Blockchain for Business

The book focuses on the power of business blockchain. It gives an overview of blockchain in traditional business, marketing, accounting and business intelligence. The book provides a detailed working knowedge of blockchain, user cases of blockchain in business, cryptocurrency and Initial Coin Offering(ICO) along with the risks associated with them. The book also covers the detailed study of decentralization, mining, consensus, smart contracts, concepts and working of distributed ledgers and hyper ledgers as well as many other important concepts. It also details the security and privacy aspects of blockchain.

The book is beneficial for readers who are preparing for their business careers, those who are working with small scale businesses and startups, and helpful for business executives, managers, entrepreneurs, bankers, government officials and legal professionals who are looking to blockchain for secure financial transactions. The book will also be beneficial for researchers and students who want to study the latest developments of blockchain.

S.S. TYAGI is a Professor of Computer Engineering and Dean at Manav Rachna International Institute of Research & Studies, Faridabad, India. He obtained his PhD from Kururkshetra University in 2010 in Computer Technology. He has more than 28 years of teaching and research experience and has authored many research publications in high indexed journals. SHAVETA BHATIA is Professor of Faculty of Computer Applications, Manav Rachna International Institute of Research & Studies. She has more than 17 years of academic and research experience. She has authored many research papers and published over a span of her teaching career in various reputed journals and conferences. Preface xv

1 INTRODUCTION TO BLOCKCHAIN 1

Akshay Mudgal

1.1 Introduction 1

1.1.1 Public Blockchain Architecture 5

1.1.2 Private Blockchain Architecture 5

1.1.3 Consortium Blockchain Architecture 5

1.2 The Privacy Challenges of Blockchain 6

1.3 De-Anonymization 8

1.3.1 Analysis of Network 9

1.3.2 Transaction Fingerprinting 9

1.3.3 DoS Attacks 9

1.3.4 Sybil Attacks 9

1.4 Transaction Pattern Exposure 10

1.4.1 Transaction Graph Analysis 10

1.4.2 AS-Level Deployment Analysis 10

1.5 Methodology: Identity Privacy Preservation 10

1.5.1 Mixing Services 10

1.5.2 Ring Signature 12

1.6 Decentralization Challenges Exist in Blockchain 14

1.7 Conclusion 15

1.8 Regulatory Challenges 16

1.9 Obstacles to Blockchain Regulation 16

1.10 The Current Regulatory Landscape 17

1.11 The Future of Blockchain Regulation 18

1.12 Business Model Challenges 19

1.12.1 Traditional Business Models 19

1.12.2 Manufacturer 19

1.12.3 Distributor 20

1.12.4 Retailer 20

1.12.5 Franchise 20

1.13 Utility Token Model 20

1.13.1 Right 21

1.13.2 Value Exchange 21

1.13.3 Toll 21

1.13.4 Function 21

1.13.5 Currency 22

1.13.6 Earning 22

1.14 Blockchain as a Service 22

1.15 Securities 23

1.16 Development Platforms 24

1.17 Scandals and Public Perceptions 25

1.17.1 Privacy Limitations 26

1.17.2 Lack of Regulations and Governance 26

1.17.3 Cost to Set Up 26

1.17.4 Huge Consumption of Energy 26

1.17.5 Public Perception 27

References 27

2 THE SCOPE FOR BLOCKCHAIN ECOSYSTEM 29

Manisha Suri

2.1 Introduction 30

2.2 Blockchain as Game Changer for Environment 32

2.3 Blockchain in Business Ecosystem 38

2.3.1 Business Ecosystem 39

2.3.1.1 What Is Business Model? 39

2.3.1.2 Business Model—Traditional 39

2.3.2 Are Blockchain Business Models Really Needed? 41

2.3.2.1 Blockchain Business Model 41

2.3.2.2 Model 1: Utility Token Model 41

2.3.2.3 Model 2: BaaS 43

2.3.2.4 Model 3: Securities 44

2.3.2.5 Model 4: Development Platforms 45

2.3.2.6 Model 5: Blockchain-Based Software Products 46

2.3.2.7 Model 6: Blockchain Professional Services 46

2.3.2.8 Model 7: Business Model—P2P 47

2.4 Is Blockchain Business Ecosystem Profitable? 48

2.5 How Do You “Design” a Business Ecosystem? 49

2.6 Redesigning Future With Blockchain 53

2.6.1 Is Earth Prepared for Blockchain? 53

2.7 Challenges and Opportunities 57

References 58

3 BUSINESS USE CASES OF BLOCKCHAIN TECHNOLOGY 59

Vasudha Arora, Shweta Mongia, Sugandha Sharma and Shaveta Malik

3.1 Introduction to Cryptocurrency 60

3.2 What is a Bitcoin? 60

3.2.1 Bitcoin Transactions and Their Processing 62

3.2.2 Double Spending Problem 65

3.2.3 Bitcoin Mining 67

3.3 Bitcoin ICO 69

3.3.1 ICO Token 69

3.3.2 How to Participate in ICO 70

3.3.3 Types of Tokens 71

3.4 Advantages and Disadvantages of ICO 72

3.5 Merchant Acceptance of Bitcoin 73

References 75

4 ETHEREUM 77

Shaveta Bhatia and S.S Tyagi

4.1 Introduction 78

4.2 Basic Features of Ethereum 78

4.3 Difference between Bitcoin and Ethereum 79

4.4 EVM (Ethereum Virtual Machine) 82

4.5 Gas 85

4.5.1 Gas Price Chart 85

4.6 Applications Built on the Basis of Ethereum 86

4.7 ETH 87

4.7.1 Why Users Want to Buy ETH? 87

4.7.2 How to Buy ETH? 88

4.7.3 Alternate Way to Buy ETH 88

4.7.4 Conversion of ETH to US Dollar 89

4.8 Smart Contracts 90

4.8.1 Government 90

4.8.2 Management 91

4.8.3 Benefits of Smart Contracts 91

4.8.4 Problems With Smart Contracts 92

4.8.5 Solution to Overcome This Problem 92

4.8.6 Languages to Build Smart Contracts 92

4.9 DApp (Decentralized Application or Smart Contract) 93

4.9.1 DApp in Ethereum 93

4.9.2 Applications of DApps 93

4.10 Conclusion 95

References 95

5 E-WALLET 97

Ms. Vishawjyoti

5.1 Overview of Wallet Technology 97

5.2 Types of Wallet 98

5.2.1 Paper 98

5.2.2 Physical Bitcoins 99

5.2.3 Mobile 99

5.2.4 Web 100

5.2.5 Desktop 100

5.2.6 Hardware 100

5.2.7 Bank 101

5.3 Security of Bitcoin Wallets 101

5.4 Workings of Wallet Technology 101

5.5 Create HD Wallet From Seed 102

5.5.1 Initiation 103

5.5.2 Steps for Creating an HD Wallet From a 24-Word Seed Phrase Through Particl-qt Tool 104

5.5.3 Steps for Encrypting the HD Wallet 106

5.5.4 Utilization 108

5.5.5 Steps for Generating Address to Access Transactions on the HD Wallet 108

5.6 Navigating HD Wallet 109

5.7 Conclusion 110

References 110

6 BLOCKCHAIN AND GOVERNANCE: THEORY, APPLICATIONS AND CHALLENGES 113

Bhavya Ahuja Grover, Bhawna Chaudhary, Nikhil Kumar Rajput and Om Dukiya

6.1 Introduction 114

6.2 Governance: Centralized vs Decentralized 115

6.3 Blockchain’s Features Supportive of Decentralization 117

6.4 Noteworthy Application Areas for Blockchain-Based Governance 119

6.4.1 Public Service Governance 119

6.4.2 Knowledge and Shared Governance 121

6.4.3 Governance in Supply Chain 123

6.4.4 Governance of Foreign Aid 124

6.4.5 Environmental Governance 125

6.4.6 Corporate Governance 126

6.4.7 Economic Governance 128

6.5 Scopes and Challenges 128

6.6 Conclusion 136

References 137

7 BLOCKCHAIN-BASED IDENTITY MANAGEMENT 141

Abhishek Bhattacharya

7.1 Introduction 141

7.2 Existing Identity Management Systems and Their Challenges 142

7.3 Concept of Decentralized Identifiers 144

7.4 The Workflow of Blockchain Identity Management Systems 145

7.5 How Does it Contribute to Data Security? 148

7.6 Trending Blockchain Identity Management Projects 150

7.7 Why and How of Revocation 152

7.8 Points to Ponder 154

7.8.1 Comparison Between Traditional and Blockchain-Based Identity Management Systems 156

7.9 Conclusion 157

References 158

8 BLOCKCHAIN & IOT: A PARADIGM SHIFT FOR SUPPLY CHAIN MANAGEMENT 159

Abhishek Bhattacharya

8.1 Introduction 159

8.2 Supply Chain Management 160

8.2.1 The Aspects of a Supply Chain 161

8.2.2 Supply Chain Performance Dimensions 162

8.2.3 Supply Chain Migration Towards Digitalization 163

8.3 Blockchain and IoT 164

8.3.1 What Makes Blockchain Suitable for SCM? 166

8.3.1.1 Shared Ledger 167

8.3.1.2 Permissions 168

8.3.1.3 Consensus 168

8.3.1.4 Smart Contracts 169

8.3.2 The Role of Blockchain in Achieving the SCM Performance Dimensions 170

8.3.3 The Role of IoT in the Implementation of Blockchain Technology 171

8.4 Blockchain Technology and IoT Use Cases in Supply Chain Management 172

8.5 Benefits and Challenges in Blockchain-Based Supply Chain Management 173

8.6 Conclusion 176

References 176

9 BLOCKCHAIN-ENABLED SUPPLY CHAIN MANAGEMENT SYSTEM 179

Sonal Pathak

9.1 Introduction 180

9.1.1 Supply Chain Management 180

9.2 Blockchain Technology 184

9.3 Blockchain Technology in Supply Chain Management 186

9.4 Elements of Blockchain That Affects Supply Chain 190

9.4.1 Bitcoin 195

9.5 Challenges in Implementation of Blockchain-Enabled Supply Chain 197

9.6 Conclusion 197

References 199

10 SECURITY CONCERNS OF BLOCKCHAIN 201

Neha Jain and Kamiya Chugh

10.1 Introduction: Security Concerns of Blockchain 201

10.2 Cryptocurrencies Scenarios 202

10.3 Privacy Challenges of Blockchain 203

10.3.1 Protection Problems in Blockchain 203

10.3.2 Privacy-Preserving Mechanisms Analysis 207

10.3.3 Data Anonymization-Mixing 207

10.4 Decentralization in Blockchain 208

10.4.1 Role of Decentralization in Blockchain 209

10.4.2 Analysis of PoS and DPoS 210

10.4.3 Problems With Decentralization 210

10.4.4 Decentralization Recovery Methods 212

10.5 Legal and Regulatory Issues in Blockchain 213

10.5.1 Legal Value of Blockchain and its Problems 214

10.6 Smart Contracts 218

10.7 Scandals of Blockchain 220

10.7.1 Blockchain Technologies as Stumbling Blocks to Financial Legitimacy 223

10.8 Is Blockchain the Rise of Trustless Trust? 223

10.8.1 Why Do We Need a System of Trust? 226

10.9 Blockchain Model Challenges 227

References 229

11 ACCEPTANCE AND ADOPTION OF BLOCKCHAIN TECHNOLOGY: AN EXAMINATION OF THE SECURITY & PRIVACY CHALLENGES 231

Amandeep Dhaliwal and Sahil Malik

11.1 Introduction 231

11.1.1 Research Methodology 233

11.1.2 Analysis 233

11.2 Security Issues of Blockchain 233

11.2.1 The Majority Attack (51% Attacks) 233

11.2.2 The Fork Problems 234

11.2.2.1 Hard Fork 234

11.2.2.2 Soft Fork 235

11.2.3 Scale of Blockchain 235

11.2.4 Time Confirmation of Blockchain Data— Double-Spend Attack/Race Attack 235

11.2.5 Current Regulations Problems 236

11.2.6 Scalability and Storage Capacity 236

11.2.7 DOS Attack/Sybil Attack/Eclipse Attack/Bugs 237

11.2.8 Legal Issues 237

11.2.9 Security of Wallets 238

11.2.10 The Increased Computing Power 238

11.3 Privacy Challenges of Bitcoin 238

11.3.1 De-Anonymization 239

11.3.1.1 Network Analysis 239

11.3.1.2 Address Clustering 239

11.3.1.3 Transaction Finger Printing 240

11.3.2 Transaction Pattern Exposure 240

11.3.2.1 Transaction Graph Analysis 240

11.3.2.2 Autonomous System-Level Deployment Analysis 241

11.4 Blockchain Application-Based Solutions 241

11.4.1 Bitcoins 241

11.4.2 IoT 242

11.4.2.1 MyBit 242

11.4.3 Aero Token 242

11.4.4 The Chain of Things 243

11.4.5 The Modum 243

11.4.6 Twin of Things 243

11.4.7 The Blockchain of Things 244

11.4.8 Blockchain Solutions: Cloud Computing 244

11.5 Conclusion and Future Work 245

References 245

12 DEFICIENCIES IN BLOCKCHAIN TECHNOLOGY AND POTENTIAL AUGMENTATION IN CYBER SECURITY 251

Eshan Bajal, Madhulika Bhatia, Lata Nautiyal and Madhurima Hooda

12.1 Introduction 252

12.2 Security Issues in Blockchain Technology 252

12.3 Privacy Challenges 253

12.3.1 BGP Hijacking Attack 255

12.3.2 BDoS (Blockchain Denial of Service) 255

12.3.3 Forcing Other Miners to Stop Mining 256

12.4 Decentralization Challenges 256

12.5 Regulatory Challenges 260

12.5.1 Principles to Follow While Regulating 262

12.5.1.1 Flexible to Legal Innovation 262

12.5.1.2 Experimentation Should be Encouraged 263

12.5.1.3 Focus on the Immediate Implications 264

12.5.1.4 Regulators Should Engage in a Transnational Conversation 264

12.5.2 Regulatory Strategies 265

12.5.2.1 Wait-and-See 265

12.5.2.2 Imposing Narrowing and Broadening Guidance 266

12.5.2.3 Sandboxing 266

12.5.2.4 Issue a New Legislation 267

12.5.2.5 Use Blockchain in Regulation 268

12.6 Business Model Challenges 269

12.7 Scandals and Public Perception 271

12.8 Why Blockchain is Trustless 277

12.8.1 Trust Mechanism 278

12.8.2 Anonymity 279

12.8.3 Use in Digital Wallets 279

12.8.4 Forgery Resistance 279

12.9 Use of Blockchain in Cybersecurity 280

12.9.1 Blockchain Database 281

12.9.2 DNS Security 283

12.9.3 IoT Security 283

12.9.4 DDoS Prevention 286

12.9.5 CDN (Content Delivery Network) 286

12.9.6 SMS Authentication 287

References 288

13 INTERNET OF THINGS AND BLOCKCHAIN 295

Priyanka Sharma

13.1 History of ‘Internet of Things’ 296

13.2 IoT Devices 298

13.3 Sensors and Actuators 302

13.4 Cloud and Haze-Based Engineering 307

13.5 Blockchain and IoT 315

13.6 Edge Computing 321

13.7 Contextual Analyses 324

13.8 Fate of Blockchain and IoT 332

References 332

14 BLOCKCHAIN APPLICATIONS 337

Boby Singh, Rohit Pahwa, Hari Om Tanwar and Nikita Gupta

14.1 Introduction to Blockchain 337

14.1.1 Uses of Blockchain in Administration 339

14.2 Blockchain in Big Data Predictive Task Automation 340

14.2.1 How Can Blockchain Help Big Data? 341

14.2.2 Blockchain Use Cases in Big Data 341

14.3 Digital Identity Verification 342

14.3.1 Why Digital Identity Matters? 343

14.3.2 Blockchain (Definition and its Features) 343

14.3.3 Why do we Need Blockchain in Digital Identity? 344

14.3.4 How Does a Blockchain Works? 345

14.3.5 Why is a Blockchain Secure? 345

14.3.6 What’s Blockchain Identification Management? 346

14.3.7 Advantages 347

14.4 Blockchain Government 348

14.4.1 Decentralized Government Services 349

14.4.2 Liquid Democracy and Random Sample Election 350

14.5 Blockchain Science 351

14.5.1 FoldingCoin 351

14.5.2 GridCoin (GRC) 352

14.5.3 Global Public Health 353

14.5.4 Bitcoin Genomics 354

14.6 Blockchain Health 355

14.6.1 Health Coin 355

14.6.2 EMR on Blockchain 355

14.6.3 Bit Coin Health Notary 356

14.7 Blockchain Learning 357

14.7.1 Bitcoin MOOCs 357

14.7.2 Smart Contract Literacy 357

14.7.3 LearnCoin 359

References 359

15 ADVANCE CONCEPTS OF BLOCKCHAIN 361

Raj Kumar

15.1 Community Supercomputing 361

15.2 Blockchain Genomics 364

15.3 Blockchain Learning 365

15.4 Community Coin 366

15.4.1 Monetary and Non-Monetary Currencies 367

15.4.2 Difference Between Monetary and Non-Monetary Assets 369

15.4.3 Currency Multiplicity 369

15.4.4 List of Some Prominent Alternate Coins is Given Below 370

15.5 Demurrage Currencies 371

Reading List 371

Index 373