SAP Blockchain, How Does It Work?


SAP is a big German company dealing in software and was started in the 1970s by a couple of IBM engineers. The company has been looking into different applications for the upcoming technology in supply chain management, finance and payments. They are not sure whether the blockchain’s future is in cards.

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What is the SAP Blockchain?

This is also known as distributed technology in order to show the difference between it and Bitcoin crypto-currency chain. In simple terms, the SAP blockchain details the records of who possesses what and who deals with what. This can be viewed as a digital version of a ledger that a bank runs. You can simply define it as a very reliable and difficult to hack transactions record.

Most the potential transactions include payments, financial markets trade and supply chain, among others in need of faster and pocket-friendly ledger recordings apart from the normal IT systems.

All transaction data and files get shared through a peer-to-peer network. Here, every participant is in a position to view the shared data and can easily use the consensus algorithms to either accept or reject it. Any accepted data goes into the ledger as blocks that are stored in a cryptography-secured chain.

These blockchains can include loans, title deeds, trades, votes and anything valuable. This technology is not restricted to the banking sector only as you can use it in verifying precious metals and stop any trade in blood diamonds.

SAP is among the many technology providers looking to implement this system. Banks are also looking into how they can make use of blockchain through the R3 consortium or even by becoming partners with specialist providers like Ripple.


Types of Blockchain Networks

There are four types of blockchain namely:

Consortium Blockchains

In this type, the consensus process gets controlled by an initially selected group of corporations. The blockchain read rights and submit processes are either open to the public or just the participants. These are the most preferred blockchains for most businesses since they are considered permissioned.


Semi-private Blockchains

These are usually managed by one company that has the power to give access to users meeting specified criteria. Although this type is not fully decentralised, it is also a permissioned blockchain suitable for business-to-business use or any government applications.


Private Blockchains

These are usually under control of one organisation that has all the power over who gets to read, submit transactions and play a part in the consensus process of the blockchain. They are mainly fully centralised, making them ideal for sandbox environments but not actual production.


Public Blockchains

With this kind of a blockchain, anyone can access it, do transactions or even play a part in the consensus. These blockchains are permissionless. All the transactions are public, and the users don’t have to divulge their identities. Good examples of these blockchains include Ethereum and Bitcoin.


Benefits of SAP Blockchain

There are many benefits that come with blockchain like:
  • Fewer intermediaries. Due to its peer-to-peer nature, it eliminates the need for a third party.
  • Transparency. All the information in the blockchain can be viewed by all the participants without being changed. This minimises the risk of fraud or mistrust.
  • Security. Since the blockchain is encrypted and distributed, there is no possibility of it being hacked.

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