. SWOT analysis also provides other meaningful information about how company is structured and where it is heading. This can help you in company analysis in better way.

10. What is your force majeure?

Natural calamity or any unforeseen event or circumstances can put your business on hold. It is very important to know how company manages and reacts to force majeure like earthquake or any other natural calamity to ensure business continuity. These terms can help to know how soon your business can be expected to resume during force majeure.

A wrong decision of choosing software outsourcing company in India can outweigh the benefits of outsourcing in terms of money, time and skills and right choice can boost your business to next level. Though this list is not exhaustive but indicative to help you choose right software outsourcing partner to reap the competitive and economic benefits of software outsourcing.