International Journal of Hyperconnectivity and the Internet of Things
Volume 1 • Issue 2 • July-December 2017
The Blockchain Technology:
Applications and Threats
Ahmed Ben Ayed, University of the Cumberlands, Santa Clara, USA
Mohamed Ben Belhajji, University of Quebec at Rimouski, Rimouski, Canada
ABSTRACT
This article describes how Blockchain is a technology that has a great potential to change the way
business is done in the future, exactly like the internet did in the early nineties. Blockchain offers new
opportunities to develop new types of digital services to overcome business problems, and improve
business practices by making transaction information a public resource. While research on the topic
is still emerging, it has mostly focused on crypto-currencies instead of taking advantage of this novel
concept to create new advanced services. This article discusses blockchain and the technology behind
it, some of its possible applications, as well as threats targeting the new poorly understood technology.
KeywoRdS
Bitcoin, Blockchain, Crypto-Currency, IoT
INTRodUCTIoN
A Blockchain is essentially a dispersed data source of records, or public ledger, of all transactions
or digital occasions that have actually been executed and also shared amongst participating parties.
Each transaction in the public ledger is verified by the consensus of the majority of participants in the
system. Once admitted, details can never, ever be removed. The Blockchain includes a particular and
verifiable record of every single transaction ever made. Bitcoin, a decentralized peer-to-peer digital
money platform, is one of the most popular examples that utilize the Blockchain innovation. The
Bitcoin itself is very debatable; however, the underlying Blockchain innovation has worked perfectly
to make it trustworthy and implemented in a vast array of applications in both the financial and
non-financial worlds. The major hypothesis is that the Blockchain develops a system of distributed
agreements in the virtual world. This allows participating entities to know for sure that an electronic
event happened by creating an irrefutable record in a public ledger. It opens up the door for creating
democratic open and scalable electronic economies instead of centralized ones. There are tremendous
chances in this disruptive technology, and the changes it is bringing to how business is being done
have only just started.
SRUCTURe oF THe BLoCKCHAIN
The Blockchain is an arranged back-linked list of blocks that contain transactions.
The Blockchain can be stored as a flat file, or in a regular database. Blocks are linked back, where
each block refers to the previous block in the chain. The Blockchain is often visualized as a vertical
pile of transactions, and the first block ever created serves as the foundation of the stack (Figure 1).
DOI: 10.4018/IJHIoT.2017070101
Copyright © 2017, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
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Blockchain is the main technology behind the Bitcoin, which is considered the first decentralized
crypto-electronic money. In Bitcoin, the transaction starts when the future owner of the Bitcoin sends
out to the original own era request to receive money. If approved, the Bitcoin gets moved using a
digital hash signature. Every coin is related to an address, and every transaction in the Blockchain
is basically a trade in Bitcoin from one address to another. In Blockchain, the information utilized
in transactions are saved in an unalterable public spreadsheet that is protected by users in a peer-topeer network which acts as verification for the credibility of the transactions (Dorri et al., 2016).
Blockchain technology allows “trustless” transactions without the need for entities to verify or check
the amount exchanged by using a computer network. Simply speaking, Blockchain enables peers to
perform transactions between one another without the need for a central bank or any other financial
institution (Kiviat, 2015). A Blockchain transaction occurs between two parties and it begins when
one of the involved parties sends a message to the network concerning the conditions governing the
transaction. After that, the other party broadcasts their approval of the conditions to the network,
which by default causes the network participants to authenticate and confirm the transaction (Kiviat,
2015). When the transaction becomes verified and validated, the public Blockchain record, as well
as all users in the network, will be collectively updated with the status of the recently added blocks
to the network. This decentralized system, along with the cryptography used, guarantees that no
confirmed transaction can be altered or deleted, and helps in establishing trust between parties by
using a decentralized public journal and cryptographic formulas that can ensure accepted purchases
will not be changed after confirmation. Every block throughout the Blockchain is generally defined
with a hash, created using the SHA256 cryptographic hash algorithm. Every block contains a reference
to the previously created block, referred to as the ‘parent’. Every block contains the hash information
from the parent within its own header. This series of hashes makes it easy to connect each block to
its parent, which helps create a chain that goes back to the first-ever created block, referred to as the
‘genesis block’. Although a block has only one parent, it may momentarily obtain several children.
Every child relates back to the exact same block as its parent, and has the exact same previous block
hash. Several children blocks occur during a Blockchain “fork”, which is a provisional circumstance
that happens whenever various blocks are created at virtually the exact same time by different miners.
Ultimately, just one child block will become part of the Blockchain, and the “fork” is fixed. Despite
the fact that a block may have more than one child, each block can have only one parent due to the
one single previous block hash located in every block header (see Figure 2).
A block is a container that aggregates different information that helps in identifying a transaction
in the chain. The block header is 80 bytes, whereas the typical transaction is about 250 bytes.
Every transaction is composed of the sender, the receiver, and any additional information about the
transaction. The transaction is protected by an encryption code. The block has a number of transactions
and the Blockchain is created from a number of blocks. The transaction must be confirmed and the
block needs to be created, chained, and validated by peers. Figure 3 shows a simple overview on how
Blockchain network functions.
1.
2.
3.
4.
5.
6.
2
Adam wants to send money or transfer property to Eve
The transaction is represented as a block.
The block is sent to everyone in the network.
Peers in the network will have to validate the transaction and confirm it is valid.
If approved the block will be added to the chain and the transactions is recorded and viewable
by everyone in the network.
The money or property will be transferred from Adam to Eve.
International Journal of Hyperconnectivity and the Internet of Things
Volume 1 • Issue 2 • July-December 2017
Figure 1. Blockchain structure (Antonopoulos, 2014)
BLoCKCHAIN APPLICATIoNS
Blockchain is providing new possibilities to create novel kinds of electronic solutions. While study on
the subject is still underway, researchers have mainly concentrated on legal technical issues instead
of using this unique idea to develop innovative electronic solutions that could revolutionize the
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Figure 2. Basic components of Blockchain (Froystad & Holm, 2016)
Figure 3. Basic simple presentation of the Blockchain function
idea of open solutions. Blockchain could be used in different areas to enhance service and void any
third-party needs to validate transactions. In this part of the research paper, we are going to discuss
potential areas where Blockchain could be used (see Figure 4).
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Figure 4. Blockchain potential applications
Cryptocurrencies
Bitcoin
Bitcoin is the most popular application that is intrinsically tied to Blockchain technology. It is also
the most controversial application since it enables a multibillion-dollar worldwide marketplace of
anonymous transactions without any government control. For this specific reason, the Bitcoin was not
initially accepted by many governments, and has been tied to illegal activities. In 2008, an individual
(or an intelligence agency) writing under the name of Satoshi Nakamoto published a paper entitled
“Bitcoin: A Peer-To-Peer Electronic Cash System”. This paper described a peer-to-peer version of
a cryptocurrency that would allow online payments to be sent directly from one party to another
without going through any financial institution. The author of the initial Bitcoin paper wanted to
remain anonymous, and hence no one knows the author’s identity.
A few months after the publication of Satoshi Nakamoto’s paper, an implementation of the new
protocol was released, starting with the Genesis block of 50 coins, which was the first realization
of this concept. Currencies other than the Bitcoin exist; based on the same technology, they have
succeeded in obtaining a significant market share and provide good alternatives to the Bitcoin
Blockchain system. As of December 2017, the Bitcoin is still thriving with a value of more than
$17,000 USD per 1 Bitcoin (see Figure 5).
Ripple, Litecoin, and Ether are all considered to be the main cryptocurrencies in the market
alongside Bitcoin. Other digital currencies exist, but they run on the same technology with much
smaller market share.
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Figure 5. Bitcoin value chart
Ripple
Ripple was created by the start-up Ripple Labs, Inc. Unlike Bitcoin, Ripple was created to improve
current functionalities in the financial system instead of replacing current means of legal tender.
Ripple is basically an enhancement to the current financial system, not an alternative like Bitcoin
apparently aims to be.
Litecoin
Litecoin is another cryptocurrency that was invented by former Google developer Charles Lee. It
was marketed as the “silver to Bitcoin’s gold” (Bitcoin Forum, 2011). It is structurally similar to
Bitcoin, and was purposefully created as an enhancement to Bitcoin. The currency was developed to
generate roughly four Litecoins for every one Bitcoin. Additionally, Litecoin better supports payments
by havinga considerably faster creation time (Litecoin, 2017). Contrary to Bitcoin, Litecoin can be
useful for small-value transactions. Litecoin basically serves as change for Bitcoin, however, the
developer did not actually state the worth of Litecoins to Bitcoins, leaving it instead for the market
to determine a value rather than be influenced by a concrete liaison.
Even though four times more Lite coins have been generated than Bitcoins, the price relative to
Bitcoin has been noticeably volatile. This indicates that, even though Litecoin was imagined as an
enhancement to Bitcoin, it is on a somewhat separate demand function than Bitcoin.
Ether
Ether is a digital token created by the Ethereum Foundation. Ether runs on an underlying technology
called Ethereum, which is a different Blockchain to the one that powers Bitcoin. Each Blockchain – or
decentralized ledger – has its own property.
IoT and Blockchain
The Internet of Things (IoT) is progressively becoming the most preferred technology in both the
business and consumer space. Blockchain innovation might be the silver bullet required by the IoT
sector. It could be used to connect and track billions of devices around the globe, making it easy on
IoT manufactures to secure their devices, which could save a large amount of money. The majority
of IoT systems are based upon a centralized model where a broker or hub controls communications
between different devices. This method has actually become impractical, especially when devices
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have to exchange data between each other autonomously. This particular need has actually brought
researchers’ attention to the direction of decentralized IoT systems. (Higgins, 2015).
Blockchain offers a decentralized IoT platform which can provide secure and trusted data
exchanges between devices. Within this type of framework, the Blockchain acts as the regular
ledger for keeping a trustworthy log for all information exchanged amongst different smart objects
in a decentralized IoT system. For an IoT solution to work properly without any centralized broker,
decentralized solutions have to support three fundamental functions: peer-to-peer messaging,
distributed file sharing, and autonomous device communication. For that matter, IBM and Samsung
were the first to develop a platform called “Autonomous Decentralized Peer-To-Peer Telemetry”
(ADEPT) in order to build a decentralized IoT system (Higgins, 2015). ADEPT used some elements
from the Bitcoin design to build the system. ADEPT implemented its fundamental functions by using
three open source protocols: Telehash for messaging, BitTorrent for file sharing, and Ethereum, a
Blockchain protocol for autonomous device coordination functions (IBM, 2015).
Public Services
Along with the applications of Blockchain in the financial sector and IoT systems, Blockchain could
be used extensively in public services. One Blockchain use for civil service is that of land registration
(Shin, 2016), where land details such as physical condition or other relevant information could be
registered and advertised on Blockchain. Property registration has been one of the best uses of
Blockchain technology. It has been used to keep records of property information, ownership, and
any other related information to make it publicly available in the Blockchain, to be examined later
by any potential buyers. Any changes to the property would be recorded in the Blockchain, which
could potentially improve the efficiency of public service and cut down costs and time wasted when
checking on a specific property.
The Republic of Georgia was the first government to use the Bitcoin Blockchain to secure and
validate official actions. In 2016, the Georgian government launched a project to register land titles
via a private Blockchain, and then to make those transactions verifiable using the public Bitcoin
Blockchain (Shin, 2016).
The Blockchain was also used to design an e-voting system that would help perform secure,
reliable, and anonymous e-voting, as well as restore the trust of people in their government. The
system proposed a Blockchain-voting solution that created an initial block called ‘candidate’ which
would serve as the genesis block, with every new vote placed on top of it. Every time someone votes,
the vote would be sent to the public decentralized Blockchain (Ayed, 2017).
Blockchain and Healthcare
The realization of the idea of using Blockchain for the healthcare field has begun to expand with
the emergence of a lot of opportunities in such an important industry. New designs for handling and
sharing medical records which make use of Blockchain’s capability to offer trust and security while
reducing expenses and resources needed by the regular healthcare management infrastructure have
certainly arisen.
MedRec is a healthcare application used to keep medical records. It has leveraged Blockchain
technology to create a healthcare solution: Each block includes data ownership and viewership
permissions information shared within a private peer-to-peer network. The solution makes use of
“smart contracts,” which allow the automation and tractability of certain state transitions, such as
changes in access rights or the birth of a new record in the system (Ekblaw et al., 2016).
Blockchain in Scientific Research
Credibility of the outcome of scientific research is very important, especially when it comes to such
vital areas as medical sciences. However, scientific research has suffered trust issues caused by
result manipulations, selective result publications, and many researches which have been sponsored
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by corporations with the intention of pushing their own products on the market. A study done by
Carlisle (Carlisle, 2014) has actually confirmed that Blockchain could be used as an inexpensive,
separately proven technique to audit and also verify the integrity of the results of scientific research
studies by using Blockchain-time stamped procedures. Carlisle’s research study demonstrates how
Blockchain offers an unalterable record of the existence, stability, as well as ownership of medical
trial details (Irving & Holden, 2016).
PoSSIBLe ATTACKS AGAINST BLoCKCHAIN SySTeMS
Blockchain is a new technology and attacks are emerging and still not known by most users. Most
attacks to date are targeting the Bitcoin Blockchain since it is the first Blockchain application that
involves money, and if compromised could result in financial gain. The Blockchain system solely
recognizes the lengthiest chain as genuine. As a result, it is close to impossible for an attacker to come
out with a phony transaction since it has not only has to create a block by solving a mathematical
problem, but also has to compete mathematically with the legit nodes to create all succeeding blocks
in order for it to make the other nodes in the network accept its transaction as the legitimate one. Since
all transactions in the network are cryptographically connected, this task turns to be very tough and
virtually impossible (see Figure 6).
Quantum Computing
The Blockchain technology depends mainly on the very fact that it is mathematically impossible for a
single party to alter or play with because of the computing limitation. However, with the advancement
of quantum computing and the potential enormous computing power offered, the key might become
easy enough to crack in a reasonable time. This would defeat the entire Blockchain system and make
it very weak.
Anomality Attack
Blockchain- and especially the Bitcoin Blockchain- is believed to be anonymous where users can
receive and send money without the need to reveal their identities. Bitcoin addresses are not linked
to a person, but instead they are linked to a pseudonym. However, this pseudonym could be linked to
people using other means, and when that happens the attacker will be able to find out all transactions
linked to the person from day one.
Figure 6. Race to protect transactions
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Hosted wallet could be an easy way to reveal the user’s identity, as well as internet providers
that can track which IPs a user is visiting. Users’ information is stored in providers, and wallet host
databases could be passed along to the government if requested and the right paperwork is filled out.
distributed denial of Service Attack
DDoS attacks are nothing new, however with the increase of the use of information technology in all
aspects of life, recent attacks are becoming intense, complicated, and frequent. This makes them a
mainstream problem to businesses as well as to consumers. The variety of devices remotely controllable
by apps is expanding greatly and the number of IoT devices is expected to quickly exceed 20billion
linked devices by the end of 2020. Most of the connected devices are unfit and not equipped with
safety and security measures to avoid malevolent as well as improper use (reference); therefore, they
can be hijacked to conduct DDoS attacks.
Other than DDoS targeting IoT devices in the Blockchain, Bitcoin currency exchange markets
are the most frequent target. In 2011, Gox suffered a massive DDoS attack after experiencing
extraordinary peaks in trading volume (Vasek et al., 2014). After the attack, the value of Bitcoin
went down dramatically.
Mining Attack
On April 2017, security researcher Gregory Maxwell revealed a short cut in the mining process called
ASICBOOST which gives some Bitcoin miners a competitive advantage by skipping a step in hashing
in order to reduce the mining time (O’Higgins, 2017). The new patented technique reduced the amount
of time needed to hash by 30%, which translates to a lot of extra money for miners. Maxell considered
the technique an attack on the Bitcoin network that could lead to the distraction of the whole concept.
He wrote, “This could have a phenomenal centralizing effect by pushing mining out of profitability
for all other participants, and the income from secretly using this optimization could be abused to
significantly distort the Bitcoin ecosystem in order to preserve the advantage” (Maxwell, 2017).
Bitcoin Scams
More people have been attracted to Bitcoin, usually out of the desire to make money in a fast and
easy manner. Because Bitcoin is a new technology, scam techniques are emerging and are not fully
understood, which helps hackers take advantage of the eager and poorly-informed users. A study done
by Vasek (Vasek, 2017) found that scammers were able to gain about $11 million worth of Bitcoin
from 13,000 users, averaging at $85,000 per user.
Mining Scams
Almost every mining business that either sells equipment or offers cloud services turns out to be a
scam. Those scams usually offer cloud mining services or equipment without delivering anything
to customers. The most known mining scams were Labcoin, Active Mining Corporation, Ice Drill,
AsicMiningEquipment.com, and Dragon-Miner.com (Böhme & Okamoto, 2015). These scams
promised to deliver mining hardware or/and cloud mining services, collected money from victims
and never fulfilled their promises. Some of the companies were installed overseas and money was
never recovered.
wallet Scams
These consist of fraudulent services that operate as online Bitcoin wallets. Fraudulent wallet services
operate the exact same way as a legitimate wallet does, except they confiscate the Bitcoin of the victim
when it reaches a certain threshold. Onion Wallet, Easy Coin, and Bitcoinwallet.in were identified
as the most-used scams.
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CoNCLUSIoN
While many Blockchain development projects are emerging, research in Blockchain is still in its early
stages. Nevertheless, Blockchain technology has already shown lots of promise, but at the same time
it is facing many challenges in harnessing the power of Blockchain to make the cyber world more
trustworthy. While Blockchain appeared with Bitcoin- the most effective and known digital currencyits extensive adoption within the financial and various other sectors will certainly bring numerous
business opportunities and will definitely change the structure of cyber space.
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ReFeReNCeS
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Ayed, A.B. (2017). A conceptual secure Blockchain-based electronic voting system. International Journal of
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php?topic=3755.0
R. Böhme, & T. Okamoto (Eds.). (2015). Financial Cryptography and Data Security. In Proceedings of the 19th
International Conference, FC 2015, San Juan, Puerto Rico, January 26-30. Springer.
Carlisle, B. G. (2014). Proof of prespecified endpoints in medical research with the Bitcoin Blockchain. The
Grey Literature, 25.
Dorri, A., Kanhere, S., & Jurdak, R. (2016) Blockchain in internet of things: challenges and solutions.
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Ekblaw, A., Azaria, A., Halamka, J. D., & Lippman, A. (2016). A Case Study for Blockchain in
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Vasek, M. (2017). Measuring Bitcoin-based cybercrime. The University of Tulsa.
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Ahmed Ben Ayed received a Bachelor of Science in Computer Information Systems, Master of Science in Cyber
Security and Information Assurance, and Doctor of Computer Science. His research interests are Android Security,
Pattern Recognition of Malicious Applications, Machine Learning, Cryptography, Information & System Security,
and Cyber Security.
Mohamed Amine Belhajji holds a Bachelor of Science in Industrial Engineering, Master of Science in Electrical
Engineering, and is currently a Doctoral student in Global Cyber Security & Intelligence at the University of Quebec
at Rimouski.
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