Blockchain Papers

Anton Hasselgren, Jens-Andreas Hanssen Rensaa, Katina Kralevska, Danilo Gligoroski · 5 authors

<sec> <title>BACKGROUND</title> Health care systems are currently undergoing a digital transformation that has been primarily triggered by emerging technologies, such as artificial intelligence, the Internet of Things, 5G, blockchain, and the digital representation of patients using (mobile) sensor devices. One of the results of this transformation is the gradual virtualization of care. Irrespective of the care environment, trust between caregivers and patients is essential for achieving favorable health outcomes. Given the many breaches of information security and patient safety, today’s health information system portfolios do not suffice as infrastructure for establishing and maintaining trust in virtual care environments. </sec> <sec> <title>OBJECTIVE</title> This study aims to establish a theoretical foundation for a complex health care system intervention that aims to exploit a cryptographically secured infrastructure for establishing and maintaining trust in virtualized care environments and, based on this theoretical foundation, present a proof of concept that fulfills the necessary requirements. </sec> <sec> <title>METHODS</title> This work applies the following framework for the design and evaluation of complex intervention research within health care: a review of the literature and expert consultation for technology forecasting. A proof of concept was developed by following the principles of design science and requirements engineering. </sec> <sec> <title>RESULTS</title> This study determined and defined the crucial functional and nonfunctional requirements and principles for enhancing trust between caregivers and patients within a virtualized health care environment. The cornerstone of our architecture is an approach that uses blockchain technology. The proposed decentralized system offers an innovative governance structure for a novel trust model. The presented theoretical design principles are supported by a concrete implementation of an Ethereum-based platform called VerifyMed. </sec> <sec> <title>CONCLUSIONS</title> A service for enhancing trust in a virtualized health care environment that is built on a public blockchain has a high fit for purpose in Healthcare 4.0. </sec>

Kenji Saito, Akimitsu Shiseki, Mitsuyasu Takada, Hiroki Yamamoto · 14 authors

It is said that blockchain will contribute to the digital transformation of society in a wide range of ways, from the management of public and private documents to the traceability in various industries, as well as digital currencies. A number of so-called blockchain platforms have been developed, and experiments and applications have been carried out on them. But are these platforms really conducive to practical use of the blockchain concept? To answer the question, we need to better understand what the technology called blockchain really is. We need to sort out the confusion we see in understanding what blockchain was invented for and what it means. We also need to clarify the structure of its applications. This document provides a generic model of understanding blockchain and its applications. We introduce design patterns to classify the platforms. We categorize possible use cases by identifying the structure among applications, and organize the functional, performance, operational and legal requirements for each such case. Based on the categorization and criteria, we evaluated and compared the following platforms: Hyperledger Fabric, Hyperledger Iroha, Hyperledger Indy, Ethereum, Quorum/Hyperledger Besu, Ethereum 2.0, Polkadot, Corda and BBc-1. We have tried to be fair in our evaluations and comparisons, but we also expect to provoke discussion. The intended readers for this document is anyone involved in development of application systems who wants to understand blockchain and their platforms, including non-engineers and non-technologists. The assessments in this document will allow readers to understand the technological requirements for the blockchain platforms, to question existing technologies, and to choose the appropriate platforms for the applications they envision. The comparisons hopefully will also be useful as a guide for designing new technologies.

Jyoti Yadav, Ranjana Sanjay Shevkar

Cryptocurrencies like Bitcoin and Ethereum, are widely known applications of blockchain technology, have drawn much attention and are largely recognized in recent years. Initially Bitcoin and Ethereum processed 7 and 15 Transactions Per Second (TPS) respectively, whereas VISA and Paypal process 1700 and 193 TPS respectively. The biggest challenge to blockchain adoption is scalability, defined as the capacity to change the block size to handle the growing amount of load. This paper attempts to present the existing scalability solutions which are broadly classified into three layers: Layer 0 solutions focus on optimization of propagation protocol for transactions and blocks, Layer 1 solutions are based on the consensus algorithms and data structure, and Layer 2 solutions aims to decrease the load of the primary chain by implementing solutions outside the chain. We present a classification and comparison of existing blockchain scalability solutions based on performance along with their pros and cons

Bin Wang, Han Liu, Chao Liu, Zhiqiang Yang · 7 authors

Decentralized finance, i.e., DeFi, has become the most popular type of application on many public blockchains (e.g., Ethereum) in recent years. Compared to the traditional finance, DeFi allows customers to flexibly participate in diverse blockchain financial services (e.g., lending, borrowing, collateralizing, exchanging etc.) via smart contracts at a relatively low cost of trust. However, the open nature of DeFi inevitably introduces a large attack surface, which is a severe threat to the security of participants funds. In this paper, we proposed BLOCKEYE, a real-time attack detection system for DeFi projects on the Ethereum blockchain. Key capabilities provided by BLOCKEYE are twofold: (1) Potentially vulnerable DeFi projects are identified based on an automatic security analysis process, which performs symbolic reasoning on the data flow of important service states, e.g., asset price, and checks whether they can be externally manipulated. (2) Then, a transaction monitor is installed offchain for a vulnerable DeFi project. Transactions sent not only to that project but other associated projects as well are collected for further security analysis. A potential attack is flagged if a violation is detected on a critical invariant configured in BLOCKEYE, e.g., Benefit is achieved within a very short time and way much bigger than the cost. We applied BLOCKEYE in several popular DeFi projects and managed to discover potential security attacks that are unreported before. A video of BLOCKEYE is available at https://youtu.be/7DjsWBLdlQU.

Liyi Zhou, Kaihua Qin, Antoine Cully, Benjamin Livshits · 5 authors

Decentralized Finance (DeFi) is a blockchain-asset-enabled finance ecosystem with millions of daily USD transaction volume, billions of locked up USD, as well as a plethora of newly emerging protocols (for lending, staking, and exchanges). Because all transactions, user balances, and total value locked in DeFi are publicly readable, a natural question that arises is: how can we automatically craft profitable transactions across the intertwined DeFi platforms?In this paper, we investigate two methods that allow us to automatically create profitable DeFi trades, one well-suited to arbitrage and the other applicable to more complicated settings. We first adopt the Bellman-Ford-Moore algorithm with DeFiPoser-ARB and then create logical DeFi protocol models for a theorem prover in DeFiPoser-SMT. While DeFiPoser-ARB focuses on DeFi transactions that form a cycle and performs very well for arbitrage, DeFiPoser-SMT can detect more complicated profitable transactions. We estimate that DeFiPoser-ARB and DeFiPoser-SMT can generate an average weekly revenue of 191.48 ETH (76,592 USD) and 72.44 ETH (28,976 USD) respectively, with the highest transaction revenue being 81.31 ETH (32,524 USD) and 22.40 ETH (8,960 USD) respectively. We further show that DeFiPoser-SMT finds the known economic bZx attack from February 2020, which yields 0.48M USD. Our forensic investigations show that this opportunity existed for 69 days and could have yielded more revenue if exploited one day earlier. Our evaluation spans 150 days, given 96 DeFi protocol actions, and 25 assets.Looking beyond the financial gains mentioned above, forks deteriorate the blockchain consensus security, as they increase the risks of double-spending and selfish mining. We explore the implications of DeFiPoser-ARB and DeFiPoser-SMT on blockchain consensus. Specifically, we show that the trades identified by our tools exceed the Ethereum block reward by up to 874×. Given optimal adversarial strategies provided by a Markov Decision Process (MDP), we quantify the value threshold at which a profitable transaction qualifies as Miner Extractable Value (MEV) and would incentivize MEV-aware miners to fork the blockchain. For instance, we find that on Ethereum, a miner with a hash rate of 10% would fork the blockchain if an MEV opportunity exceeds 4× the block reward.

Shaokai Lin, Xin‐Yuan Sun, Jianan Yao, Ronghui Gu

The growing adoption of smart contracts on blockchains poses new security risks that can lead to significant monetary loss, while existing approaches either provide no (or partial) security guarantees for smart contracts or require huge proof effort. To address this challenge, we present SciviK, a versatile framework for specifying and verifying industrial-grade smart contracts. SciviK's versatile approach extends previous efforts with three key contributions: (i) an expressive annotation system enabling built-in directives for vulnerability pattern checking, neural-based loop invariant inference, and the verification of rich properties of real-world smart contracts (ii) a fine-grained model for the Ethereum Virtual Machine (EVM) that provides low-level execution semantics, (iii) an IR-level verification framework integrating both SMT solvers and the Coq proof assistant. We use SciviK to specify and verify security properties for 12 benchmark contracts and a real-world Decentralized Finance (DeFi) smart contract. Among all 158 specified security properties (in six types), 151 properties can be automatically verified within 2 seconds, five properties can be automatically verified after moderate modifications, and two properties are manually proved with around 200 lines of Coq code.

Tomilayo Fatokun, Avishek Nag, Sachin Sharma

Security and privacy of patients’ data is a major concern in the healthcare industry. In this paper, we propose a system that activates robust security and privacy of patients’ medical records as well as enables interoperability and data exchange between the different healthcare providers. The work proposes the shift from patient’s electronic health records being managed and controlled by the healthcare industry to a patient-centric application where patients are in control of their data. The aim of this research is to build an Electronic Healthcare Record (EHR) system that is layered on the Ethereum blockchain platform and smart contract in order to eliminate the need for third-party systems. With this system, the healthcare provider can search for patient’s data and request the patients’ consent to access it. Patients manage their data which enables an expedited data exchange across EHR systems. Each patient’s data are stored on the peer-to-peer node ledger. The proposed patient-centric EHR platform is cross-platform compliant, as it can be accessed via personal computers and mobile devices and facilitates interoperability across healthcare providers as patients’ medical records are gathered from different healthcare providers and stored in a unified format. The proposed framework is tested on a private Ethereum network using Ganache. The results show the effectiveness of the system with respect to security, privacy, performance and interoperability.

Nejc Rožman, Janez Diaci, Marko Corn

Shared Manufacturing is a new mode of social manufacturing based on the principles of a sharing economy. This paper presents a scalable framework for blockchain-based Shared Manufacturing that preserves the transparency and immutability characteristics of transaction records, which is critical to building trust between entities in blockchain-based systems. We define a blockchain-based protocol for the service execution according to the design principles of the sharing economy. We present a scalable integration of blockchain technology into the concept of Shared Manufacturing by employing cross-chain solutions. We discuss existing cross chain technologies regarding the requirements of Shared Manufacturing and propose hybrid approach. We compare implementations of the proposed framework on two different blockchain networks: Ethereum public network and Xdai sidechain network. We conduct user-oriented test to explore the performance (cost and time) of the implementations in realistic situations in order to justify the use of the sidechain technology. Results indicate that the implementation on the sidechains provides greater scalability than the implementation on the public blockchain network.

Minghao Wang, Shaofei Wu

Abstract With the continuous development of block chain technology, people realize that this trusted underlying mechanism has important practical significance as the foundation of various activities. This paper combines block chain technology with sports health system, and improves it based on Ethereum system. In the traditional block chain system, the time to generate blocks is too slow and the centralization problem is caused by the large asset gap. We propose the concept of surplus advantage of account to determine which account has more power to generate the new block in the block chain. In this way, users of the system can maintain the system, which can further ensure the security of the whole system and the authenticity of data information, and greatly improve the efficiency of the whole system. And we write smart contracts to make sure that things always follow the agreed rules. This will also make the whole sports health system has better security and credibility. With this block chain technology as the guarantee of the underlying technology, the sports health system can be more accurate, the relevant departments for the implementation and supervision of sports health subsidies, but also ensure the authenticity and security of the data information.

Pierre Schutz, Stanislas Gal, Dimitris Chatzopoulos, Pan Hui

Abstract Peer‐to‐peer (P2P) networks utilize centralized entities (trackers) to assist peers in finding and exchanging information. Although modern P2P protocols are now trackerless and their function relies on distributed hash tables (DHTs), centralized entities are still needed to build file indices (indexing) and assist users in joining DHT swarms (bootstrapping). Although the functionality of these centralized entities are limited, every peer in the network is expected to trust them to function as expected (e.g. to correctly index new files). In this work, a new approach for designing and building decentralized online applications is proposed by introducing DIBDApp. The approach combines blockchain, smart contracts and BitTorrent for building up a combined technology that permits to create decentralized applications that do not require any assistance from centralized entities. DIBDApp is a software library composed of Ethereum smart contracts and an API to the BitTorrent protocol that fully decentralizes indexing, bootstrapping and file storing. DIBDApp enables any peer to seamlessly connect to the designed smart contracts via the Web3J protocol. Extensive experimentation on the Rinkeby Ethereum testnet shows that applications built using the DIBDApp library can perform the same operations as in traditional back‐end architectures with a gas cost of a few USD cents.

Yojna Arora, Mr. Vivek Birla, Mr. Rajat Gupta, Mr. Samarth Tiku

Voting is a constitutional part of governmental systems which gives the people of the nation the liberty to express their opinions. The contemporary system constitutes Electronic Voting Machines (EVM) that is a pile-up of data natively and centralized, making it implausible. Since the data is amassed locally over the EVM(s) prior to the election's cessation, it could be hacked. Furthermore, there have been events of "polling booth hijacking" in some regions during the elections. Ethereum blockchain technology addresses concerns regarding integrity, security, and accessibility of current voting systems. Expanding e-voting into Ethereum based blockchain technology is one potential application of the emerging blockchain technology. This paper presents a decentralized, incognito, and limpid e-voting system named "DILE". It will escalate accessibility as the users could cast their votes without paying a visit to the polling booths. DILE makes practical and effective use of Ethereum's blockchain technology and smart contracts for its implementation.

R S Mohammed, Raaid Alubady, Ali Sherbaz

Abstract Recent years have witnessed a widespread interest in healthcare issues and the search for faster and safer service for patients. Electronic health record was established to provide advanced health services. Researchers seek to provide permanent and simplified ways to monitor patients remotely using remote patient monitors. One of these methods is the use of Internet of Things (IoT) devices, where the healthcare provider can monitor the patient remotely. However, with the current centralized electronic patient record system and increase in number of IoT devices, security and privacy issues have arisen, as some patients may not want to disclose their data, in addition to particular concerns or risks that affect the patient’s life. To reduce these issues, several studies have presented the use of blockchain technology as a trustworthy network of solutions to ensure patient information security and secure the transfer of IoT devices’ data. In this regard, this research is an attempt to present a new framework that facilitates the storage and transfer of patient data in the blockchain by merging the electronic health record and remote patient monitoring techniques into a single framework using Django. This framework allows the transfer of data from IoT devices to multiple peers, making use of the smart contract provided by the Ethereum platform.

Guillermo Angeris, Alex Evans, Tarun Chitra

Constant function market makers (CFMMs) such as Uniswap, Balancer, Curve, and mStable, among many others, make up some of the largest decentralized exchanges on Ethereum and other blockchains. Because all transactions are public in current implementations, a natural next question is if there exist similar decentralized exchanges which are privacy-preserving; i.e., if a transaction's quantities are hidden from the public view, then an adversary cannot correctly reconstruct the traded quantities from other public information. In this note, we show that privacy is impossible with the usual implementations of CFMMs under most reasonable models of an adversary and provide some mitigating strategies.

Igor Ponomarev

Today, blockchain applications are being developed for a wide variety of areas of activity - from trade and advertising to logistics and social networks. Building an application using a ready-made blockchain on one of the specialized platforms is the most efficient way to develop. The development of a decentralized voting system on one of the most functional blockchain platforms Ethereum with a developed infrastructure for creating smart contracts is being considered.

Giuseppe Antonio Pierro, Roberto Tonelli

The practice of writing smart contracts for the Ethereum blockchain is quite recent and still in development. A blockchain developer should expect constant changes in the security software field, as new bugs and security risks are discovered, and new good practices are developed. Following the security practices accepted in the blockchain community is not enough to ensure the writing of secure smart contracts. The paper aims to study the practice of code cloning among the smart contracts by analyzing two corpora. The first corpus, the "Smart-Corpus", includes smart contracts already deployed in the Ethereum blockchain. The second corpus, the "Open-Zeppelin's Solidity Library", is supervised by a community of developers who constantly take care to increase the security and efficiency of the smart contracts included in the corpus. From the comparative analysis of the corpora, we observe that the smart contracts developers frequently duplicate the code by cloning already existing smart contracts which are not part of the "OpenZeppelin corpus". In particular, we found that 79.1% of smart contracts contain duplicated code and only 18.4% of smart contracts reuse the code by implementing a smart corpus belonging to the OpenZeppelin repository. The paper discusses the advantages and the disadvantages of code duplication in the Ethereum blockchain ecosystem, and suggests to refer to the smart contracts of the OpenZeppelin's Solidity Library. The Ethereum blockchain community can indeed benefit from using the tested code presented in OpenZeppelin's Solidity Library to increase its security.

Yuhang Sun, Lize Gu

Abstract Ethereum attracts extensive attention due to its distinctive function of smart contract and decentralized applications (Dapps). Since the number of contracts on blockchain has increased vigorously, various security vulnerabilities come up. Researchers rely on static symbolic analysis method at first, and it seems to perform well in the accuracy of vulnerability detection. However, this method requires manual analysis in advance and it needs to traverse all the possible execution paths to find out the vulnerable ones. The deeper the path goes, the more time it costs to detect the contracts. This paper proposes an approach to detect smart contracts vulnerability on blockchain by using machine learning(ML) methods. This approach aims to build a general benchmark for new vulnerability detection in order to reduce the demand of expert manpower. Moreover, the high-speed-performance ML algorithm makes quick detection comes true. As long as we adjust the threshold of the model, it can work as a fast prefilter for the traditional symbolic analysis tools in further improvement of accuracy.

Giuseppe Antonio Pierro

The Ethereum blockchain enables executing and recording smart contracts. The smart contracts can facilitate, verify, and implement the negotiation between multiple parties, also guaranteeing transactions without a traditional legal entity. Many tools supporting the smart contracts development in different areas are flourishing because in Ethereum blockchain valuable assets are often involved. Some of the tools help the developer to find security vulnerabilities via static and/or dynamic analysis or to reduce the Gas fees consumption. Despite the plethora of such tools, there is no tool supporting smart contracts evaluation and analysis via a graphical representation for expert developers.The paper embraces this way to facilitate the developers&#x2019; analysis activity, by proposing a graphical representation model to visualize smart contract source code. The paper makes available a tool via a web interface, which accepts the smart contract address as an input and produces a graphical representation of the smart contract as an output. The graphical representation can help developers to better understand the structure of smart contracts and share it with other developers. Moreover, some metrics, such as the relations among smart contracts, are easier to be understood via "spatial" than "tabular" representation. Indeed, representing smart contracts&#x2019; metrics via visual representation facilitates the developers, who are used to analyse the source code by directly inspecting it or using other tools that provide the metrics in a table format. Finally, the paper provides detailed data regarding a smart contract to the developers and proposes a graphical representation of the smart contracts without obscuration of details, also highlighting areas of the code that are possibly too big in size and/or too complex via a diagram displaying their connections.

Paulus Hartono, Robiyanto Robiyanto

The purpose of this research to test the cryptocurrency, gold and bonds as safe haven assets to Indonesian capital market. The data used in this study is the daily closing data of cryptocurrency, gold (GOLDIDR) and the Indonesian Government Bond Index (IGBI) during the period on August 2015 to December 2018 obtained from Investing, Yahoo Finance, and Spindices. The analysis of the data is used Ordinary Least Square (OLS) and Quantile Regression (QREG). The results found that ethereum can be a safe haven. While bitcoin, ripple, gold, and the Indonesian Government Bond Index (IGBI) cannot be a safe haven for the Indonesian capital market.

Purathani Praitheeshan, Lei Pan, Robin Doss

No abstract is available for this record.

Authors unavailable

Citation (2021), "Discussion Questions and Answers (Chapters 2–22)", Baker, H.K., Nikbakht, E. and Smith, S.S. (Ed.) The Emerald Handbook of Blockchain for Business, Emerald Publishing Limited, Bingley, pp. 383-415. https://doi.org/10.1108/978-1-83982-198-120211029 Publisher: Emerald Publishing Limited Copyright © 2021 by Emerald Publishing Limited Chapter 2 – History of Blockchain Define the three major characteristics of money that bitcoin possesses. Bitcoin has three major characteristics of money. First, bitcoin is divisible similar to how fiat currency units are divisible into smaller units of previously existing units. The division takes place digitally in the form of bitcoin and other cryptocurrencies, but the divisibility still exists. Second, any medium of exchange (money) must also be useful as a unit of account, which bitcoin partially fulfills. Despite prior price volatility and continued lower levels of volatility, bitcoin has a value in other forms of currency. In fact, after the 2017 price bubble, volatility decreased substantially. Third, any medium of exchange must be portable. That is, it must be able to be transferred across borders and boundaries. As a digital medium of exchange, bitcoin is easily portable and can be transferred across borders without fees. Describe five core components of blockchain technology. Blockchain technology has the following five core components that include but are not limited to the following. First, every blockchain has a tamper-resistant ledger, which is where the transactions and other information that have occurred on the blockchain network are stored. Second, this information stored on the ledger is approved, before posting on the network itself, via some sort of consensus methodology that enables network members to jointly confirm that data are presented correctly. Third, any blockchain is defined by the encryption protocols used to safeguard information, with the most famous iteration being the SHA-256 encryption protocol used by the bitcoin blockchain. Fourth, the management of this entire process (i.e., the way in which data are confirmed and added to the network itself) is generally managed by full nodes, playing an important role in maintaining the integrity of the blockchain network. Fifth, every blockchain is in some way defined by the peer-to-peer (P2P) nature of transactions that underpin the entire blockchain ecosystem, which greatly reduces the need for intermediaries and other third-party organizations. Define interoperability in the context of blockchain implementation. In the context of blockchain implementation, interoperability equates to how easily a blockchain network or application can transfer data among the blockchain platform and other technology applications. A blockchain is simply a record of transactions. For that information to be leveraged effectively, it must be able to be communicated effectively. Discuss how problems with scaling and interoperability affect wider blockchain utilization. Issues involving interoperability and scaling are two major obstacles to wider enterprise or commercial adoption of blockchain technology. If blockchain cannot meet the needs of commercial business, both in terms of transaction processing and network capacity, or the ease with which data can be transferred between the blockchain and other technologies, implementation efforts are likely to fail. As efforts and other iterations of blockchain emerge, scaling and interoperability continue to come to the forefront. Describe how blockchain is helpful for e-commerce. Blockchain and crypto assets, specifically stablecoins, can be helpful for e-commerce transactions. Such an arrangement mirrors many of the benefits and savings associated with other mobile and digital payment transactions. Venmo, PayPal, Square, and Zelle have capitalized on the growing need for digital and P2P payments, increasing demand for lower cost options and general dissatisfaction with traditional financial incumbents. Stablecoins and blockchain-based payment platforms are equally well positioned to take advantage of many of these market forces. Chapter 3 – Review of Blockchain and Emerging Applications Explain what constitutes a blockchain network, including a main property of that network. A blockchain network usually consists of specific agents with each transaction verified by an agreement among the majority of the agents. Unlike a traditional database, the data on the chain are permanently stored and cannot be erased once a transaction enters the system. To maintain a cumulatively added ledger in a blockchain network, cryptography is used to record transactions among the participating agents of the same network. List several differences between a public and a private blockchain. The identities of users are anonymous in a public blockchain platform and known in a private blockchain platform. Relative to a private blockchain system, the speed of transactions is usually relatively slower in a public blockchain platform due to scalability. Transactions can be created by any participant in a public blockchain, but participation is limited to the members of a private blockchain platform. Despite these expected differences, cases exist in which some of these properties are not always distinct between the two platforms. Identify two major benefits of using blockchain in supply chain management. If blockchain is properly implemented, the origin of a problem item, such as a specific food if exposed to a bacteria, can easily be traced, and a corrective action can be made in that specific region. Without a blockchain system, the entire inventory for the same food throughout the chain, regardless where the contamination occurred, might have to be destroyed. In the case of supply chains using blockchain-based technology, the technology tracks goods and materials to prevent counterfeit products and low-quality products. Explain the concept of humans, technology, and organizations in the context of smart cities. Blockchain systems encompass three interrelated factors of humans, technology, and organizations. The framework identifies the attributes of the sharing economy of a smart city. Thus, blockchain may influence and create value-added. Blockchain increases the accessibility and availability of technology, which makes people more willing to accept access over ownership and to trust organizations and technology. Identify some relatively news areas where blockchain might have applications. Blockchain is relatively well-known to the financial sector, supply chain management, and the fields of accounting and auditing. Smart cities, water distribution, and waste management sectors are relatively new to this emerging technology. As the world's population increases, living conditions are likely to become more challenging in such areas as communication and access to resources. This change has brought about the emergence of smart cities. A smart city relies on innovation and technology to have something unique to offer, such as introducing smart parking or blockchain and Artificial intelligence (AI) into city life. Chapter 4 – Technical Aspects of Blockchain Describe the concept of a block and its components. A block is a main component in blockchain architecture. It is a kind of data structure to record transactions during a specific period. Once a block is completed and validated, it is a permanent storage that cannot be altered or removed. Blocks are connected with each other by a hashing code as a chain. A block consists of a header and transaction data. A header is section in a block that serves as a summary of data. A header consists of several components such as version number, timestamp, difficulty target, nonce, previous hash, and Merkle root. Version number is the current version of the block structure. It is used for keeping track of changes and updating the block. Timestamp provides the time when the block is created. Difficulty target is a value used to show how hard is it to find a hash. It will be lower than the target defined by a system. Nonce is a random value that a miner is allowed to manipulate to get a block hash. Once it is discovered, then all transactions are added to the blockchain. Previous hash is the hash of the previous block. It is used for connecting with other block as a chain. Merkle root consists of all the hashes of all the transactions to form a single hash code. Identify two major properties of a blockchain network. Two major properties of a blockchain network are decentralization and immutability. Decentralization: Blockchain is a distributed ledger that provides a way for data to be recorded and shared by multiple nodes or users. No single authority can approve the transactions or set specific rules for the delivery of data. So, blockchain is a decentralized system. Immutability. Blockchain introduces cryptographic hashing for enabling security in a block during the process of data transmission. It provides integrity in that blockchain data are difficult to alter or modify due to every chain being different. This property helps to prevent unauthorized access of data because an attacker would have to manipulate every single piece of the blockchain present on the network. Define a Merkle hash tree, describe its role in blockchain, and explain the meaning of a Merkle root in the block header. A Merkle hash tree (MHT) is a hash-based data structure that efficiently organizes a large amount of data. It is a tree structure in which each leaf is a hash of a block and a root is the hash at the top. MHT is designed to verify the integrity of data stored in a node and transmitted between nodes in a P2P network. More specifically, MHT helps to ensure data remain in their original state without alterations or corrupted information. The Merkle root, which is the hash of all the hashes of all the transactions in the block, is a part of the block header. This scheme enables securely verifying that the network has accepted a transaction. Explain the meaning of a distributed ledger. A centralized ledger has multiple ledgers, but only a master ledger keeps the true records as a clearinghouse. Unlike the centralized ledger, a distributed ledger has a single ledger that is shared by all nodes. All nodes have some level of access to that ledger and determine the ledger's true state. A distributed ledger in blockchain is a database that is distributed across several computers or nodes. Although a blockchain network is physically located in different places, it has a single ledger that is shared by all nodes. A distributed ledger eliminates the need for a central authority or intermediary to process, validate, or authenticate transactions. Chapter 5 – Public Blockchains Describe a public blockchain and mention three current applications. A public blockchain is a permissionless blockchain, allowing universal access to read, write, and validate information stored in the network. Current applications of public blockchain are monetary and financial networks such as Bitcoin and Zcash, distributed computing and virtual machines such as Ethereum and EOSIO, and decentralized markets such as Sia. Explain how public blockchains ensure the adherence of transaction and block-writing rules. Public blockchains ensure the adherence of transaction and block-writing rules through the consensus protocol. The consensus process goes beyond the rules that are written in the blockchain code and involves incentive mechanisms to ensure proper functioning of the validator network. The code sets the limit on miner activities that can be written into the software, for instance adding an invalid transaction (i.e., a transaction with insufficient funds or an incomplete executable contract), switching input or output addresses, or modifying transaction amounts. However, the code excludes all potential misbehavior such as rewriting a block already included on the blockchain, purposefully not including a transaction or writing empty blocks (“selfish mining”). These actions are regulated by explicit and implicit incentive mechanisms. An example of an explicit mechanism is the reward mechanism in Bitcoin, motivating but not imposing miners to write blocks following the most recently added block, as opposed to choosing a previous one. An example of an implicit mechanism is an agreement by miners not to mine on top of empty blocks, discouraging but not prohibiting adversarial miners from selfish mining. Discuss the need for predefined mechanisms and rules to modify a public blockchain's protocols. Besides the straightforward need to fix errors in the code, blockchain protocols need to adapt to the evolving use cases, applications, technology, and overall characteristics of the blockchain ecosystem. Given the decentralized nature of public blockchains, no central authority is available to determine the need and to approve and implement changes in the protocol. These decisions are vested to the blockchain's community. However, the interests of different blockchain stakeholders might diverge, hence leading to potential conflicts. Predefined mechanisms and rules would allow potential users to make informed decisions and participate in the network knowing beforehand the risks of future protocol changes. However, the permissionless nature of public blockchains also allows any user to replicate the blockchain and its protocols, modify them according to its own preference, and to launch an alternative blockchain, partly rendering the mechanisms and rules useless. Therefore, the existence of such mechanisms and rules is not a necessary condition for a public blockchain because even if present, it could be annulled by a hard fork on the blockchain. Proof of Work (PoW) consensus protocols have been criticized due to their high and continuously increasing mining cost. Discuss how mining cost affects the tamper resistance attribute of public blockchains. In PoW consensus protocols, block-writing rights are pseudo-randomly assigned according to amount of resources such as energy, memory space, and elapsed processing time that a validator has contributed to the network. If an adversarial miner wanted to tamper with the blockchain by blocking transactions or deleting transactions, the miner would have to dedicate a substantial amount of resources to attain probabilistic control of the block-writing process (51 percent attack). Therefore, as the mining cost of a blockchain increases, the cost of attacking the blockchain also increases, hence reinforcing the blockchain's tamper resistance attribute. Discuss whether a public blockchain requires issuing its own native cryptocurrency to provide incentives to its validator network. By creating its own native cryptocurrency, the blockchain network can reward validators for their contribution by issuing block rewards and transaction fees payable on such cryptocurrency. If this was not the case, validator's compensation would be limited to transaction fees paid by users through two alternative mechanisms, each with burdensome implications: (1) compensating validators through a nonblockchain (“off-chain”) system or (2) compensating validators through a blockchain compatible external cryptocurrency (crosschain atomic swaps). In both alternatives, blockchain users would require accepting some features present on the payment system or external blockchain, as well as losing noncompatible attributes. For example, both options would constrain blockchain transactions speeds to the transaction speed of the off-chain payment system or external blockchain. It would restrict the universe of potential users and validators to those individuals and institutions with access to the selected payment system. For the case of payments through traditional financial networks, it would most likely require eliminating the blockchain's anonymity and pseudonymity attributes since validators would need to be identifiable to receive payments. Describe the process of PoW. PoW is the original consensus algorithm in the blockchain network. It is used to confirm transactions and create new blocks. It requires expensive computing power to solve a complex mathematical puzzle known as a PoW problem. The process of PoW is as follows. New transactions are broadcasted to miners in the blockchain network. With PoW, miners compete against each other to complete transactions on the network and get rewarded by solving a complex mathematical puzzle using a hashing algorithm. The first miner publishes the verified PoW with a fixed length input string to all other miners. Other miners apply it to the same hash formula to see if the outcome is the same. The validated transaction is requested to enter into a block. All participants in the blockchain network attempt to approve this validated transaction using a consensus algorithm. If a majority of the participants (i.e., 51 percent rule in bitcoin) agree, then validation of this transaction occurs. After a set of approved transactions is bundled in a block, this block is sent to all the participants (nodes) in the blockchain network. Chapter 6 – Private and Hybrid Blockchains and Applications Differentiate between a public/permissionless and a private/permissioned blockchain. Several core differences exist between a permissionless and permissioned blockchain. First, a permissionless blockchain generally has few, if any, barriers or restrictions as to what kind of individual can be a part of the network itself. Second, a permissioned blockchain may operate in a similar manner as a traditional enterprise database management system depending on the levels of restrictions and barriers to entry. Third, a blockchain's internal controls are simpler to establish in a manner conducive to enterprise adoption as a result of the increased permissions. List three advantages of a private/permissioned blockchain relative to a public/permissionless blockchain for enterprise usage. Three advantages of a permissioned blockchain for enterprise usage are: Increased ease with which internal controls and access protocols can be constructed to safeguard the information and data stored and shared within this blockchain. Increased processing speed due to the fact that the consensus methodologies used at a permissioned blockchain need not be as complex or time consuming as those used at a permissionless blockchain. Enhanced opportunities for P2P activity because different network members can be granted different levels of access, custody, or control over the network information. Differentiate between stablecoins and decentralized cryptocurrencies. Stablecoins differ from decentralized cryptocurrencies in several ways. A stablecoin is pegged, tethered, or otherwise connected to an external asset such as oil, gold, or other fiat currency. A single entity or small number of organizations generally issue and govern stablecoins. Although a firm limit might exist on the number of decentralized cryptocurrencies that can be issued, not every stablecoin operates in this manner. Discuss how CBDCs differ from other stablecoins. A CBDC is a type of crypto asset that is governed and issued by a central bank or other type of quasi-governmental agency. The main difference between a CBDC and other stablecoins is that a governmental entity complete with the full backstopping of that governmental agency or count issues a CBDC instead a private sector organization. A CBDC may also not be based on any blockchain technology. Explain how consumer privacy is relevant to CBDCs. A CBDC could allow a government to keep track of all transactions in which a user engages. As a result, a government could block anything it deems an undesirable purchase. A CBDC could also reduce tax evasion because users have minimal privacy. Additional factors related to consumer and institutional privacy are more closely connected to the potential for governments or governmental actors to potentially leverage CBDCs for surveillance purposes. Specifically, those involved in the CBDC development process need to guard against the potential for abuse, tracking, and targeting or certain individuals, institutions, or purchase types. Chapter 7 – Consensus Mechanisms and Related Issues Discuss how Global Bling could adjust the amount of bitcoin that Vantage Mines paid for the diamond in Transaction #2 and whether it would belong to the same chain. Any accounting correction, whether it be an adjustment (adding the difference as a new block) or deleting the transaction in a new block and subsequently rebilling it in yet another block (two new be an transaction added to the same chain. A transaction that occurred cannot be in that block, but can be altered in blocks. 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Elvira Albert, Jesús Correas, Pablo Gordillo, Guillermo Román‐Díez · 5 authors

No abstract is available for this record.

Johannes Rude Jensen, Victor von Wachter, Omri Ross

We document an ongoing research process towards the implementation and integration of a digital artefact, executing the lifecycle of a leveraged trade with permissionless blockchain technology. By employing core functions of the 'Dai Stablecoin system' deployed on the Ethereum blockchain, we produce the equivalent exposure of a leveraged position while deterministically automating the monitoring and liquidation processes. We demonstrate the implementation and early integration of the artefact into a hardened exchange environment through a microservice utilizing standardized API calls. The early results presented in this paper were produced in collaboration with a team of stakeholders at a hosting organization, a multi-national online brokerage and cryptocurrency exchange. We utilize the design science research methodology (DSR) guiding the design, development, and evaluation of the artefact. Our findings indicate that, while it is feasible to implement the lifecycle of a leveraged trade on the blockchain, the integration of the artefact into a traditional exchange environment involves multiple compromises and drawback. Generalizing the tentative findings presented in this paper, we introduce three propositions on the implementation, integration, and implications of executing key business processes with permissionless blockchain technologies. By conducting computational design science research, we contribute to the information systems discourse on the applied utility of permissionless blockchain technologies in finance and beyond.

Dániel Kondor, Nikola Bulatovic, József Stéger, István Csabai · 5 authors

Bitcoin and Ethereum transactions present some of the largest real-world complex networks that are publicly available for study, including a detailed picture of their time evolution. As such, they have received a considerable amount of attention from the network science community along with analyses from economic and cryptographic perspectives. Among these studies, in an analysis on the early instance of the Bitcoin network, we have shown the clear presence of the preferential attachment, or the “rich-get-richer” phenomenon. Now, we revisit this question, using a recent version of the Bitcoin network that has grown almost 100-fold since our original analysis. Furthermore, we additionally carry out a comparison with Ethereum, the second most important cryptocurrency. Our results show that preferential attachment continues to be a key factor in the evolution of both the Bitcoin and Ethereum transactoin networks. To facilitate further analysis, we publish a recent version of both transaction networks, and an efficient software implementation that is able to evaluate linking statistics necessary for learn about preferential attachment on networks with several hundred million edges.

Tim Weingärtner

Identity is a crucial property of Internet of Things (IoT) devices. Due to rapid growth and high numbers of similar devices, reliable identification of those devices is a problem. The origin and history of an IoT device is especially important in security relevant environments. Our research addresses this issue by proposing an approach based on blockchain and decentralized identifiers (DID). It is inspired by the concepts of self-sovereign identity (SSI) and bootstrapping of remote secure key infrastructures (BRSKI). Devices are equipped by the manufacturer with an identity stored in a trusted execution environment (TEE) and secured by a blockchain. This identity can be used to trace back the origin of the device. During the bootstrapping process on the customer side, the identity registration of the device is updated in the blockchain. This process is performed by a so-called registrar. Smart contracts prevent unsolicited transfer of ownership and track the history of the device. Besides proof of origin and device security our concept can be used for device inventory and firmware upgrade. A prototype implementation was realized to validate the concept. All six use cases have been implemented and tested using an Ethereum blockchain infrastructure. JSON Web Tokens (JWT) have been used as signed artefacts to transfer information between the stakeholders. This enables an asynchronous communication needed for example in an environment with no direct internet access. Such an infrastructure can be provided by an independent association and can be used by all manufacturers. Depending on the environment, a registration of devices can be optional or mandatory.