Leveraging a Secure Distributed Ledger

Leveraging a Secure Distributed Ledger

Quiz

What is a decentralized commodity contract market?

What role does a secure distributed ledger (blockchain) play in a commodity contract market?

Describe the typical participants in a decentralized network (as shown in Figure 1).

What key information does a "block" in a blockchain contain?

Explain what "proof of work" means in a blockchain network.

What is the typical operation flow for a seller in this decentralized market?

What steps does a buyer need to take before accepting a good or service?

How does the escrow entity ensure the transaction is secure?

What if the buyer is not satisfied with the goods or services received?

What is the purpose of the "proposal broadcast" and "proposal acceptance" messages?

Answer

A decentralized commodity contract market is one where buyers and sellers can trade directly without relying on a centralized institution or intermediary.

A secure distributed ledger (blockchain) is an immutable record of transactions that is used to record and verify all transactions in the market, ensuring transparency and security.

Typical participants include sellers (providing goods or services), buyers (purchasing goods or services), and escrow entities (facilitating the secure transfer of funds).

Each block contains a block ID, the previous block ID, a random number (proof of work), transaction content, and other relevant data.

Proof of work refers to the large amount of computational work that miners need to complete to add new blocks to the blockchain, thereby maintaining network security and earning rewards.

Sellers usually publish proposals, negotiate terms, receive escrow funds, deliver goods or services, and finally request payment of funds.

Buyers need to select proposals, negotiate terms, transfer funds to escrow, and verify after receiving goods or services.

The escrow entity holds the buyer's funds until the transaction is completed or a dispute arises, at which time the funds are distributed according to pre-set rules.

If the buyer is not satisfied, he or she can refuse to accept the goods or services and submit the dispute to the escrow entity for arbitration.

**"Proposal broadcast" allows sellers to advertise their goods or services to potential buyers, while "Proposal acceptance"** indicates that the buyer agrees to the seller's terms.

Glossary

Term Definition Decentralized Commodity Contract Marketplace A market where buyers and sellers can trade directly without relying on a centralized institution or intermediary. Secure Distributed Transaction Ledger A decentralized, immutable database that records and verifies all transactions. Blockchain is a distributed ledger consisting of multiple blocks linked in chronological order. Miners verify and add new blocks to the nodes of the blockchain by solving complex computational problems. Proof of Work A mechanism to prove the authenticity of a transaction by completing a large amount of computational work. Smart Contract A program stored on the blockchain and automatically executed when certain conditions are met. Seller An entity that offers goods or services on the market. Buyer An entity that purchases goods or services on the market. Escrow An entity that acts as a neutral party to a transaction and is responsible for holding and distributing funds during the transaction. Proposal Broadcast A mechanism for sellers to advertise their goods or services to potential buyers. Proposal Acceptance An agreement by which buyers agree to the seller's terms. Escrow The state of holding the buyer's funds by an escrow entity before the transaction is completed. Funds Payment Request A request for funds initiated by a seller to an escrow entity after completing its obligations. Buyer Rejection The act of a buyer refusing to complete a transaction because he is not satisfied with the goods or services. Contract Completion Timeout A situation in which the seller fails to complete its obligations within the agreed time. Escrow Payment Timeout A situation in which the escrow entity has not received instructions from the buyer or seller beyond the agreed time.

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