The Study of Blockchain Technology

The Study of Blockchain Technology

Introduction

Blockchain technology is a computer protocol revolutionary used for digital recording and information storage in several computers or different nodes. One central element of blockchain is the ledger, which has a similarity to a relational database (Walport 2016). A blockchain is a list of digitally encrypted data or transaction, named a block. Bogart and Rice (2015) claimed that every block is chained to the next block in straight, chronological order, using a signature cryptographic. The blocks consist of a duplicate of the previous transactions since the last added block (Bogart & Rice 2015). The block shared, or ledger is linked to all members who are using their computers in a network to confirm and validate the transactions, thus removing the urge for a third party (Christidis &Devetsikiotis 2016; Porru et al. 2017).

Blockchain is used to distribute and secure data in a unique and new way. The exclusion of the primary instance in the network distribution network hint a radical shift to direct transaction among the non-intermediaries or intermediary services (Tapscott & Tapscott 2016). Fanning and Centers (2016) suggested that blockchain can only be updated through an agreement among parties in the system, and a transaction can never be changed or deleted. Its dispersed database cannot be exploited, hacked, or disrupted in the same way as a centralized, traditional database with a user-controlled access system. The data is unchangeable, and once it has been entered into a blockchain, no one not even the administrator can change or delete it from the ledger. Since every data block is time printed and linked in a chronological sequence through a cryptographic signature (Walport 2016). Blockchain technology can be used in every type of transaction, which involves payment processing, money transfers, digital voting, Real estate, or even digital identification cards.

Data migration in a project is not required in blockchain; all applicable transaction data are kept in the ledger and status obtained from it. Glaser and Bezzenberger (2015) suggested that blockchain is a disperse system without a central point of authority, and it’s not managed with a single control center as there can be a system administration, there’s no chance of failure. Thus, there will be no need for an IT professional to check the security on the blockchain database. It’s crucial to know blockchain is a very new technology. Aru (2017) said that there is a minimal number of cases that the technology has been applied.

A well-proven example is the use of Bitcoins, the most effective implementation of blockchain technology. It was a confirmation of a solution in building faith in fewer trust communities’ that has no central authority. The objective of this study is to present a review of challenges and security issues that are related to the blockchain technology.

The Working Mechanism of Blockchain

A blockchain contains sets of data, that consist of blocks and data chain packages. A block consists of numerous transactions, the blockchain surfaces from the particular added block. So, with a blockchain, we get a presentation of the entire ledger transaction history. Every block in blockchains usually consists of a previous harsh value or block origin, timestamp, and a nonce (Nofer, Gomber, Hinz & Schiereck 2017). A nonce is a rational number that is used to confirm a hash. The hash value is the center of the blockchain’s capacity to spot and minimize cheats because of its uniqueness. The integrity of the whole blockchain is kept through this process. Therefore, the block in the chain is altered, thus resulting in the change of the specific hash values. The systems’ integrity is prevented when the nodes in the blockchain system work closely. For instance, if a block needs to be merged to a chain, a substantial part of nodes in the system need to concur through the consensus mechanism to check if the transactions are valid in the blocks and the blocks themselves (Nofer, Gomber, Hinz & Schiereck 2017).

The blockchain functionality signifies that a transaction is not mechanically put on the ledger. In the procedure of consensus, the storage of operations in the block is for a limited period of time before it’s shifted to the accounting. Like in Bitcoin blockchain, the total time is 10 minutes after these transfers into the ledger, the data in blockchains cannot be altered (Nofer, Gomber, Hinz & Schiereck 2017).  Mougayar (2016) claimed that the analysis of the blockchain helps in understanding how the blockchain works in three view point’s: business, technically, and legally point of view. From a business angle, the blockchains are the network exchange of moving items like assets and transactions in-between peers without the referee or middlemen. Technical, is the database back end of a blockchain, which holds the ledgers, which are checked openly (Mougayar 2016). Legally, the blockchain brought in new ways to verify transactions, without a trusted entity of the past.

Blockchain isn’t an internet new version, and neither is it an internet network protocol new version. Blockchain is like a surface or overlay on the internet, and it’s able to take various implementations forms. The applications in the blockchain don’t require the World Wide Web, but it needs the internet. The internet comprises of different private and public versions, or private and public blockchains. The blockchain has four types of application, native application, hybrid web application, individual native application, and hybrid private application blockchains. These various methods of building blockchain applications develop, so it’s either you can mix them in an existing web application or build them natively on a blockchain (Mougayar 2016). Blockchain may be defined as meta technology because it consists of a lot of different technologies, which also affects other technologies. The blockchain consists of different sections, software, environment, an application software, a database, users, tools, numerous connected computers, and other pieces. The blockchain is viewed as a catalytic technology due to its capability to replace original practices and change different technology.

Application of Blockchain can Support

The blockchain is the technology predicates digital currencies and helps in ensuring all transactions are appropriately conducted and recorded. But what is stored on the blockchain is not necessary just a monetary unit, it can be put in various exciting uses. Here is the application that blockchain supports.

Bitcoin

The cryptocurrency was the first blockchain application. A lot of people know that this was the base of blockchain for digitalized currency such as Litecoin, Ethereum, and Bitcoin. A lot of recognition suggested that Bitcoin was created because of the fact that it provided people with complete access to their funds via solitary possession of cryptographic keys that are essential for the relocation of the money. Satoshi Nakamoto created Bitcoin using open-source codes that belonged to the public domains. The technology of blockchain is centralized; hence Bitcoin works via p2p networks where the computers are linked through internet-based connections. Franco (2014) suggested that the bitcoin network is the database that holds the past transaction as well as the present owners of the currencies. Bitcoin identifies users with more significant threads, such as numerical figures or letters known as address. The nodes in the system don’t identify the user’s individual identity but recognize the user through his or her address. The Bitcoin operating system creates a cryptographic public key and a private key while the address is developed in the users’ devices during these procedures. When it comes to centralized systems, the fund is held in a centralized organization. While when it comes to decentralized networks, a private key that provides accessibility to the currencies is in the final user’s possession.

Bitcoin is an arrangement that is utilized in developing distributed consensus. The Bitcoin and other alike protocols may shift various digitalized assets, thus allowing the adaptation of a smart contract. A smart contract is a contract that is settled by controlling the programs on a computer so that it does not require human intervention or interpretation to be completed. Bitcoin is an application programming interface (API) for funds, and bitcoin currencies is a single application. It may be utilized like an agreement where an application can be developed (Franco 2014). Bitcoin has proven that the application and technology have potential, thus encouraging future innovations with the same platform.

Confidentiality, Integrity, and Availability (CIA) in Blockchain

A normal blockchain consists of a transaction that is grouped in a block which is stored in a block of chains, that are connected with the new chronological blocks with the hashes of the proceeding blocks (Mani 2017). In blockchains, the components of data are not kept in a single centralized place. However, the data segments are kept all over the blockchain networks; this makes it confident that the data elements are secure in the blockchain.  For example, if a hacker tries to modify all the blocks of the chain in one node, the consensus is required by the majority of the nodes to agree on the changes version, meaning that the hacker will need to control the majority. By using an immutable ledger and decentralized, there is no need for central trust authority to validate and verify the transaction. Blockchain uses cryptography technology to encrypt data and sign messages through the assistance of private-public keys processes. These technologies enable firms to ensure confidentiality, integrity, authentication, as well as nonrepudiation of transfer of funds, takes place. By the utilization of cryptography-support infrastructures, blockchains technologies can ultimately provide security to fund transfers through the usage of cryptocurrency like Ethereum.

Hashing Techniques in Blockchains

The hashing algorithms are operations that map sequences of messages of different lengths into short fixed lengths values, and they are highly sensitive, susceptible, unidirectional, and collision-resistant (Zhai 2019). Hash is normally utilized to make sure that the integrity of the information is achieved and also when verifying the information that has been interfered with illegally. When there is a change in tested data, there is also a transition in the hash values accordingly. Thus, if the information not safe, the integrity of the information is detectable by the use of the information possessed by hash values. Bitcoins utilizes a hash operation in creating and addressing out the public keys while adding blocks of the transaction into the blockchain. Public keys are generated through a different set of mathematics that involves a random number generation. The underlying hash function used in bitcoin is SHA 256. SHA256 is an operation that results in a 256-bit, or 64-character, output (Zhai 2019). When it comes to blockchains, hash operations are utilized to carry out transaction integrity verification and a block. Inside the blockchains, the data’s hash value of the past blocks is kept in the headers of every block, thus different users may contrast the intended value of the hash with the saved hash values. Therefore, the transparency of the data of the initial block has been precisely indicated to the current user. The hash operation may also be utilized in generating a pair of the public-private key. The hash pointer is information structures together with the normal pointers; they contain particular data and passwords hashes related to the data. Standard pointers are utilized in retrieving data while the hash pointers are utilized in verifying if the data is interfered with. The blocks are linked by the block headers, and it consists of; timestamp, the initial block hashes, Merkle root, current blocks difficult target, and current block solution random number.

 

 

      Genesis Block                          Block n                                  Block n+ 1

   

Blockchain Diagram

Capabilities and Limitations of Blockchain Technology        

The capabilities of blockchains technology are that the system is transparent, secure, immutable, verifiable, and resilient (Wigley & Cary 2017). In immutability, the peers cannot change the previous transactions since it keeps a lot of blockchain copies securely, and they are controlled by consensus all over the p2p networks. Security is the second capability of the blockchains since it is nearly not possible for a more extensive network to erase the tasks of the other network. Verifiability is another capability; the people that use these systems are able to see that the regulations of the systems are adhered to. The data can’t be exploited, and it is easy to verify since the power and the size of the networks are stable. The resilience of blockchain is also a capability because when a peer goes offline, the data can still be accessible.  Transparency and privacy are other capabilities due to the availability and openness of ledgers; therefore, all the transaction is aired to all peers.

The limitation of blockchain is scalability, security implications, and lack of regulations. Scalability is a limitation to blockchains, mostly, as far as the public’s Bitcoin blockchains are concerned (Mougayar 2016). The problem results from the inability to come into accordance with the right method to weigh blockchains hence resulting in implementation delays. Another issue with blockchain’s scalability, there is a requirement to look for stability among security and decentralization. Blockchains also have security implications; this problem has made various organizations, like banks, avoid working with public blockchains for their interior requirements since blockchains happen to be a new innovation. Therefore, the implications of being introduced in the world lack precise regulations. It is challenging to control decentralized organizations than the centralized one, thus presenting problems since blockchains are typically centralized. Therefore, better and advanced control methods are required in managing blockchain’s relations.

Future of Blockchain Technology in Business

The blockchains and distributed ledgers contain essential features that make their future brighter. Since they use the actual time, and they are trusted platforms. They have also open-sourced that transfer information and values safely (Wigley & Cary 2017). They are able to assist the bank in lowering the costs of processing a payment as well as create some new product or service that can create a new income stream. The most significant part is to turn blockchain’s capabilities into actuality. It will require combined efforts from the bank to establish a system necessary in supporting worldwide payments. The bank is expected to focus on a wider angle; therefore, start working hand in hand with non- banks to come up with universal payment systems that will modify the way a bank executes its transaction.

Conclusion

Blockchain technology has a high value and good prospects in solving problems of data integrity; improving transparency enhances security preventing fraud and establishing trust and privacy. Blockchain can bring revolution in various organizations and institutes; it has a vast potential in introducing innovative solutions. The utilization of blockchain technology is currently in the initial stage; however, it is created on significantly excellent cryptographic principles, which are easy to understand. It will be necessary for people and organizations can look to take at the technologies and both the capabilities and limitations of using them. It is essential to continue analyzing the blockchain enhancement and its applications in various sectors for future references.

 

 

 

References

Aru, I., 2017. Full Stack Development Tools Lowering Blockchain Entry Barriers. [online] Cointelegraph. Available at: com/news/full-stack-development-tools-lowering-blockchain-entry-barriers“>https://cointelegraph.com/news/full-stack-development-tools-lowering-blockchain-entry-barriers. [Accessed 13 May 2020].

Bogart, S. and Rice, K., 2015. The blockchain report: welcome to the internet of value. Needham Insights.

Christidis, K. and Devetsikiotis, M., 2016. Blockchains and smart contracts for the internet of things. Ieee Access4, pp.2292-2303.

Fanning, K. and Centers, D.P., 2016. Blockchain and its coming impact on financial services. Journal of Corporate Accounting & Finance27(5), pp.53-57.

Franco, P., 2014. Understanding Bitcoin: Cryptography, engineering and economics. John Wiley & Sons.

Glaser, F. and Bezzenberger, L., 2015, March. Beyond cryptocurrencies-a taxonomy of decentralized consensus systems. In 23rd European conference on information systems (ECIS), Münster, Germany.

Mani V., 2017. C.I.S.A., A View of Blockchain Technology From the Information Security Radar.

Mougayar, W., 2016. The business blockchain: promise, practice, and application of the next Internet technology. John Wiley & Sons.

Nofer, M., Gomber, P., Hinz, O. and Schiereck, D., 2017. Blockchain. Business & Information Systems Engineering59(3), pp.183-187.

Porru, S., Pinna, A., Marchesi, M. and Tonelli, R., 2017, May. Blockchain-oriented software engineering: challenges and new directions. In 2017 IEEE/ACM 39th International Conference on Software Engineering Companion (ICSE-C) (pp. 169-171). IEEE.

Tapscott, D. and Tapscott, A., 2016. The impact of the blockchain goes beyond financial services. Harvard Business Review10, pp.2-5.

Tapscott, D. and Tapscott, A., 2016. Blockchain revolution: how the technology behind bitcoin is changing money, business, and the world. Penguin.

Walport M., 2016. Distributed Ledger Technology: Beyond Blockchain. UK Government Office for Science, Tech. Rep, pp. 19

Zhai, S., Yang, Y., Li, J., Qiu, C. and Zhao, J., 2019, February. Research on the Application of Cryptography on the Blockchain. In Journal of Physics: Conference Series (Vol. 1168, No. 3, p. 032077). IOP Publishing.

Wigley, B. and Cary, N., 2017. The Future Is Decentralised: Blockchains, Distributed Ledgers, and the Future of Sustainable Development.

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