Getting Started with Enterprise Blockchain

Chapter 1. Introduction to Blockchain

Blockchain is a shared, distributed ledger that records transactions across business networks with the aim of helping businesses remove inefficiencies from trade. It does this through the use of cryptographic proofs, which help engender trust by ensuring facts are reported consistently to all those with a need to see them.

That’s the elevator speech for blockchain. In the rest of this chapter, we’ll look in more detail into what blockchain is and why it is so important. To begin with, let’s explore the need for business networks.

Business Networks

Wealth is generated in market economies by the flow of goods and services over business networks. Business networks are necessary because of the huge advantages gained from specialization. The economist Adam Smith first wrote about these efficiency gains by referring to the example of pin production, in work that is currently immortalized on the back of an English £20 note. The economist Leonard Read, in his short paper “I, Pencil,” subsequently used the example of a pencil, and the fact that no one on earth knows how to create one completely from scratch, to demonstrate the importance of business networks to manufacturing.

Business networks are not only required to make manufacturing supply chains more efficient; they are also used in any type of business-to-business interaction. Business networks can span manufacturers, logistics companies, banks, insurers, consumers—any person or organization ...