A blockchain is an append-only distributed digital ledger that consists of a continuously growing chain of linked blocks, where each block contains a cryptographic hash of the previous block, a timestamp and batches of verified transactions. This iterative process ensures the integrity of the previous block, all the way back to the original genesis block. The blocks cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network.
A blockchain is secure by design and exemplify a distributed computing with high dependability of a fault-tolerant computer system. Decentralized consensus, achieved with a blockchain concept, makes it profoundly suitable for the recording of GTM events and processing of transactions related to GTM activities.
There are three accepted types of blockchain networks:
- Public blockchain
A public blockchain has no access restrictions. Anyone can participate in the execution of a consensus protocol, sending and validating their own transactions by running a public node on their local device. All transactions are valid and transparent but anonymous. Therefore, anyone on the private blockchain has the potential to disrupt current business models through disintermediation.For applications with limited and highly specialized participants, such as Global Trade Management, a concept of a public blockchain violates basic principles of security and restricted visibility.
- Private blockchain
A private blockchain is permissioned. Nobody can join it unless permission is granted by a network administrator. Participant and validator access is restricted.A private blockchain is beneficial to a company seeking to incorporate blockchain into their transaction-processing and record-keeping procedures without sacrificing autonomy and running the risk of exposing sensitive data to a public network.There are three key advantages to the implicit nature of a private blockchain.
- Reduction in transaction costs and data redundancies.
- Simplified data-handling and more automated compliance mechanisms.
- Faster transaction execution time overall.
- Consortium or Federated blockchain
A federated blockchain can be considered as partially decentralized. It is permissioned but instead of a single organization controlling it, a number of companies might each operate a node on such a network. The administrators of a consortium chain restrict users’ rights as they see fit and only allow a limited set of trusted nodes to execute a consensus protocol.
Sidechain and off-chain transactions
A sidechain is a separate blockchain attached to the parent through the use of a two-way peg, such as 2WP, Chain-Relays, etc. The peg allows tokens or digital assets from one blockchain to be securely used in the sidechain and then moved back to the original blockchain if needed. The original blockchain is then referred to as the main chain and all additional blockchains are referred to as sidechains. In the GTM blockchain concept, there is also a childchain. A childchain is a sidechain that is separated from the main GTM blockchain by another sidechain.
A sidechain is responsible for its own security. Since each sidechain is independent, if it is hacked or compromised, the damage will be contained within that chain and won’t affect the main chain. Conversely, should the main chain become compromised, the sidechain can still operate.
An off-chain transaction is the movement of value outside of the blockchain. An on-chain transaction – usually referred to as simply ‘a transaction’ – modifies the blockchain and depends on the blockchain to determine its validity, while an off-chain transaction relies on other methods to record and validate the transaction; i.e. calculation of values that require access to a legacy database.
Smart Contracts Concept
A smart contract is a computer coded protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Some blockchain platforms do not have a strict concept of the smart contract, but as they do support the ability to execute customs code and thus can perform similar functions. Once the contract is negotiated on the blockchain and signed by the private keys of the parties, the contract is visible to all participants and it cannot be edited or deleted. The terms of the smart contract are directly written into lines of code and that is automatically executed by the blockchain upon the occurrence of the predefined event. Smart contracts allow the performance of credible transactions without third parties.