A study on the applications and challenges of blockchain 

A study on the applications and challenges of blockchain

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Introduction

A blockchain can be defined as a distributed ledger in which data and transactions are not controlled by any third party. The blockchain has received a lot of attention compared to the conventional distributed database due to its decentralisation, persistency, anonymity, and ease of inspection (Song, 2022).

In the 2010s, blockchain technology was connected with bitcoin and non-fungible tokens (NFTs), but it has now expanded into a management solution for various global enterprises. One may use blockchain technology to give transparency for agricultural supply chains, secure healthcare data, develop innovative gaming, and change the way we think about data and ownership in general (Habib, 2022).

Blockchain consists of a growing collection of documents known as blocks that are connected together using cryptography. Each block in the series has a reference to the immediately preceding block, which is effectively a cryptographic hash value of the previous block known as parent block. The first block in a blockchain is known as the genesis block, and it has no parent block.

The structure of a blockchain is primarily made up of a block header and a block body, which comprises a list of transactions. The block header consists of several fields, including the version number, the preceding block hash, the Merkle root, the timestamp, the difficulty target, and the nonce. Furthermore, a single Merkle tree digest built using safe hash techniques, such as the SHA-256 hash algorithm, is uploaded. This digest will cover the origin evidence’s integrity. Once recorded, the data in any given block cannot be changed retroactively without affecting all following blocks, which requires network majority consensus. In other words, blockchain is immune to data structure changes (Le, 2021).

Objectives

The review-based study seeks to understand the applications and challenges of blockchain technology.

Types of Blockchain

  1. Public Blockchain: In this type of blockchain, every record is publicly available. Everyone is welcome to participate in the consensus-building process. Everyone can check and verify the transactions(Zheng, 2017). A public blockchain is readable and writable by everyone worldwide. Cryptocurrencies operate on a public blockchain.
  2. Consortium blockchain: Consortium blockchain means that the node with the authority can be pre-selected. Partnerships such as business-to-business are common in this type of blockchain. Consortium blockchain has data that can be private or public, and it can be considered somewhat decentralised. R3CEV and Hyperledger are examples of consortium blockchain.
  3. Private Blockchain: A private blockchain is considered a centralised network because it is totally controlled by a single organisation. A private blockchain restricts who can connect with or read the blockchain. Private blockchains are also known as permissioned blockchains, in which only specific nodes that may interact with the blockchain are granted access.

Features of Blockchain technology

The following are salient features of blockchain technology that makes it revolutionary.

  1. Consensus: The validity of a transaction must be agreed upon by all the participant nodes in a network.
  2. Provenance: The lineage of anything recorded on the blockchain is known to all network participants.
  3. Immutability: Any transaction on the blockchain cannot be tampered with. If a transaction is executed incorrectly, a new transaction must be issued to correct the errors of the previous one.
  4. Distributed: The blockchain network is a decentralised peer-to-peer network. There isn’t just one point of failure. If some of the nodes fail to function, the network will continue to function normally. No single authority has control over the entire network (Niranjanamurthy, 2019).
  5. Decentralisation: A blockchain does not depend on a single centralised server for its functioning (Lin, 2017).

Applications of blockchain

  1. Blockchain technology can reduce the cost due to breach of data

    2. By preventing breaches, businesses can avoid litigation, losses, lost data, and interruption costs. Security and data protection consume more than 20% of an organization’s IT expenditure. Many of these expenditures are attributed to malware, which costs an estimated $2.4 million every year.

  2. Cryptocurrencies can help reduce cross-border transaction costs

    3. The high cost of international transactions is a significant issue for banks and other organisations. Models typically take three days or longer to complete these transactions. Companies like Ripple are now using cryptocurrency and blockchain technology to overcome these limitations. Cross-border transactions may now be done in near-real time and at a fraction of the cost thanks to blockchain technology.

  3. Blockchain can make the supply chain process more efficient and economical

    4. Supply chain and trade financial transactions take many days to complete after the paperwork has been checked. This is a manual documenting procedure. Along with fraud, inefficiencies, and excessive costs, this is considered to be a highly inefficient process. To address this issue, a number of blockchain platforms are being used. These include IBM’s Batavia, R3’s Marco Polo, several banks’ Digital Trade Chain, and the Hong Kong Trade Finance Platform. These transactions can be accomplished in a matter of minutes and at just a fraction of the cost.

  4. Blockchain in pharmaceutical industry

    5. Blockchain technology is used in pharmaceutical supply chains to track and trace prescription medications. Interoperability has been demonstrated in the US Drug Supply Chain Security Act Interoperability Pilot programme. This programme can easily and promptly prevent and control counterfeit medicine distribution and recall ineffective and hazardous drugs.

  5. Mitigation of cyberattacks

    6. To improve the security of the 5G application, the blockchain can mitigate cyberattacks. The blockchain uses cryptography to store data in a highly encrypted manner, which decreases vulnerability and ensures data ownership by offering a greater level of encryption. Due to the fact that all transactions are logged across all nodes, hackers cannot steal, hack, or tamper with data unless there is a platform-level vulnerability(Niranjanamurthy, 2019).

    Challenges of Blockchain

    1. Energy Consumption

      2. To improve the security of the 5G application, the blockchain can Proof-of-work (PoW) consensus processes, which are used by several well-known blockchains such as Bitcoin, necessitate a substantial amount of computational power. This results in high energy usage, raising concerns about blockchain technology’s environmental impact. To overcome this issue, several newer blockchains are implementing more energy-efficient consensus processes, such as proof-of-stake (PoS).

    2. Scalability

      3. Scalability is one of the most significant issues associated with blockchain. Many blockchain networks, such as Bitcoin and Ethereum, have a restricted transaction processing speed and capacity. Maintaining fast transaction speeds becomes increasingly difficult as more users and apps join the network (Gill, 2019).

      Conclusion

      Blockchain technology has transformed the way data is stored, validated, and traded, providing unique benefits in a variety of industries. Because of its decentralised nature, immutability, and transparency, it has become a foundation for a wide range of applications, from cryptocurrency to supply chain management and cybersecurity. Public, consortium, and private blockchains address various organisational needs while maintaining flexibility and security. Despite its potential, issues such as energy usage and scalability remain. However, ongoing efforts to adopt energy-efficient consensus algorithms and improve scalability are influencing blockchain technology’s future. Blockchain is a monument to innovation, offering a more secure, efficient, and linked society as it evolves.

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      References

      1. Song, J., Zhang, P., Alkubati, M., Bao, Y., & Yu, G. (2022). Research advances on blockchain-as-a-service: Architectures, applications and challenges. Digital Communications and Networks, 8(4), 466-475.
      2. Habib, G., Sharma, S., Ibrahim, S., Ahmad, I., Qureshi, S., & Ishfaq, M. (2022). Blockchain Technology: Benefits, Challenges, Applications, and Integration of Blockchain Technology with Cloud Computing. Future Internet, 14(11), 341.
      3. Le, T. V., & Hsu, C. L. (2021). A systematic literature review of blockchain technology: Security properties, applications and challenges. Journal of Internet Technology, 22(4), 789-802.
      4. Zheng, Z., Xie, S., Dai, H., Chen, X., & Wang, H. (2017, June). An overview of blockchain technology: Architecture, consensus, and future trends. In 2017 IEEE international congress on big data (BigData congress) (pp. 557-564). IEEE.
      5. Lin, I. C., & Liao, T. C. (2017). A survey of blockchain security issues and challenges. Int. J. Netw. Secur., 19(5), 653-659.
      6. Niranjanamurthy, M., Nithya, B. N., & Jagannatha, S. J. C. C. (2019). Analysis of Blockchain technology: pros, cons and SWOT. Cluster Computing, 22, 14743-14757.
      7. Gill, S.S., Tuli, S., Xu, M., Singh, I., Singh, K.V., Lindsay, D., Tuli, S., Smirnova, D., Singh, M., Jain, U. and Pervaiz, H.(2019). Transformative effects of IoT, Blockchain and Artificial Intelligence on cloud computing: Evolution, vision, trends and open challenges. Internet of Things, 8, p.100118.

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