What is a Blockchain?

Topics: Supported Blockchains

A blockchain is a distributed record of transactions validated and stored at multiple peer locations in a network. The records form a consensus of replicated, shared, and synchronized information. For example, the debits and credits applied to a bank's accounts might be stored in the blockchain. The ledger (blockchain) is not the record of the accounts themselves, but rather the changes in account position.

The records stored in the blockchain are immutable, providing a high level of security and integrity. Each record is chained to the prior record, hashed, and encrypted. The records form a chain of transactions from the initial transaction to the most current. The records are duplicated among the peers in the network, and available to any authorized party for viewing. The result is a horizontal (peer storage) and vertical (historic chain) mesh that is virtually tamper proof. This results in a high level of trust, transparency, and reliability.

Once an item is recorded, it is irrefutable proof that this event occurred at a specific time and date, and (perhaps) between specific counterparties. The use of blockchains solves the problem of transferring value between parties (or entities) without the need to rely on a third intermediating party.

In the enterprise business world, a private blockchain provides a basis for non-repudiation and automates many of the existing labor-intensive processes required to settle transactions. Blockchains can reduce transaction and back office costs, the complexity of cross-enterprise business processes, fraud, and inefficiencies in the business to free up capital.

Blockchains can also take advantage of smart contracts. Smart contracts are self-executing contracts or agreements that are represented as software that can automatically trigger actions under certain conditions, such as when payments are made (or missed).

Smart contracts are implemented in chaincode, which implements the application in the peers. The peers run this code, and at a future point, validates the transaction to determine, for example, whether an asset should or should not be transferred.

In iWay Version 8, support for private blockchain maximizes the advantages of this modern approach to transaction interchange and non-repudiable storage.