Page 17 - U4SSC Blockchain for smart sustainable cities

(5) The computational logic explains that the digital nature of the ledger of the blockchain transaction
can be programmed automatically through the set-up of algorithms and rules and trigger the
transaction between nodes.

The process carried out by the blockchain to validate a transaction and to add it to the network is
presented in Figure 2. The process starts with a node that initiates a transaction and signs it with its
private key. Then a node representing the transaction request sent by one of the users will lead to the
creation of a block on the platform. At this stage, this specific block is broadcasted to the peer nodes
in the network based on any pre-defined criteria. Upon receipt of the information, the peer nodes
validate the transaction. After the validation, the block is added to the ledger and linked to the chain
(the previous block and when a new block arrives, it is cryptographically linked to this specific block).
After validation, it is included in the block, and the transaction is verified and confirmed.

Figure 2: The process used to validate transactions in a blockchain 10

In the case of a consensus blockchain (see Section 2.3), a consensus algorithm is running among the
nodes in order to reach an agreement on whether it is valid or not. Various consensus algorithms exist,
and each algorithm works differently from any other.

In the case of the smart contracts, which are specific types of legal self-executed contracts between
two participants of the blockchain network, the process is defined by the creation of the contract
between the two parties. Both parties might choose to remain anonymous. The rules for triggering
events (i.e. deadlines) are defined at first. The smart contract is then stored on the ledger. The contract
is then self-executed, and both parties can follow and track the progress of the execution. This type of
transaction is used more in the supply chain management field.

U4SSC: Blockchain for smart sustainable cities 7