Enterprise blockchain

Enterprise blockchain is a distributed, shared and immutable ledger that enables the process of chronologically recording transactions and tracking assets in a business network.

What is DLT and Blockchain?

Distributed Ledger Technology (DLT) enables businesses to record transactions on a decentralized database, eliminating the reliance on a central ledger. It facilitates data sharing and synchronization across a network of computers in various locations.

While blockchain is the most recognized form of DLT, it’s essential to understand that not all DLTs are equivalent to blockchains. Enterprises must carefully assess their specific needs related to data privacy, transparency, scalability, and decentralization when formulating their digital transformation strategy for DLT.

Blockchain serves as a distributed ledger for recording business data in sequentially linked blocks. Transactions on the blockchain are time-stamped, creating an irreversible and tamper-proof audit trail. Depending on an enterprise’s data privacy or regulatory requirements, the blockchain can be either permissioned (private) or permissionless (public).


Here is an example of how blockchain works.

  • 1. Transaction Initiation

    A transaction is initiated from a user who signs it with their private key and then subsequently broadcasts it to a network of computers (nodes).

  • 2. Block Creation

    The transaction, along with others that occurred within a set time period, is compiled into a block. Each block contains a unique cryptographic hash, a timestamp, and transaction data

  • 3. Block Distribution

    The newly created block is sent to every node where it will await to be validated.

  • 4. Validation and consensus

    The nodes in the network validate the transactions in the block through a consensus mechanism. This ensures that all copies of the distributed ledger are kept up to date.

  • 5. Block Addition

    After validation, the newly created block is added to the existing blockchain. Each block includes a hash of the preceding block, forming a chronological and tamper-proof chain.

  • 6. Transaction Completion

    The update is distributed across the network, finalizing the transaction permanently.

Blockchain decentralisation considerations for enterprise

One of the key benefits of blockchain technology stems from the concept of decentralisation. In a sufficiently decentralised blockchain, no single computer or organization can control the entire chain. Each computer (or node) maintains a copy of the ledger, which serves as the single source of truth for all participants in the network.

For instance, consider the Bitcoin blockchain, which relies on a vast network of nodes distributed globally rather than a single central authority. Anyone can participate in the network by running a node, engaging in mining, or simply using the cryptocurrency. This open access ensures that control is distributed among many participants, making it challenging for any central authority to unilaterally alter the ledger.

While public, fully decentralised blockchains offer numerous advantages, they may not always be the optimal choice for enterprise blockchain applications. Here are some things to consider when choosing the level of decentralisation:

  • Scalability

  • Data Privacy & Confidentiality

  • Governance

  • Regulatory Compliance

  • Trust & Transparency

  • Security


What are the benefits of blockchain?

Blockchain technology stands out for its exceptional transparency, security, and immutability of its records. The transparency feature stems from the ability for any participant in the network to inspect and confirm transactional data.

Regarding data security, blockchain utilizes cryptographic techniques that make altering or tampering with recorded information difficult. Cryptographic hashing functions and algorithms ensure that each transaction, or ‘block,’ is securely linked to the previous one.

Furthermore, the immutable nature of blockchain means that once a transaction is recorded, it cannot be reversed or changed. This provides a reliable audit trail crucial for meeting compliance and regulatory requirements.

A sufficiently decentralised blockchain architecture significantly reduces the risk of hacking or data breaches. Since the ledger is distributed across many nodes, an attacker would need to compromise most of these nodes simultaneously to alter the data—a task that is both impractical and unlikely.

Read: Blockchain’s Value for Enterprise: Is it worth it?


Asset Tokenisation and the benefits

Asset tokenization on blockchain refers to the process of converting ownership rights of real-world assets into digital tokens stored on a blockchain. This innovative approach allows for the representation of various assets, including real estate, stocks, commodities, art, and even intangible assets like patents and copyrights, as tradable digital tokens.

This digital transformation of asset ownership offers numerous benefits:

  • Increased liquidity: Tokenization allows traditionally illiquid assets like real estate to be more easily traded.

  • Fractional ownership: By dividing assets into smaller units, tokenization enables broader participation in investment opportunities.

  • Enhanced accessibility: Tokenized assets can be traded globally, 24/7, reducing barriers to entry for investors.

  • Improved transparency: Blockchain technology provides a transparent and immutable record of ownership and transactions.

  • Reduced transaction costs: Tokenization can streamline processes and eliminate intermediaries, potentially lowering fees.

  • Automated compliance: Smart contracts can enforce regulatory requirements and automate processes like dividend distribution.

Learn

  • Blockchain and Distributed Ledger Technology ("DLT") is often used synonymously however there is some distinction. All blockchains are DLTs but not all DLTs are blockchains.

    DLT allow businesses to record transactions on a database on a decentralised ledger. Though blockchain is one technology there are others including: directed acyclic graph ("DAG"), hashgraph and holochain.

  • A private blockchain is permission based network where participants operate in a closed database. Only those with permission are allowed to run a node, make transactions or validate on the chain.

    A public blockchain is a decentralized network where anyone can participate on the chain and permission is not restricted by any particular group.

  • Cryptography is used to secure transactions on the blockchain in such a way that an encrypted message sent would only be understood by the intended recipient.

  • A node is required to verify and record transactions on the blockchain. Each node stores the data necessary for the chain which includes the distributed ledger and its transactions.

  • These are digital contracts which can be set to automatically execute programmed transactions on the blockchain when certain criteria or conditions are met.

  • Asset tokenization on blockchain refers to the process of converting ownership rights of real-world assets into digital tokens stored on a blockchain. This innovative approach allows for the representation of various assets, including real estate, stocks, commodities, art, and even intangible assets like patents and copyrights, as tradable digital tokens.

  • A digital asset wallet on a blockchain consists of a public key address and a private key. It is used to store your digital assets which can only be accessed by signing with your private key.