**3.1 What is blockchain technology?**

## *3.1.1 Chained architecture*

The basic concepts of blockchain were introduced by Satoshi Nakamoto in Bitcoin [28], a digital cryptocurrency that can work without the need of a trusted intermediary. It offers a distributed ledger that tracks and sustains a tamper-proof record of transactions in a decentralized network. In essence, it is a unique database system that is created, replicated, synchronized, and maintained by all participants in the decentralized network. Blockchain operates in a decentralized peer-to-peer network [29] to validate and store all transactions in a consensus that is agreed upon by all nodes in the network, without any central authority to validate the transaction (as with an intermediary). All completed and validated transactions are logged in the distributed ledger in a verifiable, secure, transparent, and permanent manner along with a timestamp and other details [30]. In this way, the exchange of tangible and intangible data and assets among participants can be recorded digitally. Each stakeholder maintains a copy of the synchronized ledger, which prevents a single point of system failure or data loss [22]. When changes are made, such as adding a new block, all copies in the network are simultaneously updated, and records are permanently registered in all ledgers [31]. These changes are stored into blocks that create a chain [32], where a block is linked to the preceding one by storing its hash (a unique data that is mapped from the given block) [33]. **Figure 2** shows the fundamental chained architecture of a blockchain network.

In **Figure 2**, notice that except for the first block (called the genesis block), each block has its hash as a unique ID that includes the hash of the previous block. In this way, a chronological chain is formed. Additionally, the hash mechanism provides enhanced data security. Usually, a block stores a set of time-stamped transactions that are validated by stakeholders in the network. Once it gains consensus, the block is accepted and stored by all parties in the blockchain and can no longer be modified. Therefore, trust in and transparency of transactions between organizations are significantly improved.

### *3.1.2 Permissionless vs. permissioned blockchain*

Since the introduction and success of Bitcoin, many blockchain-based platforms can be categorized as either a permissionless or permissioned blockchain. Virtually,

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*Deploying Blockchain Technology in the Supply Chain DOI: http://dx.doi.org/10.5772/intechopen.86530*

later) are introduced to validate transactions.

*The architecture of a data chain in a blockchain network.*

throughput, and reduce the latency of transactions.

teristics of which are summarized as follows:

*3.1.3 Key characteristics*

**Figure 2.**

efficient way.

information.

anyone can join and participate anonymously in a permissionless blockchain network. Accordingly, it is also called a public blockchain, and these two notions will be used interchangeably in the remaining sections. Within this type of network, trust among users is limited or nonexistent. To overcome this lack, miners (detailed

In contrast, permissioned blockchain is a network for a group of identified users operating under a governance model, called a consensus, to improve transactional trust. To join this type of network, new users need permission from the majority of the group or a delegated user; hence, it is also called a private blockchain, and we use both notions interchangeably in this paper. These networks facilitate trust among users and do not require costly miners. More efficient consensus protocols (such as the Byzantine fault tolerant protocol) validate data, improve network

Blockchain technology has many unique features that allow for the creation of a verifiable, secure, transparent, and immutable distributed ledger, the core charac-

1.**Versatile value exchange**: Blockchain provides a secure and efficient platform for recording the transactions of intellectual property rights, the provenance of services and goods, asset ownership, cryptocurrency exchange, and more.

2.**Distributed governance**: A blockchain network is not controlled by any designated authority, organization, or person, and the need for trusted intermediaries to verify transactions is eliminated. It is a distributed database that provides secure and validated data for all participants in the network simultaneously. Thus, there is full transparency along the entire stream of transactions, and assets and data can be transferred between several organizations in a quick and

3.**Decentralized architecture**: The ledger is decentralized and stored in all nodes (i.e., individual stakeholder databases) of the network, and failure of it at a central infrastructural point is not possible. Therefore, it fosters a robust network that improves the quality, reliability, and availability of services and

*Deploying Blockchain Technology in the Supply Chain DOI: http://dx.doi.org/10.5772/intechopen.86530*

**Figure 2.**

*Computer Security Threats*

complies with new standards.

**3. Blockchain technology**

efficient economic and social systems in the future.

fundamental chained architecture of a blockchain network.

**3.1 What is blockchain technology?**

*3.1.1 Chained architecture*

supply chain. However, under current supply chain processes, it is difficult to obtain this information from a variety of stakeholders and to develop a database that

Blockchain is an innovational technology that enhances customer service, drives

end-to-end value, and increases the efficiency of operations [25]. Additionally, it allows distrusting or unfamiliar stakeholders to create shared and secure data records [26]. In sum, when an exchange of valuable data and goods is necessary, blockchain technology expedites transactions, streamlines the process, enhances transparency, reduces waste, and, ultimately, reduces cost [27]. Consequently, new types of internet and associated business models have been built off of this robust technology [22]. Blockchain promises to be the primary driver of secure and

The basic concepts of blockchain were introduced by Satoshi Nakamoto in Bitcoin [28], a digital cryptocurrency that can work without the need of a trusted intermediary. It offers a distributed ledger that tracks and sustains a tamper-proof record of transactions in a decentralized network. In essence, it is a unique database system that is created, replicated, synchronized, and maintained by all participants in the decentralized network. Blockchain operates in a decentralized peer-to-peer network [29] to validate and store all transactions in a consensus that is agreed upon by all nodes in the network, without any central authority to validate the transaction (as with an intermediary). All completed and validated transactions are logged in the distributed ledger in a verifiable, secure, transparent, and permanent manner along with a timestamp and other details [30]. In this way, the exchange of tangible and intangible data and assets among participants can be recorded digitally. Each stakeholder maintains a copy of the synchronized ledger, which prevents a single point of system failure or data loss [22]. When changes are made, such as adding a new block, all copies in the network are simultaneously updated, and records are permanently registered in all ledgers [31]. These changes are stored into blocks that create a chain [32], where a block is linked to the preceding one by storing its hash (a unique data that is mapped from the given block) [33]. **Figure 2** shows the

In **Figure 2**, notice that except for the first block (called the genesis block), each block has its hash as a unique ID that includes the hash of the previous block. In this way, a chronological chain is formed. Additionally, the hash mechanism provides enhanced data security. Usually, a block stores a set of time-stamped transactions that are validated by stakeholders in the network. Once it gains consensus, the block is accepted and stored by all parties in the blockchain and can no longer be modified. Therefore, trust in and transparency of transactions between organizations are

Since the introduction and success of Bitcoin, many blockchain-based platforms can be categorized as either a permissionless or permissioned blockchain. Virtually,

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significantly improved.

*3.1.2 Permissionless vs. permissioned blockchain*

*The architecture of a data chain in a blockchain network.*

anyone can join and participate anonymously in a permissionless blockchain network. Accordingly, it is also called a public blockchain, and these two notions will be used interchangeably in the remaining sections. Within this type of network, trust among users is limited or nonexistent. To overcome this lack, miners (detailed later) are introduced to validate transactions.

In contrast, permissioned blockchain is a network for a group of identified users operating under a governance model, called a consensus, to improve transactional trust. To join this type of network, new users need permission from the majority of the group or a delegated user; hence, it is also called a private blockchain, and we use both notions interchangeably in this paper. These networks facilitate trust among users and do not require costly miners. More efficient consensus protocols (such as the Byzantine fault tolerant protocol) validate data, improve network throughput, and reduce the latency of transactions.
