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The consensus mechanism is the process by which the

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The consensus mechanism is the process by which the computer entities (or nodes) in a networkagree on a common state of the ledger. Consensus generally involves two steps: transactionvalidation and agreement on ledger update by network parties. These features enable thecreation of records that are, for the most part, considered immutable, or unchangeable, yet theyare transparent and accessible to network participants on a near-real-time basis.2018/8/21....507
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Chapter 11 / Exercise 11
Contemporary Project Management
Kloppenborg
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Features of DLT include the use ofcryptography—an algorithmic process to encrypt data,making the data unusable if received by unauthorized parties—which enables a high level ofnetwork security and database integrity. For example, DLT uses cryptographic methods ofproof to verify network participant identity and for data encryption.DLT has the potential to accommodate “smart contracts,” which are computer programs thatself-execute on the basis of pre-specified terms and conditions agreed to by the parties to acontract. Examples of smart contract use are the automatic execution of contingent claims forderivatives and the instantaneous transfer of collateral in the event of default.Exhibit 5illustrates a distributed ledger network in which all nodes are connected to oneanother, each having a copy of the distributed ledger. The term “Consensus” is shown in thecenter of the network and represents the consensus mechanism in which the nodes agree on newtransactions and ledger updates.Exhibit 5.Distributed Ledger Network SetupSource:.Blockchainis a type of digital ledger in which information, such as changes in ownership, isrecorded sequentially within blocks that are then linked or “chained” together and secured usingcryptographic methods. Each block contains a grouping of transactions (or entries) and a securelink (known as a hash) to the previous block. New transactions are inserted into the chain onlyafter validation via a consensus mechanism in which authorized members agree on thetransaction and the preceding order, or history, in which previous transactions have occurred.2018/8/21....508
The consensus mechanism used to verify a transaction includes a cryptographic problem thatmust be solved by some computers on the network (known as miners) each time a transactiontakes place. The process to update the blockchain can require substantial amounts of computingpower, making it very difficult and extremely expensive for an individual third party tomanipulate historical data. To manipulate historical data, an individual or entity would have tocontrol the majority of nodes in the network. The success of the network, therefore, relies onbroad network participation.

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Term
Fall
Professor
INA
Tags
CFA Institute, Chartered Financial Analyst
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Contemporary Project Management
The document you are viewing contains questions related to this textbook.
Chapter 11 / Exercise 11
Contemporary Project Management
Kloppenborg
Expert Verified

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