A blockchain is a system for maintaining distributed ledgers of facts and the history of the ledger’s updates. A blockchain is a continuously growing list of records, called blocks, that are linked and secured using cryptography.
This allows organizations that don't fully trust each other to agree on the updates submitted to a shared ledger by using peer to peer protocols rather than a central third party or manual offline reconciliation process. Blockchain enables real-time transactions and securely shares tamper-proof data across a trusted business network.
A blockchain network has a founder that creates and maintains the network, and participants that join the network. All organizations included in the network are called members.
Oracle Blockchain Platform is a permissioned blockchain, which provides a closed ecosystem where only invited organizations (or participants) can join the network and keep a copy of the ledger. Permissioned blockchains use an access control layer to enforce which organizations have access to the network. The founding organization, or blockchain network owner, determines the participants that can join the network. All nodes in the network are known and use consensus protocol to ensure that the next block is the only version of truth. There are three steps to consensus protocol:
Endorsement — This step determines whether to accept or reject a transaction.
Ordering — This step sorts all transactions within a time period into a sequence or block.
Validation — This step verifies that the required endorsement are gotten in compliance with the endorsement policy and organization permissions.
Blockchain's key properties
Shared, transparent, and decentralized— The network maintains a distributed ledger of facts and update history. All network participants see consistent data. Data is distributed and replicated across the network’s organizations. Any authorized organizations can access data.
Immutable and irreversible — Each new block contains a reference to the previous block, which creates a chain of data. Data is distributed among the network organizations. Blockchain records can only be appended and can't be undetectably altered or deleted. Consensus is required before blocks or transactions are written to the ledger. Therefore, the existence and validity of a data record can't be denied. After endorsement policies are satisfied and consensus is reached, data is grouped into blocks and blocks are appended to the ledger with cryptographically secured hashes that provide immutability. Only those members authorized to have the corresponding encryption keys can view data.
Encryption — All records are encrypted.
Closed ecosystem — Joined organizations can have a copy of the ledger. Organizations are known in the real world. Consensus protocols depend on knowing who the organizations are.
Speed — Transactions are verified in minutes. Network members interact directly.
An example of an organization that benefits from using blockchain is a supply chain contract manufacturing company. Suppose this company is located in the United States and uses a third-party company in Mexico to source materials for and produce electronic components. With a blockchain network, the manufacturing company can quickly know the answers to the following questions:
Where is the product in the production cycle?
Where is the product being produced?
Does the product contain ethically sourced materials?
Does the product meet specifications and exporting compliance rules?
When is ownership transferred?
Does the invoice match and should the organization pay it?
How should the organization handle any exceptions to the manufacturing, shipping, or receiving process?