Draft

Running head: BLOCKCHAIN TECHNOLOGY 1

Blockchain Technology: Beyond Cryptocurrency

Christophe Bassono

UNO Fall 2018

CYBR 4360-Foundations of IA

Robin Gandhi

11/13/18

BLOCKCHAIN TECHNOLOGY 2

Table of Contents

Blockchain Technology: Beyond Cryptocurrency...............................................................3

Fundamentals of Blockchain Technology ...........................................................................3

Applications of Blockchain Beyond Cryptocurrency ..........................................................4

The Banking Industry ......................................................................................................5

Voting ..............................................................................................................................6

Supply Chain Management..............................................................................................7

Accounting .......................................................................................................................8

Stock Exchange................................................................................................................9

Medical Records ..............................................................................................................9

The Future of the Blockchain Technology ........................................................................10

Improved Standards of Living .......................................................................................11

World Trade on a Blockchain ........................................................................................11

Adoption of Virtual Currency ........................................................................................12

References..........................................................................................................................13

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Blockchain Technology: Beyond Cryptocurrency

A blockchain is a series of multiple blocks that are strung together each different storing information. The simplest definition of blockchain is a largely distributed ledger that is used to store records of transactions (Al-Saqaf & Seidler, 2017). The technology is used to record a series of transactions across multiple computers so that records are not altered in any way unless there is an alteration of all the subsequent blocks and the entire consensus of the network. The information is always reconciled into the system in multiple locations, and the update is done instantly (Dai & Vasarhelyi, 2017). The blockchain technology is basically made up of blocks of chains that store different sorts of information and has wide applications in various sectors such as the banking industry, voting, the supply chain management, accounting, and stock exchange and medical records. The future of the technology is promising and governments in different countries of the world adopting the technology in world trade, to raise the living standards of the people and replacement of the traditional currencies.

Fundamentals of Blockchain Technology

The blockchain technology is made up of blocks. The blocks are made up of pieces of digital information, and they have three parts. There are blocks that store information about all the forms of transactions including the date, the time and the dollar amount for the most recent purchase made (Mori, 2016). There are also blocks that store information about the parties participating in a transaction. The blocks do not use the actual names of the participants, but instead, the purchase is recorded using some unique digital signatures which resemble a username (Yeoh, 2017). The information in the blocks is what is normally used to distinguish each block from the rest. A block that contains new data is added into the chain. A block cannot just be added into the chain; some conditions are to be met. The first condition is that a transaction must occur. The transaction is then verified using a network of computers which are spread across the globe. The computers confirm the transactions including the date, time, dollar amount and the participants. The transaction must also be stored in a block, and the storage is done after verification that the transaction is accurate. The block is then assigned a code known as a hash. The block is then made available for the public to view.

Anyone can view the contents of a blockchain and users have the option of connecting the computers to the blockchain network to get access to the information that is stored in the system (Mori, 2016). The computer then receives a copy of the blockchain that is normally updated automatically if a new block is added. Each computer in the network has a unique copy of the blockchain meaning that there are millions of copies of the blockchain (Dai & Vasarhelyi, 2017). The copies are identical, but the sharing and spreading of the information ensure that there are no instances of manipulation of the

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stored information. A hacker would thus need to manipulate each copy and such is one of the ways the technology ensures that the security of the data is not compromised.

Issues Surrounding Block Chain Technology

Treacherous outcomes are inevitable with the technological revolution. Various issues are surrounding the development, governance, and use of bitcoins, a product of blockchain technology. One of these issues is security flaws. For instance, if more than half of the computers serving as nodes for the service the network make an error, the error will be treated as the truth. This is known as the 51% attack (Yli-Huumo et al., 2016).

Similarly, it is a single node experiences a 51% attack, the effects would manifest themselves in the manipulation of the blockchain (Yli-Huumo et al., 2016). As such, mining pools need to be closely monitored in the real-time to ensure the 51% attack does not occur. Additionally, due to the ability of the blockchain application to support anonymous activities, it becomes an obvious target for cyber-criminals. As such, blocking products are insecure and vulnerable to cyber attacks such as distributed denial- of-service attacks (Meng et al., 2018). Moreover, cryptocurrency is increasingly being used by cybercriminals and terrorists to move huge sums of money covertly. With the growth in technology and the internet of things, online banking and e-payments are becoming more popular. This increases the vulnerability of the global money systems to attack by criminals (Biswas, 2018). The absence of applicable regulatory supervision of cryptocurrencies in most countries creates a white space for terrorists and criminals to execute anonymous financial transfers which sustains terrorism and transnational crime.

Applications of Blockchain Beyond Cryptocurrency

The blockchain technology has not been fully embraced in the modern world, but just like the internet, the technology is anticipated to become popular with time. Most people are not yet familiar with the technology and how the concept is used in transactions (Dai & Vasarhelyi, 2017). Blockchain has been used in some various sectors and is in constant competition with cryptocurrency. The technology has varied applications in numerous fields only that the boom in Bitcoin is almost shadowing the potentials of the blockchain technology. However, the technology has been able to stretch the capability that comes with using the blocks in transactions beyond cryptocurrency (Brandon, 2016). The uses of blockchain are not limited to cryptocurrency; the technology has limitless applications which may in future be endless.

The technology is revolutionary; blockchain is here to stay, and the future may see increased uses of the same. The current applications of the technology are enough to

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convince even those that are skeptical about the technology that the future may need technology in all aspects (Brandon, 2016). Cybersecurity will be a top concern for everyone especially with the advancement in technology. Blockchain utilizes cryptography, a technique that effectively keeps track of data and ensures that the data is secured. The blockchain is gaining popularity faster than the technology itself (Dai & Vasarhelyi, 2017). The technology holds the success and future of businesses. Some of the recent and common applications of the blockchain technology are in the banking industry, voting, the supply chain management, accounting, and stock exchange and medical records.

The Banking Industry

The banking industry has been faced with challenges especially with the digitalization of financial services. Monetary transactions have been made efficient for users who own smart devices and have access to the internet (Lee & Lee, 2017). The number of transactions has thus been enormous as the self-service technique becomes familiar to most people. The surge can be handled effectively by the use of the blockchain technology. All the banks all over the globe are into the mission of adopting the blockchain technology in their operations. The blockchain technology has a security feature which ensures that all the transactions are made public immediately the process is completed. The banking industry has utilized the security feature to ensure that there is accountability among the employees. All the transactions are recorded, and there is a trace of every activity that an employee undertakes every time. The feature is also useful in monitoring and reviewing the individual transactions that have taken place. Auditing has also been made easier as there is no need to give auditors large chunks of data (Brandon, 2016). The auditors only need to be allowed into the system network to access the data. Paperwork is greatly reduced, and transaction data can be easily be achieved in a click of a button. Consumer needs have been extensively addressed, and banks have been able to cut on costs related to maintenance of ATMs and issuing of debit cards. The technology is being tweaked to ensure that foreign exchange trades can also be handled.

Voting

There are two traits of blockchain technology which have seen the extensive uses in voting; traceability and transparency. The success of a voting system is depended on the two traits (Lee & Lee, 2017). The two elements are the foundation of the blockchain technology. The use of the blockchain technology has greatly helped to eliminate cases of fraud in the voting systems and ensuring of a transparent exercise that wins the trust of all people (Collomb & Sok, 2016). The first instance in which the technology was used in voting was with the NASDAQ which adopted the concept in shareholder voting. The authorities in Moscow have plans underway to utilize the technology in domestic voting.

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With so much fraud surrounding the voting systems in almost all nations of the world, blockchain technology may be the only strategy that will save the day. Countries have had to endure economic hardships; deal with bloodshed, dictatorship, and loss of the lives of their people because of poor voting systems which cannot guarantee transparency, credibility, and traceability (Takahashi, 2016). Blockchain technology is here to save us the hurdles and has been successfully tested; utilized and achieved the intended voting purposes (Collomb & Sok, 2016). There is an opportunity to trace everything that takes place in the exercise, manage the results and ensure any action of fraud is noticed before the results are tampered with to favor a certain party or serve the interests of the few.

Supply Chain Management

When we talk supply chain, traceability must come in. Supply chain management is concerned with the flow of goods and services in an organization. There is also the aspect monitoring of the flow of raw materials within the organization and the management of the work-in-progress inventory (Takahashi, 2016). The final goods must also be monitored from the point of production to the final stage of consumption by the final users. Supply chain management is at the heart of any organization and is one department that greatly determines the success of a business, profitability and the overall competitive advantage (Collomb & Sok, 2016). Supply chain management is one area that is also very challenging to handle and requires expertise and the use of advanced and competitive technology that can store that details of every activity that takes place. Such technologies come with blockchain. Although most businesses have adopted mechanisms to enable easy movement and monitoring of the flow of goods and services, errors are unavoidable. With the blockchain technology, there is no room for errors. No business will forgo such a technology; a technology that is efficient and monitors every step that goods and services are taken through in the organization.

There are several scenarios where the blockchain technology has been used to streamline the activities in the supply chain management of organizations. There is an easier record of the movement of goods as the technology can store the details of all the products which are in transit at any given time within the supply chain nodes (Takahashi, 2016). There is an easier tracking of product movement especially because information such as that related to trade, for example, purchase orders, receipts and shipment details can easily be accessed from the blockchain link (Collomb & Sok, 2016). There is an easier sharing of product information with vendors and suppliers. The organization only needs to allow them into the network, and the use of cryptography ensures that data is only shared with those that the organization intends to share the information with. Data security and integrity is therefore ensured in the network.

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Accounting

Accounting is among the most sensitive sectors of any organization. Accounting involves the continuous collection, summarizing, analyzing, interpreting and communication of the financial data and information of an organization (Takahashi, 2016). Financial data analytics are faced with the task of providing accurate financial information that can be used in the firm to make informed decisions which can effectively handle competition from the external environment of an organization. The errors are in most cases unavoidable and such are the causes of business failure and incompetent decisions. Dealing with numerous financial data is overwhelming for analytics and such are some of the causes of the ultimate business failure due to inaccurate data and information (Collomb & Sok, 2016). The blockchain technology has successfully eliminated errors resulting from the manual entry of transactions by human beings. The transactions are recorded and verified every time ensuring that there are accuracy and credibility of the data being manipulated. An error-free reporting system is one of the competitive tools that global firms are using. The ability to overcome such errors is a reason why the technology has been used extensively in the manipulation of stored financial data and as soon as the transactions are made.

Stock Exchange

The stock exchange market involves numerous transactions and huge amounts of money. Manual handling of all the details of the transactions would be overwhelming to everyone involved (Böhme et al., 2015). There is always a need to have a platform that can maintain a fast flow of transaction information and also ensure that information can be traced with much ease. The blockchain technology performs the tiresome task of recording the transactions and maintaining a continuous stream of data entry of all the activities that take place in the system. The stock exchange in most parts of the world is already embracing the technology because of the efficiency that comes with using the concept (Takahashi, 2016). The Australian Stock Exchange has already announced the desire to adopt blockchain technology to ensure streamlined operations. The future of Stock Exchange is largely dependent on the blockchain technology.

Medical Records

Patients are getting more concerned about their health history and the overall record keeping of their health condition data. The medical records contain very sensitive data for every individual patient, and the data is prone to cyber attacks and exposure to fraudsters (Collomb & Sok, 2016). MedRec is the new technology in the medical sector that has effectively utilized blockchain technology with the core aim of ensuring that the data is kept safe and out of the hands of unauthorized parties. The last thing that a patient should be done for is letting their medical information leak to third, uninterested parties

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(Fanning & Centers, 2016). MedRec is a technology that has been aligned to the needs of patients, medical researchers and the entire treatment community. MedRec extensively applies novel which is a blockchain smart contract to ensure that there is decentralized content management for healthcare data for all healthcare providers. The MedRec has been used to streamline medical record access while at the same time ensuring that there is consistent sharing of data and that there is a means for auditability. The medical research community has been involved in providing the mining that is required to sustain and secure the authentification. The role of the blockchain technology in the medical sector cannot be underestimated. A lot has been achieved; service delivery has been made better, security of patient data has been given a top priority, and the overall patient satisfaction has been realized.

The recent years have seen the healthcare industry through a wave of federal regulations and the push towards an effective patient health management system. Blockchain technology has ensured that medial data management is made efficient (Bahga & Madisetti, 2016). All the details regarding the medical history of a patient, all the information on the current diagnosis, lab tests, and the related reports are all stored in the blocks (Böhme et al., 2015). The blockchain technology has also been used in the healthcare systems to maintain the invoicing and the billing information. The modules can also be used to track information on the insurance background of the patient and the existing medical claims. Higher efficiency can be greatly be ensured when the information is shared with the insurance companies through the blockchain network to ensure speedy claims handling procedures.

The Future of the Blockchain Technology

Cryptocurrencies took the world by storm in 2017. The price of the Bitcoin also rose substantively to nearly $20,000 (Bahga & Madisetti, 2016). There is still a heightened debate on whether the blockchain technology is the future of businesses or is just a surge that is fading away. The future of blockchain technology, however, seems promising (Fanning & Centers, 2016). There is a lot that the world still anticipates with the use of blockchain technology. The technology is expected to shape the world in several ways.

Improved Standards of Living

Income disparity and poverty are some of the social problems that most countries of the world are struggling to overcome. There is still a large portion of the population that lives below the $2 a day line. There is an estimate of about 2 billion people who are unbanked and have no access to any form of financial services (Carlozo, 2017). The world’s GDP is rising each passing day, but the only result is that the rich are getting richer while the poor continue to live a miserable, helpless lifestyle. The blockchain

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technology has the potential to curb the disparity that exists. Governments of most countries of the world are headed to the adoption of the blockchain technology (Lemieux, 2016). The technology will normalize the living conditions among the different classes of people through reducing the rates of corruption, enabling the decentralization access and also increasing the rates of financial inclusiveness. The unbanked population will be able to get banked and get paid. By 2030 there will be significant improvements in the living standards of people across the globe.

World Trade on a Blockchain

There is a possibility that blockchain technology has the potential of creating a global supply chain. The current global trade is characterized by untrusted parties and strained information flow (Apte & Petrovsky, 2016). The relationships are always chaotic, and the current state is not promising at all. The results are cases of fraud, errors, and inefficiencies. Multiple problems are unsolved in the world trade business and can only be handled using the blockchain technology (Bahga & Madisetti, 2016). Some of the typical world business problems are counterfeit medicines, fake electronic equipment and also fashion apparels witnessed all over the globe. The future of world trade is dependent on the blockchain technology to ensure that there are trust and standardization of the goods and services exchanged.

Adoption of Virtual Currency

The future government currency is inevitably crypto. The traditional currency will be eliminated in the future if the blockchain technology is to be fully embraced (Alcazar, 2017), Cryptocurrency has numerous advantages among them reduced settlement times for cash transactions, increased traceability and there is an increased efficiency (Böhme et al., 2015). Nations of the world are headed to the adoption of the cryptocurrency, and the future may see the elimination of the traditional currencies. Cryptocurrencies will shape the business world for the better. Although there is still a lot of awareness that needs to be done on the blockchain technology, governments are likely to have the concept on board especially to ensure that business is streamlined.

In conclusion, blockchain technology has already gained entry into various sectors. The technology has been adopted to ensure that there is a streamlined record of transactions that take place. Blockchain has greatly enabled the flow of data and also improved the security of data stored in the system. The technology is made up of blocks which store information every time a transaction takes place. The banking industry, the healthcare industry, supply chain management, accounting, and the stock exchange market has greatly utilized the blockchain technology. The technology is promising, and there is a possibility that governments of the world will embrace the concept to ensure

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that poverty and income disparity are eliminated and also to replace the traditional currencies.

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