Blockchain for Business

Marco Comuzzi is Associate Professor and Director of the Blockchain Research Center at the Ulsan National Institute of Science and Technology in Korea since 2016. Paul Grefen is Senior Full Professor at Eindhoven University of Technology in the Netherlands since 2003 and a Principal Architect at Eviden Digital Transformation Consulting since 2020. Giovanni Meroni is Assistant Professor at Technical University of Denmark (DTU) since 2022.

PREFACE

ACKNOWLEDGMENTS

PART 1

CHAPTER 1: A GENTLE INTRODUCTION TO THE WORLD OF BLOCKCHAIN

1.1 WHAT IS BLOCKCHAIN?

1.2 MONEY, TRUST, AND DESIGN CHOICES

1.3 DEFINING BLOCKCHAIN BY EXAMPLE: PLAYING CHESS WITH BLOCKCHAIN

1.3.1 DEFINING AN INITIAL STATE OF A GAME

1.3.2 DEFINING RULES DO DETERMINE VALID MOVES

1.3.3 AN IMMUTABLE DATABASE TO RECORD MOVES

1.3.4 AUTHENTICATING THE PLAYERS

1.4 EXPLORING THE POTENTIAL OF BLOCKCHAIN

1.5 OVERVIEW OF THIS BOOK

1.6 HOW TO USE THIS BOOK

1.7 OVERVIEW OF BLOCKCHAIN APPLICATIONS DISCUSSED IN THIS BOOK

1.8 QUESTIONS AND EXERCISES

CHAPTER 2: CRYPTOGRAPHIC TOOLS FOR BLOCKCHAIN

2.1 COMPUTER-READABLE REPRESENTATION OF DIGITAL MESSAGES

2.1.1 CHARACTER ENCODING

2.1.2 BASE-2 NUMBER REPRESENTATION

2.2 CRYPTOGRAPHIC HASHING

2.2.1 CRYPTOGRAPHIC HASH FUNCTIONS: DEFINITION

2.2.2 APPLICATIONS AND IMPLEMENTATIONS

2.3 MESSAGE ENCRYPTION: SYMMETRIC AND ASYMMETRIC

2.3.1 SYMMETRIC ENCRYPTION: THE CAESAR CYPHER

2.3.2 ASYMMETRIC ENCRYPTION

2.4 DIGITAL SIGNATURES

2.5 CASE STUDY: A BRIEF HISTORY OF CRYPTOGRAPHY

2.6 CONCLUSIONS

2.7 QUESTIONS AND EXERCISES

CHAPTER 3: AN IMPLEMENTATION-AGNOSTIC DEFINITION OF BLOCKCHAIN

3.1 WHAT IS BLOCKCHAIN?

3.2 BLOCKCHAIN AS A P2P NETWORK

3.2.1 WHAT IS A USER OF A BLOCKCHAIN NETWORK?

3.2.2 PUBLIC AND PRIVATE BLOCKCHAIN NETWORKS

3.3 DATA MANAGEMENT IN A BLOCKCHAIN NODE: TRANSACTIONS AND IMMUTABLE DATABASES

3.3.1 IMPLEMENTING DATA IMMUTABILITY BY DESIGN

3.4 CONSENSUS MECHANISM

3.5 A MORE PRECISE SPECIFICATION OF BC4C

3.6 CASE STUDY: THE PREDECESSORS OF BITCOIN

3.7 CONCLUSIONS

3.8 QUESTIONS AND EXERCISES

CHAPTER 4: EXTENDING BLOCKCHAIN WITH SMART CONTRACTS

4.1 THE CASE FOR EXTENDING BLOCKCHAIN WITH BUSINESS LOGIC

4.2 PROPERTIES OF SMART CONTRACTS

4.3 ON-CHAIN, OFF-CHAIN DATA, AND SMART CONTRACT ORACLES

4.4 AN ARCHITECTURE FOR BLOCKCHAIN SYSTEMS

4.5 CASE STUDY: THE ORIGINAL DEFINITION OF SMART CONTRACT

4.6 CONCLUSIONS

4.7 QUESTIONS AND EXERCISES

PART 2

CHAPTER 5: BITCOIN AND PUBLIC BLOCKCHAIN

5.1 THE BITCOIN NETWORK

5.2 BITCOIN TRANSACTIONS

5.2.1 TRANSACTIONS AND NODE BALANCES IN BITCOIN

5.2.2 DIGITAL SIGNATURE OF BITCOIN TRANSACTIONS

5.3 BITCOIN BLOCKCHAIN AS A DATA STRUCTURE: THE BITCOIN LEDGER

5.4 BITCOIN CONSENSUS MECHANISM

5.4.1 THE LIFE CYCLE OF BITCOIN TRANSACTIONS

5.4.2 CREATING A NEW BLOCK

5.4.3 CALCULATING A CORRECT NONCE FOR A CANDIDATE NEW BLOCK

5.5 CASE STUDY: BITCOIN IN THE REAL WORLD

5.6 CONCLUSIONS

5.7 QUESTIONS AND EXERCISES

CHAPTER 6: ETHEREUM AND SMART CONTRACT-ENABLED BLOCKCHAIN

6.1 ETHEREUM NETWORK

6.2 ETHEREUM TRANSACTIONS

6.2.1 TRANSACTIONS TRANSFERRING ETHEREUM TOKENS BETWEEN EOAS

6.2.2 SMART CONTRACT-RELATED TRANSACTIONS

6.3 ETHEREUM LEDGER AND CONSENSUS MECHANISM: THE ETHEREUM VIRTUAL MACHINE

6.4 ETHEREUM CONSENSUS MECHANISM

6.5 ETHEREUM SMART CONTRACTS AND TOKENS

6.5.1 SMART CONTRACTS

6.5.2 ETHEREUM TOKENS

6.6 ETHEREUM DISTRIBUTED APPLICATIONS (DAPPS)

6.7 CASE STUDY – EVERLEDGER: SECURE PROVENANCE IN SUPPLY CHAINS OVER ETHEREUM

6.8 CONCLUSIONS

6.9 QUESTIONS AND EXERCISES

CHAPTER 7: PRIVATE BLOCKCHAIN

7.1 CHARACTERIZING THE PRIVATE BLOCKCHAIN

7.2 ETHEREUM AS A PRIVATE BLOCKCHAIN

7.3 CORDA: PRIVATE BLOCKCHAIN BASED ON A NEED-TO-KNOW LEDGER

7.3.1 CORDA DATA STRUCTURE

7.3.2 CORDA NETWORK AND CONSENSUS MECHANISM

7.4 HYPERLEDGER FABRIC: SMART CONTRACT-ENABLED PRIVATE BLOCKCHAIN

7.4.1 HYPERLEDGER FABRIC DATA STRUCTURES

7.4.2 HYPERLEDGER FABRIC NETWORK AND CONSENSUS MECHANISM

7.5 CASE STUDY: REAL WORLD APPLICATIONS THAT USE CORDA AND HYPERLEDGER FABRIC

7.6 CONCLUSIONS

7.7 QUESTIONS AND EXERCISES

CHAPTER 8: BLOCKCHAIN AND THE INTERNET OF THINGS

8.1 WHAT IS THE IOT?

8.2 FOUNDATIONS OF THE IOT

8.2.1 RADIO FREQUENCY IDENTIFICATION (RFID)

8.2.2 WIRELESS SENSOR AND ACTUATOR NETWORK (WSAN)

8.3 APPLICATIONS FOR THE IOT

8.3.1 LOGISTICS

8.3.2 HEALTHCARE

8.3.3 MANUFACTURING

8.3.4 SMART CITIES

8.3.5 SUSTAINABLE ENERGY

8.4 COMBINING THE IOT WITH BLOCKCHAIN

8.5 CHALLENGES IN BLOCKCHAIN-BASED IOT PLATFORMS

8.5.1 LATENCY

8.5.2 VOLUME

8.5.3 COMPUTING POWER

8.5.4 STORAGE REQUIREMENTS

8.6 IOTA: A DLT FOR THE IOT

8.6.1 IOTA 2.0

8.6.2 IOTA STREAMS

8.6.3 IOTA APPLICATIONS IN THE IOT

8.7 IMPLEMENTING IOT APPLICATIONS WITH EXISTING BLOCKCHAINS

8.7.1 BITCOIN

8.7.2 ETHEREUM

8.7.3 HYPERLEDGER FABRIC

8.8 CASE STUDY: SECURE ARTIFACT-DRIVEN PROCESS MONITORING

8.9 CONCLUSIONS

8.10 QUESTIONS AND EXERCISES

PART 3

CHAPTER 9: SUITABILITY OF BUSINESS SCENARIOS FOR BLOCKCHAIN

9.1 STRUCTURING THE DECISION OF ADOPTING BLOCKCHAIN

9.2 BUSINESS SUITABILITY OF BLOCKCHAIN

9.2.1 MULTI-PARTY

9.2.2 TRUSTED AUTHORITY

9.2.3 CENTRALIZED OPERATION

9.2.4 IMMUTABILITY

9.3 TECHNICAL SUITABILITY OF BLOCKCHAIN

9.3.1 DATA SIZE

9.3.2 PERFORMANCE

9.3.3 COST

9.3.4 TRANSPARENCY

9.4 APPLYING THE DECISION MAKING TOOLS

9.4.1 SAFE DISPOSAL OF INDUSTRIAL WASTE

9.4.2 MANAGEMENT OF ELECTRONIC HEALTH RECORDS

9.4.3 SELF-SOVEREIGN IDENTITY MANAGEMENT

9.5 CONCLUSIONS

9.6 QUESTIONS AND EXERCISES

CHAPTER 10: BLOCKCHAIN AND BUSINESS MODELS

10.1 WHAT IS A BUSINESS MODEL?

10.1.1 THE BUSINESS MODEL CONCEPT

10.1.2 SPECIFYING BUSINESS MODELS INSIDE-OUT

10.1.3 SPECIFYING BUSINESS MODELS OUTSIDE-IN

10.2 BUSINESS MODELS IN THE DIGITAL AGE

10.2.1 DIGITALLY SUPPORTED BUSINESS MODELS

10.2.2 DIGITALLY ENABLED BUSINESS MODELS

10.2.3 TYPES OF E-BUSINESS MODELS AND BLOCKCHAIN

10.3 BLOCKCHAIN AS AN EFFICIENCY BOOSTER

10.3.1 THE NEED FOR EFFICIENCY

10.3.2 TRADITIONAL CERTIFIED SPARE PARTS MARKETS

10.3.3 BLOCKCHAIN-BOOSTED CERTIFIED SPARE PARTS MARKETS

10.4 BLOCKCHAIN AS A BUSINESS TRUST ENABLER

10.4.1 THE ROLE OF TRUST IN (ELECTRONIC) BUSINESS

10.4.2 TRADITIONAL MULTI-MODAL LOGISTIC MARKETS

10.4.3 BLOCKCHAIN-BASED, MULTI-MODAL LOGISTICS MARKETS

10.5 BLOCKCHAIN AS A DISINTERMEDIATOR

10.5.1 THE CONCEPT OF DISINTERMEDIATION

10.5.2 THE REAL ESTATE BUSINESS DOMAIN CASE

10.6 DESIGNING BLOCKCHAIN-ENABLED BUSINESS MODELS

10.6.1 TECHNOLOGY-PUSH BUSINESS MODEL DESIGN

10.6.1 USING FUNCTIONAL CHARACTERISTICS OF BLOCKCHAIN TECHNOLOGY

10.6.2 USING NON-FUNCTIONAL CHARACTERISTICS OF BLOCKCHAIN TECHNOLOGY

10.6.3 REQUIREMENTS-PULL BUSINESS MODEL DESIGN

10.7 CONCLUSIONS

10.8 QUESTIONS AND EXERCISES

CHAPTER 11: BLOCKCHAIN IN OUTCOME MANAGEMENT

11.1 THE OUTCOME ECONOMY CONCEPT

11.2 AN OUTCOME ECONOMY CONTROL MODEL

11.2.1 ORGANIZATION-LEVEL BUSINESS CONTROL MODEL

11.2.2 CHAIN-LEVEL BUSINESS OUTCOME CONTROL LEVEL

11.3 TRUST MANAGEMENT IN OUTCOME-BASED BUSINESS

11.3.1 THE NEED FOR TRUST

11.3.2 TRUST MANAGEMENT WITH BLOCKCHAIN

11.4 DATA PROCESSING IN OUTCOME MANAGEMENT

11.4.1 OUTCOME DATA PROCESSING

11.4.2 TYPES OF SENSORS

11.4.3 TYPES OF REGULATORS

11.4.4 FEDERATED DATA PROCESSING

11.5 A CASE STUDY IN SEA CONTAINER TRANSPORT

11.5.1 CASE OUTLINE

11.5.2 CONCEPTUAL MODEL WITH ONE CUSTOMER

11.5.3 TECHNICAL MODEL WITH ONE CUSTOMER

11.5.4 EXTENDING THE MODEL TO MULTIPLE CUSTOMERS

11.5.5 PLACING THE TECHNOLOGY IN THE REFERENCE ARCHITECTURE

11.6 BUSINESS MODEL DESIGN FOR OUTCOME MANAGEMENT

11.6.1 CHOOSING A BUSINESS MODEL SPECIFICATION TECHNIQUE

11.6.2 AN EXAMPLE BUSINESS MODEL FOR THE SEA CONTAINER CASE

11.7 CONCLUSIONS

11.8 QUESTIONS AND EXERCISES

REFERENCES

INDEX