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. 1 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 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 3 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 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). 4 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 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. 5 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 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 6 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 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 7 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 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 8 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 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. 9 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 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. 10 International Journal of Hyperconnectivity and the Internet of Things Volume 1 • Issue 2 • July-December 2017 ReFeReNCeS Antonopoulos, A. M. (2014). Mastering Bitcoin: unlocking digital cryptocurrencies. O’Reilly Media, Inc. Ayed, A.B. (2017). A conceptual secure Blockchain-based electronic voting system. International Journal of Network Security & Its Applications, 9(3). Bitcoin Forum. (2011). Alternative History of Bitcoin. Retrieved from https://Bitcointalk.org/index. 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. arXiv:1608.05187 Ekblaw, A., Azaria, A., Halamka, J. D., & Lippman, A. (2016). A Case Study for Blockchain in Healthcare:“MedRec” prototype for electronic health records and medical research data. In Proceedings of IEEE Open & Big Data Conference. Froystad, P., & Holm, J. (2016). Blockchain: powering the internet of value. EVRY Labs. Higgins, S. (2015). IBM Reveals Proof of Concept for Blockchain-Powered Internet of Things. Retrieved from https://www.coindesk.com/ibm-reveals-proof-concept-Blockchain-powered-internet-things/ IBM. (2015). Empowering the edge. Retrieved from https://www-935.ibm.com/services/multimedia/ GBE03662USEN.pdf Irving, G., & Holden, J. (2016). How Blockchain-timestamped protocols could improve the trustworthiness of medical science. PMID:27239273 Kiviat, T. I. (2015). Beyond Bitcoin: Issues in regulating Blockchain transactions. Duke Law Journal, 1, 569–608. Litecoin. (2017). Global Decentralized Currency. Retrieved from https://litecoin.org/ Maxwell, G. (2017). BIP proposal: Inhibiting a covert attack on the Bitcoin POW function. Linux Foundation. Retrieved from https://lists.linuxfoundation.org/pipermail/Bitcoin-dev/2017-April/013996.html O’Higgins, C. (2017). $100 Million/Year ASICBOOST Attack on Bitcoin Blockchain Implemented? Cryptoinsider. Retrieved from https://cryptoinsider.com/100-millionyear-asicboost-attack-Bitcoin-Blockchainimplemented/ Shin, L. (2016). Republic Of Georgia To Pilot Land Titling On Blockchain. Retrieved from https://www. forbes.com/sites/laurashin/2016/04/21/republic-of-georgia-to-pilot-land-titling-on-Blockchain-with-economisthernando-de-soto-bitfury/#11b8ead544da Vasek, M. (2017). Measuring Bitcoin-based cybercrime. The University of Tulsa. Vasek, M., Thornton, M., & Moore, T. (2014, March). Empirical analysis of denial-of-service attacks in the Bitcoin ecosystem. In Proceedings of the International Conference on Financial Cryptography and Data Security (pp. 57-71). Berlin, Heidelberg: Springer. doi:10.1007/978-3-662-44774-1_5 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. 11