Blockchain ChatGPT Unit-5
Ricardian Contracts
🧾 Ricardian Contracts – Explained
✅ Definition:
A Ricardian Contract is a digital document that:
Is legally binding (like a traditional contract),
Is human-readable (like a paper contract), and
Is machine-readable (like a digital database or code).
It was first used in a digital bond trading system called Ricardo.
🔍 Key Characteristics:
🔐 Digitally Signed
o Ensures authenticity and prevents tampering.
📄 Human-Readable
o Can be easily read and understood by legal professionals and users.
🧠 Machine-Readable
o Structured so that computer programs can parse and process it.
🧑⚖️Legally Recognized
o Designed to be acceptable in a court of law.
🔗 Linked to Assets or Value
o Identifies an issuer, the holders, and the terms of the value or asset being issued.
🧭 Contains Metadata
o Includes keys, server information, and a unique secure identifier.
🧱 Structure of a Ricardian Contract:
A Ricardian Contract typically contains:
Contract Terms & Clauses
Digital Signature of the issuer
Public Key and Server Info
Legal Identifiers
Machine-readable markup (e.g., XML or JSON)
📌 Use Case Example:
Used for the issuance of bonds, tokens, or financial assets over the internet, where:
Legal clarity is needed.
Digital automation is used for issuing and managing assets.
⚖️How It Differs from Smart Contracts:
Ricardian Contract Smart Contract
Legal + digital document Code that executes on a blockchain
Readable by both humans and machines Readable by machines only
Legally enforceable Technically enforceable
Used for documentation & legal proof Used for automation of business logic
🧠 Summary:
A Ricardian Contract is a smart legal document that acts as a bridge between traditional legal
contracts and blockchain-based systems, ensuring both legality and digital compatibility.
Hyperledger Reference Architecture
✅ What is Hyperledger?
Hyperledger is not a blockchain itself, but a collaborative open-source project hosted by
the Linux Foundation.
Its goal is to advance cross-industry blockchain technologies by developing modular and
extensible frameworks for business applications.
📐 Purpose of the Reference Architecture
Provides a standard framework for building permissioned distributed ledger systems.
Ensures modularity, interoperability, scalability, and security for enterprise use.
🔹 High-Level Components of Hyperledger Reference Architecture
👥 Identity Services
o Handles authentication, authorization, and membership services.
o Verifies and manages participant identities within the blockchain network.
o Supports Public Key Infrastructure (PKI) for issuing and managing digital certificates.
⚖️Policy Services
o Define and enforce rules and roles in the network.
o Includes:
Access control policies
Endorsement policies
Consensus policies
🧩 Smart Contracts / Chaincode
o The business logic layer.
o Runs in sandboxed environments (like Docker containers).
o Can be written in general-purpose languages such as Go, Java, and Node.js.
o Called “chaincode” in Hyperledger Fabric.
🔗 Ledger Services
o Manages the immutable ledger of all transactions.
o Contains both:
Blockchain (ordered set of blocks)
World state (current state derived from all transactions).
Consensus Layer
o Determines the order of transactions and ensures that all peers agree on the result.
o Hyperledger supports pluggable consensus algorithms such as:
Solo (for dev/testing)
Kafka (for production)
Raft, and
PBFT (Practical Byzantine Fault Tolerance)
🔄 Workflow Overview (Simplified):
A client application sends a transaction proposal to endorsing peers.
Endorsing peers simulate and sign the transaction (based on smart contract).
Orderer nodes collect, order, and bundle endorsed transactions into blocks.
Committer peers validate the block and append it to their copy of the ledger.
🧱 Benefits of This Architecture
Modular: Components like consensus and identity can be swapped or extended.
Permissioned: Access control is built in (not public like Bitcoin/Ethereum).
Enterprise-focused: Designed with business privacy, performance, and scalability in mind.
Hyperledger Fabric
📌 Overview:
Developed by IBM and contributed to the Hyperledger project under the Linux Foundation.
A modular, permissioned blockchain framework specifically designed for enterprise use
cases.
🧩 Key Features:
Permissioned Network:
1. Only authorized participants can join.
2. Identity is managed via PKI and Membership Services.
Pluggable Components:
1. Consensus, membership, and ordering services can be customized.
Chaincode (Smart Contracts):
1. Can be written in Go, Java, or Node.js.
2. Executes in a Docker container (isolated environment).
Endorsement Policies:
1. Define which peers must validate a transaction before it’s committed.
Ordering Service:
1. Decouples transaction ordering from execution and validation.
2. Uses Kafka, Raft, or BFT protocols for consensus.
Data Privacy:
1. Supports private data collections and channels for confidential communication
between subgroups.
Hyperledger Sawtooth
📌 Overview:
Developed by Intel and contributed to Hyperledger.
Designed to be modular, scalable, and run in both permissioned and permissionless
environments.
🧩 Key Features:
Modular Architecture:
1. Clean separation between the application (business logic) and the core system.
2. Business logic is handled by Transaction Processors.
Consensus Agnostic:
1. Supports multiple consensus algorithms.
2. Default: PoET (Proof of Elapsed Time) — energy efficient and suitable for large
networks.
3. Also supports PBFT, Raft, etc.
Parallel Transaction Execution:
1. Can execute transactions in parallel to increase throughput.
Dynamic Consensus:
1. Consensus can be changed on the fly without stopping the network.
Smart Contracts:
1. Written as transaction families in any language (Python, Go, etc.).
Private and Public Modes:
1. Can operate in both enterprise (private) and public configurations.
📝 Summary
Use Fabric if you need fine-grained access control, data confidentiality, and enterprise-
grade performance.
Use Sawtooth if you want scalability, consensus flexibility, and parallel transaction
execution.
Corda Architecture [application examples]
Corda Architecture – Overview
Corda is a permissioned, enterprise-grade distributed ledger (DLT) platform developed by R3. Unlike
blockchains like Ethereum or Bitcoin, Corda does not use global broadcasting. It is designed for
privacy, scalability, and legal compatibility in regulated industries such as finance, insurance, and
supply chain.
🔍 Key Components of Corda Architecture
1. Corda Node
Each organization has a Corda node.
A node includes:
1. A Vault to store ledger states.
2. CorDapps to define business logic.
3. RPC interface for external applications.
2. 🧠 CorDapp (Corda Distributed App)
Each CorDapp consists of:
States: Immutable data representing current shared facts.
Contracts: Business rules that validate state transitions.
Flows: Logic for multi-party communication and transaction coordination.
3. 📬 Flow Messaging Layer
Handles peer-to-peer communication between nodes.
Only relevant parties see the transaction (unlike blockchain’s broadcast model).
4. 📓 Vault
Stores current states locally on each node.
States are updated only upon valid and signed transactions.
5. 🧾 Notary
Provides uniqueness and consensus service.
Ensures that a transaction is not double-spent.
Can be run by one or multiple entities (can support BFT or Raft).
6. 🌐 Network Map Service
Keeps track of network participants.
Ensures that each party can find and verify others' identities.
🏭 Applications of Corda – With Examples
1. 🏦 Trade Finance
Example: A letter of credit process between an importer, exporter, and banks.
Use: Digitizes the process, automates document exchange, and reduces fraud.
Real Case: HSBC and ING used Corda for trade settlement between two global banks.
2. 📋 Insurance
Example: Auto insurance claim settlement between insurer, garage, and customer.
Use: Smart contracts reduce paperwork and enable faster claim processing.
Real Case: B3i (Blockchain Insurance Industry Initiative) used Corda for reinsurance
contracts.
3. 🚢 Supply Chain
Example: Tracking a shipment from manufacturer to retailer.
Use: Ensures all parties (supplier, logistics, retailer) share the same state view.
Real Case: Chainyard and IBM built a supply chain transparency platform on Corda.
4. 📈 Capital Markets
Example: Settlement of bonds or equity transactions between banks.
Use: Enables instantaneous settlement and reduces counterparty risk.
Real Case: SIX Digital Exchange (SDX) used Corda to issue digital securities.
5. Regulatory Reporting
Example: Banks reporting financial activities to regulators.
Use: Improves transparency and real-time compliance.
Real Case: Bank of Thailand explored Corda for real-time monitoring.
