Explain the Concept of “Data Immutability” on a Blockchain.
Data immutability means that once a piece of data (like a transaction or an oracle price update) has been recorded on the blockchain and confirmed, it cannot be altered or deleted. This is enforced by cryptographic hashing and the distributed nature of the ledger.
This characteristic is crucial for financial derivatives, as it ensures that the historical record of prices and trades is trustworthy and unchangeable.
Glossar
Immutability
Provenance ⎊ Immutability within cryptocurrency, options, and derivatives signifies the unalterable record of transaction history and contract terms, crucial for establishing trust and mitigating counterparty risk.
Cryptographic Hashing
Function ⎊ Cryptographic hashing functions serve as a fundamental building block in blockchain technology, transforming an arbitrary input data set into a fixed-size, unique output string, known as a hash digest.