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Level 2 provides Dragonchain users and enterprises alike the opportunity to participate in an ecosystem built to ensure security, flexibility, and expediency.
The verification and validation of a basic business transaction should be simple. Given the importance of transactions in a business setting and the frequency at which they occur large and small organizations, in any industry, need a secure, transparent, and efficient way to verify that a transaction has occurred. In a highly technological society, methods of verification can change quickly, but the underlying concerns remain the same. Blockchain can address these basic business needs, but how can it ensure transactional efficiency, without risking the exposure of sensitive business data?
Modern accounting is based on double-entry bookkeeping. This method gets its name because you enter all transactions twice. For every credit transaction, there is an equal debit transaction. The goal of double-entry bookkeeping is to enter financial transaction records so that when reports are ran, the company’s assets are equal to their liabilities, plus the owners’ equity (net worth). Double-entry is a costly and time consuming exercise. Blockchain technology has the potential to dramatically disrupt this inefficient process; lowering operational costs and eliminating double entry bookkeeping.
Keeping separate records based on transactions is operationally ineffective. Instead, one could write their transactions directly to a blockchain to create a shared ledger system. A shared ledger system using blockchain makes it possible to validate a transaction easily and with a single source of truth. A general ledger records transactions relating to a company’s assets, liabilities, equity, revenue, and expenses.
One approach to validating that a transaction has occurred on a blockchain is to record a hash of the transaction. That hash represents that the transaction in the form of a digital fingerprint. That hash can be used to validate a transaction and remains unaltered. With public blockchain networks, like Bitcoin and Ethereum, anyone can participate, making it easy to share data. However, this certainly raises data privacy concerns. The more secure, transparent, and efficient solution to these transaction verification pitfalls reside in a hybrid blockchain model.
The Dragonchain architecture uses a hybrid blockchain model; providing a spectrum of trust to consumers of data. Level 2 Nodes validate Level 1 transactions without seeing the details of the transactions. Level 2 nodes store the hash of the transaction in form, signature, and required data elements. Level 2 Nodes are hosted by the Dragonchain user community and provide a compute service to validate Level 1 transactions; no provisioning or managing servers required. Level 2 Nodes only execute when needed and scale automatically. You only pay for the transactions that Level 2 nodes validate. If Level 1 can be thought of as analogous to other blockchain systems, where data can be trusted by the team that owns that data, Level 2 is where checks for block and individual transaction validity occur.
Level 2 Verification of your business data is a service, not a chore. The specifications of a given transaction will be outlined in your smart contract, which is generated at Level 1. After that, your work is done. Level 2 (and for that matter, Levels 3–5 as well) will provide verification, which increases security, decreases risk, and makes measuring risk possible.
Still skeptical? Rightfully so. It is in a company’s best interest to say that their app, software, or platform is “user-friendly”. Level 2 Verification presents an opportunity for members of the Dragonchain community to actively participate in this ecosystem as a service provider. As the host of a L2 Node, you’ll perform the validation/verification function for an enterprise/user.
Instead of just talking, let’s walk through the process of using Level 2 Verification.
To run a Level 2 Node, you’ll need to meet the minimum DDSS requirement. Currently, the DDSS requirement is at 500 Million. Over time, this score requirement will be lowered. Once you’re on the platform, scroll down to CREATE CHAIN. Creating a chain currently requires 50 DRGN. Here are the steps:
You’ve just created a Level 2 chain and are now ready to perform verification/validation of Level 1 transactions.
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