Blockchain technology

Novatrace implements permissioned distributed legder blockchain technology to run its system database and user account services on.

Blockchain technology provides a high level of trust as stored data cannot be tampered with. An immutable log displays all versions of any data updated.

Our implemented blockchain has no crypto coins, transaction costs and mining processes. There is no market speculation and energy waste involved.


Blockchains are special databases operated by networks of nodes which verify that any stored information stays immutable. When some data on a node is edited, its signature changes causing the other nodes on the network to reject the edited data.

A ledger is a database made up of blocks connected by hashes. Hashes are “cryptographic” signatures with a value corresponding to a specific set of data. When a block is full of data its hash value is calculated and inserted into the next block. The inserted value influences that blocks’ own hash, which get inserted into the next block again. This connects all block together and is called a blockchain.

If some data in a ledger is edited, the hash of the block it is in changes. This causes a mismatch with the original hash stored in the next block. The hash in the next block needs to be updated to reconnect the blocks. Doing so changes the hash of that block and creates another mismatch with the next block in line. Conclusion: editing any data in a ledger changes the hashes all the way up to the last block.

The final element of a blockchain is a network of synced servers called nodes. Nodes run the same ledger and vote which new blocks get added. If some data on a node is edited, the hash of its last block changes. The other nodes which form a majority will reject the node with the different hash, cancelling the data edit.

Public blockchains can be used by anyone and are perfect for public services. Private blockchains require permission to use and are great for businesses solutions.

Public blockchains
Public chains enable anyone to run nodes and to add and explore data. They implement cryptographic (crypto) coins for several functions. The first is project funding, resembling company shares. The second is spam prevention, imposing transaction fees to prevent the system from flooding with data. The third is public node compensation for electricity bills, server costs and locked stake.

Private blockchains
Private (permissioned) chains require user permission to run nodes and to add and explore data. Nodes are run by consortium members who have an incentive to keep the system operational. System users can be added and removed. There is no need for crypto coins as spam prevention and node rewards are not required.

Public vs private
Public chains are a perfect choice for public services such as digital currencies, but it is difficult to store large amounts of data on, application development requires rigorous security testing and the technology has not fully matured yet. Private chains solve these problems making them a great choice for business solutions, but are less suited for storing large amounts of value owned by the public.

Today’s challenges are a transitory phase of an emerging technology hype cycle. Blockchain technology will likely develop a prominent role in the near future.

Market state
The blockchain ecosystem consists of thousands of projects aiming to solve problems with crypto coins. Large profits can be made from coin price hikes, regardless of how well the actual project performs. The focus to profit from crypto coins results in many scams, non-working beta phase projects and applications with inadequate business sense and short life spans.

Monetary effect
We could create a limited supply of “Novatrace Coin” for consumers to pay for blockchain verified food supplements in web apps and for brands to pay their suppliers in our traceability app. Its value however would be heavily influenced by speculative trading. As the amount of crypto projects keeps increasing, a separate coin to pay for every product and service equals going back to barter trade.

Data integrity
Blockchain applications are often presented as cut out the middle man solutions, suggesting that any data stored on a blockchain is inevitably true. While blockchain excels in data tampering prevention, the technology cannot verify whether users enter factual correct information. The solution is having designated entities with system oversight managing data integrity, as is performed by Novatrace.

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