Blockchain is a category of software that manages assets and transactions for a network of participants. It distributes a ledger of processed transactions so participants can stay in sync on the state of the assets. Transactions are sequentially grouped and communicated by block. Each block is chained to the previous block, and immutably recorded across the network of participant nodes, using cryptography and a consensus mechanism.

Blockchain platforms add value by creating trust among participants through a digital consensus on transactions and asset states. But that is probably all what blockchain platforms have in common. They are many kinds focusing on different use cases.

Consensus is a distributed algorithm run by the nodes of a blockchain network to generate, exchange, and verify the distributed ledger. It secures the network, allows participants to verify and account for the transactions, and guarantees that they all have identical views on the state of the assets.

That said, consensus algorithms in use can be very different and tailored for the kind of blockchain they power. The main algorithms are Proof of Work (known for consuming a lot of energy), Proof of Stake, and Proof of Authority. (See Wikipedia for definitions). Atlas uses Proof of Notarization, which adds smart contracts and electronic signatures to Proof of Authority. For more detail, please see our whitepaper.

The two main categories of blockchain are cryptocurrency, or public, blockchains and enterprise, or permissioned, blockchains.

Cryptocurrency/Public Blockchains

• Examples: Bitcoin and Ethereum
• Use case: Decentralized management of digital cash
• Principle: Digital currency platform that operates independently of a central bank to regulate the creation of currency units and the transfer of funds
• Network: One global instance, anonymous, open, and decentralized
• Consensus: Proof of Work or Proof of Stake

Some participants in the network, called miners, compete to validate transactions and generate blocks for a reward in coins. The first miner who gives a valid Proof of Work for a valid block wins a reward. Proof of Work is a solution to a cryptographic puzzle, solvable only by brute force. The problem is adjusted permanently to take a significant amount of time and energy, even with specialized hardware. Blockchain immutability is guaranteed if no one has 51% of the computing power within the network, which is necessary to alter previous blocks and recompute related Proofs of Work before a new block is added. Participants only consider the longest chain of blocks.

Enterprise/Permissioned Blockchains

• Examples: Hyperledger Fabric, R3 Corda, and Sky Republic Atlas
• Respective use cases: Distributed databases, distributed workflows, and enterprise-grade smart contracts
• Principle: Business platform to manage assets and/or automate transaction workflows
• Network: One instance per community, which is permissioned, confidential, and governed

Consensus: Proof of Authority or Proof of Notarization
Some participants in the network, called notaries, validate transactions and produce the ledger using digital signatures. A standardized digital electronic signature is legally enforceable, where the identity of the signer is proven by a digital certificate. By signing the ledger, notaries prove their identity, ensure blockchain immutability, and engage their liability.

Cryptocurrency platforms using Proof of Work consensus are slow.

Enterprise blockchains using permissioned networks are fast and target throughput and latency delivered by current transactional systems.

Platforms using Proof of Work consensus are energy intensive. Enterprise blockchains are not, because the digital or electronic signatures used to certify the validity of blocks are nearly instantaneous.

The answer is yes from an architecture perspective, as platforms usually implement a decentralized architecture that improves resilience and a decentralized ledger verification process that automates the detection of any wrongdoing by miners or notaries.

From a cryptography perspective, digital signatures are safe today for business use cases. Claims of quantum proof properties made by cryptocurrencies only apply to the immutability of blocks, as coins are transacted through digital signatures.

No. For enterprises, the main value of blockchain is to create consensus on processes and data within ecosystems and decentralize benefits compared to a control tower or SaaS network.

The term DLT was originally created to include cryptocurrency and enterprise platforms in the same software category. Some enterprise platforms, like R3 Corda, use point-to-point ledgers and, technically, are not real blockchains. This Forrester blog suggests that most enterprises continue to use the term blockchain for the overall industry. DLT tends to be used to qualify enterprise platforms that are not blockchains.

Atlas is both a DLT and a permissioned blockchain.

No. A shared database is never used as a transaction mechanism because participants want control over their transaction records and proper documentation in case of litigation.

With a shared database, users cannot verify changes made by others or control availability. Classically, enterprises transact via peer-to-peer messages and keep copies of them. Using electronic signatures, these messages become legally enforceable and non-repudiable, which creates trust between trading partners.

Blockchains and DLTs, including Atlas, process transactions on a distributed architecture with no single point of failure and distribute records through a ledger than can be stored separately by participants.

Point-to-point messaging through EDI or API creates fragmentation and scatters processes and data among participants. DLTs usually focus on defragmenting processes OR data. Atlas defragments data AND processes, while also automating their reconciliation. Supply chain ecosystems can then easily track and trace assets, automate processes end to end, and enable comprehensive digital transformation.

A notary is an organization in charge of verifying transactions and producing ledger entries for an enterprise blockchain network. A notary may or may not oversee the network’s governance (membership, operation support, maintenance, upgrades, etc.).

Decentralized networks face technical governance challenges because nobody is in charge. Enterprise blockchains can be operated by a single entity or a consortium of entities. While a consortium approach is powerful for designing new solutions, the operation of a network is simpler and safer when only one entity is responsible. The infrastructure should be decentralized anyway to ensure business continuity.

With Atlas, a single notary can safely operate a network for its participants, thanks to the Proof of Notarization consensus algorithm (see the Atlas whitepaper).

A smart contract is a packaged piece of code that implements the terms of an agreement between a group of parties. Most of the time, this agreement must also be formalized in a traditional contract to be legally binding and enforceable. The code runs on a ledger that is distributed across a blockchain network. It allows each party to automate transactions, synchronize on the state of its terms and related assets, verify proper execution, and protect itself from tampering by miners or notaries.

Atlas uses an enterprise-grade smart contract—purpose-built for supply chains—called Sky Contracts.

A smart app is a dApp (blockchain terminology) or composite application (middleware terminology) that runs natively on a blockchain node. It automates the business logic of a participant, which can transact through smart contracts, store private assets, and integrate and reconcile back-end applications.

Atlas uses enterprise-grade smart apps called Sky Apps.

An event is any business or technical change that has significance for a blockchain network and should be identified and/or recorded. The issuance of a purchase order, a temperature threshold being met, a change in an existing document, a flight being delayed, a change of custody for a shipment, or an asset transaction are all examples of events.

Nearly all established EDI and IT standardization bodies have started initiatives on blockchain. Some industry specific consortia are very active, like BiTA (Blockchain in Transport Alliance) and the SITA Blockchain Alliance. Looking back at the time it took for EDI standards to be established, most enterprises are leveraging blockchain benefits right now, while following the evolution of potential standards for future compliance.