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From Wikipedia, the free encyclopedia

For other uses, see Block chain (disambiguation).

A blockchain is a distributed ledger with growing lists of records (blocks) that are
securely linked together via cryptographic hashes.[1][2][3][4] Each block contains a
cryptographic hash of the previous block, a timestamp, and transaction data
(generally represented as a Merkle tree, where data nodes are represented by leaves).
Since each block contains information about the previous block, they effectively form
a chain (compare linked list data structure), with each additional block linking to the
ones before it. Consequently, blockchain transactions are irreversible in that, once
they are recorded, the data in any given block cannot be altered retroactively without
altering all subsequent blocks.

Blockchains are typically managed by a peer-to-peer (P2P) computer network for use
as a public distributed ledger, where nodes collectively adhere to a consensus
algorithm protocol to add and validate new transaction blocks. Although blockchain
records are not unalterable, since blockchain forks are possible, blockchains may be
considered secure by design and exemplify a distributed computing system with
high Byzantine fault tolerance.[5]

A blockchain was created by a person (or group of people) using the name
(or pseudonym) Satoshi Nakamoto in 2008 to serve as the public distributed
ledger for bitcoin cryptocurrency transactions, based on previous work by Stuart
Haber, W. Scott Stornetta, and Dave Bayer.[6] The implementation of the blockchain
within bitcoin made it the first digital currency to solve the double-spending problem
without the need for a trusted authority or central server. The bitcoin design has
inspired other applications[3][2] and blockchains that are readable by the public and are
widely used by cryptocurrencies. The blockchain may be considered a type
of payment rail.[7]

Private blockchains have been proposed for business use. Computerworld called the
marketing of such privatized blockchains without a proper security model "snake oil";
[8]
however, others have argued that permissioned blockchains, if carefully designed,
may be more decentralized and therefore more secure in practice than permissionless
ones.[4][9]

History

Cryptographer David Chaum first proposed a blockchain-like protocol in his 1982

dissertation "Computer Systems Established, Maintained, and Trusted by Mutually
Suspicious Groups".[10] Further work on a cryptographically secured chain of blocks
was described in 1991 by Stuart Haber and W. Scott Stornetta.[4][11] They wanted to
implement a system wherein document timestamps could not be tampered with. In
1992, Haber, Stornetta, and Dave Bayer incorporated Merkle trees into the design,
which improved its efficiency by allowing several document certificates to be collected
into one block.[4][12] Under their company Surety, their document certificate hashes
have been published in The New York Times every week since 1995.[13]

The first decentralized blockchain was conceptualized by a person (or group of

people) known as Satoshi Nakamoto in 2008. Nakamoto improved the design in an
important way using a Hashcash-like method to timestamp blocks without requiring
them to be signed by a trusted party and introducing a difficulty parameter to
stabilize the rate at which blocks are added to the chain. [4] The design was
implemented the following year by Nakamoto as a core component of
the cryptocurrency bitcoin, where it serves as the public ledger for all transactions on
the network.[3]

In August 2014, the bitcoin blockchain file size, containing records of all transactions
that have occurred on the network, reached 20 GB (gigabytes).[14] In January 2015, the
size had grown to almost 30 GB, and from January 2016 to January 2017, the bitcoin
blockchain grew from 50 GB to 100 GB in size. The ledger size had exceeded 200 GB
by early 2020.[15]

The words block and chain were used separately in Satoshi Nakamoto's original paper,
but were eventually popularized as a single word, blockchain, by 2016.[16]

According to Accenture, an application of the diffusion of innovations theory suggests

that blockchains attained a 13.5% adoption rate within financial services in 2016,
therefore reaching the early adopters' phase.[17] Industry trade groups joined to create
the Global Blockchain Forum in 2016, an initiative of the Chamber of Digital
Commerce.

In May 2018, Gartner found that only 1% of CIOs indicated any kind of blockchain
adoption within their organisations, and only 8% of CIOs were in the short-term
"planning or [looking at] active experimentation with blockchain". [18] For the year 2019
Gartner reported 5% of CIOs believed blockchain technology was a 'game-changer' for
their business.[19]

Structure and design

Blockchain formation. The main chain (black) consists of the

longest series of blocks from the genesis block (green) to the current block. Orphan
blocks (purple) exist outside of the main chain.

A blockchain is a decentralized, distributed, and often public, digital ledger consisting

of records called blocks that are used to record transactions across many computers
so that any involved block cannot be altered retroactively, without the alteration of all
subsequent blocks.[3][20] This allows the participants to verify and audit transactions
independently and relatively inexpensively.[21] A blockchain database is managed
autonomously using a peer-to-peer network and a distributed timestamping server.
They are authenticated by mass collaboration powered by collective self-interests.
[22]
Such a design facilitates robust workflow where participants' uncertainty regarding
data security is marginal. The use of a blockchain removes the characteristic of
infinite reproducibility from a digital asset. It confirms that each unit of value was
transferred only once, solving the long-standing problem of double-spending. A
blockchain has been described as a value-exchange protocol.[23] A blockchain can
maintain title rights because, when properly set up to detail the exchange agreement,
it provides a record that compels offer and acceptance.[citation needed]

Logically, a blockchain can be seen as consisting of several layers: [24]

 infrastructure (hardware)

 networking (node discovery, information propagation[25] and verification)

 consensus (proof of work, proof of stake)

 data (blocks, transactions)

 application (smart contracts/decentralized applications, if applicable)

Blocks

Blocks hold batches of valid transactions that are hashed and encoded into a Merkle
tree.[3] Each block includes the cryptographic hash of the prior block in the blockchain,
linking the two. The linked blocks form a chain. [3] This iterative process confirms the
integrity of the previous block, all the way back to the initial block, which is known as
the genesis block (Block 0).[26][27] To assure the integrity of a block and the data
contained in it, the block is usually digitally signed.[28]

Sometimes separate blocks can be produced concurrently, creating a temporary fork.

In addition to a secure hash-based history, any blockchain has a specified algorithm
for scoring different versions of the history so that one with a higher score can be
selected over others. Blocks not selected for inclusion in the chain are called orphan
blocks.[27] Peers supporting the database have different versions of the history from
time to time. They keep only the highest-scoring version of the database known to
them. Whenever a peer receives a higher-scoring version (usually the old version with
a single new block added) they extend or overwrite their own database and retransmit
the improvement to their peers. There is never an absolute guarantee that any
particular entry will remain in the best version of history forever. Blockchains are
typically built to add the score of new blocks onto old blocks and are given incentives
to extend with new blocks rather than overwrite old blocks. Therefore, the probability
of an entry becoming superseded decreases exponentially [29] as more blocks are built
on top of it, eventually becoming very low. [3][30]: ch. 08 [31] For example, bitcoin uses
a proof-of-work system, where the chain with the most cumulative proof-of-work is
considered the valid one by the network. There are a number of methods that can be
used to demonstrate a sufficient level of computation. Within a blockchain the
computation is carried out redundantly rather than in the traditional segregated
and parallel manner.[32]

Block time

The block time is the average time it takes for the network to generate one extra
block in the blockchain. By the time of block completion, the included data becomes
verifiable. In cryptocurrency, this is practically when the transaction takes place, so a
shorter block time means faster transactions. The block time for Ethereum is set to
between 14 and 15 seconds, while for bitcoin it is on average 10 minutes. [33]

Hard forks

This section is an excerpt from Fork (blockchain) § Hard fork.[edit]

A hard fork is a change to the blockchain protocol that is not backward compatible
and requires all users to upgrade their software in order to continue participating in
the network. In a hard fork, the network splits into two separate versions: one that
follows the new rules and one that follows the old rules.

For example, Ethereum was hard forked in 2016 to "make whole" the investors in The
DAO, which had been hacked by exploiting a vulnerability in its code. In this case, the
fork resulted in a split creating Ethereum and Ethereum Classic chains. In 2014
the Nxt community was asked to consider a hard fork that would have led to a
rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT
from a major cryptocurrency exchange. The hard fork proposal was rejected, and
some of the funds were recovered after negotiations and ransom payment.
Alternatively, to prevent a permanent split, a majority of nodes using the new
software may return to the old rules, as was the case of bitcoin split on 12 March
2013.[34]

A more recent hard-fork example is of Bitcoin in 2017, which resulted in a split

creating Bitcoin Cash.[35] The network split was mainly due to a disagreement in how
to increase the transactions per second to accommodate for demand. [36]

Decentralization

By storing data across its peer-to-peer network, the blockchain eliminates some risks
that come with data being held centrally.[3] The decentralized blockchain may use ad
hoc message passing and distributed networking.[37]

In a so-called "51% attack" a central entity gains control of more than half of a
network and can then manipulate that specific blockchain record at will,
allowing double-spending.[38]

Blockchain security methods include the use of public-key cryptography.[39]: 5 A public

key (a long, random-looking string of numbers) is an address on the blockchain. Value
tokens sent across the network are recorded as belonging to that address. A private
key is like a password that gives its owner access to their digital assets or the means
to otherwise interact with the various capabilities that blockchains now support. Data
stored on the blockchain is generally considered incorruptible. [3]

Every node in a decentralized system has a copy of the blockchain. Data quality is
maintained by massive database replication[40] and computational trust. No
centralized "official" copy exists and no user is "trusted" more than any other.
[39]
Transactions are broadcast to the network using the software. Messages are
delivered on a best-effort basis. Early blockchains rely on energy-intensive mining
nodes to validate transactions,[27] add them to the block they are building, and
then broadcast the completed block to other nodes.[30]: ch. 08 Blockchains use various
time-stamping schemes, such as proof-of-work, to serialize changes.[41] Later
consensus methods include proof of stake.[27] The growth of a decentralized blockchain
is accompanied by the risk of centralization because the computer resources required
to process larger amounts of data become more expensive. [42]

Finality

Finality is the level of confidence that the well-formed block recently appended to the
blockchain will not be revoked in the future (is "finalized") and thus can be trusted.
Most distributed blockchain protocols, whether proof of work or proof of stake, cannot
guarantee the finality of a freshly committed block, and instead rely on "probabilistic
finality": as the block goes deeper into a blockchain, it is less likely to be altered or
reverted by a newly found consensus.[43]

Byzantine fault tolerance-based proof-of-stake protocols purport to provide so called

"absolute finality": a randomly chosen validator proposes a block, the rest of
validators vote on it, and, if a supermajority decision approves it, the block is
irreversibly committed into the blockchain.[43] A modification of this method, an
"economic finality", is used in practical protocols, like the Casper protocol used
in Ethereum: validators which sign two different blocks at the same position in the
blockchain are subject to "slashing", where their leveraged stake is forfeited. [43]

Openness

Open blockchains are more user-friendly than some traditional ownership records,
which, while open to the public, still require physical access to view. Because all early
blockchains were permissionless, controversy has arisen over the blockchain
definition. An issue in this ongoing debate is whether a private system with verifiers
tasked and authorized (permissioned) by a central authority should be considered a
blockchain.[44][45][46][47][48] Proponents of permissioned or private chains argue that the
term "blockchain" may be applied to any data structure that batches data into time-
stamped blocks. These blockchains serve as a distributed version of multiversion
concurrency control (MVCC) in databases.[49] Just as MVCC prevents two transactions
from concurrently modifying a single object in a database, blockchains prevent two
transactions from spending the same single output in a blockchain. [50]: 30–31 Opponents
say that permissioned systems resemble traditional corporate databases, not
supporting decentralized data verification, and that such systems are not hardened
against operator tampering and revision.[44][46] Nikolai Hampton of Computerworld said
that "many in-house blockchain solutions will be nothing more than cumbersome
databases," and "without a clear security model, proprietary blockchains should be
eyed with suspicion."[8][51]

Permissionless (public) blockchain

An advantage to an open, permissionless, or public, blockchain network is that

guarding against bad actors is not required and no access control is needed.[29] This
means that applications can be added to the network without the approval or trust of
others, using the blockchain as a transport layer.[29]

Bitcoin and other cryptocurrencies currently secure their blockchain by requiring new
entries to include proof of work. To prolong the blockchain, bitcoin
uses Hashcash puzzles. While Hashcash was designed in 1997 by Adam Back, the
original idea was first proposed by Cynthia Dwork and Moni Naor and Eli Ponyatovski
in their 1992 paper "Pricing via Processing or Combatting Junk Mail".

In 2016, venture capital investment for blockchain-related projects was weakening in

the USA but increasing in China.[52] Bitcoin and many other cryptocurrencies use open
(public) blockchains. As of April 2018, bitcoin has the highest market capitalization.

Permissioned (private) blockchain

See also: Distributed ledger

Permissioned blockchains use an access control layer to govern who has access to the
network.[53] It has been argued that permissioned blockchains can guarantee a certain
level of decentralization, if carefully designed, as opposed to permissionless
blockchains, which are often centralized in practice. [9]

Disadvantages of permissioned blockchain

Nikolai Hampton argued in Computerworld that "There is also no need for a '51
percent' attack on a private blockchain, as the private blockchain (most likely) already
controls 100 percent of all block creation resources. If you could attack or damage the
blockchain creation tools on a private corporate server, you could effectively control
100 percent of their network and alter transactions however you wished." [8] This has a
set of particularly profound adverse implications during a financial crisis or debt
crisis like the financial crisis of 2007–08, where politically powerful actors may make
decisions that favor some groups at the expense of others, [54] and "the bitcoin
blockchain is protected by the massive group mining effort. It's unlikely that any
private blockchain will try to protect records using gigawatts of computing power —
it's time-consuming and expensive."[8] He also said, "Within a private blockchain there
is also no 'race'; there's no incentive to use more power or discover blocks faster than
competitors. This means that many in-house blockchain solutions will be nothing more
than cumbersome databases."[8]

Blockchain analysis

The analysis of public blockchains has become increasingly important with the
popularity of bitcoin, Ethereum, litecoin and other cryptocurrencies.[55] A blockchain, if
it is public, provides anyone who wants access to observe and analyse the chain data,
given one has the know-how. The process of understanding and accessing the flow of
crypto has been an issue for many cryptocurrencies, crypto exchanges and banks. [56]
[57]
The reason for this is accusations of blockchain-enabled cryptocurrencies enabling
illicit dark market trading of drugs, weapons, money laundering, etc. [58] A common
belief has been that cryptocurrency is private and untraceable, thus leading many
actors to use it for illegal purposes. This is changing now that specialised tech
companies provide blockchain tracking services, making crypto exchanges, law-
enforcement and banks more aware of what is happening with crypto funds and fiat-
crypto exchanges. The development, some argue, has led criminals to prioritise the
use of new cryptos such as Monero.[59][60][61]

Standardisation
In April 2016, Standards Australia submitted a proposal to the International
Organization for Standardization to consider developing standards to support
blockchain technology. This proposal resulted in the creation of ISO Technical
Committee 307, Blockchain and Distributed Ledger Technologies. [62] The technical
committee has working groups relating to blockchain terminology, reference
architecture, security and privacy, identity, smart contracts, governance and
interoperability for blockchain and DLT, as well as standards specific to industry
sectors and generic government requirements.[63][non-primary source needed] More than 50
countries are participating in the standardization process together with external
liaisons such as the Society for Worldwide Interbank Financial
Telecommunication (SWIFT), the European Commission, the International Federation of
Surveyors, the International Telecommunication Union (ITU) and the United Nations
Economic Commission for Europe (UNECE).[63]

Many other national standards bodies and open standards bodies are also working on
blockchain standards.[64] These include the National Institute of Standards and
Technology[65] (NIST), the European Committee for Electrotechnical
Standardization[66] (CENELEC), the Institute of Electrical and Electronics
Engineers[67] (IEEE), the Organization for the Advancement of Structured Information
Standards (OASIS), and some individual participants in the Internet Engineering Task
Force[68] (IETF).

Centralized blockchain

Although most of blockchain implementation are decentralized and

distributed, Oracle launched a centralized blockchain table feature in Oracle 21c
database. The Blockchain Table in Oracle 21c database is a centralized blockchain
which provide immutable feature. Compared to decentralized blockchains, centralized
blockchains normally can provide a higher throughput and lower latency of
transactions than consensus-based distributed blockchains. [69][70]

Types

Currently, there are at least four types of blockchain networks — public blockchains,
private blockchains, consortium blockchains and hybrid blockchains.

Public blockchains

A public blockchain has absolutely no access restrictions. Anyone with

an Internet connection can send transactions to it as well as become a validator (i.e.,
participate in the execution of a consensus protocol).[71][self-published source?] Usually, such
networks offer economic incentives for those who secure them and utilize some type
of a proof-of-stake or proof-of-work algorithm.

Some of the largest, most known public blockchains are the bitcoin blockchain and the
Ethereum blockchain.

Private blockchains

A private blockchain is permissioned.[53] One cannot join it unless invited by the

network administrators. Participant and validator access is restricted. To distinguish
between open blockchains and other peer-to-peer decentralized database applications
that are not open ad-hoc compute clusters, the terminology Distributed Ledger (DLT)
is normally used for private blockchains.

Hybrid blockchains

A hybrid blockchain has a combination of centralized and decentralized features.

[72]
The exact workings of the chain can vary based on which portions of centralization
and decentralization are used.

Sidechains

A sidechain is a designation for a blockchain ledger that runs in parallel to a primary

blockchain.[73][74] Entries from the primary blockchain (where said entries typically
represent digital assets) can be linked to and from the sidechain; this allows the
sidechain to otherwise operate independently of the primary blockchain (e.g., by
using an alternate means of record keeping, alternate consensus algorithm, etc.).[75]
[better source needed]

Consortium blockchain

A consortium blockchain is a type of blockchain that combines elements of both public

and private blockchains. In a consortium blockchain, a group of organizations come
together to create and operate the blockchain, rather than a single entity. The
consortium members jointly manage the blockchain network and are responsible for
validating transactions. Consortium blockchains are permissioned, meaning that only
certain individuals or organizations are allowed to participate in the network. This
allows for greater control over who can access the blockchain and helps to ensure that
sensitive information is kept confidential.

Consortium blockchains are commonly used in industries where multiple organizations

need to collaborate on a common goal, such as supply chain management or financial
services. One advantage of consortium blockchains is that they can be more efficient
and scalable than public blockchains, as the number of nodes required to validate
transactions is typically smaller. Additionally, consortium blockchains can provide
greater security and reliability than private blockchains, as the consortium members
work together to maintain the network. Some examples of consortium blockchains
include Quorum and Hyperledger.[76]

Uses

Blockchain technology can be integrated into multiple areas. The primary use of
blockchains is as a distributed ledger for cryptocurrencies such as bitcoin; there were
also a few other operational products that had matured from proof of concept by late
2016.[52] As of 2016, some businesses have been testing the technology and
conducting low-level implementation to gauge blockchain's effects on organizational
efficiency in their back office.[77]

In 2019, it was estimated that around $2.9 billion were invested in blockchain
technology, which represents an 89% increase from the year prior. Additionally, the
International Data Corp estimated that corporate investment into blockchain
technology would reach $12.4 billion by 2022. [78] Furthermore, According
to PricewaterhouseCoopers (PwC), the second-largest professional services network in
the world, blockchain technology has the potential to generate an annual business
value of more than $3 trillion by 2030. PwC's estimate is further augmented by a 2018
study that they have conducted, in which PwC surveyed 600 business executives and
determined that 84% have at least some exposure to utilizing blockchain technology,
which indicates a significant demand and interest in blockchain technology. [79]

In 2019, the BBC World Service radio and podcast series Fifty Things That Made the
Modern Economy identified blockchain as a technology that would have far-reaching
consequences for economics and society. The economist and Financial
Times journalist and broadcaster Tim Harford discussed why the underlying
technology might have much wider applications and the challenges that needed to be
overcome.[80] His first broadcast was on June 29, 2019.

The number of blockchain wallets quadrupled to 40 million between 2016 and 2020. [81]

A paper published in 2022 discussed the potential use of blockchain technology

in sustainable management.[82]

Cryptocurrencies

Main article: Cryptocurrency

Most cryptocurrencies use blockchain technology to record transactions. For example,

the bitcoin network and Ethereum network are both based on blockchain.

The criminal enterprise Silk Road, which operated on Tor, utilized cryptocurrency for
payments, some of which the US federal government seized through research on the
blockchain and forfeiture.[83]

Governments have mixed policies on the legality of their citizens or banks owning
cryptocurrencies. China implements blockchain technology in several industries
including a national digital currency which launched in 2020.[84] To strengthen their
respective currencies, Western governments including the European Union and the
United States have initiated similar projects. [85]

Smart contracts

Main article: Smart contract

Blockchain-based smart contracts are contracts that can be partially or fully executed
or enforced without human interaction.[86] One of the main objectives of a smart
contract is automated escrow. A key feature of smart contracts is that they do not
need a trusted third party (such as a trustee) to act as an intermediary between
contracting entities — the blockchain network executes the contract on its own. This
may reduce friction between entities when transferring value and could subsequently
open the door to a higher level of transaction automation. [87] An IMF staff discussion
from 2018 reported that smart contracts based on blockchain technology might
reduce moral hazards and optimize the use of contracts in general, but "no viable
smart contract systems have yet emerged." Due to the lack of widespread use, their
legal status was unclear.[88][89]

Financial services
According to Reason, many banks have expressed interest in
implementing distributed ledgers for use in banking and are cooperating with
companies creating private blockchains;[90][91][92] according to a September
2016 IBM study, it is occurring faster than expected.[93]

Banks are interested in this technology not least because it has the potential to speed
up back office settlement systems.[94] Moreover, as the blockchain industry has
reached early maturity institutional appreciation has grown that it is, practically
speaking, the infrastructure of a whole new financial industry, with all the implications
which that entails.[95]

Banks such as UBS are opening new research labs dedicated to blockchain technology
in order to explore how blockchain can be used in financial services to increase
efficiency and reduce costs.[96][97]

Berenberg, a German bank, believes that blockchain is an "overhyped technology"

that has had a large number of "proofs of concept", but still has major challenges, and
very few success stories.[98]

The blockchain has also given rise to initial coin offerings (ICOs) as well as a new
category of digital asset called security token offerings (STOs), also sometimes
referred to as digital security offerings (DSOs). [99] STO/DSOs may be conducted
privately or on public, regulated stock exchange and are used to tokenize traditional
assets such as company shares as well as more innovative ones like intellectual
property, real estate,[100] art, or individual products. A number of companies are active
in this space providing services for compliant tokenization, private STOs, and public
STOs.

Games

Main article: Blockchain game

Blockchain technology, such as cryptocurrencies and non-fungible tokens (NFTs), has

been used in video games for monetization. Many live-service games offer in-game
customization options, such as character skins or other in-game items, which the
players can earn and trade with other players using in-game currency. Some games
also allow for trading of virtual items using real-world currency, but this may be illegal
in some countries where video games are seen as akin to gambling, and has led
to gray market issues such as skin gambling, and thus publishers typically have shied
away from allowing players to earn real-world funds from games. [101] Blockchain
games typically allow players to trade these in-game items for cryptocurrency, which
can then be exchanged for money.[102]

The first known game to use blockchain technologies was CryptoKitties, launched in
November 2017, where the player would purchase NFTs with Ethereum
cryptocurrency, each NFT consisting of a virtual pet that the player could breed with
others to create offspring with combined traits as new NFTs. [103][102] The game made
headlines in December 2017 when one virtual pet sold for more than US$100,000.
[104]
CryptoKitties also illustrated scalability problems for games on Ethereum when it
created significant congestion on the Ethereum network in early 2018 with
approximately 30% of all Ethereum transactions[clarification needed] being for the game.[105]
[106]

By the early 2020s, there had not been a breakout success in video games using
blockchain, as these games tend to focus on using blockchain for speculation instead
of more traditional forms of gameplay, which offers limited appeal to most players.
Such games also represent a high risk to investors as their revenues can be difficult to
predict.[102] However, limited successes of some games, such as Axie Infinity during
the COVID-19 pandemic, and corporate plans towards metaverse content, refueled
interest in the area of GameFi, a term describing the intersection of video games and
financing typically backed by blockchain currency, in the second half of 2021.
[107]
Several major publishers, including Ubisoft, Electronic Arts, and Take Two
Interactive, have stated that blockchain and NFT-based games are under serious
consideration for their companies in the future. [108]

In October 2021, Valve Corporation banned blockchain games, including those using
cryptocurrency and NFTs, from being hosted on its Steam digital storefront service,
which is widely used for personal computer gaming, claiming that this was an
extension of their policy banning games that offered in-game items with real-world
value. Valve's prior history with gambling, specifically skin gambling, was speculated
to be a factor in the decision to ban blockchain games. [109] Journalists and players
responded positively to Valve's decision as blockchain and NFT games have a
reputation for scams and fraud among most PC gamers, [101][109] and Epic Games, which
runs the Epic Games Store in competition to Steam, said that they would be open to
accepted blockchain games in the wake of Valve's refusal. [110]

Supply chain

This section needs to be updated. Please help update this article

to reflect recent events or newly available information. (August
2023)

There have been several different efforts to employ blockchains in supply chain
management.

 Precious commodities mining — Blockchain technology has been used for

tracking the origins of gemstones and other precious commodities. In 2016, The
Wall Street Journal reported that the blockchain technology company Everledger
was partnering with IBM's blockchain-based tracking service to trace the origin
of diamonds to ensure that they were ethically mined. [111] As of 2019,
the Diamond Trading Company (DTC) has been involved in building a diamond
trading supply chain product called Tracer. [112]

 Food supply — As of 2018, Walmart and IBM were running a trial to use a
blockchain-backed system for supply chain monitoring for lettuce and spinach –
all nodes of the blockchain were administered by Walmart and located on the
IBM cloud.[113]

 Fashion industry — There is an opaque relationship between brands,

distributors, and customers in the fashion industry, which prevents the
sustainable and stable development of the fashion industry. Blockchain could
 make this information transparent, assisting sustainable development of the
industry.[114]

 Motor vehicles — Mercedes-Benz and partner Icertis developed a blockchain

prototype used to facilitate consistent documentation of contracts along the
supply chain so that the ethical standards and contractual obligations required
of its direct suppliers can be passed on to second tier suppliers and beyond. [115]
[116]
In another project, the company uses blockchain technology to track the
emissions of climate-relevant gases and the amount of secondary material
along the supply chain for its battery cell manufacturers.[117]

Domain names

There are several different efforts to offer domain name services via the blockchain.
These domain names can be controlled by the use of a private key, which purports to
allow for uncensorable websites. This would also bypass a registrar's ability to
suppress domains used for fraud, abuse, or illegal content. [118]

Namecoin is a cryptocurrency that supports the ".bit" top-level domain (TLD).

Namecoin was forked from bitcoin in 2011. The .bit TLD is not sanctioned by ICANN,
instead requiring an alternative DNS root.[118] As of 2015, .bit was used by 28 websites,
out of 120,000 registered names.[119] Namecoin was dropped by OpenNIC in 2019, due
to malware and potential other legal issues. [120] Other blockchain alternatives to ICANN
include The Handshake Network,[119] EmerDNS, and Unstoppable Domains.[118]

Specific TLDs include ".eth", ".luxe", and ".kred", which are associated with the
Ethereum blockchain through the Ethereum Name Service (ENS). The .kred TLD also
acts as an alternative to conventional cryptocurrency wallet addresses as a
convenience for transferring cryptocurrency.[121]

Other uses

Blockchain technology can be used to create a permanent, public, transparent ledger

system for compiling data on sales, tracking digital use and payments to content
creators, such as wireless users[122] or musicians.[123] The Gartner 2019 CIO Survey
reported 2% of higher education respondents had launched blockchain projects and
another 18% were planning academic projects in the next 24 months. [124] In
2017, IBM partnered with ASCAP and PRS for Music to adopt blockchain technology in
music distribution.[125] Imogen Heap's Mycelia service has also been proposed as a
blockchain-based alternative "that gives artists more control over how their songs and
associated data circulate among fans and other musicians." [126][127]

New distribution methods are available for the insurance industry such as peer-to-peer
insurance, parametric insurance and microinsurance following the adoption of
blockchain.[128][129] The sharing economy and IoT are also set to benefit from
blockchains because they involve many collaborating peers. [130] The use of blockchain
in libraries is being studied with a grant from the U.S. Institute of Museum and Library
Services.[131]

Other blockchain designs include Hyperledger, a collaborative effort from the Linux
Foundation to support blockchain-based distributed ledgers, with projects under this
initiative including Hyperledger Burrow (by Monax) and Hyperledger Fabric
(spearheaded by IBM).[132][133][134] Another is Quorum, a permissioned private blockchain
by JPMorgan Chase with private storage, used for contract applications. [135]

Oracle introduced a blockchain table feature in its Oracle 21c database.[69][70]

Blockchain is also being used in peer-to-peer energy trading.[136][137][138]

Lightweight blockchains, or simplified blockchains, are more suitable for internet of

things (IoT) applications than conventional blockchains. [139] One experiment suggested
that a lightweight blockchain-based network could accommodate up to 1.34 million
authentication processes every second, which could be sufficient for resource-
constrained IoT networks.[140]

Blockchain could be used in detecting counterfeits by associating unique identifiers to

products, documents and shipments, and storing records associated with transactions
that cannot be forged or altered.[141][142] It is however argued that blockchain
technology needs to be supplemented with technologies that provide a strong binding
between physical objects and blockchain systems, [143] as well as provisions for content
creator verification ala KYC standards.[144] The EUIPO established an Anti-
Counterfeiting Blockathon Forum, with the objective of "defining, piloting and
implementing" an anti-counterfeiting infrastructure at the European level. [145][146] The
Dutch Standardisation organisation NEN uses blockchain together with QR Codes to
authenticate certificates.[147]

Beijing and Shanghai are among the cities designated by China to trial blockchain
applications as January 30, 2022.[148] In Chinese legal proceedings, blockchain
technology was first accepted as a method for authenticating internet evidence by
the Hangzhou Internet Court in 2019 and has since been accepted by other Chinese
courts.[149]: 123–125

Blockchain interoperability

With the increasing number of blockchain systems appearing, even only those that
support cryptocurrencies, blockchain interoperability is becoming a topic of major
importance. The objective is to support transferring assets from one blockchain
system to another blockchain system. Wegner [150] stated that "interoperability is the
ability of two or more software components to cooperate despite differences in
language, interface, and execution platform". The objective of blockchain
interoperability is therefore to support such cooperation among blockchain systems,
despite those kinds of differences.

There are already several blockchain interoperability solutions available. [151] They can
be classified into three categories: cryptocurrency interoperability approaches,
blockchain engines, and blockchain connectors.

Several individual IETF participants produced the draft of a blockchain interoperability

architecture.[152]

Energy consumption concerns

Some cryptocurrencies use blockchain mining — the peer-to-peer computer

computations by which transactions are validated and verified. This requires a large
amount of energy. In June 2018, the Bank for International Settlements criticized the
use of public proof-of-work blockchains for their high energy consumption. [153][154][155]

Early concern over the high energy consumption was a factor in later blockchains such
as Cardano (2017), Solana (2020) and Polkadot (2020) adopting the less energy-
intensive proof-of-stake model. Researchers have estimated that bitcoin consumes
100,000 times as much energy as proof-of-stake networks. [156][157]

In 2021, a study by Cambridge University determined that bitcoin (at 121 terawatt-
hours per year) used more electricity than Argentina (at 121TWh) and the Netherlands
(109TWh).[158] According to Digiconomist, one bitcoin transaction required 708
kilowatt-hours of electrical energy, the amount an average U.S. household consumed
in 24 days.[159]

In February 2021, U.S. Treasury secretary Janet Yellen called bitcoin "an extremely
inefficient way to conduct transactions", saying "the amount of energy consumed in
processing those transactions is staggering". [160] In March 2021, Bill Gates stated that
"Bitcoin uses more electricity per transaction than any other method known to
mankind", adding "It's not a great climate thing." [161]

Nicholas Weaver, of the International Computer Science Institute at the University of

California, Berkeley, examined blockchain's online security, and the energy
efficiency of proof-of-work public blockchains, and in both cases found it grossly
inadequate.[162][163] The 31TWh-45TWh of electricity used for bitcoin in 2018 produced
17-23 million tonnes of CO2.[164][165] By 2022, the University of Cambridge and
Digiconomist estimated that the two largest proof-of-work blockchains, bitcoin and
Ethereum, together used twice as much electricity in one year as the whole of
Sweden, leading to the release of up to 120 million tonnes of CO 2 each year.[166]

Some cryptocurrency developers are considering moving from the proof-of-work

model to the proof-of-stake model.[167]

Academic research

Blockchain panel discussion at the first IEEE Computer

Society TechIgnite conference

In October 2014, the MIT Bitcoin Club, with funding from MIT alumni, provided
undergraduate students at the Massachusetts Institute of Technology access to $100
of bitcoin. The adoption rates, as studied by Catalini and Tucker (2016), revealed that
when people who typically adopt technologies early are given delayed access, they
tend to reject the technology.[168] Many universities have founded departments
focusing on crypto and blockchain, including MIT, in 2017. In the same
year, Edinburgh became "one of the first big European universities to launch a
blockchain course", according to the Financial Times.[169]

Adoption decision
Motivations for adopting blockchain technology (an aspect of innovation adoption)
have been investigated by researchers. For example, Janssen, et al. provided a
framework for analysis,[170] and Koens & Poll pointed out that adoption could be
heavily driven by non-technical factors.[171] Based on behavioral models, Li[172] has
discussed the differences between adoption at the individual level and organizational
levels.

Collaboration

Scholars in business and management have started studying the role of blockchains
to support collaboration.[173][174] It has been argued that blockchains can foster both
cooperation (i.e., prevention of opportunistic behavior) and coordination (i.e.,
communication and information sharing). Thanks to reliability, transparency,
traceability of records, and information immutability, blockchains facilitate
collaboration in a way that differs both from the traditional use of contracts and from
relational norms. Contrary to contracts, blockchains do not directly rely on the legal
system to enforce agreements.[175] In addition, contrary to the use of relational norms,
blockchains do not require a trust or direct connections between collaborators.

Blockchain and internal audit

External videos

Blockchain Basics &

Cryptography, Gary
Gensler, Massachusetts
Institute of Technology,
0:30[176]

The need for internal audits to provide effective oversight of organizational efficiency
will require a change in the way that information is accessed in new formats.
[177]
Blockchain adoption requires a framework to identify the risk of exposure
associated with transactions using blockchain. The Institute of Internal Auditors has
identified the need for internal auditors to address this transformational technology.
New methods are required to develop audit plans that identify threats and risks. The
Internal Audit Foundation study, Blockchain and Internal Audit, assesses these factors.
[178]
The American Institute of Certified Public Accountants has outlined new roles for
auditors as a result of blockchain.[179]

Journals

Main article: Ledger (journal)

In September 2015, the first peer-reviewed academic journal dedicated to

cryptocurrency and blockchain technology research, Ledger, was announced. The
inaugural issue was published in December 2016. [180] The journal covers aspects
of mathematics, computer science, engineering, law, economics and philosophy that
relate to cryptocurrencies.[181][182] The journal encourages authors to digitally sign a file
hash of submitted papers, which are then timestamped into the bitcoin blockchain.
Authors are also asked to include a personal bitcoin address on the first page of their
papers for non-repudiation purposes.[183]
See also

 Economics portal

 Changelog – a record of all notable changes made to a project

 Checklist – an informational aid used to reduce failure

 Economics of digitization

 List of blockchains

 Privacy and blockchain

 Version control – a record of all changes (mostly of software project) in a form of

a graph