What is Blockchain?
Blockchain explained from an enterprise perspective
What is blockchain technology?
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.
What is distributed ledger technology?
A distributed ledger is a database of transactions that is shared and synchronized across multiple computers and locations – without centralized 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
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 decentralized, 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 organization that determines who can read it, submit transactions to it, and participate in the consensus process. Since they are 100% centralized, 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.
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Blockchain use cases
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.
See how companies are using blockchain technology
Tracking fruit from vine to table
Naturipe is implementing blockchain to digitally track crops from their point of harvest along the supply chain. Thanks to this technology Naturipe will be able to deliver fresh fruit faster and provide consumers proof of the grower’s sustainability practices.
Identifying counterfeit pharmaceuticals
Learn how Boehringer Ingelheim – a global pharmaceutical company and SAP co-innovation customer – is using a blockchain-based system to verify the authenticity of pharmaceutical products and combat counterfeits.
Battling bureaucracy with blockchain
The Italian region of South Tyrol is pioneering the use of blockchain to replace inefficient legacy systems, break free from excessive government bureaucracy, and comply with European data sharing regulations.
Getting started with blockchain technology
Join the SAP Blockchain Consortium
Stay ahead of the curve by exploring how distributed ledger technology can benefit your business – learn about industry use cases and see how distributed ledger technology is being leveraged to address real world problems.
- Communicate and network with peers
- Stay on top of industry trends
- Hear from guest speakers and SAP experts
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