Blockchain system
Are blockchain and distributed ledger technology the same? This is a common misconception that many people have. We are living in a digital age of sound bites and buzzwords. An age where even complex technological solutions are reduced to five words or less. As a result, we are witnessing a rise in cunning businesses attempting to piggyback the so-called crypto boom. Predictably, using buzzwords such as blockchain technology to attract investment will only deliver short-term gains.
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15 Applications for Blockchain Technology
Staples, M. To the extent permitted by law, all rights are reserved and no part of this publication covered by copyright may be reproduced or copied in any form or by any means except with the written permission of CSIRO.
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CSIRO is committed to providing web accessible content wherever possible. If you are having difficulties with accessing this document please contact csiroenquiries csiro. We are grateful for the participation of Emma Weston from AgriDigital for input into the preparation of the agricultural supply chain sidebar in this report.
We have received helpful feedback on earlier drafts of this report from anonymous reviewers, and from the following reviewers.
Blockchain technologies originally emerged to support new forms of digital currency, but now hold promise as a new foundation for transactions in society. A blockchain is a distributed database, replicated across many locations and operated jointly by a collective. Blockchains transactions can support services for payments, escrow, notarisation, voting, registration, and process coordination. These are key in the operation of government and industry. Conventionally, these services are provided by specific trusted third-parties such as banks, legal firms, accountancy firms, government agencies, and service providers in specific industries.
With a blockchain-based system, rather than relying on third-party organisations, we could instead choose to rely on the blockchain software and on a majority of the collective that jointly operates the blockchain system. The report describes some of the technical risks and opportunities in the application of blockchain technologies within government and industry, and how to assess whether blockchain-based systems will meet critical requirements.
Three use cases have been selected after a number of initial workshops and preliminary research: remittance payments, open data registries, and agricultural supply chain. These provide reasonable coverage of various kinds of requirements and regulatory concerns, against which we can evaluate design alternatives, and in turn learn more general lessons about blockchain technologies.
In addition to this design-based analysis, we also report on some empirical results from testing prototype implementations. Compared to conventional centralised databases and computational platforms on-premises or cloud , blockchains can reduce some counter-party and operational risks by providing neutral ground between organisations.
Blockchain technologies may provide advantages for integrity and non-repudiation. However, they also currently have limitations for confidentiality, privacy, and scalability.
For latency and availability, reading is improved but writing is worsened. Blockchains are also subject to a different cost model. Digital currency transfer and long-term storage of transactional data may be less expensive. However, program execution and storage of big data may be more expensive. Public blockchains provide very low barriers to entry for new participants, which can facilitate competition, innovation, and productivity. However, they do not mandate authentication of those participants, which creates challenges for regulation of money laundering, terrorism financing, and tax avoidance.
Private blockchains can impose more controls on authentication and access, which can partly address those regulatory concerns. Still, for competitors within an industry consortium, private blockchains may not be private enough to provide normal levels of commercial confidentiality for business operations, competitive position, and customer relationships. When assessing business risk, regulatory acceptance, and assurance arguments for a blockchain-based system, we need to consider not just the blockchain, but also all of the other components that are integrated in the design of the whole system.
Other components will provide user interfaces, cryptographic key management, and off-chain databases, communications, and processing.
Finally, blockchains are still a rapidly evolving technology, with ongoing developments especially to improve scalability and confidentiality. There is still much that is unknown about the development of trustworthy blockchain-based systems. Further research is required to improve our knowledge about how to create blockchain-based systems that work, and how to create evidence that blockchain-based systems will work as required. Blockchains are a digital technology that combine cryptographic, data management, networking, and incentive mechanisms to support the checking, execution, and recording of transactions between parties.
Parties proposing a transaction may add it to a pool of transactions intended to be recorded on the ledger. Processing nodes within that blockchain community take some of those transactions, check their integrity, and record them in new blocks on the ledger.
The contents of the blockchain ledger are replicated across many geographically-distributed processing nodes. These processing nodes jointly operate the blockchain system, without the central control of any single trusted third party. Nonetheless, the blockchain system ensures that all nodes eventually achieve consensus about the integrity and shared contents of the blockchain ledger.
Transactions between parties such as payments, escrow, notarisation, voting, registration, and process coordination are key in the operations of government and industry. Traditionally, these transactions are supported by trusted third-parties such as government agencies, banks, legal firms, accounting firms, and service providers in specific industries. Blockchains provide a different way to support these transactions. Instead of trusting third-parties, we would trust a majority of the collective jointly operating the blockchain, and the correctness of their shared technology platform.
Blockchains were originally used for the Bitcoin [11] digital currency 1 , but are now being implemented in many other platforms, and used for many other purposes. Just like a traditional database, a blockchain can in principle be used to represent transactions or information in any kind of organisation in industry or society. Nonetheless, blockchains are different from traditional databases in important ways, and the full range of technical, organisational, and societal consequences of these differences are not yet well understood.
There are several kinds of blockchains, and to provide more general insights in this project we take a broad view. Other well-known systems, such as the Ethereum [16] blockchain, are similar in this regard. It is possible to use a separate instantiation of the Bitcoin or Ethereum computer programs to operate a blockchain within a private context, for example on a virtual private network. Private networks and private computer systems allow strong access controls.
This provides greater administrative control for private blockchains. However, the software for public blockchains is not always the best technical solution to use in a private setting. Many industry consortia, such as Hyperledger, R3CEV, and Ripple, are actively developing specialised private blockchain solutions.
These typically support a smaller number of processing nodes than public blockchain solutions, but can provide improved security and performance. A distributed ledger is in some ways a more abstract notion, capturing a purpose for use: the distributed replication of auditable logs of transactions, shared between parties of interest.
While public or private blockchain technologies can be used to implement a distributed ledger, there are alternative technological approaches which could be used instead. For example, the Corda system [4] implements distributed ledgers between parties, but unlike most blockchain systems does not have a global ledger that is independently checkable by all processing nodes.
In a permissioned private blockchain system, the admittance of processing nodes is controlled by its governing bodies. Consensus mechanism : Most public blockchains use Nakamoto consensus , where processing nodes by convention treat the longest history of blocks as the authoritative history.
The rate at which blocks can be created is limited, often by using a proof of work mechanism, whereby a processing node can only add a new block by demonstrating that a difficult task has been completed. Proof of work is widely used, but the auxiliary effort required to complete the difficult task can be economically inefficient. Proof of stake can be more efficient, but is more recent and has not yet been widely adopted.
Other consensus mechanisms have been proposed. On private blockchains, conventional replication algorithms such as practical Byzantine fault tolerance can be used instead of Nakamoto consensus. This can provide stronger guarantees about the completion of transactions, and may be more performant, but only support a smaller number of processing nodes which must be more trusted.
Representation of transactions : A distributed ledger may record financial transactions, such as in Bitcoin. However, a distributed ledger may be thought of as a shared database, and might allow any other kind of data to be recorded. In particular, the data recorded for a transaction may be the text of a computer program, and the integrity check for that transaction may involve executing that program. A blockchain transaction is not appropriate for all data — because it is replicated globally, transactions should not contain very large data, nor plaintext data which must be kept confidential.
However, even if static data is stored off-chain, the blockchain can nonetheless record a cryptographic hash of that data to allow its integrity to be checked. The transactions stored on a blockchain can be more than simple records of the exchange of assets — some blockchain systems also allow computer programs to execute and be stored as part of transactions on the ledger. The legal status of smart contracts as legal contracts is currently debated. A legal contract is an agreement between parties, and a computer program is either the text of source code or an executing physical machine.
So smart contracts, as computer programs, may be the wrong category of thing to be a legal contract. Nonetheless a smart contract may provide evidence for there being a legal contract, and may be able to facilitate the execution of a legal contract. Importantly as a mechanism for the execution of provisions of a legal contract, smart contracts can carry and conditionally-transfer digital currency and other digital assets or tokens between parties.
This can be done in a predictable and transparent way on the neutral ground provided by the mechanised infrastructure of a blockchain. As a result, blockchains can be more than a simple distributed database — they can be general computational platforms.
Albeit currently with severe practical limitations on computational complexity. This capability significantly expands the power of blockchain systems, and increases their range of use and potential for innovation.
Some blockchains eschew the use of Turing-complete smart contract languages, in order to facilitate the automated verification of the correctness of smart contracts. Private blockchains are increasingly deployed inside large enterprises and across industry consortia.
The adoption of blockchain technologies is still in its infancy. Globally, many financial services companies, governments, enterprises and startups are exploring the applicability of blockchain technologies in their domains.
New businesses and business models are expected to arise, but as yet there are very few examples of significant use in production of blockchain systems within industries or government.
Blockchains, particularly public blockchains, offer opportunities for disruptive innovation. As discussed earlier, blockchains may disintermediate trusted third-party organisations, thus disrupting conventional business arrangements across society.
In economies where trusted third-parties are not always trustworthy, a significant benefit of blockchain systems may be in the strong support they can provide for immutability and non-repudiation.
In developed societies, trusted third-party organisations are usually trustworthy, so the benefits of using blockchain technologies would likely arise from enabling faster business model innovation, reducing the cost of establishing business relationships, and perhaps reducing the cost or risk of transactions. Digital currency : new forms of money can be implemented on blockchains, but also a foundation for incentive models that support integrity for many blockchain systems.
Blockchains allow digital currency to be transferred between parties, often without those transfers being processed or recorded by banks or payment services. International payments : often via digital currency on a blockchain, with local exchanges between the digital currency and fiat currencies. Securities registration, clearing and settlement : where the joint exchange of payment and security holdings are enacted as a transaction on a blockchain.
Markets : smart contracts on blockchains can provide a platform for making and accepting offers to trade assets or services. The blockchain will record the status of these trade offers. Individual smart contracts could themselves carry the digital currency required to be paid on fulfilment of these offers.
ITCS 4158 - Blockchain System Architecture
Blockchains are tamper-proof distributed data structures in which transactions are recorded in chronological order and mapped in an understandable and unalterable form without any centralised control. Blockchain technology makes it possible to save and manage ownership more directly and efficiently than before because it works on the basis of uninterrupted and unalterable data recording. A particularly quick and simplified way to understand the basic structure of blockchains is by way of analogy with a distributed spreadsheet. Such a spreadsheet is copied and distributed throughout a network consisting of many computers. In the case of blockchain technology, the computer network regularly updates the spreadsheet and records any changes. The information saved in a blockchain therefore exists as a distributed spreadsheet or database that is continuously compared with the other versions of itself.
Advances in Security and Performance of Blockchain Systems
Blockchain promises to solve this problem. The technology behind bitcoin, blockchain is an open, distributed ledger that records transactions safely, permanently, and very efficiently. For instance, while the transfer of a share of stock can now take up to a week, with blockchain it could happen in seconds. Blockchain could slash the cost of transactions and eliminate intermediaries like lawyers and bankers, and that could transform the economy. In this article the authors describe the path that blockchain is likely to follow and explain how firms should think about investments in it. The level of complexity—technological, regulatory, and social—will be unprecedented. Contracts, transactions, and the records of them are among the defining structures in our economic, legal, and political systems. They protect assets and set organizational boundaries.
Explainer: What is a blockchain?
With the conceptualization of the blockchain as a socio-technical assemblage, this study aims to critically examine the blockchain initiatives in Korea in terms of the opportunities, risks and challenges embedded in their development. This paper analyzes blockchain design and development from socioecological views: social, technological and cultural phenomena that represent the strategic interaction among people, technology and society. The qualitative data were collected from a variety of sources and diverse means. The results imply that blockchain needs a close socio-technical examination to avoid simplistic assumptions of its promises and pitfalls.
The Truth About Blockchain
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Blockchain on AWS
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Official websites use. Share sensitive information only on official, secure websites. Blockchain represents a new paradigm for digital interactions and serves as the underlying technology for most cryptocurrencies.
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At Shell, we are leveraging blockchain technology to reimagine current processes, create new value propositions and establish new markets. We are leveraging blockchain technology to reimagine current processes, deliver cost savings, increase efficiencies and drive standardization across our processes and, indeed, across the entire energy industry. We will find new value propositions, particularly in emerging or rapidly evolving markets, by reimagining the operation of end-to-end value chains based on blockchain technology. Additionally, blockchain technology is making it possible to create completely new markets. Shell continues to support and initiate the creation of decentralised ecosystems.
This paper discusses blockchain technology as a public record keeping system, linking record keeping to power of authority, veneration temples , and control prisons that configure and reconfigure social, economic, and political relations. It discusses blockchain technology as being constructed as a mechanism to counter institutions and social actors that currently hold power, but whom are nowadays often viewed with mistrust. It explores claims for blockchain as a record keeping force of resistance to those powers using an archival theoretic analytic lens.
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