Blockchain can be described as a data structure or database. In a broader sense, blockchain is a decentralized system or network that combines certain technologies to create an exchange environment for its participants. As the internet has changed our lives, the potential for blockchain and distributed ledger technologies to do the same is considerable. The ideas behind blockchain technology stem from an open-source movement and build on existing technology to facilitate the exchange of value in general and assets in particular via a protocol on top of the internet. Current platform-based business structures face the risk of being replaced by evolving decentralized ecosystems and individuals are set to become empowered by sovereignty over their digital data and footprints.
The best way to explain blockchain is to break it down into its basic components. We define components as the applied technologies and concepts which are either standalone technologies or concepts in computer science, which have been researched for decades in contexts other than blockchain. We identify technical and mathematical components as well as economic, political and social concepts, which are intertwined to facilitate blockchain functionalities.
However, while Blockchain technology does offer a promising future, it has likely suffered from the hype of its potential applications. This hype opened the door for questionable and fraudulent enterprises claiming Blockchain technology as their core business. While this may have eroded some trust and confidence particularly in the finance and technology sectors, it has offered the benefit of increasing public attention and interest in the topic. Consequently, it has provided an incentive for academic research into its technical aspects and applications.
Some of the application of Blockchain is as follows:
Enhanced Security of Interconnected Devices
A major problem with the interconnectivity of the millions of devices needed to propagate an IoT phenomenon is the exponential increase in security concerns presented by the various interfaces through which network devices communicate. This includes the various security problems pertaining to the IoT including but not limited to low-level concerns such as interlocking adversaries and insecure physical interfaces, intermediate-level security concerns such as insecure neighbour discovery, authentication, and communication to high-level security problems that include insecure interfaces, software/firmware and middleware security.
A major problem with the interconnectivity of the millions of devices needed to propagate an IoT phenomenon is the exponential increase in security concerns presented by the various interfaces through which network devices communicate. This includes the various security problems pertaining to the IoT including but not limited to low-level concerns such as interlocking adversaries and insecure physical interfaces, intermediate-level security concerns such as insecure neighbour discovery, authentication, and communication to high-level security problems that include insecure interfaces, software/firmware and middleware security
From the user perspective, there is an inherent lack of trust in having devices that communicate constantly with the companies that spawned them and send private consumer data in a targetable way to profit-seeking entities. Such problems are assumed to be behind the delayed adoption of some home speaker and smart assistant devices for fear that companies would be spying on their customers. Blockchain helps address this problem by allowing “security through transparency” where a secure transfer of data among users would occur while maintaining the anonymity of their specific identity.
Blockchain addresses the security dilemma currently faced by constrained devices in an IoT framework where organizations cannot implement current access control standards but at the same time do not want to include powerful centralized mechanisms (due to privacy and data sensitivity concerns). To that end, Blockchain enables the introduction of a decentralized authorization management framework that leverages the consistency of the Blockchain technology in addressing privacy and data sensitivity concerns.
Smart Contract Provisions
Smart contracts leverage blockchain technology in order to build contracts and agreements between various parties. These agreements are essentially computer programs with specific instructions allowing them to be executed within the context and applicability of precise parameters. Existing on the blockchain, these contracts are part of a decentralized environment and allow for the automation and execution of multi-step procedures thereby facilitating information and currency exchange on the blockchain.
An example of a smart contract can be found on the Ethereum platform, whereby issuers of new cryptocurrencies set certain exchange rates between a new crypto currency and that of Ethereum. These parameters depend on the issuer of the contract itself and can range from the volume of the transaction to the overall volume of currency distributed up to that point in time. Through the smart contract, the issuer can automate the process of users sending their Ethereum tokens and receiving the appropriate and equivalent amounts of the crypto currency in question.
With the use of Blockchain technology, the full automation of device interactions through the network is expected. For multiple interacting devices. Blockchain can allow user-less exchanges of information between the different inputs such as the transmitter from one component and the receiver from another. For example, when a container gets on board a ship, a truck for delivery or to a home address, the interaction is automatically recorded in the Blockchain and removes the human error component and added labour of tracking items.
A shift towards a decentralized architecture would lead to a more sustainable ecosystem, the current centralized model requires too much maintenance costs, especially for something as simple as distributing a software update to millions of devices not just once, but on a continuous basis even after they are no longer manufactured.
An example can be used to demonstrate the application of anonymity using blockchain’s private/public feature found in its hashing algorithm, by considering vehicle intelligence and communication. Specifically, blockchain would leverage asymmetric encryption in order to generate a public and private key which are then assigned to vehicles, thereby enabling them to transact among one another through the public key while retaining anonymity through the securing of the private key. Consequently, cars will be able to exchange data directly with each other using the blockchain peer network infrastructure (such as the one used today for car crypto currencies) in order to exchange traffic information and other sensitive data while maintaining the anonymity of the vehicle itself and by extension its driver.
Blockchain technology possesses certain characteristics that render it a valuable tool for industrial applications and a potential source of disruption for established industries. These include the immutability of the ledger, the decentralization of the data, the preservation of privacy, the allowance of trustless transactions, the efficiency and sustainability of processes as well as the ability to automate multi-step processes using smart contracts.
Blockchain applications have focused heavily on sectors of the industry, namely IoT, Energy, Finance, Healthcare, and Government; this focused interest is likely due to the propensity for such industries to benefit by the unique combination of advantages that blockchain offers into the market.