INFORMATION TECHNOLOGY TRENDS

SIT 406

LESSON 9

BLOCKCHAIN
 Objectives

• What is blockchain technology

• Types of blockchain
• How Blockchain technology works and the three security measures it uses
• Applications of blockchain
• Implementation Challenges of blockchain
 Definition and Types

• Blockchain is a decentralized, distributed, immutable ledger which is used

to securely record transactions across many computers in a peer-to-peer
network, without the need of third party.
• According to (Ray P.P et al, 2020) there are four types of blockchain,
public, private, consortium and hybrid blockchains.
• Public blockchains provide a fully decentralized network, where every
member can access the blockchain content and could take part in the
consensus process.
• Private blockchains are dedicated for single enterprise solutions and
utilized to keep track of data exchanges occurring between different
departments or individuals.
Every participant need consent to join the network and considered as a known
member once it has been adhered. A consortium blockchain is a permissioned
network and public only to a privileged group.
It is used as an auditable and reliably synchronized distributed database that
keeps track of participant’s data exchanges.

Hybrid blockchains combine the benefits of private and public blockchains.

Therefore, a public blockchain is employed to make the ledger fully accessible,

with a private blockchain running in the background that can control access to
the modifications in the ledger.
 How Block Chain works and its security measures

How does it work

• Lets take close look at a block each data contain some data, the hash of the block, and hash
of the previous block.

•
• The data saved in a block depends on the type of blockchain eg the bitcoin blockchain stores the
details about the transaction which has the sender, receiver and the amount of coins.

•
• Block also has a hash. You can compare a hash to a finger print, it identifies a block and all
of its contents and it is always unique just as a finger print.

• Once a block is created, its hash is being calculated. Changing something inside the
block will cause the hash to change. So hashes are very useful if you want to detect
changes in a block.
• The hash of the previous block creates a chain of block and its this technique that makes
the blocks so secure. E.g. Here we have a chain of three blocks.

• Each block has a hash of the previous block.

• Block number 3 points block number 2 and number 2 points to number 1.

• The first block is a bit special, it cannot point a previous block because it is the first one.
This block is known as the genesis block.
• If you tamper with the second block, it causes the hash of the block to change. In turn that will
make block three, four and the following block invalid because they no longer store a valid hash
of the previous block.
• Using hash is not enough to prevent tampering. Computers this days are very fast and can
calculate hundreds of thousands of hashes per second. You can effectively tamper with the block
and recalculate all the hashes of other blocks to make your blockchain valid again.

• To mitigate this, block chain have something we call proof of work. It’s a mechanism that slows
down the creation of the new blocks. Eg in bitcoin it takes 10 minutes to calculate the required
proof of work and add a new block to the chain. This mechanism makes its hard to tamper with
the block because if you tamper with a block, you need to recalculate all the proof of work for all
the following blocks.

• So security of blocks is offered by hash and proof of work mechanisms.

• There is one more way block chain secure themselves and that is being distributed. Instead of
using a central entity to manage chain, block chain use a peer to peer network and everyone is
allowed to join, when someone joins this network he gets a full copy of this block chain. The node
can use this chain to verify that everything is in order.

• When someone creates a new block, it is sent to everyone on the network, each node verifies
the block to make sure it has not been tampered with and if everything checks out. Each adds
the block to its bock chain. All the nodes in the network creates consensus. If the block is
tampered it will be rejected.
Application of blockchain
 Healthcare during covid- 19 blockchain was used to combat pandemics
by enabling decentralized healthcare data sharing, protecting users’
privacy, providing data empowerment, and ensuring reliable data
management during outbreak tracking. intelligent computer-aided
solutions by analyzing a patient’s medical images and symptoms caused
by coronavirus for efficient treatments, future outbreak prediction, and
drug manufacturing. ( Jabarulla,et al, 2021. )
 Cyrptocurrency
Each transaction that is done by various corporation and individuals
through bitcoin and ethereum is recorded in form of blocks. This enhances
accuracy, transparency and speed of task (Hashemi Joo et al,2020). Thus
replacing the current task carried out in banks and financial institution.
Also, saving cost incurred in employment and operational cost.
 Identity Verification
 Estonia's e-Residency Program: Provides a digital identity for the initiation
and handling of the business on an online basis within the EU to the non-
Estonians. The blockchain secures the records of digital identities and also
confirms their integrity.
 Civic: It provides identity verification solutions that enhance privacy while
mitigating the threat of theft of an individual’s identity through the
platform based on the blockchain.
 Gaming and Collectibles
CryptoKitties: One of the world's first blockchain games that allow players to
buy, collect, breed, and sell virtual cats using digital tokens on the Ethereum
blockchain.
NBA Top Shot: A platform for fans to purchase, collect and trade officially
licensed NBA collectible highlights.
 Financial Services
Ripple: It utilizes blockchain technology to expedite real-time international
remittances as well as currency exchange, in a bid to enhance efficiency with
which cross-border business is done.
 Smart Contracts:
They allow running smart contracts that perform transactions once predefined
conditions have been automatically fulfilled, without intermediaries. It may be
applicable to lending and insurance.
Intellectual Property And Copyrights
KodakOne: A blockchain-based platform for photographers to register and
license their work.
 Machine learning
Block chain has been used in machine learning in above to show the use of
smart devices and how they are used by different clients. As the data provided
enhances users to develop smart homes and enhances insight in production of
commodities. This is made easier through the use of robotics thus saving on
time.
Fig 1 architecture for machine learning adopting block chain technology
Implementation Challenges
Challenges arising from implementation of blockchain technology generally fall
under technical, operational, regulatory, and societal challenges. Being
knowledgeable of these challenges is important to a person in the organization that
is interested in implementing blockchain solutions. Below are major
implementation challenges:
Technical Challenges
 1. Scalability: One of the biggest problems with many blockchain networks,
especially those that leverage proof-of-work (PoW) consensus mechanisms, is
the problem of scalability. High transaction throughput leads to network
congestion that promotes sluggish transactions and big fees.

 2. Interoperability: It introduces challenges for distinct blockchain networks

systems to interoperate and communicate with each other, thus making it
impossible for the transfer of assets as well as information between a myriad of
blockchain systems, thereby limiting its scope for wider applications
3. Energy Consumption:
PoW-dependent blockchain (like Bitcoin) requires tremendous energy usage,
therefore sustainability in terms of environmental and operational cost.

4. Data Privacy:
One of the concerns that might arise from the transparency in public blockchains is
the privacy of information shared among users of the network. Since the shared
transactions can be seen and accessed by anyone, some applications might prefer to
maintain secrecy on either the details of the transaction or the users' identity.

5. Security:
Though blockchains are cryptographically secured, they are not bulletproof for
attack. The menace of 51% attacks, imperfections in smart contracts, and other
security lapses loom large.
Operational Issues

 1. Integration into Existing Set-ups: Integration of Blockchain technology with

existing legacy systems and set-up is quite complicated as well as expensive, as
it may require replacement of the existing IT infrastructure and business
operations.
 2. Cost: Costed out in the deployment and further through maintenance of the
deployed blockchain solutions is likely to be high for this complex technology
particularly when implemented organization-wide. Such costed out for
implementation does not always commensurate with benefits derived by the
organization and possibly forms low-tractability scenarios for adoption of this
technology.
 3. User Adoption : Convincing stakeholders to adopt the technology which
underlays blockchain can be a tough task - especially when there is competition
with conventional solutions in industries that are change-averse or where the
benefits of say, transparency and immutability, are not immediately evident to
decision-makers.
Regulatory Challenges
 1. Uncertain Regulatory Environment: The blockchain technology is an emerging
domain with regulatory systems maturing in silos having more variations, less
uniformity across the jurisdictions. Such a situation escalates uncertainty and
complicates the blockchain adoption and developing.

 2. Compliance: It tends to become difficult to ensure the compatibility of blockchain

applications with the legal framework, enveloping the aspects of data protection (for
instance GDPR in Europe).
Challenges for the Society
 1. Public Perception: Starting from public, reaching regulators, the blockchain
technology and all cryptocurrencies making their space in everything wrong
developed such extreme biases related to perception on this disruptive technology.

 2. Knowledge and Skill Gap: Lack of skilled personnel who have versed in both the
technical and business angles of blockchain technology often presses the brake on
its development and eventual adoption.

All these challenges can only be surmounted in a group effort that will include
developers, smart businesses, regulators, and the community at large. Regarding these
challenges, developments around blockchain technology such as consensus algorithms
improvements for efficiency, enhanced mechanisms of privacy and cross-chain
interoperability solutions are being developed to fight these challenges. This can be
further facilitated by clearer regulatory frameworks and greater awareness and
understanding regarding the potential and limitations of blockchain.
 References
 Ray, P.P., Dash, D., Salah, K., Kumar, N.: Blockchain for IoT-based healthcare: background,
consensus, platforms, and use cases. IEEE Syst. J. (2020)
 Jabarulla, M. Y., & Lee, H. N. (2021, August). A blockchain and artificial intelligence-based,
patient-centric healthcare system for combating the COVID-19 pandemic: Opportunities and
applications. In Healthcare (Vol. 9, No. 8, p. 1019). MDPI.
 Hashemi Joo, M., Nishikawa, Y., & Dandapani, K. (2020). Cryptocurrency, a successful
application of blockchain technology. Managerial Finance, 46(6), 715-733.
 Tanwar, S., Bhatia, Q., Patel, P., Kumari, A., Singh, P. K., & Hong, W. C. (2019). Machine
learning adoption in blockchain-based smart applications: The challenges, and a way
forward. IEEE Access, 8, 474-488.
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