Mastering Blockchain

111 Blockchain-Outside of

Currencies Digital currencies were the first ever application of blockchain technology, arguably without realizing its true potential. With the invention of bitcoin the concept of blockchain was introduced for the very first time, but it wasn't until 2013, with the advent of Blockchain 2.0 that the real benefits of blockchain were realized with its possible application in many different industries. Since then a number of use cases of blockchain technology in different industries, have been proposed including but not limited to finance, the Internet of Things, digital rights management, government, and law. In this chapter, four main industries namely the Internet of Things (IoT), government, health, and finance, have been selected for discussion. Readers will be introduced to all these fields and various related use cases will be presented.

Internet of Things The Internet of Things or IoT for short has recently gained much traction due to its potential for transforming business applications and everyday life. IoT can be defined as a network of computationally intelligent physical objects that are capable of connecting to the Internet, sensing real-world events or environments, reacting to those events, collecting relevant data, and communicating it over the Internet. This simple definition has huge implications and has led to exciting concepts, such as wearable's, smart homes, smart grids, smart connected cars, and smart cities, that are all based on this basic concept of an IoT device. After dissecting the definition of IoT above, there are four functions that come to light as being performed by an IoT device. These include sensing, reacting, collecting, and communicating. All these functions are performed by using various components on the IoT device.

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Sensing is performed by sensors. Reacting or controlling is performed by actuators, collection is a function of various sensors, and communication is performed by chips that provide network connectivity. One thing to note is that all these components are accessible and controllable via the Internet in the IoT. An IoT device on its own is perhaps useful to some extent but if it is part of a larger IoT ecosystem it is more valuable.

A typical IoT can consist of many physical objects connecting with each other and to a centralized cloud server. This is shown in the diagram below:

Elements of IoT are spread across multiple layers and various reference architectures exist that can be used to develop IoT systems. Generally, a five layer model can be used to describe IoT, which contains a physical object layer, device layer, network layer, services layer, and application layer. Each layer or level is responsible for various functions and includes various components. These are described in detail below.

Physical object layer These include any physical real-world objects includes people, animals, cars, trees, fridges, trains, factories, homes, and in fact anything that is required to be monitored and controlled can be connected to the IoT.

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Device layer This layer contains things that make up the IoT such as sensors, transducers, actuators, smart phones, smart devices, and Radio Frequency Identification tags (RFIDs). There can be many categories of sensors such as body sensors, home sensors, and environmental sensors based on the type of work they perform. This is the core of an IoT ecosystem where various sensors are used to sense real-world environments. This includes sensors that can monitor temperature, humidity, liquid flow, chemicals, air, pressure, and much more. Usually, an Analog to Digital Converter (ADC) is required on a device in order to turn the real-world analog signal into a digital signal that a microprocessor can understand.

Actuators in this layer provide the means to enable control of external environments, for example, starting a motor or opening a door. These components also require digital to analog converters in order to convert a digital signal into analogue. This is especially relevant when control of a mechanical component is required by the IoT device.

Network layer This layer is composed of various network devices that are used to provide Internet connectivity between devices and to the cloud or servers that are part of the IoT ecosystem. These devices can include gateways, routers, hubs, and switches. This layer can include two types of communication. First is the horizontal means of communication, which includes radio, Bluetooth, WiFi, Ethernet, LAN, ZigBee, and PAN and can be used to provide a communication between IoT devices. Second, we have communicating to the next layer, which is usually through the Internet and provides communication between machines and people or other upper layers. The first layer can optionally be included in the device layer as it physically is residing on the device layer where devices can communicate with each other at the same layer.

Management layer This layer provides the management layer for the IoT ecosystem. This includes platforms that enable processing of data gathered from the IoT devices and turn that into meaningful insights. Also, device management, security management, and data flow management are included in this layer. It also manages communication between the device and application layers.

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Application layer This layer includes applications running on top of the IoT network. This can include a number of applications depending on the requirements such as transportation, healthcare, financial, insurance, or supply chain management. This of course is not an exhaustive list by any stretch of the imagination; there is a myriad of IoT applications that can fall into this layer:

With the availability of cheap sensors, hardware, and bandwidth, IoT has gained popularity in recent years and currently has applications in many different areas including healthcare, insurance, supply chain management, home automation, industrial automation, and infrastructure management. Moreover, advancements in technology such as the availability of IPv6, smaller and powerful processors, and better Internet access have also played a vital role in the popularity of IoT. The benefits of IoT range from cost saving to enabling businesses to make vital decisions and thus improve performance based on the data provided by the IoT devices. Raw data from millions of things (IoT devices) is analyzed and provides meaningful insights that help in making timely and effective business decisions.

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The normal IoT model is based on a centralized paradigm where IoT devices usually connect with a cloud infrastructure or central servers in order to report and process the relevant data back. This centralization poses certain possibilities of exploitation including hacking and data theft. Moreover, not having control of personal data on a single, centralized service provider also increases the possibility of security and privacy issues. Whilst there are methods and techniques to build a highly secure IoT ecosystem based on the normal IoT model there are certain much more desirable benefits that blockchain can bring to IoT. A blockchain-based IoT model differs from the traditional IoT network paradigm. According to IBM, blockchain for IoT can help to build trust, reduce costs, and accelerate transactions. Additionally, decentralization, which is at the very core of blockchain technology, can eliminate single points of failure in an IoT network. For example, a central server perhaps is not able to cope with the amount of data that billions of IoT devices (things) are producing at high frequency. Also the peer-to-peer communication model provided by blockchain can help to reduce costs because there is no need to build high-cost centralized data centres or implementation of complex public key infrastructure for security. Devices can communicate with each other directly or via routers.

As an estimate from various researchers and companies, by 2020 there will be roughly 22 billion devices connected to the Internet. With this explosion of billions of devices connecting to the Internet, it is hard to imagine that centralized infrastructures will be able to cope with the high demands of bandwidth, services, and availability without incurring excessive expenditure. Blockchain-based IoT will be able to solve scalability, privacy, and reliability issues in the current IoT model.

Blockchain enables things to communicate and transact with each other directly and with the availability of smart contracts negotiation and financial transactions can also occur directly between the devices instead of requiring a middleman, authority, or human intervention. For example, if a room in a hotel is vacant, it can rent itself out, negotiate the rent, and can open the door lock for a human who has paid the right amount of funds. Another example could be that if a washing machine runs out of detergent, it could order it online after finding the best price and value based on the logic programmed in its smart contract.

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The above mentioned five-layer IoT model can be adapted to a blockchain-based model by adding a blockchain layer on top of the network layer. This layer will run smart contracts, and provide security, privacy, integrity, autonomy, scalability, and decentralization services to the IoT ecosystem. The management layer in this case can consist of only software related to analytics and processing, and security and control can be moved to the blockchain layer. This can be visualized in the following diagram:

In this model, other layers would perhaps remain the same but an additional blockchain layer will be introduced as a middleware between all participants of the IoT network.

It can also be visualized as a peer-to-peer IoT network after abstracting away all the layers mentioned above. This is shown in the following diagram where all devices are communicating and negotiating with each other without a central command and control entity:

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It can also result in cost saving which is due to easier device management by using a blockchain based decentralised approach. The IoT network can be optimized for performance by using blockchain. In this case there will be no need to store IoT data centrally for millions of devices because storage and processing requirements can be distributed to all IoT devices on the blockchain. This can result in completely removing the need for large data centres for processing and storing the IoT data.

Blockchain-based IoT can also thwart denial of service attacks where hackers can target a centralized server or data centre more easily but with blockchain's distributed and decentralized nature, such attacks are no longer possible. Additionally, if as estimated there will be billions of devices connected to the Internet in the near future, it will become almost impossible to manage security and updates of all those devices from traditional centrally- owned servers. Blockchain can provide a solution to this problem by allowing devices to communicate with each other directly in a secure manner and even request firmware and security updates from each other. On a blockchain network these communications can be recorded immutably and securely which will provide auditability, integrity, and transparency to the system. This is not possible with traditional P2P systems.

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In summary, there are clear benefits that can be reaped with the convergence of IoT and blockchain and a lot of research and work in academia and industry are already in progress. There are various projects already proposed providing blockchain-based IoT solutions. For example, IBM Blue Horizon and IBM Bluemix are IoT platforms supporting blockchain IoT platforms. Various start-ups such as Filament have already proposed novel ideas on how to build a decentralised network that enables devices on IoT to transact with each other directly and autonomously driven by smart contracts.

In the following section, a practical example is provided on how to build a simple IoT device and connect it to the Ethereum blockchain. This IoT device is connected to the Ethereum blockchain and is used to open a door (in this case the door lock is represented by an LED) when the appropriate amount of funds are sent by a user on the blockchain. This is a simple example and requires a more rigorously-tested version in order to implement it in production but it demonstrates how an IoT device can be connected, controlled, and responded to in response to certain events on an Ethereum blockchain.

IoT blockchain experiment This example makes use of a Raspberry device which is a Single Board Computer (SBC). Raspberry Pi is a single-board computer developed as a low cost computer to promote computer education but has also gained much more popularity as a tool of choice for building IoT platforms. A Raspberry Pi 3 model B is shown in the following figure:

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In the following section, an example will be discussed where a Raspberry Pi will be used as an IoT device connected to the Ethereum blockchain and will perform an action in response to a smart contract invocation.

First, the Raspberry Pi needs to be set up. This can be done by using NOOBS which provides an easy method of installing Raspbian or any other operating system. This can be downloaded and installed from the link . Alternatively, only Raspbian can be installed from the link

. Another alternative available at can also be used to install a

minimal non-GUI version of Raspbian OS. For the purpose of the example, NOOBS has been used to install Raspbian, as such the rest of the exercise assumes Raspbian is installed on the SD memory card of the Raspberry Pi.

Once the Raspbian operating system is installed, the next step is to download the appropriate binary for the Raspberry Pi ARM platform. The platform can be confirmed by running the following command in a terminal window in Raspberry Pi Raspbian operating system. The command output shows that which architecture the operating system is running on. In this case it is , therefore ARM-compatible binary for will be downloaded.

The following steps are described in detail:

download:, note that in the example below a specific version is downloaded1. however other versions are available which can be downloaded from

.

wget https://gethstore.blob.core.windows.net/builds/geth-linux- arm7-1.5.6-2a609af5.tar.gz

Unzip and extract into a directory, the directory named 2. will be created automatically with that tar command

next:

tar -zxvf geth-linux-arm7-1.5.6-2a609af5.tar

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This will create a directory named and will extract binary and related files into that directory. binary can be copied into

or the appropriate path on Raspbian to make it available from anywhere in the operating system. When the download is finished, the next step is to create the genesis block.

The same genesis block needs to be used that was created previously in , Ethereum Development. The genesis file can be copied from the other node on the network. This is shown in the following screenshot. Alternatively, an entirely new genesis block can be generated. This was discussed in detail in , Ethereum Development.

Once the file is copied onto the Raspberry Pi, the following command can be run in order to generate the genesis block. It is important that exactly the same genesis block is used that was generated previously otherwise the nodes will effectively be running on separate networks:

$ ./geth init genesis.json

This will show the output similar to the one shown in the following screenshot:

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After genesis block creation, there is a need to add peers to the network. This can be achieved by creating a file named , which contains the enode ID of the peer that geth on the Raspberry Pi will connect to for synching.

This information can be obtained from the geth JavaScript console by running the following shown command, this command should be run on the peer to which Raspberry is going to connect:

> Admin.nodeInfo

This will show the output similar to the one shown in the following screenshot:

After this step, further instructions presented below can be followed in order to connect Raspberry Pi to the other node on the private network. In the example, the Raspberry Pi will be connected to the network ID 786 created in , Ethereum Development. The key is to use the same genesis file created previously and different port numbers. Different ports are not a strict requirement however. If the two nodes are running under a private network and access from an environment external to the network is required then a combination of DMZ/router and port forwarding will be used. Therefore it is recommended to use different TCP ports to allow port forwarding to work correctly. The identity switch, which hasn't been introduced previously, in the following command allows for an identifying name to be specified for the node.

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First node setup First, needs to be started on the first node using the following command:

$ geth --datadir .ethereum/privatenet/ --networkid 786 --maxpeers 5 --rpc - -rpcapi web3,eth,debug,personal,net --rpcport 9001 --rpccorsdomain "*" -- port 30301 --identity "drequinox"

Once is started up it should be kept running and another instance should be started from the Raspberry Pi node.

Raspberry Pi node setup On Raspberry Pi, the following command is required to be run in order to start and sync it with other nodes (in this case only one node). The following is the command:

$ ./geth --networkid 786 --maxpeers 5 --rpc --rpcapi web3,eth,debug,personal,net --rpccorsdomain "*" --port 30302 --identity "raspberry"

This should produce the output similar to the one shown in the following screenshot. When the output contains the row displaying Block synchronization started it means that the node has connected successfully to its peer.

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This can be further verified by running commands in the console on both nodes as shown in the following screenshot. can be attached by simply running the command on the Raspberry Pi:

$ geth attach

Similarly can be attached to by running the command below on the first node:

$ geth attach ipc:.ethereum/privatenet/geth.ipc

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Once the console is available can be run to reveal the details about other connected nodes as shown in the following screenshot:

Once both nodes are up-and-running further prerequisites can be installed in order to set up the experiment. Installation of Node.js and the relevant JavaScript libraries is required. The required libraries and dependencies are listed below. First Node.js and npm need to be updated on the Raspberry Pi Raspbian operating system. For this the following steps can be followed:

Install latest Node.js on the Raspberry Pi using the following command:1.

$ curl -sL https://deb.nodesource.com/setup_7.x | sudo -E bash -

This should display output similar to the following. The output is quite large therefore only the top part of the output is shown in the following screenshot:

Run the update via :2.

$ sudo apt-get install nodejs

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Verification can be performed by running the following command to ensure that the correct versions of Node.js and are installed, as shown in the following screenshot below:

It should be noted that these version are not a necessity; any latest version of and will work. The examples in this chapter makes use of npm 4.0.5 and node v7.4.0.

Install Ethereum web3 npm, which is required to enable JavaScript code to access3. the blockchain:

Similarly, can be installed, which is required in order to4. communicate with the Raspberry Pi and control GPIO:

When all prerequisites are installed, hardware setup can be performed. For this purpose a simple circuit is built using a breadboard and a few electronic components.

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These components are listed as follows:

LED: The abbreviation of Light Emitting Diode, this can be used as visual1. indication for an event. Resistor: A 330 ohm component is required which provides resistance to passing2. current based on its rating. It is not necessary to understand the theory behind it for this experiment; any standard electronics engineering text covers all these topics in detail. Breadboard: This provides a means of building an electronic circuit without3. requiring soldering. T-Shaped cobbler: This is inserted on the breadboard as shown in the figure 4. below and provides a labeled view of all GPIO (General Purpose I/O) pins for the Raspberry Pi. Ribbon cable connector: This is simply used to provide connectivity between the5. Raspberry Pi and the breadboard via GPIO. All these components are shown in the following image:

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Circuit As shown in the following image, the positive leg (long leg) of the LED is connected to pin number 21 of the GPIO and the negative (short leg) is connected to the resistor, which is then connected to the ground (GND) pin of the GPIO. Once the connections are set up the ribbon cable can be used to simply connect to the GPIO connector on the Raspberry Pi.

Once the connections are set up correctly and the Raspberry Pi has been updated with the appropriate libraries and geth, the next step is to develop a simple smart contract that expects a value. If the value provided to it is not what it expects it does not trigger an event; otherwise, if the value passed matches the correct value, the event triggers which can be read by the client JavaScript programme running via Node.js. Of course, the solidity contract can be very complex and can also deal with the ether sent to it and if the amount of ether is equal to the required amount then the event can trigger; but in this example the aim is to demonstrate the usage of smart contracts to trigger events that can then be read by JavaScript programmes running on Node.js, which then in turn can trigger actions on IoT devices using various libraries.

The smart contract source code is shown as follows:

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The solidity online compiler can be used to run and test this contract. The Application Binary Interface (ABI) required for interacting with the contract is also available in the Interface field as shown in the following screenshot:

There are two methods by which Raspberry node can connect to the private blockchain via the web3 interface. The first is where the raspberry device is running its own geth and maintains its own ledger but with resource-constrained devices it is not possible to run a full node, or even a light node in a few circumstances. In that case, the web3 provider can be initialized to connect to the appropriate RPC channel. This will be shown later in the client JavaScript Node.js programme. A comparison of both of these approaches is shown in the following diagram:

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There are obvious security concerns which arise from exposing RPC interfaces publicly, therefore it is recommended that this option is used only on private networks and if required to be used on public networks appropriate security measures are put in place, such as allowing only the known IP addresses to connect to the geth RPC interface. This can be achieved by a combination of disabling peer discovery mechanisms and HTTP-RPC server listening interfaces. More information about this can be found in geth help. The traditional network security measures such as firewalls, Transport Layer Security (TLS) and certificates can also be used, but have not been discussed in this example.

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Now Truffle can be used to deploy the contract on the private network ID 786 to which at this point the Raspberry Pi is connected. A truffle deploy can be performed simply by using the following shown command; it is assumed that and other preliminaries discussed in , Ethereum Development have already been performed:

$ truffle migrate

It should produce the output similar to the following screenshot:

Once the contract is deployed correctly, JavaScript code can be developed that will connect to the blockchain via web3, listen for the events from the smart contract in the blockchain, and turn the LED on via the Raspberry Pi. The JavaScript code is shown as follows:

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Note that in the example above the contract address is specific to the deployment and it

will be different when readers run this example. Simply change the address in the file to what the readers see after deploying the contract. This JavaScript code can be placed in a file on the Raspberry PI, for example, . It can be run by using the following command:

$ sudo nodejs index.js

This will start the programme, which will run on Node.js and listen for events from the smart contract. Once the program is running correctly, the smart contract can be invoked by using the Truffle console as shown in the following screenshot.

In this case the function is called with parameter 10, which is the expected value.

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After the contract is mined, will be triggered, which will turn the LED on. In this example it is a simple LED but it can be any physical device such as a room lock that can be controlled via an actuator. If all works well, the LED will be turned on as a result of the smart contract function invocation as shown in the following image:

As demonstrated in the preceding example, a private network of IoT devices can be built that runs a geth client on each of the nodes and can listen for events from smart contracts and trigger an action accordingly. The example shown is simple on purpose but demonstrates the underlying principles of an Ethereum network that can be built using IoT devices along with smart contract-driven control of the physical devices.

In the next section, other applications of the blockchain technology in government, finance, and health will be discussed.

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Government There are various applications of blockchain being researched currently that can support government functions and take the current model of e-government to the next level. First, in this section some background for e-government will be provided and then a few use cases such as e-voting, homeland security (border control), and electronic IDs (citizen ID cards) will be discussed.

E-government or electronic government is a paradigm where information and communication technology is used to deliver public services to citizens. The concept is not new and has been implemented in various countries around the world but with blockchain a new avenue of exploration has opened up. Many governments are researching the possibility of using blockchain technology for managing and delivering public services. Transparency, auditability, and integrity are attributes of blockchain that can go a long way in effectively managing various government functions.

Border control Automated border control systems have been in use for decades now in order to thwart illegal entry into countries and prevent terrorism and human trafficking.

Machine-readable travel documents and specifically biometric passports have paved the way for automated border control; however current systems are limited to a certain extent and blockchain technology can provide solutions. A Machine-readable Travel Document (MRTD) standard is defined in document ICAO 9303 by the International Civil Aviation Organization (ICAO) and has been implemented by many countries around the world.

Each passport contains various security and identity attributes that can be used to identify the owner of the passport and also circumvent attempts at tampering with the passports. These include biometric features such as retina scan, finger prints, facial recognition, and standard ICAO specified features including Machine Readable Zone (MRZ) and other text attributes that are visible on the first page of the passport.

One key issue with current border control systems is centralization whereby the systems are controlled by a single entity and the fact that data is not readily shared between law enforcement agencies. This makes it difficult to track suspected individuals. Another issue is related to the immediate implementation of blacklisting of a travel document, for example, when there is an immediate need to track and control suspected travel documents. Currently, there is no mechanism available to immediately blacklist or revoke a suspected passport.

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Blockchain can provide a solution to this problem by maintaining a blacklist in a smart contract which can be updated as required and any changes will be immediately visible to all agencies and border control points thus enabling immediate control over the movement of a suspected travel document. It could be argued that traditional mechanisms like PKIs and P2P networks can also be used for this purpose but they do not provide the benefits that a blockchain can provide. With blockchain the whole system can be simplified without the requirement of complex networks and PKI setups which will also result in cost reduction. Moreover blockchain based systems will provide cryptographically guaranteed immutability which helps with auditing and discourages any fraudulent activity.

The full database of all travel documents perhaps cannot be stored on the blockchain currently due to scalability issues but a backend distributed database such as BigChainDB, IPFS, or Swarm can be used for that purpose. In this case, a hash of the travel document with the biometric ID of an individual can be stored in a simple smart contract and a hash of the document can then be used to refer to the detailed data available on the distributed file system such as IPFS. This way, when a travel document is blacklisted anywhere on the network, that information will be available immediately with the cryptographic guarantee of its authenticity and integrity throughout the distributed ledger. This functionality can also provide effective support in anti-terrorism activities, thus playing a vital role in the homeland security function of a government.

A simple contract in solidity can have an array defined for storing identities and associated biometric records. This array can be used to store the identifying information about a passport. The identity can be a hash of Machine readable zone (MRZ) of the passport or travel document concatenated with the biometric record from the RFID chip. A simple boolean field can be used to identify blacklisted passports. Once this initial check passes, further detailed biometric verification can be performed by traditional systems and eventually when a decision is made regarding the entry of the passport holder that decision can be propagated back to the blockchain, thus enabling all participants on the network to immediately share the outcome of the decision.

A high-level approach to building a blockchain-based border control system can be visualized as shown in the following figure. In this scenario, the passport is presented for scanning to an RFID and page scanner which reads the data page and extracts machine- readable information along with a hash of the biometric data stored in the RFID chip. At this stage, a live photo and retina scan of the passport holder is also taken. This information is then passed on to the blockchain where a smart contract is responsible for verifying the legitimacy of the travel document by first checking its own list of blacklisted passports and then requesting more data from the backend IPFS database for comparison. Note that the biometric data such as photo or retina scan is not stored on the blockchain, instead only a reference to this data in the backend (IPFS or BigChainDB) is stored in the blockchain.

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If the data from the presented passport matches with what is held in the IPFS as files or in BigChainDB and also passes the smart contract logical check then the border gate can be opened.

After verification this information is propagated throughout the blockchain and is instantly available to all participants on the border control blockchain. These participants can be a worldwide consortium of homeland security departments of various nations.

Voting Voting in any government is a key function and allows citizens to participate in the democratic election process. Whilst voting has evolved over time into a much more mature and secure process, it still has limitations that need to be addressed in order to achieve a desired level of maturity. Usually, the limitations in current voting systems revolve around fraud, weaknesses in operational processes, and especially transparency. Over the years, secure voting mechanisms have been built which make use of specialized voting machines that promised security and privacy but they still had vulnerabilities that could be exploited in order to subvert the security mechanisms of those machines. This can lead to serious implications for the whole voting process and can result in mistrust in the government by the public.

Blockchain-based voting systems can resolve these issues by introducing end-to-end security and transparency in the process. Security is provided in the form of integrity and authenticity of votes by using public key cryptography which comes as standard in a blockchain. Moreover, immutability guaranteed by blockchain ensures that votes cast once cannot be cast again. This can be achieved through a combination of biometric features and a smart contract maintaining a list of votes already cast. For example a smart contract can maintain a list of already casted votes with the biometric ID (for example a fingerprint) and can use that to detect and prevent double casting. Secondly, zero knowledge proofs can also be used on the blockchain to protect voters' privacy on the blockchain.

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Citizen identification (ID cards) Electronic IDs or national ID cards are issued by various countries around the world at present. These cards are secure and possess many security features that thwart duplication or tampering attempts. However, with the advent of blockchain technology there are several improvements that can be made to this process.

Digital identity is not only limited to just government-issued ID cards, it is a concept that is applicable in online social networks and forums too. There can be multiple identities used for different purposes. A blockchain-based online digital identity allows control over personal information sharing. Users can see who used their data and for what purpose and can control access to it. This is not possible with the current infrastructures which are centrally controlled. The key benefit is that a single identity issued by the government can be used easily and in a transparent manner for multiple services via a single government blockchain. In this case, the blockchain serves as a platform where government is providing various services such as pensions, taxation, or benefits and a single ID is being used for accessing all these services. Blockchain in this case provides an immutable record of every change and transaction made by a digital ID, thus ensuring integrity and transparency of the system. Also citizens can notarize birth certificates, marriages, deeds, and many other documents on the blockchain tied with their digital ID as a proof of existence.

Currently, there are successful implementations of identity schemes in various countries that work well and there is an argument that perhaps blockchain is not really required in identity management systems. Although, there are several benefits such as privacy and control over the usage of identity information but due to the current immaturity of blockchain technology perhaps it is not ready for use in real-world identity systems. However, research is being carried out by various governments to explore the usage of blockchain for identity management.

Moreover, laws such as the right to be forgotten can be quite difficult to incorporate in to blockchain due to its immutable nature.

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Miscellaneous Other government functions where blockchain technology can be implemented in order to improve cost and efficiency include collection of taxes, benefits management and disbursement, land ownership record management, life event registration (marriages, births), motor vehicle registration, and licenses. This is not an exhaustive list and over time many functions and processes of a government can be adapted to a blockchain-based model. The key benefits of blockchain such as immutability, transparency and decentralization can help to bring improvements to most of the traditional government systems.

Health The health industry has been identified as another major industry that can benefit by adapting blockchain technology. Blockchain provides an immutable, auditable, and transparent system that traditional P2P networks cannot. In addition blockchain provides a cost-effective, simpler infrastructure as compared to traditional complex PKI networks. In healthcare, major issues such as privacy compromises, data breaches, high costs, and fraud can arise from lack of interoperability, overly complex processes, transparency, auditability, and control. Another burning issue is counterfeit medicines; especially in developing countries, this is a major cause of concern.

With the adaptability of blockchain in the health sector, several benefits can be realized, ranging from cost saving, increased trust, faster processing of claims, high availability, no operational errors due to complexity in the operational procedures, and preventing the distribution of counterfeit medicines.

From another angle, blockchains that are providing a digital currency as an incentive for mining can be used to provide processing power to solve scientific problems that can help to find cures for certain diseases. Examples include FoldingCoin, which rewards its miners with FLDC tokens for sharing their computer's processing power for solving scientific problems that require particularly large calculations. FoldingCoin is available at

. Another similar project is called CureCoin which is available at . It is yet to be seen that how successful these projects will be in

achieving their goals but the idea is very promising.

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Finance Blockchain has many applications in the finance industry. Blockchain in finance is the hottest topic in the industry currently and major banks and financial organizations are researching to find ways to adapt blockchain technology especially due to its highly-desired potential to cost-save.

Insurance In the insurance industry, blockchain technology can help to stop fraudulent claims, increase the speed of claim processing, and enable transparency. Imagine a shared ledger between all insurers that can provide a quick and efficient mechanism for handling inter- company claims. Also with the convergence of IoT and blockchain, an ecosystem of smart devices can be imagined where all these things are able to negotiate and manage their own insurance policies controlled by smart contracts on the blockchain.

Blockchain can reduce the overall cost and effort required to process claims. Claims can be automatically verified and paid via smart contracts and the associated identity of the insurance policy holder. For example a smart contract with the help of Oracles and possibly IoT can make sure that when the accident occurred, it can record related telemetry data and based on this information can release payment. It can also withhold payment if the smart contract after evaluating conditions of payment concludes that payment should not be released. For example in a scenario where the vehicle was not repaired by an authorized workshop or was used outside a designated area and so on and so forth. There can be many conditions that a smart contract can evaluate to process claims and choice of these rules depend on the insurer, but the general idea is that smart contracts in combination with IoT and Oracles can automate the entire vehicle insurance industry.

Several start-ups such as Dynamis have proposed smart contract-based peer-to-peer insurance platforms that run on Ethereum blockchain. This is initially proposed to be used for unemployment insurance and does not require underwriters in the model. It is available at .

Post trade settlement This is the most sought-after application of blockchain technology. Currently, many financial institutions are exploring the possibility of using blockchain technology to simplify, automate, and speed up the costly and time-consuming post-trade settlement process.

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In order to understand the problem better, the trade lifecycle is described briefly. A trade lifecycle contains three steps: execution, clearing, and settlement. Execution is concerned with the commitment of trading between two parties and can be entered into the system via front office order management terminals or exchanges. Clearing is the next step whereby the trade is matched between the seller and buyer based on certain attributes such as price and quantity. At this stage, accounts that are involved in payment are also identified. Finally, settlement is where eventually the security is exchanged for payment between the buyer and seller.

In the traditional trade lifecycle model, a central clearing house is required in order to facilitate trading between parties which bears the credit risk of both parties. The current scheme is somewhat complicated, whereby a seller and buyer have to take a complex route in order to trade with each other. This comprises of various firms, brokers, clearing houses, and custodians but with blockchain a single distributed ledger with appropriate smart contracts can simplify this whole process and can enable buyers and sellers to talk directly to each other.

Particularly, the post trade settlement process takes two to three days and has dependency on central clearing houses and reconciliation systems. With the shared ledger approach, all participants on the blockchain can immediately see a single version of truth regarding the state of the trade. Moreover, peer-to-peer settlement is possible, which results in the reduction of complexity, cost, risk, and the time it takes to settle the trade. Finally, intermediaries can be totally eliminated by making use of appropriate smart contracts on the blockchain.

Financial crime prevention Know your customer (KYC) and Anti Money laundering (AML) are the key enablers for the prevention of financial crime. In the case of KYC, currently each institution maintains their own copy of customer data and performs verification via centralized data providers. This can be a time-consuming process and can result in delays in on-boarding a new client. Blockchain can provide a solution to this problem by securely sharing a distributed ledger between all financial institutions that contains verified and accurate identities of customers. This distributed ledger can only be updated by consensus between the participants thus providing transparency and auditability. This can not only reduce costs but also enable meeting regulatory and compliance requirements in a better and consistent manner.

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In the case of AML, due to the immutable, shared, and transparent nature of blockchain, regulators can easily be granted access to a private blockchain where they can fetch data for relevant regulatory reporting. This will also result in reducing complexity and costs related to the current regulatory reporting paradigm where data is fetched from various legacy and disparate systems and aggregated and formatted together for reporting purposes. Blockchain can provide a single shared view of all financial transactions in the system that are cryptographically secure, authentic, and auditable, thus reducing the costs and complexity associated with the currently employed regulatory reporting methods.

Media Key issues in the media industry revolve around content distribution, rights management, and royalty payments to artists. For example, digital music can be copied many times without any restriction and any attempts to apply copy protection have been hacked in some way or other. There is no control over the distribution of the content that a musician or song writer produces; it can be copied as many times as needed without any restriction and consequently has an impact on the royalty payments. Also, payments are not always guaranteed and are based on traditional airtime figures. All these issues revolving around copy protection and royalty payments can be resolved by connecting consumers, artists, and all players in the industry, allowing transparency and control over the process. Blockchain can provide a network where digital music is cryptographically guaranteed to be owned only by the consumers who pay for it. This payment mechanism is controlled by a smart contract instead of a centralized media agency or authority. The payments will be automatically made based on the logic embedded within the smart contract and number of 'downloads'. Moreover, illegal copying of digital music files can be stopped altogether because everything is recorded and owned immutably in a transparent manner on blockchain. A music file for example can be stored with owner information and timestamp which can be traced throughout the blockchain network. Furthermore, the consumers who own a legal copy of some content are cryptographically tied to the content they have and it cannot be moved to another owner unless permissioned by the owner. Copyrights and transfers can be managed easily via blockchain once all digital content is immutably recorded on the blockchain. Smart contracts can then control the distribution and payment to all concerned parties.

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Summary There are many applications of blockchain technology and as discussed in the chapter they can be implemented in various industries to bring about multiple benefits to existing solutions. In this chapter, five main industries that can benefit from blockchain have been discussed. First IoT was discussed, which is another revolutionary technology on its own; and by combining it with the blockchain several fundamental limitations can be addressed, which brings about tremendous benefits to the IoT industry. More focus has been given to IoT as it is the biggest and most ready candidate for adapting blockchain technology. Already, practical use cases and platforms have emerged in the form of Platform as a Service (PaaS) for blockchain-based IoT such as the IBM Watson IoT blockchain. IBM Blue Horizon is also now available for experimentation, which is a decentralized blockchain- based IoT network. Second, applications in the government sector were discussed whereby various government processes such as homeland security, identification cards, and benefit disbursements can be made transparent, secure, and more robust. Furthermore, issues in the finance sector were discussed with possible solutions that blockchain technology can provide. Although the finance sector is exploring the possibilities of using blockchain with high energy and enthusiasm, it is still far away from production-ready blockchain-based systems. Finally, some aspects of the health sector and music industry were also discussed. All these use cases and many more in the industry stand on pillars provided by core attributes of blockchain technology such as decentralization, transparency, reliability, and security. However, certain challenges need to be addressed before blockchain technology can be adapted fully; these will be discussed in the next chapter.

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