What is blockchain technology? 

Blockchain is a shared, immutable ledger for recording transactions, tracking assets and building trust. Discover why businesses worldwide are adopting it

what is blockchain? leadpsace

Blockchain success starts here

Now in its 3rd edition, IBM’s Blockchain for Dummies has introduced blockchain to more than 68,000 readers.

What’s inside:

  • Blockchain fundamentals

  • How blockchain works

  • Blockchain in action: use cases

  • Hyperledger, hosted by the Linux Foundation

  • Ten steps to your first blockchain application

Blockchain overview

Blockchain defined: 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 blockchain is important: Business runs on information. The faster it’s received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members. 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, as well as new efficiencies and opportunities.

Key elements of a blockchain

Distributed ledger technology

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.

Immutable records

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.

Smart contracts

To speed transactions, a set of rules — called a smart contract — is stored on the blockchain and executed automatically. A smart contract can define conditions for corporate bond transfers, include terms for travel insurance to be paid and much more.

How blockchain works

As each transaction occurs, it is recorded as a “block” of data

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 and even the condition — such as the temperature of a food shipment.

Each block is connected to the ones before and after it

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.

Transactions are blocked together in an irreversible chain: a blockchain

Each additional block strengthens the verification of the previous block and hence the entire blockchain. This renders the blockchain tamper-evident, delivering the key strength of immutability. This removes the possibility of tampering by a malicious actor — and builds a ledger of transactions you and other network members can trust.


Benefits of blockchain

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 we need a better way. Enter blockchain.

Greater trust

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 will be shared only with network members to whom you have specifically granted access.

Greater security

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.

More efficiencies

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 — called a smart contract — can be stored on the blockchain and executed automatically.


Types of blockchain networks

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 substantial computational power 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, execute 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 pre-selected organizations determine who may 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.


Blockchain for industries

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 (PDF, 340 KB)


Blockchain FAQ

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 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 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


Blockchain solutions

IBM Blockchain solutions

Technical innovators turn to the IBM Blockchain Platform, the leading Hyperledger Fabric platform, to build, operate, govern and grow blockchain solutions across any computing environment through Red Hat® OpenShift®.

Blockchain consulting

As the top-ranked blockchain services provider, IBM Blockchain Services has the expertise to help you build powerful solutions, based on the best technology. More than 1,600 blockchain experts use insights from 100+ live networks to help you build and grow.

All IBM Blockchain solutions

Embracing an IBM Blockchain solution is the fastest way to blockchain success. IBM has convened networks that make onboarding easy as you join others in transforming the food supply, supply chains, trade finance, financial services, insurance, and media and advertising.


Next Steps

Explore our informational guides to gain a deeper understanding of various aspects of blockchain such as how it works, ways to use it and considerations for implementation.

Blockchain Topics Benefits of blockchain Smart contracts Blockchain for business Blockchain security Blockchain for good Blockchain and IoT Hyperledger