Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.
An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.
Why is blockchain important?
Business runs on information. The faster information is received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared, and observable information that is stored on an immutable ledger that only permissioned network members can access. A blockchain network can track orders, payments, accounts, production and much more. And because members share a single view of the truth, you can see all details of a transaction end to end, giving you greater confidence, and new efficiencies and opportunities.
The latest AI News + Insights
Discover expertly curated insights and news on AI, cloud and more in the weekly Think Newsletter.
All network participants have access to the distributed ledger and its immutable record of transactions. With this shared ledger, transactions are recorded only once, eliminating the duplication of effort that’s typical of traditional business networks.
No participant can change or tamper with a transaction after it’s been recorded to the shared ledger. If a transaction record includes an error, a new transaction must be added to reverse the error, and both transactions are then visible.
To speed transactions, a set of rules that are called a smart contract is stored on the blockchain and run automatically. A smart contract defines conditions for corporate bond transfers, include terms for travel insurance to be paid and much more.
How blockchain works
Those transactions show the movement of an asset that can be tangible (a product) or intangible (intellectual). The data block can record the information of your choice: who, what, when, where, how much. It can even record the condition, such as the temperature of a food shipment.
These blocks form a chain of data as an asset moves from place to place or ownership changes hands. The blocks confirm the exact time and sequence of transactions, and the blocks link securely together to prevent any block from being altered or a block being inserted between two existing blocks.
Each additional block strengthens the verification of the previous block and hence the entire blockchain. Rendering the blockchain tamper-evident, delivering the key strength of immutability. Removing the possibility of tampering by a malicious actor, and builds a ledger of transactions you and other network members can trust.
What needs to change: Operations often waste effort on duplicate record keeping and third-party validations. Record-keeping systems can be vulnerable to fraud and cyberattacks. Limited transparency can slow data verification. And with the arrival of IoT, transaction volumes have exploded. All of this slows business, drains the bottom line, and means that we need a better way. Enter blockchain.
With blockchain, as a member of a members-only network, you can rest assured that you are receiving accurate and timely data. And that your confidential blockchain records are shared only with network members to whom you granted access.
Consensus on data accuracy is required from all network members, and all validated transactions are immutable because they are recorded permanently. No one, not even a system administrator, can delete a transaction.
With a distributed ledger that is shared among members of a network, time-wasting record reconciliations are eliminated. And to speed transactions, a set of rules that are called a smart contract can be stored on the blockchain and run automatically.
There are several ways to build a blockchain network. They can be public, private, permissioned, or built by a consortium.
Public blockchain networks
A public blockchain is one that anyone can join and participate in, such as Bitcoin. Drawbacks might include the substantial computational power that is required, little or no privacy for transactions, and weak security. These are important considerations for enterprise use cases of blockchain.
Private blockchain networks
A private blockchain network, similar to a public blockchain network, is a decentralized peer-to-peer network. However, one organization governs the network, controlling who is allowed to participate, run a consensus protocol and maintain the shared ledger. Depending on the use case, this can significantly boost trust and confidence between participants. A private blockchain can be run behind a corporate firewall and even be hosted on premises.
Permissioned blockchain networks
Businesses who set up a private blockchain will generally set up a permissioned blockchain network. It is important to note that public blockchain networks can also be permissioned. This places restrictions on who is allowed to participate in the network and in what transactions. Participants need to obtain an invitation or permission to join.
Consortium blockchains
Multiple organizations can share the responsibilities of maintaining a blockchain. These preselected organizations determine who submit transactions or access the data. A consortium blockchain is ideal for business when all participants need to be permissioned and have a shared responsibility for the blockchain.
Blockchain security
Risk management systems for blockchain networks
When building an enterprise blockchain application, it’s important to have a comprehensive security strategy that uses cybersecurity frameworks, assurance services, and best practices to reduce risks against attacks and fraud.
Industry leaders are using IBM Blockchain to remove friction, build trust, and unlock new value. Select your segment to see how.
Supply chain
Healthcare
Government
Retail
Media and Advertising
Oil and gas
Telecommunications
Manufacturing
Insurance
Financial services
Travel and transportation
What’s the difference between blockchain and Bitcoin?
Bitcoin is an unregulated, digital currency. Bitcoin uses blockchain technology as its transaction ledger.
This video illustrates the distinction between the two.
How are the IBM Blockchain Platform and Hyperledger related?
The IBM Blockchain Platform is powered by Hyperledger technology.
This blockchain solution can help turn any developer into a blockchain developer.
Visit the Hyperledger website for details.
Can I deploy on any cloud I want?
IBM Blockchain Platform Software is optimized to deploy on Red Hat® OpenShift®, Red Hat’s state-of-the-art enterprise Kubernetes platform.
This means that you have more flexibility when choosing where to deploy your blockchain network components, whether on-premises, in public clouds, or in hybrid cloud architectures.
I need more detailed information. Where is it?
For a more detailed look at how a blockchain network operates and how you can use it, read Introduction to distributed ledgers.
Learn more from the blockchain tutorial on IBM Developer
Explore the capabilities of the IBM Blockchain Platform, the only fully integrated enterprise-ready blockchain platform that is designed to help you accelerate the development, governance, and operation of a multi-institution business network.
Register to download the IBM Blockchain Platform white paper
Get the details on Hyperledger Fabric and discover what’s unique about it, why it matters to business networks and how to start using it.
Visit the Hyperledger page on IBM Developer
The quick-start guide for developers explains how to build a kick-starter blockchain network and start coding with the IBM Blockchain Platform Starter Plan.
View the quick-start guide for developers
Resources
Hyperledger Fabric is an open-source, modular blockchain framework for developing enterprise-grade applications with industry strategies.
Governments, businesses and institutions use blockchain to enable a secure and trusted infrastructure for digital identity and credentials.
Blockchain is a trustless network that provides enhanced security, transparency, and automation
The Home Depot implements IBM Blockchain technology to resolve vendor disputes and improve supply chain efficiency.
IPwe uses IBM Blockchain and AI to create a transparent global patent market, helped by IBM to increase visibility and flexibility.
Enabling companies of all sizes to trade across borders, helping to drive global economic growth.
Streamline your digital transformation with IBM’s hybrid cloud solutions, built to optimize scalability, modernization, and seamless integration across your IT infrastructure.
Unlock the full potential of blockchain technology with IBM's consulting and services, designed to accelerate your business transformation through scalable, secure and innovative solutions.
IBM Blockchain Platform: Hyperledger Fabric Support Edition provides SLAs and 24x7 enterprise support for Hyperledger Fabric, the de facto standard for enterprise blockchain platforms from the Linux Foundation.