A Survey Report on
Blockchain and Applications using Blockchain Techniques
158.738 Implementation & Management of System Security
Ann Susan Sebastian (17205838)
Table of Contents
TOC o “1-3″ h z u 1.Abstract PAGEREF _Toc528003621 h 32.Introduction PAGEREF _Toc528003622 h 33.Blockchain Technology PAGEREF _Toc528003623 h 33.1Structure of blockchain PAGEREF _Toc528003624 h 43.2Consensus Algorithms used in blockchain PAGEREF _Toc528003625 h 53.3Working of Blockchain PAGEREF _Toc528003626 h 63.4Some drawbacks of blockchain PAGEREF _Toc528003627 h 74.Key characteristics of Blockchain – Literature review PAGEREF _Toc528003628 h 75.Search methodology PAGEREF _Toc528003629 h 86.Applications based on Blockchain techniques PAGEREF _Toc528003630 h 96.1Some Existing Blockchain Applications in various fields PAGEREF _Toc528003631 h 96.2Trending blockchain applications worldwide PAGEREF _Toc528003632 h 116.3Some future applications using Blockchain techniques PAGEREF _Toc528003633 h 127.Conclusion PAGEREF _Toc528003634 h 15Bibliography PAGEREF _Toc528003635 h 16
AbstractBlockchain technology is becoming incredibly popular nowadays and its capabilities enable the existing applications to improve and develop new applications and are growing throughout the years. Like bitcoin which is the first successful digital currency, the researchers are applying blockchain technology in different areas. This report focusses on blockchain and applications that use blockchain technology, their advantages and limitations.
IntroductionBlockchain was developed by Satoshi Nakamoto in 2008. Bitcoin was the first application based on blockchain. Bitcoin is also the first digital currency for online payment transactions. The success of Bitcoin inspired others to develop applications which applies blockchain technique. Blockchain based applications are developed across various fields such as finance, music, IoT, healthcare, digital ID, agricultural, data storage and so on. In this paper, we will first discuss what blockchain is, the structure of a block, algorithms used and how the technology works. In section 6, we discuss some blockchain based applications in various fields, their advantages, and disadvantages.
Blockchain Technology”A blockchain is essentially a distributed database of records, or public ledger of all transactions or digital events that have been executed and shared among participating parties” CITATION Mic16 l 1033 (Michael Crosby, 2016). In simple words, blockchain contains a chain of blocks where each block stores information. It is a distributed ledger which is open to anyone and once the information is recorded in a block then it is difficult to tamper or erase the information. It stores the data of every single transaction ever made. Blockchains use P2P network where everyone is allowed to join. When someone joins the network, the person gets the full copy of blockchain. When a user adds a new block, it is sent to all nodes and they verifies it. If the block is valid, it is then added to their own blockchain.
Blockchain technology includes different techniques such as cryptography, mathematics, algorithms, peer to peer networks, altogether makes it an integrated multi-field infrastructure construction. CITATION Iuo17 l 1033 (Iuon-Chang Lin, 2017).
Structure of blockchainA block contains a block header and a block body. Block header consists of block version, hash/markle tree, timestamp, nBits, Nonce and parent block hash whereas block body consists of transaction counter and transactions. Fig.1 shows the structure of a block.
Fig. 1. Structure of a Block in blockchain
Block version: Version number that indicates the set of block validation rules.
Hash/Merkle tree root: When a transaction is executed, it produces a hash value and broadcasts to all blocks. Since there are thousands of transaction records in each node of a block, blockchain uses Merkle tree function to calculate a hash value which will be stored in block header. CITATION Iuo17 l 1033 (Iuon-Chang Lin, 2017). Merkle tree produces digital finger print of all transaction records so that a user can check if a transaction is included in a block or not. (Ray, 2017,para.2). Merkle tree is a bottom-up tree which is created by hashing pairs repeatedly (hash of individual transactions) until only one hash is left. This hash value is called a root hash or merkle root.
Timestamp: It holds the time the block is generated.
nBits: target threshold
Nonce: 4 byte value starting from 0 and increments for every hash value calculation. CITATION Zib17 l 1033 (Zibin Zheng, 2017)Parent block hash: 256-bit hash value pointing to the previous block. This creates a chain of blocks and thus makes blockchain secure. The first block in the blockchain is called Genesis block. When the hash value of a block has tampered then it makes the following blocks invalid. This makes this technology secure. But nowadays there are softwares that can tamper hash values and calculate the hash value of blocks in seconds and make the blockchain work. In order to prevent this, blockchain uses proof of work technique. We will discuss this mechanism in section 3.2.
Block body: This section consists of transaction counter and transactions. The number of transactions in a block is dependent on the size of the block and each transaction size.
Consensus Algorithms used in blockchainProof of Work
PoW (Proof of work) is a consensus algorithm used in blockchain technology that makes a network invulnerable to attacks. Each node of a network calculates hash values. The nodes that calculate hash values are called miners. A block contains a Nonce value and miners alters the nonce value frequently to produce different hash values. CITATION Zib17 l 1033 (Zibin Zheng, 2017). This calculated hash value is equal or less than difficulty target. Difficulty target is the time taken for a node to calculate a hash value less than a target value. CITATION Iuo17 l 1033 (Iuon-Chang Lin, 2017). When a node reaches the target value, it broadcasts the block to all the nodes and it confirms the accuracy of the hash value. CITATION Zib17 l 1033 (Zibin Zheng, 2017). After validating the block, the miners will add this block into its blockchains.
The new block is connected to the blocks in front of it. “The length of the chain is proportional to the amount of workload. If anyone wants to tamper with the blockchain, he needs to control more than 50% of the world’s hashing power to ensure that he can become the first one to generate the latest block and master the longest chain.” CITATION DuM17 l 1033 (Du Mingxiao, 2017). This guarantees the safety of blockchain.
Satoshi Nakamoto used HashCash PoW system in Bitcoins. For bitcoins, it takes around 10 minutes to create a block.
Proof of Stake
The operation of blockchain based on PoW consumes too much energy since for generating one block it has to do a number of hash calculations exceeding 260 . CITATION Agg16 l 1033 (Aggelos Kiayias, 2016). PoW is substituted by PoS ( proof of state) to save energy and make it more efficient. According to Zibin Zheng (2017), people with more currencies are less likely to attack the network. PPCoin is the first application that uses PoS. It uses coin age based selection. Coin age is calculated by multiplying its value by time period it is created. Longer a node holds the coin increase the probability of mining the next block. The holders also get rewards according to coin age. The formula used in PoS is proofhash < coin age * target. “The proofhash is a compose hash value of the weight factor, the unspent output value and the fuzzy sum of current time.” CITATION Zib17 l 1033 (Zibin Zheng, 2017). PoS also guarantees more security than PoW. This is because attackers need to hold a large number of coins and hold it long enough to attack the network. Blackcoin, Nxt are some other applications of PoS but they have different methods (other than coin age).
Delegate Proof of Stake
In DPoS, each node votes for a witness to secure their network. The top witnesses that hold the most number of votes have the accounting right. The elected witness creates new blocks assigned and receive rewards. If the elected witness is not able to create assigned block then the activity of that block will be moved on to the next block and people in the network or stakeholders vote for a new witness. CITATION DuM17 l 1033 (Du Mingxiao, 2017). System using DPoS is more efficient and faster than PoW and PoS. BitShare is an application of DPoS.
Working of BlockchainFollowing are the summarized steps of a blockchain. (Fig.2)
Users in P2P network use private/public keys to interact with blockchain. The users use a private key to sign their transaction and broadcast on the network using public key. Blockchain uses asymmetric cryptography to ensure authentication and integrity. CITATION Kon16 l 1033 (Konstsntinos Christidis, 2016).
The neighbouring users validate the transaction and accept if the transaction is valid and discard if its invalid.
After receiving the transactions the node executes consensus algorithm such as proof of work or proof of state or any other.
After executing consensus algorithm the block is then stored in the chain and every other node adds this block into its chain.
These steps go on repeating.
Fig. 2 Working of a blockchain
Some drawbacks of blockchain
Scaling: In a blockchain network all nodes record transactions and the number of blocks increases and the network size grows. Storage of large volume transactions becomes a burden for network members to handle.
Redundancy: In blockchain all the transactions by every member in the network are recorded which increases the redundancy. Considering a Bank, there is no need for the bank to share the transaction details to every other bank. CITATION Amm16 l 1033 (Ammous, 2016)Irreversibility: If there is an error in a transaction, it is very difficult to reverse it. Only possibility to reverse is to engage in hard fork, where all nodes agree to move simultaneously to a changed blockchain. This requires 51% of the processing power of the network. CITATION Amm16 l 1033 (Ammous, 2016)Key characteristics of Blockchain – Literature ReviewFor literature review, I collected articles discussing the key characteristics of blockchain technology. Based on the following properties I created a review table showing the characteristics the authors discussed in there research works. (Table 1).
Author Article Title & year Decentra-
lization Immutable Transparent Openness Auditable Anonymity
Kefa Rabah Overview of Blockchain as the Engine of the 4th Industrial Revolution; 2016 ?
Deepak Puthal, Nisha Malik, Saraju P. Mohanty,
Elias Kougianos, and Gautam Das Everything You Wanted to Know About the Blockchain; 2018 ?
JianiWu, Nguyen Khoi Tran Application of Blockchain Technology in Sustainable
Energy Systems: An Overview; 2018 ?
T.Prathyusha, M.Kavya, P.Sree Laxmi AkshitaBlock Chain Technology; 2018 ?
Iuon-Chang Lin, Tzu-Chun Liao A Survey of Blockchain Security Issues and Challenges; 2017 ?
Zibin Zheng, Shaoan Xie, Hongning Dai, Xiangping Chen, Huaimin Wang An Overview of Blockchain Technology:Architecture,Consensus, and Future Trends; 2017 ?
Table. 1. Literature review table
Search methodologyKeyword Sort order (year) Search engine/Database
Blockchain Anytime Google scholar, Wikipedia,
Structure of blockchain Anytime Google scholar
Merkle tree Since 2017 Google scholar, Wikipedia
Key elements of blockchain Anytime Google scholar
Consensus algorithms Anytime Google scholar
Proof of work Anytime Google scholar
Proof of stake Anytime Google scholar, Wikipedia
Decentralization Anytime Google scholar, Google
Working of blockchain Anytime Google scholar
Hyperledger Anytime Google scholar, Wiki
Hyperledger Since 2016 Google scholar
Gridcoin Anytime Google scholar, Wiki
Blockchain in healthcare Since 2016 Google scholar
Smart contracts Anytime Google scholar
Voting based on blockchain Anytime, since 2017 Google scholar
Blockchain in finance industry Anytime Google scholar
Crowdfunding Anytime Google scholar, Wikipedia
Emerging blockchain applications Since 2018 Google scholar
Blockchain in identity management Anytime Google scholar
MedRec Since 2016 Google scholar
Applications based on Blockchain techniquesSome Existing Blockchain Applications in various fieldsHyperledger Fabric
It is a permission blockchain infrastructure with distributed ledger platform developed under Hyperledger Project by IBM for running chaincodes (smart contract). This system is mostly aimed at the business sector. It is designed to create pluggable functions which allow you to use any programming language to implement chaincodes. CITATION Saj18 l 1033 (Sajana P, 2018). The architecture of Hyperledger fabric is organized based on three services: blockchain services, membership services, and chaincode services.
This architecture offers the following,
No complete transparency since it uses permissioned blockchain instead of public
Since it does not use PoW, the system is not immutable
In this system, all the participants have to register with the network and the transactions between them are private and confidential. CITATION Saj18 l 1033 (Sajana P, 2018).
Gridcoin is peer to peer internet based cryptocurrency using blockchain technique to crowdsource computations in scientific projects. The main difference between Gridcoin and Bitcoin is that Gridcoin uses proof of state algorithm instead of proof of work to save energy. It uses environmental friendly approaches to distribute coins to the nodes and secures the network. It uses a new algorithm proof of research to give rewards (Gridcoins) to the participants who perform calculations on BOINC (Berkeley Open Infrastructure for Network Computing). CITATION Cho18 l 1033 (Chohan, 2018). Gridcoin rewards have two parts: Proof of stake – generate coins new coins based on an interest rate of 1.5% p.a. on the staking coins and; proof of research depends on the user participation in BOINC. Extra Gridcoins are rewarded to the user who relatively participates in BOINC compared to all other users.
Environmental friendly: energy efficient since it uses proof of stake instead of proof of work
Blockchain in Finance industry
Usage of blockchain technique in finance industry is widely accepted all over the world. It ensure secured and transparent of transactions between trading parties. Each transaction are added to blocks and then local authority confirms for the data legitimacy. By doing this it is easier to detect money theft and fraudulent activities in stock exchange. CITATION Geo15 l 1033 (George Foroglou, 2015).
Blockchain technique is also used in crowdfunding. Applying decentralized platform in crowdfunding solves the issue of trust problem. It manages the sponsor’s money and when the campaign becomes successful, it distributes money to the runners and if not successful, then the money is returned back.
Identification system has various issues like security, privacy, and usability. By combining decentralized blockchain and identity verification these issues can be resolved. It creates a digital watermark that is added to all the online transactions by the users which represent the identity of the user. The user does not need to enter a username or password to login. After every transaction, the organization checks the identity of the transactions so that it eliminates the chances of fraud activities. CITATION Jac16 l 1033 (Jacobovitz, 2016) Trending blockchain applications worldwideSmart Contracts
Smart Contract is one of the emerging blockchain application in recent years. Smart contract was developed as a part of Ethereum project. CITATION Geo15 l 1033 (George Foroglou, 2015). Nowadays Codius and some other companies using bitcoin begins to support smart contract. A user can create a virtual contract with more than one parties where the entity should fulfil the contract bound with the agreement. CITATION Dan18 l 1033 (Daniel Macrinici, 2018). Also, the participants involved can respond and store the data. Cases in which lawyers or bank need to create a contract can be replaced by smart contracts and it is automatically enforced by the computer protocols. CITATION Mic16 l 1033 (Michael Crosby, 2016).
Smart contract is used in various fields such as financial, commercial market, agricultural market and real estate. The number of uses of smart contract is limitless.
Advantages of Smart contract:
No third party participation
Secure: data cannot be lost or attacked
Less time consuming and fast: The contract is automated, there is no human participation
Drawbacks:Cannot change data: You cannot change a transaction if you entered a wrong one
Third party agents are not fully eliminated, they take a different role
Blockchain based Voting system
Blockchain based voting system was first implemented by Danish political party for election purposes. CITATION FXa16 l 1033 (F. Xavier Olleros, 2016). The voters are connected to the PC based system using an open source code. This open source code is a kind of authentication source to prove the identity. The voter enters a private key to get the right to vote and use a public key to select the choice and confirms it. Each voter has a coin which can be used to vote only once. This vote is recorded into the blockchain and cannot be changed. BitCongress is an example of this system. It uses Ethereum platform and every voter has a “votecoin” with them which can be used only once. Other examples are Remotengrity, AgoraVoting which includes bitcoin network used by Spanish Congress. After 2016 US Election, there were rumours that the voting system was tampered by hackers and most countries started applying blockchain technology in voting system. CITATION Teo17 l 1033 (Teogenes Moura, 2017). The transformation of paper voting system to digital system is evolving.
Voting system is connected to P2P network where nodes communicate with each other. This might lead to cyber-attacks CITATION Teo17 l 1033 (Teogenes Moura, 2017).
Blockchain uses more energy and the process is slow. So applying this system in National elections are not recommended. CITATION FXa16 l 1033 (F. Xavier Olleros, 2016).
Blockchain in Healthcare
According to WHO (World Health Organization) 10% of drugs are fake across the world which affects the human life style products such as supplements, body building products and even in treatments for cardiovascular disorders. CITATION Mat16 l 1033 (Mettler, 2016). Counterfeit Medicines Project launched by Hyperledger research network focusses on this drug issue. They use blockchain technology to monitor the production of drugs. A timestamp is attached to the drug when it is produced. By using timestamp, it is possible to determine when and where the drug was produced. The origin of the drug and its components can be detected using blockchain and the transfer of ownership of these drugs are available to everyone. Here, blockchain ensures the safety of the drugs produced. Poor quality, fake or stolen drugs can be tracked using blockchain. CITATION Mat16 l 1033 (Mettler, 2016).
Guardtime is a Netherland based security firm that uses blockchain technique to validate the patient identities. The people were given a smartcard that links with the EHR and connected to the blockchain. CITATION Ang181 l 1033 (Angraal, Krumholz, & Schulz, 2018). Any update on EHR will be hashed and stored in the blockchain and these data cannot be modified maliciously. This solves the security problem in this sector.
Some future applications using Blockchain techniquesBlockchain based Internet of Vehicles
IoV has some huge challenges for storing large data, security and management. Blockchain technology is applied to this system to minimize these challenges and but mostly makes the vehicle networking more secure. Fig 3. shows blockchain based IoV network structure. In this network, there are five blockchain nodes. CITATION Tig18 l 1033 (Tigang Jiang, 2018).
N1: Advance management – vehicles, road monitoring nodes, vehicle management nodes
N2: Vehicle monitoring – vehicles, toll station nodes, car manufacturer nodes
N3: Audio video surveillance
N4: Insurance, vehicles, insurance company nodes
N5: General trading categories, vehicles, toll stations, gas stations.
Fig. 3. Blockchain based IoV network
Moving vehicle transmits its generated data to the network using neighbouring nodes such as roadside nodes, toll station nodes, gas station nodes, neighbouring vehicles. If there is no available roadside system it uses 4G telecommunications network. CITATION Tig18 l 1033 (Tigang Jiang, 2018). When a vehicle generates new data, it chooses the roadside nodes for data transmission. Since there are sudden changes in speed and poor quality of transmission results in failure. If transmission fails again and again then it chooses 4G network. In blockchain, the block contains hash value of previous block, timestamp and block is distributed by P2P. In order to secure the data, IoV uses blockchain with “lag timestamp range”. The verification of block is based on timestamp and but is verified jointly by some other blocks whose time stamp is within a certain range. Thus data corruption caused in one RsU node which was attacked can be avoided. CITATION Tig18 l 1033 (Tigang Jiang, 2018).
Machine to machine electricity market
Blockchain technology is used to ease machine-to-machine interactions and creates M2M electricity market. Fig 4 shows the scenario of blockchain in M2M electricity market.
Multichain is used to create blockchain in this system. It is a software package used for creating and working of private blockchains.
Aspen Plus: Process modelling and optimization software to simulate industrial process.
Windows 10 machine having 3 Fedora 24 virtual machine.: It represents producers and consumers and receives data.
Fig. 4. Blockchain based electricity market
The system consists of two electricity producers and one electricity consumer and they exchange data over a blockchain. The producers post exchange offers of energy (kWh) for currency (US Dollar) in Stream. It shows the offers posted by the producers. After publishing the offers, the consumer looks through the offers and accepts the cheapest offer which satisfies him. The offer is executed as an atomic exchange where the two simultaneous transactions are executed and both succeed or fail together. CITATION Jan17 l 1033 (Janusz J. Sikorski, 2017).
It is a decentralized record management system based on blockchain technology which handles EMRs of patients. Most of the patients leave their medical information scattered across the providers and they lose access to this information after a few years. MedRec provides easy access to patients to access their medical records across providers and health treatment sites. CITATION Asa16 l 1033 (Asaph Azaria, 2016).
Fig. 5. Diagram showing working of MedRec
The physician adds new medical record through MedRec Provider App and the record is stored in the Provider Database.(Fig.5). The new record and hashed reference to the data is added to the blockchain using Ethereum client and MedRec library APIs. A patient can retrieve or download from the Provider Database only after database gatekeeper confirms their access and data ownership rights. The gatekeeper checks the incoming data query requests. Each request is cryptographically signed by the patient who requested it and hence gatekeeper confirm its identity. After verifying the signature, the gatekeeper checks blockchain patient-provider contract to determine whether the requester is allowed for data viewership. If the request is accepted then it retrieves the data and syncs with the database.
Immutable and auditable history of medical records.
Easy access for patients to get the record
Privacy: The identity of a patient can be retrieved from the metadata of Ethereum address. One solution for this is to use delegated contracts.
ConclusionThe popularity of blockchain technology started with the success of Bitcoin in 2008. In this report, we saw that the application of blockchain technique is spreading in both financial and non-financial sectors and the main reason is that of the key characteristics of this technology. Even though there are some drawbacks in blockchain it is overshadowed by the features of blockchain. According to David W. Cearley (2017) blockchain is No.8 in the list of trending technologies for 2018. The applications based on blockchain will continue to grow in different areas in the future.
Bibliography BIBLIOGRAPHY Aggelos Kiayias, I. K. (2016). A Provably Secure Proof-of-Stake Blockchain Protocol.
Ammous, D. S. (2016). Blockchain Technology: What is it good for?
Angraal, S., Krumholz, H. M., & Schulz, W. L. (2018). Blockchain Technology Applications in Health Care. Circ Cardiovasc Qual Outcomes, 1-3.
Asaph Azaria, A. E. (2016). MedRec: Using Blockchain for Medical Data Access and Permission Management. 2nd International Conference on Open and Big Data, 25-30.
Chohan, U. W. (2018). Environmentalism in Cryptoanarchism: Gridcoin Case Study. University of New South Wales, School of Business and Economics, Canberra.
Daniel Macrinici, C. C. (2018). Smart contract applications within blockchain technology: A systematic mapping study. Telematics and Informatics, 1-17.
David W. Cearley, B. B. (2017). Top 10 Strategic Technology Trends for 2018.
Deepak Puthal, N. M. (2018). Everything You Wanted to Know About the Blockchain. IEEE Consumer Electronics Magazine, 6-14.
Du Mingxiao, M. X. (2017, October). A Review on Consensus Algorithm of Blockchain. IEEE International Conference on Systems, Man, and Cybernetics (SMC), 2567-2571.
F. Xavier Olleros, M. Z. (2016). Research Handbook on Digital Transformations (Vol. 1). Cheltenham, UK: Edwad Elgar.
George Foroglou, A.-L. T. (2015). Further applications of the blockchain. University of Macedonia, Finance and Accounting.
Iuon-Chang Lin, T.-C. L. (2017, September). A Survey of Blockchain Security Issues and Challenges. International Journal of Network Security, 19(5), 653-659.
Jacobovitz, O. (2016). Blockchain for Identity Management. Ben-Gurion University, Computer Science.
Janusz J. Sikorski, J. H. (2017). Blockchain technology in the chemical industry: Machine-to-machine electricity market. Applied Energy, 234-246.
JianiWu, N. K. (2018). Application of Blockchain Technology in Sustainable Energy Systems: An Overview. Sustainability, 1-22.
Konstsntinos Christidis, M. D. (2016, June 3). Blockchains and Smart Contracts for the Internet of Things. Special Section on the Plethora of Research in Internet of Things (IoT), 4, 2292-2301.
Laure A. Linn, M. B. (2016). Blockchain For Health Data and Its Potential Use in Health IT and Health Care Related Research.
Mettler, M. (2016). Blockchain Technology in Healthcare The Revolution Starts Here. IEEE 18th International Conference on e-Health Networking, Applications and Services (Healthcom).
Michael Crosby, N. P. (2016). BlockChain Technology: Beyond Bitcoin. Applied Innovation Review(2), 7-15.
Michael Nofer, P. G. (2017). Blockchain.
Rabah, K. (2016, October). Overview of Blockchain as the Engine of the 4th Industrial Revolution. Mara Research Journals, 1(1), 125-135.
Ray, S. (2017). Merkle Trees. Retrieved from Hackernoon: https://hackernoon.com/merkle-trees-181cb4bc30b4
Sajana P, S. M. (2018). On Blockchain Applications: Hyperledger Fabric And Ethereum. International Journal of Pure and Applied Mathematics, 118(18), 2965-2970.
T.Prathyusha, M. P. (2018, March). Block Chain Technology. International Journal of Computer & Mathematical Sciences, 7(3), 232-237.
Teogenes Moura, A. G. (2017). Blockchain Voting and its e?ects on Election Transparency and Voter Confidence. Brazil.
Tigang Jiang, H. F. (2018). Blockchain-based Internet of Vehicles: Distributed Network Architecture and Performance Analysis. IEEE Internet of Things Journal, 1-10.
Zibin Zheng, S. X. (2017). An Overview of Blockchain Technology: Architecture, Consensus, and Future Trends. IEEE 6th International Congress on Big Data, 557-563.