Abstract
Blockchain technology is one of the latest innovations in computer science that has world-wide scale and reach. A blockchain is a mathematical structure for storing digital transactions in a distributed and decentralized digital ledger consisting of multiple blocks that are linked using cryptographic signatures and spread across multiple computers. Each block records digital transactions data securely and has a hash link pointing to the previous block in the network in an efficient manner. New blocks can be added and removed through an agreed consensus of all nodes that each share the distributed ledger without the need for a centralized controlling authority. This chapter aims to introduce the blockchain technology, also known as distributed ledger technology (DLT), and discuss its applications in various sectors of the society including banking, healthcare, transportation, manufacturing, supply chain, and education. Extension of the internet of things vision using the DLT is also briefly discussed.
TopIntroduction
Blockchain Technology is one of the newest innovations in the field of computer science, that has world-wide scale and reach. Blockchain has long been associated with cryptocurrency e.g. Bitcoin. However, this emerging technology is destined to disrupt the global economy in the foreseeable future. It has a huge potential to positively impact on the various industries including healthcare, transportation, manufacturing, finance, automotive, education, and government. The World Economic Forum estimates that by 2025, at least 10% of the world’s GDP, currently at USD 100 trillion, will be managed via the Blockchain technology (Hance, 2020).
The idea of Blockchain, originally termed as ‘block chain’, was first put forward in 2008. This was essentially the realisation that the technology that underlined the operation of ‘Bitcoin’ could be separated from the currency and used for all kinds of other interorganisational cooperation. There was, then, further exponential development over the period of about 10 years in terms of ‘smart contracts’, ‘proofs of work’, and Blockchain ‘scaling’. Since its origin in 2008, The Blockchain technology has gone through a number of phases but most notably by the three as follows (Goyal, 2018):
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Transactional: around 2012-2014
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Contracts based: around 2014-2016
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Applications: from 2017 onwards
The timeline of the development of Blockchain technology can be presented as mentioned below.
2009-12: White paper on Bitcoin; emergence of Bitcoin cryptocurrency; Blockchain as backbone of digital currency; Bitcoin magazine
2012-14: Bitcoin marketplace and start-ups; Ethereum based projects; Blockchain attraction for financial services sector
2014-15: Over 40 Blockchain implementations; smart contracts; Hyperledger; Endorsement for Blockchain from technology companies
2016-17: Blockchain adoption beyond proofs of concept; EOS.IO protocol; Blockchain mainstream adoption across different industries
2018-20: Blockchain protocols and standards; accelerated investment from ISPs; Rise of IPOs and Blockchain start up ecosystem
2020-: New business models combining Analytics, IoT and Blockchain; Endorsement by World Economic Forum
Blockchain technology presents numerous highly attractive characteristics including decentralisation, transparency, immutability, security, consensus, and smart contracts (Rosic, 1016; Tasca, 2019). Witscad (2020) divides the main characteristics into two varieties: functional and emergent. Refer to Figure 1. These are explained in detailed in a later section of this chapter.
Because of the attraction of these features, Blockchain has been gaining enormous attention in areas beyond its cryptocurrency roots, since about 2014. This technology has gone beyond its first application in Bitcoin cryptocurrency; and is now being applied to nearly every sector of the society including banking, healthcare, manufacturing, transportation, logistics, supply chain management, and education, amongst others. Some of these applications are also discussed later in this contribution.
Figure 1.
Blockchain characteristics
The organisation of this chapter is as follows. The next main section defines the Blockchain technology, describes the essential terminology, outlines the characteristics, describes the underlying concepts and varieties of Blockchain, and summarises the generic Blockchain transactional process. The next section is the main focus of the chapter, that lists various case studies and applications currently being pursued in various different industries, including banking, healthcare, transportation, manufacturing, supply chain, and education. Extension of the Internet of Things (IoT) vision using the Distributed Ledger Technology (DLT) is also briefly discussed. The final section presents the conclusion.
Key Terms in this Chapter
Proof of Stake (PoS): It is a type of consensus algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. In PoS-based cryptocurrencies, the addition of the next block is organised considering various combinations of random selection e.g. wealth or age (i.e., the stake).
Bitcoin: Bitcoin is a digital currency created for use in peer-to-peer online transactions, Introduced in 2008. It is the most prominent of a group of virtual currencies.
Hyperledger Fabric: It is a platform for distributed ledger solutions, developed by IBM, underpinning a modular architecture delivering high degrees of confidentiality, resiliency, flexibility, and scalability. It is designed to support pluggable implementations of different components of the blockchain technology.
Hash: This is a digital signature (comprising public and private keys) of a block (consisting of information about digital assets and hash pointer) for authentication and verification purposes. It is the process that blockchain uses to confirm its state; each transaction in a blockchain requires one or more digital signatures.
Proof of Work (PoSW): It is a consensus mechanism that helps to stop or reduce denial of service attacks and other security abuses such as spam on a network by requiring some work from the service requester, usually meaning processing time by a computer.
Consensus: It is a fault-tolerant mechanism used in blockchain systems to achieve the necessary agreement on a single data value or a single state of the network among distributed processes or multi-agent systems, such as with cryptocurrencies.
Chaincode: It is another name for a self-executing smart contract, in the context of blockchain technology.
Cryptography: This is the science of securing communication using individualized codes (e.g. public and private keys) so only the participating parties can read the encrypted messages.
Smart Contract: A smart contract is a computer protocol that facilities the transfer of digital assets between parties considering the already agreed-upon stipulations or terms. It is a self-executing code that comes into action when pre-agreed conditions are met.
Blockchain: A blockchain is a distributed database spread across many computers with no central control, that can transform governance, business models and the functioning of organisations. A Blockchain stores information on digital assets (representing values, identities, agreements, property rights, credentials, etc.).
Ethereum: An open source platform to build Blockchain based applications. It permits distribution of a currency called ether (ETH); and allows storage and execution of code allowing for smart contracts.