2018 IEEE International Multidisciplinary Conference on Engineering Technology (IMCET)

On BlockChain Technology: Overview of Bitcoin

and Future Insights
Hussein Hellani Abed Ellatif Samhat Maroun Chamoun Hussein El Ghor Ahmed Serhrouchni
Saint Joseph Univeristy Lebanese University Saint Joseph Univeristy Lebanese University Telecom ParisTech
Lebanon, Beirut Lebanon, Beirut Lebanon, Beirut Lebanon, Beirut Paris, France
Hussein.helani@cci- [email protected] [email protected] [email protected] [email protected]
me.com.lb

Abstract— In this paper, we consider blockchain technology existence. This is achieved by supposing new different
that enabled the existence of digital currency and we investigate architecture whereas databases are distributed across the whole
Bitcoin cryptocurrency application. This technology nowadays participants of the network, similar to the server redundancy
represents a new feature that replaces existing client-server core but in a very high scalability and independent of any kind of
system on top of some distributed systems with many additional central control. With centralized systems such as those existing
features such as high availability, resistance to alteration, fault in the banking sector, all data and applications are monitored
tolerance and cost reduction. After overviewing how such by their owners (whom are few) and thus any transaction that is
technology is working, we highlightthe requirements and benefits triggered by a client must be verified by one of the application
related to the security, database and network. We mainly focus
owners and this effectively makes it costly from both a time
on answering the most Bitcoin queries including privacy and
double spending. Furthermore, as blockchain has potential
and fees perspective. With Blockchain technology, each
applications far beyond bitcoin, we draw future insights where participant is the Bank compared to the up-to-date copy
applications based blockchain are provisioned in the market in possession. Blockchain revolution changed the owner authority
order to be totally or partially independent of the centralized fundamentally. It came with four main basic features:
systems and we provide a questionnaire helping organizations for decentralization, distributed, immutable- hence data cannot be
better using the blockchain feasibilities. changed without leaving a trace, and transparent where
participants rely upon each other to compute transactions. This
Keywords: POW; Blockchain; P2P; distributed ledger; new technology is mainly based on hash functions,
Consensus. asymmetric key pair cryptography and digital signature.

I. INTRODUCTION Thus blockchain is a technology that provides a distributed

ledger of transactions on a network that is scalable, secure,
Contrary to the days of old, we're now experiencing a fast tamper-proof, and accessible by each peer on the network. It is
paced boom in technology. Within the past few years, the shared transactions, distributed over a network of members,
services' consumption and how enterprises provided these made up of series of data blocks, each by itself contains a set of
servers were subject to a lot of changes. these changes haven't transactions. Blocks are electronically chained together and
stopped and the market demands high modularity when it locked with cryptography, and a public record of every
comes to its need. It is obvious that a true replacement of the transaction is established. The more blocks there are, the less
old technologies has occurred during the past few years and the the probability that blocks can be altered. The well-known
slow computing machines do no longer exist. Thanks to this cryptocurrency for which blockchain technology was invented
progress, the world now witnesses a rapid development in both is the Bitcoin, invented by Satoshi Nakamoto in 2008 [2]. In
hardware and software fields and new concepts and models intelligent way, Nakamoto combines the previous technologies
appear with direct impact on our daily jobs, tasks and of security: Hashcash [3], asymmetric encryption, consensus
achievements. Nowadays business applications are based on a [4] and Merkle tree [5] to invent what is called bitcoin
centralized data center consisting of many physical servers cryptocurrency. Officially, the first block (genesis) was
located basically in one or more place, offering application initiated on 2009, thereafter the chain is increasing every few
services to their employees/clients across many regions, reliant minutes to reach around 52k blocks on year 2018 with BTC
significantly on the internet service. Installing applications on price growing up to 8k$ for each bitcoin.
these servers came later with a notion of high availability “HA”
such as VMware fault tolerance, Microsoft exchange data The success of bitcoin triggered the technologists to think of
availability group “DAG” and no later SQL Always-on, to decentralization and start researching about the topic. It is
eliminate single point of failure in case of disaster. “HA” is a important to distinguish between bitcoin and Blockchain,
server role, aims to distribute an application and/or database to where bitcoin is an electronic cryptocurrency that can be used
different server nodes to provide always on services. This to purchase goods or services based on incentivizing the
feature is applied by integrating what is called “Quorum” [1] or participant nodes (miners), to validate transactions and to
witness file in order to vote for which server(s) should be render the network as stable as maximum. Blockchain is the
active at any given time. Beside the centralized revolution, a underlying technology that enables the Bitcoin network to
newly decentralized system called Blockchain [2] imposing operate in an open, autonomous, decentralized model, where
itself on the scene to eliminate the concept of third party trust is enforced through cryptography and not over its

978-1-5386-4500-0/18/$31.00 ©2018 IEEE

 2018 IEEE International Multidisciplinary Conference on Engineering Technology (IMCET)

participants. Essentially, there would be no bitcoin without operating the complete bitcoin stack) can act as a miner, using
Blockchain, but there can certainly be Blockchain without the computing power it has at its disposal in order to solve the
bitcoin. This distinction is significant because blockchain problem. Every 10 minutes in average, a new solution is found
technology can be applied to other uses rather than financial by someone who is then able to validate the transactions of the
development. In this paper, we consider blockchain technology current block. In summary, bitcoin mining decentralizes the
and we investigate Bitcoin cryptocurrency application. We issuance of money and reconciles the different procedures,
draw attention to bitcoin functionality in general and the making unnecessary for a similar body to act as a central bank.
problems/solutions of that technology in specific. The participants (nodes) that are spanning across different
regions and countries interconnect in a mesh network with a
The rest of this paper is structured as followings: in section II, "flat" topology. There are two types of nodes: mining nodes are
we will explain in details the Blockchain behaviors in terms of the users who participate in the creation of blocks and are
bitcoin. In section III, we will focus on the underlying bitcoin incentivized by an amount of bitcoin to guarantee their
queries and available solutions. Section IV, discusses the future presence in the network. The non-miners benefit from the
of blockchain apart from bitcoin technology, and we conclude bitcoin system without participating in the block creation. The
in section V. second main role of this incentive is to issue the Bitcoins
II. BLOCKCHAIN PHENOMENON currency, started by 50BTC for each block (every 10 minutes)
at its launch on 2009 and is being halved every 4 years to reach
Many questions arise when talking about decentralization around 21billion BTC on 2140. By year 2032 the incentive will
and the new technology version which should replace an be less than 1 BTC, at that time incentives shall be replaced by
existing client-server core system. Concerns are many in such the transaction fees only. The future of fees is not clear after
major turning point, mainly the network stability, security year 2140 where incentive will no longer exist [11].
threats, power of consensus and participants’ privacy. To
address these queries and more, we should first present the
most famous use case “bitcoin”, as it is the originator of
Blockchain and it will be a good starting point towards
generalizing the decentralization system that is already the hot
topic of the newest generation of technology.
A. Understand Bitcoin
Bitcoin word denotes three different objects: Blockchain
platform, digital currency, and protocol that runs over this
platform to define how transactions are moved. Bitcoin was
invented in 2008 with the publication of a document entitled
"Bitcoin: A peer-to-peer electronic cash system" written under
the pseudonym of Satoshi Nakamoto. He has combined several
previous inventions such as b-money and Hashcash [3] and
existing contributions from decade of research [6], [7], [8] to
create a completely decentralized electronic cash system that
does not rely on any central authority for issuing currency or
validating transactions. The main innovation is to use a
distributed computing system (known as a "proof-of-work"
algorithm). Figure 1: Bitcoin address construction
After the failure of precedent trials such as [9], [10],
Bitcoin answers the big query which was raised many years
The three main core components of bitcoins are:
ago: how can we eliminate the bank and force P2P
transactions? The answer of Nakamoto proposal was simply: it 1- Transactions and scripts
is analogous to “everyone is the bank”, where most participants
keep a copy of the data which would be the bank responsibility. 2- Consensus and mining
This data called "distributed ledger" contains all preceding and 3- Peer to peer communication network
current transactions. Now the sender and the receiver are
totally independent of any kind of third party control. On the In details, the transaction is mainly based on a public
other hand, they are submitted to a new network control called /private key pair and hash functions, where transactions are
“consensus” that accepts or refuse their transaction(s) based on signed and distributed on a public network. Public and private
a ledger content. Using “consensus”, majority of the network keys are referred to asymmetric cryptography, so they are
users vote for transactions to be passed or blocked. Bitcoin is a mathematically bounded and cannot be interchanged. In other
fully distributed peer-to-peer system. Thus, there is no words, the public key only functions with its corresponding
dominant server or single point of control system; in contrast, private key. Transactions are then grouped into blocks, shared
bitcoins are created through a process called "mining", which is and validated by a network of nodes, wherefore Consensus on
involved in the procedure of finding the solution of difficult the network determines which blocks are accepted. To generate
problem. Any participant in the bitcoin network (any computer the Bitcoin address, SHA256 and RIPEMD-160 hashing
functions are first applied to the public key as shown in figure
 2018 IEEE International Multidisciplinary Conference on Engineering Technology (IMCET)

1. A network identifier is added to the front of the address to formula lets the pubkey script verify that he owns the private
identify which network the address is intended for, then a key which created the public key. This transaction behavior lets
checksum is appended to the end of the address. Finally, a the receivers prove their ownership as well as it makes
BASE58 function is applied to the string of network identifier, broadcasting over a network safe and tamper-proof.
hash and checksum to encode large numeric values into an
alphanumeric string of characters. The BASE58 output can be
easily read or written by humans, making it useful for creating
Bitcoin public addresses.
Every user in the bitcoin network has a virtual wallet
consisting at least of one public/private key pair. A new key
and address are recommended for each transaction to avoid
comparison-based attacks on signatures [12] and tracking of
coin flows [13],[14]. Each wallet contains a list of inputs and
outputs in order to receive and send coins via transactions.
Each output of a transaction can only be used once as an input
in the whole blockchain, otherwise using the same output twice
it will be considered as an attempt for double spending, thus
forbidden. Accordingly, the output of a transaction is
categorized by either unspent transaction output (UTXO) or
spent transaction output (STXO). Each input of a Bitcoin Figure 2: Spending P2PKH output
transaction connects to a given, previous output, thus Another script has been added in 2012 called pay-to-script-
transactions between two users pass from sender input to hash P2SH [15] to replace pubkey script by redeem script. A
receiver output. In fact there is no user balances, instead, there redeem script is created by the spender, it is hashed and pushed
is only set of UTXO scattered in the blockchain ledger. So, a to sender same as pubkey. To spend the output, spender
user who intends to send bitcoin to someone else, must provides his signature along with the full redeem script in the
consume the entire UTXO amount and produce two outputs: signature script. The bitcoin network ensures the full redeem
one for paying the desired bitcoin to a specific recipient script hashes to the same value as the script hash sender put in
address and another for paying the change back to the sender his output; it then processes the redeem script exactly as it
wallet. Since wallet is designed to contain many addresses, a would if it was the primary pubkey script.
user who receives many payments from different senders in
separate time, will have a wallet containing addresses from All transactions are continuously passed to miners for
each sender with the specific amount of bitcoins. To clarify, verification in a peer to peer network. The miners are
assume that Alice received 2 BTC from Jean, 5 BTC from individuals or groups, pool, running the bitcoin software in a
Charlie and 1 BTC from Micheal. She needs to send Bob 1.5 worldwide network of independent computers. They compete
BTC for some online service. None of her addresses adds up to turn the latest transactions into a block. Roughly every ten
that amount even when combined. Alice then will send the 2 minutes, one of them succeeds. This process is called “Proof-
BTC received from Jean input to Bob output using her private of-work” which is considered as the main bitcoin component
key to sign the message. So, her wallet will automatically against denial of service and Sybil attack [16]. Proof-of-work
create two outputs for her transaction: 1.5 BTC to Bob, and 0.5 in short consists of calculating a hash of the formed block and
BTC to a new address, which is created for herself to get the adjusting a nonce in such a way that the hash value is lower
change from Bob. than or equal to a certain target value. A reward is delivered to
the miner that solves the puzzle for two reasons: network
A set of scripts is settled to accomplish a secure bitcoin stability that motivate the participants to stay online, and to
transfer between two or more untrusted parties as illustrated in issue bitcoins. Currently reward is 12.5 BTC for every puzzle
figure 2: P2PKH (pay to public key hash) means pay to a solved and thereby a block is added to the chain. Beside, these
specific bitcoin address. It is an instruction on the blockchain to purposes used to maintain a waiting time of 10 minutes
transfer ownership from a current owner to a new one of the between two successive blocks. Every two weeks (2016
bitcoin address. A receiver should create a private/public key blocks), a target is readjusted to meet a verification rate of
pair, hash its public key and send the hashed key (receiver's approximately one block every 10 minutes. The new target T is
address) to the sender in the first step. Then the sender creates a given by:
new transaction with a specific amount addressed to the hashed
public key address of the intended receiver. After that, the T = TPrev• tactual ÷ (2016 • 10 min)
sender broadcasts the transaction he created to the blockchain
tactual is the time taken to issue 2016 blocks using TPrev the
network that will be categorized as UTXO for the receiver's
previous target. If those 2016 blocks were produced during a
wallet after being verified by the network nodes. Later, when
time frame shorter than two weeks, this means that the
the receiver want to spend this amount, he should first create a
computing power has been increased by miners, and the proof
signature script called scriptsig to prove that he is the owner of
of work difficulty should be increased to maintain the 10
these bitcoins. This procedure can be done using his unhashed
minutes of block creation and vice versa.
public key: it firstly hashes the same value as the sender
provided during P2PKH, then using the ECDSA cryptographic
 2018 IEEE International Multidisciplinary Conference on Engineering Technology (IMCET)

III. BLOCKCHAIN QUERIES AND ANSWERS

The easiest way to study the blockchain model is to pass
through bitcoin characteristics and topology in order to address
its strengths and weaknesses. In this section we will focus on
answering the most bitcoin queries.
A. Distributed ledger control
Blockchain network is a peer to peer network (P2P) relying on
consensus concept and proof of work. By comparison to
centralized systems where data is stored in a huge storage that
is redundant, backed up and probably safe, blockchain database
is located on a normal computer running perhaps on a single
data drive. Each node of the P2P network keeps a copy of the
database that contains all the transactions which are above
100GB. Thereby such blockchain mechanism impedes the
participation of small device capacity such as mobile and IoT
devices. Nakamoto solved the reclaiming disk space using Figure 3: Blockchain wallets types
Merkle tree [5] where transactions are hashed according to a
tree of hashes with only the root included in the block's hash In addition, bitcoin makes use of elliptic curve cryptography
instead of storing the whole hashed transactions. With referring [21], [22] to prove user’s ownership. Thereby he needs to
to [29], big data is the future of blockchain to mitigate the risk provide his public key and signature whenever he participates
of huge data, as it is already used by many distributed in a new transaction. Furthermore, many applications use multi
databases such as google, facebook, and others. factor of authentication to protect their users from losing their
accounts. It is based on “something you know (private key or
B. Wallet Protection password) and something you have (email, mobile, etc..) to
Each bitcoin user has a wallet that is composed mainly of make the hacker mission difficult as a much as possible.
private/public key pair. Since these addresses represent direct
money or they are the bank themselves, then it is highly C. “Double spending” meaning in P2P network
necessary to protect them against exploitations. In bitcoin, Double spending means that someone can issue more than
there is a variety of wallet types with different level of security, one transaction in parallel and transfer the same amount to
such as software, hardware, paper, brain and online wallets as different recipients. In a centralized bank system, double
shown in figure 3. Both software and online wallets are spending has been resolved permanently by assigning a serial
exposed to attackers since they are connected directly to the number to each transaction and thereby ability to detect such
internet, hence an attacker can gain access to the entire suspicious behavior. But with P2P network concept, where the
machine and steal their wallets’ addresses. The main idea is to third party is totally eliminated and some participants might be
protect the private key from being lost, because losing access malicious, it ought to be taken into consideration to resolve it
or account usage by any non-owner users is equivalent to as it is considered the highest risk factor that hinders
losing bitcoins. Hardware wallet is a new invention to hide blockchain expansion. In general, with bitcoin P2P network,
sensitive operations throughout a hardware token that delegates double spending is almost blockaded by enforcing a rule during
the creation of transactions to another entity and allows transaction propagation and mining. As per this rule, only
independent review of transaction details before signing, this previous unspent transaction outputs may be used in the input
taken called bluewallet [17]. In addition, there are also of a current transaction. Moreover, transactions’ order within
traditional ways to protect private keys either by storing the the ledger, replaces the serial numbers used by a centralized
key on a physical document called paper wallet, or store it in system. On the other hand, the distributed ledger which is in a
the user’s brain called brain wallet. continuous synchronization across a large network scale, is
vulnerable to Sybil attack [16] by relying on redundant
The most important method to secure online wallets is m-of-n operations to defeat the consensus mechanism. In a Sybil attack
multi signature transactions [18] used within P2SH method, a single node is presented illegally to other nodes in the
and based on providing m valid out of n possible signatures to network as multiple nodes. This attack is feasible by either
redeem a transaction. Only the recipient who created the P2SH faking new identities, or stealing legal identities. This type of
address knows the full redeem script. This method is used attack is resolved by bitcoin proof of work thus the attacker
mainly to dispute mediator so coins are locked and neither the capabilities become limited by his/her computing power. As
receiver nor the sender alone can claim them. If, however, both the network grows up quickly, resulting some blockchain
agree, the sender could pass a half-signed transaction over to fork(s) due to more than miners solve the difficulty of power of
the receiver, who is now able to complete the transaction. A work “POW”, thereby an adversary can exploit such scenario
very similar method to multi signature is the threshold to perform double spending attacks. Under the condition of
signature [19],[20] characterized by its main property that the synchronous communication, bitcoin network is resilient to
key is never revealed, so trusted user should provide a subset adversaries controlling less than half of the computational
equal to or greater than a predefined threshold to be able to power, relying on byzantine resilience [23] where the honest
reconstruct the private key. nodes n prevail the adversaries f by the ratio of n > 2 f + 1.
 2018 IEEE International Multidisciplinary Conference on Engineering Technology (IMCET)

This inequality defined by [23], guarantees system stability in Beside transactions and scripts, consensus mechanism is
presence of limited adversaries. considered the main core of the P2P bitcoin network within the
total elimination of the bank. Thereby, network stability and
Adversary can secretly mine on a fork which builds on the performance have a direct impact on consensus protocol since
last block, includes double spending transaction. If adversary latency between the discovery of a block and its receipt by all
has chance to solve the proof of work, he will add a new block other nodes could lead to a temporary fork. In addition,
to the blockchain containing conflict transactions. This attack is network latency could increase the possibility to win a block by
known by finney attack [24]. Bitcoin developers enforced the malicious miners who are able to control a substantial portion
six blocks confirmation to avoid such attack, where a block is of the network by broadcasting their own blocks. Therefore, it
considered valid after six confirmations, giving enough time to is necessary a decentralized system to propagate their message
other nodes to verify the transactions. However double in a low latency network in order to render the attacker mission
spending cannot be eliminated completely and is still possible as difficult as possible. By design, each node in the network
for an attacker earn more than 50% of the computational aims to connect to its neighbor nodes through eight minimum
power, which is the worst case scenario, known by 51% attack connections and 125 maximums. A node connection is made of
or goldfinger attack [30], that definitely lead to success. application handshake and a message including timestamp, IP
D. Reach consensus in P2P network addresses and protocol version, thereafter each node maintains
The ideal network scenario within bitcoin P2P network is a list of known peer addresses. The act of nodes to keep asking
to propagate transactions as fast as possible to reach continuously each other about their network lists that contain
consensus and build a blockchain. Thereby the rule of peers of different areas, can limit an attacker of controlling its
thumb is to reach distributed consensus so nodes agree on neighbor’s environment. Peer keeps sending messages in a
the value which is generated by the honest node only. A continuous manner every 30 minutes to prove its availability in
large networking company such as Facebook, Google have the network, thereby in case a peer doesn’t send any message
thousands of servers distributed across many regions, each within 90 minutes, thus a heartbeat message is broadcasted
information should be recorded and replicated to other telling that this peer does no longer exist in the network. In
nodes instantly. The main difference in bitcoin is that details, a sender who prepared its transaction including
transactions are put into blocks where consensus is applied information about input and output sends an inventory message
on a blockǦbyǦblock basis. Each node in the P2P network (including TXIDs hashes only) to all its neighbors he/she wants
has a copy of ledger consisting of a sequence of blocks, to broadcast a data message on the network. Then the
each of them containing the valid transactions that was neighbors ask the sender to send its transaction for verification
agreed on. In addition a node has multi transactions that are then broadcast it to all the neighbors to be included in the next
in progress and waiting to be included in the next block. block. In case the transaction doesn’t get into blockchain, the
Transactions that are not included in the block due to originator is responsible to retransmit it.
network latency, they will be included into the next block. E. Privacy: Identity protection
Bitcoin protocol is designed to achieve consensus under
As bitcoin is a P2P distributed system, thereby the full nodes
two main obstacles: imperfection of the network such as
are able to see the entire transactions history including balance
latency since the nodes are connected through internet, and
presence of malicious nodes that attempt to subvert the details of every account in the system. An account consists of
consensus process. One of the much known concerns is a hash over public key referred to the bitcoin address of the
byzantine general problem [23]. Inspired from byzantine intended participant, who’s able to have more than one
army where their groups of lieutenants were commanded address under his wallet. Bitcoin address is not anonymous,
by one general to attack or suspend and were but, rather, pseudo-anonymous. Anonymity means that
communicating via messenger. In case generals or someone’s identity is completely unknown. Any act made by
lieutenants could be traitors thus they attempt to subvert the an anonymous person cannot be associated with the individual
process in order to avoid the loyal generals to arrive at a who actually made them. On the other hand, Pseudonymous
unified plan. It has been proven that this is impossible to be means that a real name isn’t used to identify the user. In
achieved if oneǦthird or more of the generals are traitors. bitcoin, the hashed public key is the replacement of the
An alternative consensus algorithm called Paxos [25], participant’s identity. Thus, to transfer an amount of bitcoin
initiated on 1989, integrates fault tolerance in a distributed from Alice to Bob, she first needs to create a transaction
database consensus-based but it is still not applied due to its include the specific amount together with the hashed public
high processing requirement (digital signing) and key of Bob and propagate it to the network after being signed
communication (decisions cannot be made based on simple by her private key. The message is then published by Alice, so
majorities). every participant in the network can detect that Alice’s
Despite all the negative results were proven in a specific account is minimized by n amount of bitcoin and Bob has
model, the surprise is that bitcoin consensus is working additional n bitcoin in his account. In order to spend this
better in practical rather than theoretical, due to the amount, Bob create a transaction to verify his ownership of the
incentive released within each block that push the nodes to UTXO. An attacker attempts to discover the user’s identity by
behave honestly. But it is still mandatory to go deeply into mapping between users and public keys, but the bitcoin is
research to identify how exactly this consensus is working structured to frustrate such breaches by storing the mapping of
to avoid any misbehaviors in the future.
 2018 IEEE International Multidisciplinary Conference on Engineering Technology (IMCET)

a user’s public-keys locally on its node only and by allowing in the network without relying on any authoritative copy,
each user to generate as many public-keys as required [26]. whereas it uses a consensus mechanism to prevent modification
of an ordered series of time-stamped records. Distributed
IV. FUTURE INSIGHTS ledgers simplify the operations and minimize the fraud based
As of 2008, the blockchain technology has emerged into on cryptographic verification instead of user identity.
our daily life and the big change began. Obviously, this new Centralized ledgers can also mitigate the risk of transactions
technology has a global presence nowadays, thereby the being recorded differently. This is because all parties share the
blockchain concept becomes more mature by the time. same records and can recognize the history of the transaction.
Hashgraph [28] is a distributed ledger application that differs
Enhancements over bitcoin application, made it explode into
from blockchain by recording multiple transactions at the same
mainstream hence bitcoin is going to be a legal currency as in time, rather than recording one transaction after another in a
Russia and Japan [27]. Apart from bitcoin and currencies, the chain. Distributed ledgers improve relationships and efficiency
amazing characteristics of blockchain are revealed in short by in the businesses especially for a company which regularly
creating a transparent paper trail that anyone can access it but deals with unknown or new customers. A blockchain is a type
no one can alter it. Decentralization or shared control, of a distributed ledger, comprised of unchangeable timestamps
immutability and native assets, have good impacts on existing records by hashing them into an ongoing chain of hash-based
technologies such as artificial intelligence and IoT. Thereby proof-of-work, digitally recorded data in block of transactions
decoupling bitcoin of blockchain is a must, as bitcoin is just that are validated by consensus mechanism based on the online
one application of many others that could be applied in data of distributed ledger. We can conclude that all
different domains such as medical, Security, votes, games, art, blockchains are distributed ledgers, but not all distributed
scientific discoveries, intellectual properties, copyrights, etc. ledgers are blockchains (see figure 4).
these technologies when combined with blockchain platform, B. Blockchain characteristics
they will change the near future dramatically and turn many
science fictions into reality. Generally speaking, anywhere that First it is important to note that the distributed ledger is
a database can be used as a mean of storing information, a structured into two main network types:
blockchain could be used in order to add a set of features to x Permisionless network: such as bitcoin, where anyone can
empower existing and future applications to be as useful as join the network without previous permission. Participants
possible. of this type can validate the transaction and might be part
of the consensus and block creation.
A. Central ledger vs Distribued Ledger vs Blockchain
To fight against single point of failure, the centralized ™ Permissioned network: this is a private network limited to a
systems use many approaches based on replication where number of trusted entities that got permission to join the
ledger is maintained by a central authority (single place). It network in order to validate transactions. Microsoft
depends how information is distributed on a central ledger, recently deployed blockchain as a service called
where in general, normal users have limited access to the “Ethereum consortium blockchain” [33]. It consists of a
ledger so they can add or change records based on their set of load-balanced transaction nodes, with which an
predefined privilege. Access to the ledger enables them to add application or a user can interact to submit transactions
entries as well as read or change existing ones where security is and a set of mining nodes to record transactions.
applied to the ledger based on identity and integrity of those x Apart of general ledger, blockchain is characterized
users. Domain name service (DNS) is a good example of by awesome features and benefits allowing blockchain
central ledger. Any centralized system puts its effort on revolution to change our lives. Below are the most
checking streaming data records that come into its database by advantage/characteristics of blockchain:
building a complex system which is considered costly in terms
of money and time. Transparency: per design, each peer in the network has a
copy of the ledger therefore containing a full history of every
transaction, enabling traceability of each asset back to its
Bitcoin, Ethereum, Ripple,etc.. origin. Participants might be able to better understand the
source of goods and services that they buy. This could allow
more informed consumer decision making. Tracking each
transaction within the chain is the fruit of this technology thus
Blockchain Other Applications
adding more benefits to businesses.
Decentralized system: Blockchain is a peer to peer
network where peers are equal in terms of authority and rights.
Distributed Ledger Central authorities are no longer existent in such system where
rules and behaviors are predefined by the software itself.
Figure 4: Distributed Ledger topology Obviously, eliminating the third party from any system, has a
On the other hand, distributed ledgers are designed to good impact on the organization budget where servers and
mainly fight against single point of failure as well as single some other hardware become useless. The bigger the network
point of control hence ledger is distributed equally to all peers is, the more stable it is. Thus there is no worry about failure of
some nodes since the ledger exists on many others.
 2018 IEEE International Multidisciplinary Conference on Engineering Technology (IMCET)

Figure 5: Blockchain varieties

Consensus: This is the main mechanism of a decentralized the ledger and distributed to all the nodes. This block cannot be
system that enables peer-to-peer value exchange without changed after its creation, a fact which renders the blockchain
involving a trusted third party or intermediary for that suitable for many use cases such as ownership registrations.
consensus, by enabling the entire network to reach agreement
about which blocks of transactions are valid and which ones Smart Contract: it is integrated with blockchain second
are not There are different models of distributed consensus generation. The concept was first discussed in Nick Szabo’s
such as Proof of work that is used by bitcoin and aims to paper 1997 [32]. Basically, a smart contract is a computer
achieve agreement on its propagated transactions. Many other code based on “if-then” condition where events are in direct
models such as proof of stake, proof of existence are suitable to relation to their contracts occurs, then actions are triggered to
be used in different scenarios rather than financial purpose. satisfy the smart contracts conditions. Ethereum is one of the
cryptocurrency application that mainly relies on smart
Tamper-Proof: it is a distributed system mainly relying on contracts. The integration of smart contract with blockchain
cryptography system to maintain the whole network. eliminates the need for an intermediary and minimizes
Essentially, each participant in the network has its own
contractual-related transaction costs.
private/public key. Public key is designed to be shared by
everyone on the network while private should be kept by the C. Blockchain Considerations
participants. Each transaction is digitally signed using a Blockchain with its characteristics listed above is considered
participant’s private encryption key and validated by its public
flexible and suitable to replace many applications. Many use
key to ensure the transaction is created by the holder of that
cases are now being explored in different fields other than
specific private key. A hash function is used thereafter to create
a unique digital fingerprint for this transaction, which is then financial and payments, including portfolio management
hashed with other transactions into a block. Once a block has reporting, product distribution, security and anti-fraud
been accepted by network, it is cryptographically bounded to measures.
 2018 IEEE International Multidisciplinary Conference on Engineering Technology (IMCET)

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