Literature review on fundamentals of Blockchain technology

I. INTRODUCTION

Blockchain technology primarily involves cryptographic algorithms. Blockchain, as it sounds refers to blocks arranged to inform of a chain. Block is defined as digital information and chain refers to public database storage. Blockchain refers to tamper-resistant and tamper-evident digital ledgers connected in a decentralized manner and has no central authority, that is, a company, a bank, or government. The decentralized network has no central server but instead is a linkage of computer combination.[2] Tamper evident is described as a process that eases the detection of data alterations. Tamper-resistant is a process which hardens data changes and makes it expensive to carry out or both. Blockchain enables a group of users to document transactions in a common ledger in a way that once published, no transaction charges can be possible, under normal blockchain network operation. The transaction is an event record, such as asset transfer between groups.

II. BACKGROUND

The blockchain concept and digital currency decentralization emerged in the early 1990s. The Paxos protocol was developed by Leslie Lampart in 1989 and submitted to ACM transactions, in 1990, on computer systems. Later in 1998, the paper was published.[3] It explains the model of consensus for agreeing on a computer network result, where the network or the computers may not be reliable. In 1991, a chain of signed information was utilized for the digital signing of documents in such a manner that it could display no alterations that have been made on the signed documents. In 2008, electronic cash, which was explained in the bitcoin, was implemented from the combination of the concepts, and which was firstly published by Satoshi Nakamoto.[4] It was later reprinted in 2009 when the blockchain network of bitcoin cryptocurrency was established.

III. COMPONENTS

Blockchain refers to digital ledgers distributed immutably, which is guarded with advanced cryptography and is copied in the peer-to-peer network and utilizes consensus method to agree on a transaction, and its control is not centered.[5] A ledger is where transactions are recorded and stored per an entity A digital ledger records transaction electronically and may include a database or a computer file. Cryptography refers to techniques that are used to ensure communication is secure and confidential, in case of adversaries. Block is defined as the structure of data used to keep a combination of transactions and chain refer to a specific order of block. Node is the computer or user within the architecture of the blockchain. Consensus refers to a set of arrangements and rules to perform blockchain operations. Network, which is a very crucial component, refers to the interconnection or linkage of two or more computers for electronic communications, sharing resources, or exchange files. An example is an internet.

The major characteristics of blockchain technology are immutability, transparency, and decentralization. In a decentralized system, one does not need to pass through a third party to be served. It enables one to make a transaction to another person without involving another party like a bank. The second feature is transparency. Although the technology displays the transactions made by showing the public address of the individual, it keeps the privacy of the real identity of the. The fact that the list of all transactions accomplished can be displayed, big institutions and companies are forced to be honest. The last major feature of blockchain technology is immutability. This eliminates any possible alterations which can be made once information is in the blockchain.

Ethereum is an application of open software that gives developers a framework to create decentralized applications. Hyperledger is a sourcing hub that is open, and which supports the development of industrial development. Corda is a blockchain platform that is also open and works to ease legal contract management and other data shared between trusting businesses. All altogether outline the proficiency and magnitude of ledger technology.[6] They, however, have great differences when it comes to application. Ethereum and hyper ledger have a different concrete case, whereas Corda's most applications are derived in the financial services company. Ethereum is a generic platform, the hyper ledger is modular, and Corda is a specialized platform. Etherium is governed by its developers, Corda by R3 and hyper ledger by Linux foundation. Both Corda and hyper ledger have permission operation mode and no currency but for Ethereum, the operation is permissionless and uses tokens as currency. With the development of new applications, the comparison should continuously gather pace Applications developed from Ethereum blockchain has the below advantages. Firstly, involves security. There is top protection of the applications derived from etherium against any fraudulent activity or hacking. Secondly, censorship is not possible as the principle of consensus is used on the formation of etherium apps. Thirdly, there is zero online app downtime because they cannot be hosted by any central server. Furthermore, there is immutability. No alterations can be made on the data inserted in the applications of etherium blockchain. However, it has its consequences in that; it has low scalability, poor throughput, and no data privacy.

The Corda platform possesses some great advantages as outlined below. Firstly, it enables data sharing in a network without requiring a central controller. Secondly, it has no native currency. Thirdly, even at an individual transaction level, a consensus is attained, as opposed to the whole system. Furthermore, the platform comes with observer nodes of supervision and regulation.[7] It also avoids unnecessary data sharing on the blockchain. It is also much faster as compared to the other two platforms.

Lastly, Hyperledger has got some advantages. Due to strict access control, the platform has high privacy levels. It also provides faster transactions and a high level of scalability. The platform can also be used to develop permission blockchain It however got some disadvantages in that it requires skilled programmers to use it. Also, cases for proven use are unavailable. In conclusion, numerous considerations need to be considered when making a choice on ledger technology, spanning ease of programming, data privacy, and private and public networks.

V. SYMMETRIC AND ASYMMETRIC CRYPTOGRAPHY

These are types of basic algorithms applied in modern cryptography. Symmetric algorithms utilize private keys known as secret keys while the asymmetric algorithm applies both public and private keys. The private keys are a secret to the owner while the public keys can be publicly shared. Symmetric cryptography is composed of five components namely the secret key, decryption algorithm, plaintext, ciphertext, and encryption algorithm. They both provide high security and confidentiality as they involve authentication and identification. Data encryption is also done when the recipient and the sender are exchanging information. The two parties are the only ones with the key and no one can access the transmitted information.

VI. GOVERNANCE

It refers to a structure that must be followed by every participant or user. Blockchain governance initially was a free system as a result of small usage.[8] However, as it grew and became complex, governance became necessary for better management. Proper models of blockchain governance are crucial to preserve legitimacy and cope with the changing environments the purpose of the governance is to upgrade the existing technology, to fix vulnerabilities and bugs, and repair damages caused by attacks. There exist different styles of blockchain governance, but the common ones include direct governance and representative governance.

In direct governance, which also refers to as the on-chain model of governance, every user or participant vote directly on any action or decision to be taken. The power of voting is subject to the token amount each actor holds. The model has some advantages in that; each vote counts, users have more decisions of the output, there is transparency since intermediaries involved and make the government more accountable and any rogue government official can be removed. Furthermore, it makes voting a responsibility as opposed to a privilege. However, some of its shortcomings include; managing a bigger group is difficult and may become non-functional, some actors can fail to participate, educating all people about the voting process becomes costly and reaching consensus is difficult.

In representative governance, also called the off-chain governance model, all people vote to decide a few who are to represent them in decision making, creation, and implementation of a new rule. The benefits of the governance model include; users are allowed to elect their representatives, a large group can be managed, easier to reach a decision, and it is cost-effective as compared to the other model. However, some of its disadvantages are; the elected representatives may not perform according to people’s expectations and may follow their interests, practices of deceptive practices of an election are possible and the representatives are not accountable.

VII. PUBLIC AND PRIVATE BLOCKCHAIN

A public blockchain is defined as a network that is open for everybody to participate in other words, it is permission less. All transactions made are public and encourage equal nodes. An example is bitcoin. A private blockchain a single entity governed network where those who want to participate can only do so if they are granted permission. Some of the characteristics both shares include; they are both decentralized, meaning the utilize peer-to-peer computer network.[9] Records are immutable, meaning they cannot be deleted or altered, but can only be added. However, public blockchains are open to everyone and decentralized, for example, bitcoin. Private Blockchain permissions only some participants in a closed network and can be termed as centralized. An example is Hyperledger. The following are illustrations showing how public and private blockchains look.

Fig: Centralized vs Distributed ledger

The common features of a public blockchain are that it is anonymous, that is to mean the identities of every participant are confidential, it has no regulations, there is full transparency, ensures high security, and is immutable. Moreover, a private blockchain is characterized by full privacy, better scalability, faster transactions, and high efficiency.

One of the greatest benefits of a public blockchain is that trust is not much needed. The recorded information is not prone to alteration and is public. It also ensures security and transparency. Its main disadvantage is that it is extremely slow. Secondly, it consumes a lot of energy and lastly, it has scalability issues. On the other side, a private blockchain is advantageous when it comes to speed. Since it has fewer users, to reach a decision, the network takes less time. They are also more scalable and reach consensus fast since they are centralized. However, the main shortcoming is that it is centralized since the network is private. There is less security since it involves a few users who can maliciously control the network. Lastly, the issue of trust is also a problem with a private blockchain. To conclude, things will continue to change with evolving technology. Accessibility is all which is required in blockchain and can be through private or public chains, but there is a possibility they may be used interchangeably.

VIII. DIGITAL AND MULTI-SIGNATURE

Multi-signature, which permits the signing of a single document by multiple users, is a scheme type of digital signature. It can be termed as the generalization of the ring and group signatures. It tops cryptocurrency transactions security. A digital signature refers to a mathematical technique which validates the integrity and authenticity of software, a digital document, or a message.[10] It provides more security and it is purposed to solve impersonation and tampering issues in communications. They are based on asymmetric cryptography.

IX. ELLIPTIC CURVE CRYPTOGRAPHY

It refers to an encryption method based on a public blockchain that can create more efficient, smaller, and faster cryptographic keys. Instead of the traditional way, it creates keys using the elliptic curve equation.it is a technology that can be utilized together with other encryption public-key methods. It is gaining popularity in mobile applications since it uses lower power of computing and battery resources to offer equivalent security. Certicom, a mobile security provider for e-business created the elliptical curve cryptography and Hifn licensed it recently. Many manufactures have shown support for the technology in their commodities. For example, Cylink, Siemens, and Motorola use the technology.[11] The below figure illustrates an elliptic curve. The equation is satisfied by the points of the curve.

Fig: Elliptical curve

X. SMART CONTRACT

It refers to a protocol of computerized transaction that performs contract terms. It is a collection of computer codes that can be integrated into the blockchain to negotiate, verify and facilitate an agreement of a contract.[12] The contracts work adhering to the agreed set conditions between the users. Agreement terms are fulfilled when the users have met the agreed plan. For example, a smart contract can be applied in house lending between the tenant and the landlord. The contracts are stored in the blockchain and automatically execute upon completion of a transaction. The data is immutable with zero chances of manipulation or alteration, which cements trust between the parties.

XI. HASH FUNCTIONS

It refers to a mathematical function that accepts any input number and gives an output in numbers in a fixed range. For instance, SHA256 is a hash function that gives outputs ranging from 0-2256. Another popular hash function is MD5. It provides integrity assurance of transfer information.[13] For security purposes, the hash functions should not collide, that is, it should not be easy for two input numbers to produce matching hash output. For this to be possible, the hash functions should have zero weaknesses, should be one-way and the possibility output should have a large number. The security of the blockchain is endangered if the requirements are violated. The technology depends on secure functions to make it difficult for modification of stored data in the leger. They are applied in the storage of passwords and check the integrity of data. Below is an illustration of a hash function.

Fig: Hash Functions

Hash functions possess the following properties. Firstly, they are resistant to a collision. That means it should be difficult for two inputs which are different from each other to give the same hash output. This property hardens the possibility of a hacker to get two value input producing the same result. Secondly, hash functions are pre-image resistance. This makes it hard for a hash function to be reversed. The characteristic denies the attacker an opportunity to get the input when he has a hash value. Lastly, hash functions are characterized by second pre-image resistance. This displays that with an input together with its hash, to get a different input having the same hash is hard. This denies the attacker a chance to replace different values as the substitute values when he has the input value together with its hash.

XII. PROOF-OF-WORK

It is defined as a consensus model in which the next block is published by a publishing node by expanding computational cycles, energy, and time to solve a problem, which is easy for verification but solving is hard. It is the most used popular algorithms utilized on blockchains. It requires network nodes to solve one-way mathematical complex functions before blocks are added to the blockchain.[14] The main goal of the model is to provide a barrier to the blocks being published to two untrusted parties to transact. The process of getting correct proofs when solving functions related to cryptography is known as mining. The participants or nodes are referred to as miners. The model is advantageous in that anyone can access it. However, it is power consuming and computationally intensive.

XIII. PROOF-OF-STAKE

It is a model of consensus where users with cryptocurrency amount into the network have the mandate to secure the blockchain network. This process is known as staking. Those participants whose stake is having more amounts get chances during consensus. The algorithm selects validators to create blocks under certain criteria. The criteria details how the voting is to be done and blocks to be created depending on their network economic stake. It applies a coin-based or randomization approach when selecting the individuals. The model works like the proof-of-work, but it provides a less barrier to a transaction. It is also open for those who are willing to stake cryptocurrencies. However, it is controlled by stakeholders.

XIV. APPLICATIONS

Although blocks store monetary transaction data, blockchain technology got many other applications like candidate votes and property. Firstly, the technology is applied in banks. The fact that banks operate in a fixed number of hours per day, they are not always available for the customer to make choice transactions. However, the blockchain technology never sleeps and allows transact any time, regardless of the day or time.[15] Furthermore, the technology allows banks to exchange money more securely and quickly between organizations. Secondly, blockchain technology is also used in healthcare facilities. They help store the medical records of patients more securely. Once the signed record is written in the blockchain, it cannot be modified.[16] This gives more confidence and proof to the patients. In voting, it is applied to boost the turnout of the voters and prevent fraud in elections.

In conclusion, the research work has defined and explained the key concepts in the blockchain. Technology history and applications have also been discussed. All in all, blockchain technology has got more uses in companies, providing secure transactions and privacy, in absence of central authority. As discussed in the work, the technology has broad advantages ranging from transparency, security, absence of central authority, reduction of costs, and security. However, technology also has some shortcomings, but they are negligible when compared with the benefits it provides to different organizations. Furthermore, the technology is continuously upgrading hence the problems might be eliminated in the coming days.[17]

XV. REFERENCES

[1]. Yaga, Dylan, Peter Mell, Nik Roby, and Karen Scarfone. "Blockchain technology overview." arXiv preprint arXiv:1906.11078 (2019).

[2]. Niranjanamurthy, M., B. N. Nithya, and S. Jagannatha. "Analysis of Blockchain technology: pros, cons and SWOT." Cluster Computing 22, no. 6 (2019): 14743-14757.

[3]. Underwood, Sarah. "Blockchain beyond bitcoin." (2016): 15-17.

[4]. Crosby, Michael, Pradan Pattanayak, Sanjeev Verma, and Vignesh Kalyanaraman. "Blockchain technology: Beyond bitcoin." Applied Innovation 2, no. 6-10 (2016): 71.

[5]. Syed, Toqeer Ali, Ali Alzahrani, Salman Jan, Muhammad Shoaib Siddiqui, Adnan Nadeem, and Turki Alghamdi. "A comparative analysis of blockchain architecture and its applications: Problems and recommendations." IEEE Access 7 (2019): 176838-176869.

[6]. Reijers, Wessel, Fiachra O'Brolcháin, and Paul Haynes. "Governance in blockchain technologies & social contract theories." Ledger 1 (2016): 134-151.

[7]. Treleaven, Philip, Richard Gendal Brown, and Danny Yang. "Blockchain technology in finance." Computer 50, no. 9 (2017): 14-17.

[8]. Reijers, Wessel, Fiachra O'Brolcháin, and Paul Haynes. "Governance in blockchain technologies & social contract theories." Ledger 1 (2016): 134-151.

[9]. Guegan, Dominique. "Public blockchain versus private blockhain." (2017).

[10]. Underwood, Sarah. "Blockchain beyond bitcoin." (2016): 15-17.

[11]. Ahram, Tareq, Arman Sargolzaei, Saman Sargolzaei, Jeff Daniels, and Ben Amaba. "Blockchain technology innovations." In 2017 IEEE technology & engineering management conference (TEMSCON), pp. 137-141. IEEE, 2017.

[12]. Luu, Loi, Duc-Hiep Chu, Hrishi Olickel, Prateek Saxena, and Aquinas Hobor. "Making smart contracts smarter." In Proceedings of the 2016 ACM SIGSAC conference on computer and communications security, pp. 254-269. 2016.

[13]. Applebaum, Benny, Naama Haramaty-Krasne, Yuval Ishai, Eyal Kushilevitz, and Vinod Vaikuntanathan. "Low-complexity cryptographic hash functions." In 8th Innovations in Theoretical Computer Science Conference (ITCS 2017). Schloss Dagstuhl-Leibniz-Zentrum fuer Informatik, 2017.

[14]. Crosby, Michael, Pradan Pattanayak, Sanjeev Verma, and Vignesh Kalyanaraman. "Blockchain technology: Beyond bitcoin." Applied Innovation 2, no. 6-10 (2016): 71.

[15]. Miraz, Mahdi H., and Maaruf Ali. "Applications of blockchain technology beyond cryptocurrency." arXiv preprint arXiv:1801.03528 (2018).

[16]. by Mettler, Matthias. "Blockchain technology in healthcare: The revolution starts here." In 2016 IEEE 18th international conference on e-health networking, applications, and services (Healthcom), pp. 1-3. IEEE, 2016.

[17]. Syed, Toqeer Ali, Ali Alzahrani, Salman Jan, Muhammad Shoaib Siddiqui, Adnan Nadeem, and Turki Alghamdi. "A comparative analysis of blockchain architecture and its applications: Problems and recommendations." IEEE Access 7 (2019): 176838-176869.