IBM Blockchain Platform

Tutorial A1: Introduction

Estimated time: 10 minutes

In this tutorial you will:

Learn what blockchain is and why it is important

At the end of this tutorial you will be invited to gain the IBM Blockchain Essentials badge.

As you read these tutorials, look out for things that you need to do. They are always written on their own line,
are numbered sequentially, and look like the following:

A1.1: Expand the 'What is blockchain' section below to get started.

If you run into problems, first check to make sure that you have completed all of these numbered steps in the
correct order.

What is blockchain?

The generally accepted definition of a blockchain is a distributed ledger with smart contracts.

In business, whenever any object of value or importance changes, it is captured in a transaction. Transactions
therefore describe how a company's essential assets move through a lifecycle; for example, their movement
between their suppliers and consumers in a supply chain.

Traditionally, transactions are recorded in a business ledger. Unfortunately, a transaction which involves
multiple organizations will be recorded differently by each business. Business processes which would benefit
from a consistent, up-to-date and high integrity ledger are adversely affected organizations with different
ledgers and technology recording essentially the same transactions. For example, if two organizations
disagree on the state of a transaction then a dispute occurs, which can often be costly and time-consuming to
resolve. A shared ledger can also introduce new possibilities; real-time tracking and tracing of products
becomes possible when all the participants in a supply chain have access to a trusted source of transactions.

Blockchain transactions and ledgers are different. Blockchain introduces a new kind of transaction – a
multiparty transaction - that is signed by everyone involved in the transaction. Blockchain ledgers are different
too; the same ledger is replicated in every organization in the network, and kept synchronized using a
process called consensus. Moreover, these ledgers are immutable and final; once a multi-party transaction is
written to the ledger, it cannot be reversed.
These tutorials will help you understand these ideas in more detail, and how to use them in practice.

Smart contracts

In business, transactions are generated according to contracts which define the exact conditions under which
a transaction is generated. If I buy a car from you and it breaks down a month later, the terms of our contract
might say that you are liable for the repair.

Blockchain introduces the idea of a smart contract. It describes in code what a transaction generated by the
smart contract looks like. For example, a car contract might use logic to check that you're the current owner of
the car, and that a purchaser has the required funds. If so, then a transaction will be generated that
represents the transfer of the money to the seller and the car ownership to the buyer.

Blockchains such as Hyperledger Fabric make it easy to write smart contracts, by maintaining the current
value of every business object in a ledger. It means that smart contracts don't need to compute the
cumulative effect of the history of transactions that involve your car -- they simply look up the current state of
that car, and modify it as required. Hyperledger Fabric makes it easy to capture these object changes as
transactions and recorded on the distributed blockchain ledger.

In these tutorials we'll learn a lot more about smart contracts and how to write them.

Blockchain and Bitcoin

Blockchain is commonly associated with Bitcoin, the cryptocurrency and peer-to-peer payments system.
Bitcoin uses a blockchain as the ledger to record its transactions and a resource-intensive method of
consensus called proof of work. Bitcoin favors anonymity; even though the ledger is public, it's almost
impossible to determine who is behind a Bitcoin transaction.

Businesses often have a different operating environment. For example, they are required to carry out Know
Your Customer (KYC) and Anti-Money Laundering (AML) checks, which require businesses to know who they
are dealing with. This means that business blockchains require identifiable participants and favor features
such as privacy and confidentiality. Knowing who's behind a transaction helps to remove incentives for fraud
and as such, resource-intensive methods of consensus are not needed.

And of course, business ledgers also store more than cryptocurrency transactions; any object of value to a
business could be subject to multi-party transactions, and will therefore also benefit from a business
blockchain.

A1.2: Expand the 'Introduction to Hyperledger Fabric' section below to continue.

Introduction to Hyperledger Fabric

In early 2016, the Linux Foundation formally announced the creation of the Hyperledger project. Its aim
continues to be to develop blockchain technologies that specifically cater for the requirements of businesses.
Hyperledger is more than a single technology; it is a collection of cross-industry frameworks and tools that
come under a single open license and governance structure.

Find out more about the Hyperledger Project at https://www.hyperledger.org/

Hyperledger Fabric is the most widely implemented of these technologies. It provides a shared, replicated
ledger implementation with support for smart contracts. It is designed as a pluggable framework so that it can
evolve over time, for example as new privacy and consensus technologies emerge. It continues to be
developed by hundreds of developers in the community representing dozens of different organizations.

Read the Hyperledger Fabric technical documentation at https://hyperledger-fabric.readthedocs.io/

Hyperledger Fabric underpins many of the world's most successful blockchain implementations, including IBM
Food Trust, TradeLens and we.trade.

Hyperledger Fabric technology

A Hyperledger Fabric network consists of three key types of components:

Peer node: holds a copy of the ledger and is responsible for running smart contracts.
Orderer node: part of a distributed ordering service that agrees the order that transactions are added
to the ledger.
Certificate Authority: responsible for issuing the certificates that identify users and organizations on
the network.

Each organization that joins a Hyperledger Fabric network will typically own peers and certificate authorities.
There needs to be one ordering service in each network, although this can be distributed between
organizations.

As we progress through these tutorials, we will work with each of these components.

A1.3: Expand the 'Introduction to IBM Blockchain Platform' section below to continue.

Introduction to IBM Blockchain Platform

IBM Blockchain Platform is a set of tools and services that allow users to build and operate Hyperledger
Fabric networks. Broadly, it consists of two main elements:

IBM Blockchain Platform Extension for Visual Studio Code. This is the tool you are using now. It
allows developers to create Hyperledger Fabric smart contracts and the applications that interact with
them. Developers can test their applications using an embedded instance of Hyperledger Fabric, or
connect to a remote Hyperledger Fabric network.
 IBM Blockchain Platform Console. This allows users to create and manage their Hyperledger Fabric
components. The components can be run on IBM Cloud or on any OpenShift-based environment,
including on-premises.

Learn more about the IBM Blockchain Platform here: https://www.ibm.com/blockchain/platform

In later tutorials you will learn more about the console. For now, you will start to familiarize yourself with the
IBM Blockchain Platform developer tools.

A1.4: Expand the next section to continue.

IBM Blockchain Platform Extension for Visual Studio Code

In these tutorials you will be performing actions in VS Code, so begin by ensuring that you can comfortably
see both this tutorial and VS Code. If you can, arrange the tutorial on a second window ('File' -> 'New
Window') and move it to a second monitor. If this is not possible, you can click on the 'Split Editor' icon the top
right of the VS Code editor to split within a single window.

Let's start with the basic elements of the IBM Blockchain Platform VS Code extension:

1. Editor pane: Used for editing smart contracts and application code.
2. The IBM Blockchain Platform icon in the VS Code activity bar: Shows or hides the IBM Blockchain
Platform side bar.
3. IBM Blockchain Platform side bar: A set of views that show the Hyperledger Fabric resources you are
working with: smart contracts, environments, gateways and wallets.
4. IBM Blockchain Platform home page: At both the top and bottom of the screen are icons that allow you
to return to the IBM Blockchain Platform welcome screen if you get lost.
5. Output: The results of running any transaction are displayed here. Also note the neighboring tabs that
allow you, among other things, to run Terminal commands in an embedded shell. Note that the dropdown on
the right of the Output pane should be set to Blockchain.
6. Notifications: Timely information is displayed here, such as the results of deploying a new smart contract.
If you click on the icon in the corner you can usually revisit any notifications you've missed.
7. Command palette: When you tell VS Code to do something, such as package a smart contract, VS Code
will invite you to enter any parameters here. You can also bring up the command palette before you invoke
any command by selecting "View -> Command Palette"; if you type ">IBM Blockchain Platform" here you can
quickly show all the commands implemented by the extension.

If you're not familiar with VS Code, it's worthwhile spending a few minutes clicking around to get yourself
comfortable with it. When you are ready, continue on.

A1.5: Expand the next section to continue.

IBM Blockchain Essentials

In this tutorial we've covered the basics of blockchain; this is the term used to describe distributed ledger
technology that uses smart contracts to share multi-party transactions with the member organizations of a
business network.

We introduced the Linux Foundation Hyperledger Project, which aims to develop blockchain technologies for
business, and Hyperledger Fabric, which is a shared ledger implementation that underpins many blockchain
projects.

Finally we looked at IBM Blockchain Platform, which is a set of tools and services for building and operating
Hyperledger Fabric-based blockchains. The IBM Blockchain Platform VS Code extension is one such tool,
and is what we will be using in these tutorials.

You've now completed the first tutorial and are now ready to pass the IBM Blockchain Essentials course.

Click on the link above to view the course. You'll consolidate what you've learned, take a short quiz to
demonstrate your understanding and claim your badge on Acclaim.

In the next tutorial you will create your first smart contract.

→ Next: A2: Creating a smart contract