Confidentiality in blockchain business networks is achieved with segregated communication between network participants, which is achieved by using HLF channels. Transactions in a blockchain business network are executed on a channel, where transacting parties are authenticated and authorized to effect transactions on that channel. By default, all participants in a network are part of a channel. However, for private transactions, organizations need to create separate channels and authorize members to that channel. Ledgers are separated from channel to channel and, hence, ledger data cannot move between channels. The separation of ledger data and peers by channels allows private and confidential transactions between organizations that are still part of the same blockchain network. Data separation between channels is achieved by configuring membership services, chaincode, and the gossip protocol. Here, data includes transaction information, the state of the ledger, and channel membership. This data is restricted to just those verified peers who are members of the channel.

A client SDK passes parameters, such as the MSP ID (unique within a channel), policies, and members (organizations) to the network configuration chaincode. This invocation creates configuration transactions on the network configuration chaincode. These versioned configuration transactions (configtx) result in the creation of a genesis block on the channel's ledger. This genesis block records information such as the channel configuration. As soon as a member is added to a channel, it gets access to relevant information on the genesis block.

Participants can deploy chaincode once the channel setup is complete. Then, participants can propose transactions, endorse, order, and validate transactions. Access rights are granted to participants by their MSP, and these rights define the limits of a participant on a channel. Participants outside the channel do not have access to any transactions or messages on the channel. Hence, segregating transactions based on their channels enhances the privacy offered by the blockchain network.