The simplest blockchain definition? A reliable, difficult-to-hack record of transactions – and of who owns what. Blockchain is based on distributed ledger technology, which securely records information across a peer-to-peer network. Although it was originally created for trading Bitcoin, blockchain’s potential reaches far beyond cryptocurrency. Blockchain ledgers can include land titles, loans, identities, logistics manifests – almost anything of value. The technology is still new, but the potential impact it can have on business is exciting, and immense.
Blockchain and Distributed Ledger Technology
Blockchain explained from an enterprise perspective
Blockchain has the potential to revolutionise how businesses operate.
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What is blockchain technology?
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What is distributed ledger technology?
A distributed ledger is a database of transactions that is shared and synchronised across multiple computers and locations – without centralised control. Each party owns an identical copy of the record, which is automatically updated as soon as any additions are made.
How does blockchain work?
A blockchain records data across a peer-to-peer network. Every participant can see the data and verify or reject it using consensus algorithms. Approved data is entered into the ledger as a collection of “blocks” and stored in a chronological “chain” that cannot be altered.
What are smart contracts?
Smart contracts – self-executing agreements based on blockchain technology – automatically trigger actions or payments once conditions are met. In the near future, they will use real-time information, such as asset GPS data, to trigger an event, such as a transfer of ownership and funds.
4 types of blockchain networks
Of the four ways to establish a blockchain network – currently, consortium is the most accepted model for business.
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Consortium blockchains
In a consortium blockchain, the consensus process is controlled by a pre-selected group – a group of corporations, for example. The right to read the blockchain and submit transactions to it may be public or restricted to participants. Consortium blockchains are considered to be “permissioned blockchains” and are best suited for use in business.
Semi-private blockchains
Semi-private blockchains are run by a single company that grants access to any user who satisfies pre-established criteria. Although not truly decentralised, this type of permissioned blockchain is appealing for business-to-business use cases and government applications.
Private blockchains
Private blockchains are controlled by a single organisation that determines who can read it, submit transactions to it, and participate in the consensus process. Since they are 100% centralised, private blockchains are useful as sandbox environments, but not for actual production.
Public blockchains
Anyone can read a public blockchain, send transactions to it, or participate in the consensus process. They are considered to be “permissionless.” Every transaction is public, and users can remain anonymous. Bitcoin and Ethereum are prominent examples of public blockchains.
Blockchain use cases
Blockchain shows promise in many different industries and lines of business. Here are three key use cases:
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Supply Chain
Blockchain technology has the potential to improve transparency and accountability across the supply chain. Applications are already being used to track and trace materials back to the source, prove authenticity and origin, get ahead of recalls, and accelerate the flow of goods.
Public Sector
The public sector is looking at the potential of blockchain to serve as the official registry for government and citizen-owned assets like buildings, houses, vehicles, and patents. Blockchains could also facilitate voting, reduce fraud, and improve back-office functions like purchasing.
Utilities
Blockchain software solutions are being tested for a wide range of applications in the utilities industry: peer-to-peer solar energy sales between neighbors, energy trading among utility conglomerates, automated billing for autonomous electric vehicle charging stations, and more.
How SAP is bringing blockchain to the enterprise
At SAP, we see blockchain as a promising way to simplify complex multi-party processes and create trust among participants. We’re using our expertise in 25 industries and across all lines of business to actively explore blockchain technology, and help you capitalise on its potential. SAP Leonardo, our digital innovation system, includes some early-stage blockchain capabilities, and integrates them with other breakthrough technologies – such as the IoT and machine learning.
SAP Cloud Platform Blockchain service
Embedded in the SAP Cloud Platform, our blockchain-as-a-service (BaaS) pilot is giving registered customers an easy way to experiment with the technology. By eliminating the need for a large upfront capital investment, BaaS is perhaps the lowest-risk gateway to enterprise blockchain adoption.
- Experiment with blockchain to see how it could benefit your business
- Use open standards to create consortium and private blockchain networks
- Prototype, test, and build customised blockchain applications and smart contracts
Blockchain and IoT co-innovation for the digital supply chain
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SAP is co-innovating with our customers and partners to explore high-value blockchain functionality for some of our existing products. We’re currently investigating new capabilities for multiple solutions across our IoT and supply chain portfolio, including: SAP Asset Intelligence Network, SAP Distributed Manufacturing, SAP Transportation Management, and SAP Global Track and Trace.
Get the facts
10%
of global GDP will be stored in blockchain by 2027.
World Economic Forum
90%
of major banks in NA and Europe are exploring blockchain technology.
Accenture
83%
of life science leaders expect blockchain will be adopted within five years.
The Pistoia Alliance
Meet some of our blockchain co-innovators
Meet the companies participating in our blockchain co-innovation program – an open collaboration project focused on distributed business processes in peer-to-peer networks.
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HP’s world-renowned technology portfolio includes printers, PCs, mobile devices, solutions, and services.
Mercuria is the largest integrated energy and commodity trading company operating all over the world.
SAF-Holland manufactures chassis-related systems and components for trailers, trucks, and buses.
Getting started with blockchain technology
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Join the SAP Blockchain Community
Certain sectors will be heavily impacted by blockchain in the near future. Stay ahead of the curve by exploring how the technology can benefit your business – in the SAP Blockchain Community.
- Hear from guest speakers and SAP experts
- Stay on top of industry trends
- Communicate and network with peers via our forum
Stay on top of the latest blockchain news and trends
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Gil Perez
SVP, IoT & Digital Supply Chain
SAP
SAP
Digital supply chains: The blockchain solution
Emerging technologies led by blockchain, 3D printing, and the IoT can transform today’s supply chain into tomorrow’s new
business model. Here’s how.
Susan Galer
Marketing Strategy & Thought Leadership
SAP
SAP
Making waves in ocean shipping and global trade
The paper-based bill of lading (B/L) – a legally required title of goods used in international trade – is getting an overhaul thanks to blockchain technology.
Steve Banker
Service Director, Supply Chain Management
ARC Advisory Group
ARC Advisory Group
Blockchain matures into a supply management ally
I used to consider blockchain too immature to impact supply chain management in a big way. Based on what I've heard recently, I need to revise that opinion.