Enterprise Systems and Blockchain Technology

Heba Waleed Mohamed

Supervised By:
Dr. Tarek El-Shishtawy
1. Introduction
Global interest in blockchain technology is growing fast. It's hard to
find someone in today's business environment who hasn't heard about
blockchain. However, not everyone is aware of blockchain's capabilities
and how it might benefit enterprises. Although most people probably only
know it from its relationship with bitcoin and other cryptocurrencies,
blockchain technology has a lot more applications in the world of
business. As blockchain technology advances and gains popularity, it
may provide a chance for rapid innovation and disruption.

2. Description of Blockchain technology

2.1 What is Blockchain.

Blockchain is a distributed ledger and immutable database for facilitates
the process of recording transactions and tracking assets in a
business network. An asset can be tangible (a house, car, cash, land) or
intangible (intellectual property, patents, copyrights, branding). Virtually
anything of value can be tracked and traded on a blockchain network,
reducing risk, and cutting costs for all involved. [1],[2]
The name is a combination of two words-the "block" that contains
batched transactions and a "chain" that represents cryptographically
linked blocks. Once the transactions are confirmed, the block is formed,
time-stamped, and added to the previous block. [3]

2.2 Types of Enterprise Blockchains

There are several blockchains, each with characteristics and suitability
for different use cases. The main types of blockchains include:
• Public Blockchain
Public blockchains are open and permissionless, allowing anyone
to join the network, participate in consensus, and validate
transactions. While not specifically designed for enterprise use,
 some organizations may leverage public blockchains for specific
applications. Public blockchains, such as Bitcoin and Ethereum,
provide a high level of decentralization and transparency but may
have limitations regarding scalability and privacy.

• Private Blockchain
A private blockchain, also known as a "permissioned blockchain,"
is restricted to a specific group of participants permitted to
participate and operate the network. These participants are
typically known and trusted entities, such as consortium members
or employees within an organization. Private blockchains offer
more privacy, scalability, and control than public ones. Examples
of private blockchain platforms include Hyperledger Fabric and R3
Corda.

• Consortium Blockchain
Consortium blockchains are a variant of private blockchains where
multiple organizations come together to form a shared blockchain
network. Consortium members jointly manage the network and
participate in consensus mechanisms. Consortium blockchains
are suitable for use cases where multiple entities must collaborate
while maintaining a certain level of trust and control. They are often
found in industries such as supply chain management and finance.

• Hybrid Blockchain
Hybrid blockchains combine properties of public and private
blockchains. They provide a flexible architecture that allows
certain parts of the blockchain to be public while others remain
private. This allows for a balance between transparency and
privacy, accommodating various use cases. Hybrid blockchains
can enable interoperability between public and private networks or
provide selective data sharing between participants.
3. Blockchain architecture model

A generalized blockchain architecture model typically encompasses the

following key components:

• Block
Blocks are containers that store data related to transactions. They
typically include a header and a body. The header contains metadata
such as a timestamp, a reference to the previous block's hash, and a
nonce (for Proof of Work consensus). The body of the block consists
of a list of transactions that have been validated and are ready to be
added to the blockchain.

• Transactions
Transactions represent the fundamental interactions within a
blockchain network. Whether it's transferring digital assets,
recording data, or executing smart contracts, transactions are the
building blocks of the blockchain. Each transaction contains
relevant information, such as the sender's address, recipient's
address, amount, timestamp, and a digital signature for
authentication.
 • Smart Contracts
Smart contracts are self-executing programs running on the
blockchain. They encode the rules and conditions of an agreement
and automatically execute when predefined conditions are met.
Smart contracts enable trustless and decentralized execution of
agreements, eliminating the need for intermediaries. They are
written in programming languages specific to the blockchain
platform.

• Consensus Mechanism
To maintain a consistent and agreed-upon state of the blockchain
across all nodes, a consensus mechanism is employed. This
mechanism ensures that all nodes validate and agree on the
validity of transactions and the order of adding them to the
blockchain. Common consensus mechanisms include Proof of
Stake (PoS) and Proof of Work (PoW). These mechanisms differ in
determining which node has the authority to add a new block to the
chain.

• Nodes
A blockchain node refers to a device-stakeholder pair that
participates in running the protocol software of a decentralized
network. In lieu of a central entity, nodes work together to form the
governing infrastructure of a blockchain. Their primary function is
to maintain consensus of a public ledger, accomplished by
transaction validation and monitoring live activity to ensure a
system’s security.

4. Integrate blockchain technologies to reinforce enterprise

systems.

Blockchains can reinforce ES by accomplishing a single source of

truth, and a common environment for shared information amongst a
larger scope of actors and organizations. We can classify blockchain into
four components: identity, assets, logistics, and transactions. And we
will talk about each one how this affects ES. Primary research in the form
of interviews with five experts and 19 articles was thereby conducted to
gain a greater understanding of the topic and gather insights from the
professionals within both fields (ES & blockchain). [4]
1. Identity
This component refers to how participants in the blockchain
network are identified and authenticated. Many research works
analyzed enterprise systems about the decentralized feature of
blockchain technology, as well as the extent of company digital
identity inside a larger blockchain network. The suitability of the
different blockchain-based applications for use in business
environments was examined by comparing them with business
applications. The research suggests that private platforms would
be more suitable for implementing blockchains as using
blockchain technology requires a company to convince its
cooperating parties to use the same software and technology,
which may provide challenges.
2. Assets
Blockchain technology is considered to have the ability to
reinforce enterprise systems through the ownership, recording,
and tokenization of assets. Digital currencies like Bitcoin or
Ethereum tokens, as well as tangible assets like real estate or even
intellectual property, can all be represented by assets on a
blockchain. Because blockchain technology offers an irreversible
process, it will produce data with higher standards. Similar to the
blockchain application Smart Property, which is supposed to be
able to track assets (like inventory) and the product distribution of
a business.
3. Logistics
Logistics in the context of blockchain typically refers to the
tracking and management of physical goods like they move
through a supply chain within an ERP system. By recording each
step of a product's journey on the blockchain, participants can
have greater transparency and traceability, reducing the risk of
 fraud or errors. An enterprise's ability to track various elements of
the supply-chain, cause have control over the different actors and
their production methods and recognizing false or stolen
merchandise.
4. Transactions
Transactions are the fundamental building blocks of a
blockchain. They represent the transfer of assets from one party
to another and are recorded on the blockchain's distributed
ledger. Each transaction is cryptographically signed to ensure its
authenticity and immutability. The transaction capability of
blockchain is commonly discussed in relation to finance and
accounting processes within an enterprise system so demanded
due to the ability to eliminate third parties. As it could generate
cost savings and time, as the two parties in the deal will
communicate directly. Also, the decentralization effect on
transactions, where actors involved in the ecosystem will verify
transactions, and actions will be stored as irreversible data. This
is argued to contribute to a more secure financial transaction
process, which will encourage partnerships amongst low-trusting
actors.

5. Benefits of Enterprise Blockchain

• Improved Security and Trust: blockchains are tamper-evident and
highly secure, making them ideal for storing sensitive business data.
The decentralized nature of blockchain reduces risks of data
breaches and fraud.

• Increased Transparency and Traceability: All transactions on a

blockchain are recorded chronologically and are immutable,
increasing transparency across business operations.

• Operational Efficiency and Cost Reduction: Blockchain automates

and streamlines processes, reducing the need for manual
intervention and lowering the cost of operations. By eliminating
 intermediaries, businesses can achieve faster transaction times and
reduced costs. [5]

6. Challenges of Enterprise Blockchain

• Scalability Challenges: Increasing transaction volume can strain
blockchain networks, leading to scalability issues.

• Interoperability: Integrating and Consensus blockchain solutions

with existing systems and technologies can be complex.
Enterprises often have legacy systems and databases that are
needed to interact with the blockchain network.

• Energy Consumption: Proof-of-Work consensus mechanisms, as

used in Bitcoin, require significant computational power, leading
to high energy consumption.

• Data modification: Blockchain technology does not allow easy

modification of data once recorded, and it requires rewriting the
codes in all the blocks, which is time-consuming and expensive.
The downside of this feature is that it is hard to correct a mistake or
make any necessary adjustments.[6]

7. Use cases of blockchain in enterprise systems

• Supply Chain Management:

Walmart and IBM's Food Trust: Walmart partnered with IBM to
implement a blockchain-based food traceability solution called Food
Trust. It enables end-to-end traceability of food products, allowing
Walmart to track the journey of products from farm to shelf. This
enhances transparency, reduces food waste, and improves food
safety.[7]
 • Digital Identity Management:
Microsoft's Decentralized Identity (DID) Network: Microsoft
has developed a decentralized identity solution based on
blockchain technology. It allows users to create and control their
digital identities, reducing reliance on centralized identity
providers. Users can securely access services and prove their
identity without sharing unnecessary personal data.[8]
• Cross-Border Payments:
Ripple's RippleNet: RippleNet is a blockchain-based
network developed by Ripple for cross-border payments and
remittances. It enables banks and financial institutions to settle
international transactions quickly, securely, and at a lower cost
compared to traditional correspondent banking systems. Ripple's
XRP cryptocurrency is often used as a bridge asset for liquidity.[9]

8. Conclusion
Enterprise blockchain has the potential to transform how businesses
work together. Its key features, including transparency, traceability, security,
and efficient processes, provide real advantages across different sectors. By
utilizing enterprise blockchain solutions, companies can boost productivity,
cut costs, build trust, and access new business prospects. However, it is
crucial to recognize that implementing enterprise blockchain is complex.
Issues such as scalability, privacy, compatibility, governance, compliance,
integration, and adoption need careful attention. Overcoming these
obstacles demands careful planning, cooperation, and a clear grasp of the
specific scenario. Despite these difficulties, enterprise blockchain has the
capacity to bring about fundamental change by enabling secure and
effective collaboration among organizations, reducing fraud and conflicts,
enhancing supply chain management, and ensuring data accuracy.
9. Reference
[1]. Satoshi Nakamoto." Bitcoin: A Peer-to-Peer Electronic Cash System"
(2008)
[2]. https://www.ibm.com/topics/blockchain
[3]. Maslova, Natalia. (2018) “Blockchain: disruption and opportunity.”
Strategic Finance.
[4]. Moutaz Haddara, Julie Norveel, Marius Langseth. "Enterprise
Systems and Blockchain Technology: The Dormant Potentials" (2021).
[5].https://www.kaleido.io/blockchain-blog/enterprise-
blockchain#:~:text=Enterprise%20blockchain%20is%20a%20specializ
ed,are%20often%20private%20and%20permissioned
[6]. https://www.xenonstack.com/blog/enterprise-blockchain
[7].https://www.ibm.com/products/supply-chain-intelligence-
suite/food-trust
[8]. Microsoft Security. " Decentralized identity and verifiable credentials"
[9]. https://ripple.com