Elsevier

Advances in Computers

Volume 111, 2018, Pages 121-162
Advances in Computers

Chapter Five - Blockchain for Business: Next-Generation Enterprise Artificial Intelligence Systems

https://doi.org/10.1016/bs.adcom.2018.03.013Get rights and content

Abstract

This chapter discusses Blockchain distributed ledgers in the context of public and private Blockchains, enterprise Blockchain deployments, and the role of Blockchains in next-generation artificial intelligence systems, notably deep learning Blockchains. Blockchain technology is a software protocol for the secure transfer of unique instances of value (e.g., money, property, contracts, and identity credentials) via the Internet without requiring a third-party intermediary such as a bank or government. Public Blockchains such as Bitcoin and Ethereum are trustless (human counterparties and intermediaries do not need to be trusted, just the software) and permissionless (open use), whereas private Blockchains are trusted and permissioned. Enterprise Blockchains are private (trusted, not trustless) immutable decentralized ledgers, with varying methods of reaching consensus (validating and recording transactions). Four enterprise systems are examined: R3’s Corda, Ethereum Quorum, Hyperledger Fabric, and Ripple. New business analytics and data science methods are needed such as next-generation artificial intelligence solutions in the form of deep learning algorithms together with Blockchains. The hidden benefit of Blockchain for data analytics is its role in creating “clean data”: validated, trustable, interoperable, and standardized data. Business Blockchains may develop across industry supply chains with shared business logic and processes, and shared financial ledgers. Payment channels and smart contract asset pledging may allow net settlement across supply chains and reduce debt and working capital obligations. Specific use cases are considered in global automotive supply chains, healthcare, digital identity credentialing, higher education, digital collectibles (CryptoKitties), and asset tokens (Primalbase).

Introduction

Blockchain technology was inaugurated in 2008 with Nakamoto's white paper “Bitcoin: A Peer-to-Peer Electronic Cash System” [1]. The first Blockchain is Bitcoin. The original purpose and first use case of Blockchain technology were the implementation of the cryptocurrency, Bitcoin. Beyond their use in the economic domain, Bitcoin and Blockchain technology as articulated by Nakamoto solve an important computer science problem that had been a barrier to having a functional digital monetary system for years: the double-spending problem. The double-spending problem is that money should only be spent once, unlike a file, which might be copied arbitrarily many times. The first Bitcoin transactions occurred in January 2009. Almost 10 years later in 2018, distributed ledger technology implementations are well underway in a variety of areas.

Blockchain distributed ledgers are one of the fastest-adopted technologies in history. UK-based market research firm Juniper said that (as of July 2017) 57% of large corporations worldwide (companies with more than 20,000 employees) were either actively considering or in the process of deploying Blockchain [2]. Two-thirds of these firms said they expected to ingrate Blockchain distributed ledgers into their enterprise IT systems by the end of 2018. Corporate, industrial, and government interest in Blockchain technologies is high because applications extend well beyond the domain of cryptocurrencies. There are four main application classes for Blockchain technology: (1) monetary assets (currency, payments, remittance, finance, securities, and financial instruments), (2) property (land, real estate, and auto title registries), (3) contracts (business agreements, licensing, registration, wills and trusts, partnership agreements, and IP registration), and (4) identity credentials (passport, visa, driver's license, and birth registries).

There are two kinds of Blockchain networks: public and private. Public Blockchains are trustless (meaning that users need to trust the software, but not human counterparties such as banks or governments) and permissionless (meaning that anyone can join and use the network). Private Blockchains on the other hand are trusted (meaning that users need to know and trust the human-based network provider and counterparties (individuals, companies, and governments)), and permissioned (meaning that users are known and credentialed).

Public Blockchain networks such as Bitcoin, Ethereum, Litecoin, and any of the ~ 1500 cryptocurrencies listed at CoinMarketCap, and the 1127 (March 2018) Ethereum token projects listed at https://www.stateofthedapps.com/ are public. This means that anyone can download a wallet, obtain the native cryptotoken, and start conducting transactions on the network. Identity is pseudonymous (meaning using an address hash (a 32-character alphanumeric sequence to transfer funds)) or fully confidential (using ZKPs (zero-knowledge proofs) or another technology feature to mask sender and receiver address and the amount sent). Many Blockchains are starting to offer confidential transactions, such as Monero, Zcash, and Ethereum. The implication is that true Internet privacy might be possible that lets the user prove certain information without revealing it. This could include someone proving that his or her age is over 18 without revealing the date of birth, or proving that there is enough money in the bank for a financial transaction without revealing the total balance or other details. The properties of public Blockchain networks are useful to understand because enterprise networks draw from the same kinds of decentralized architectures, concepts, design principles, and tools.

Private Blockchain networks comprise the majority of corporate, industrial, and government Blockchain projects. In private Blockchains, users are known, have login credentials issued by a trusted authority, and are likely assigned to a certain limited scope of activities on the network. Private Blockchain network users may have specific kinds of ledger writing access. Various other parties may have different private read-only views of the data (for example, compliance officers and regulators). It is important to understand the parameters and operation of any private network a user might consider joining. For example, if you are a supplier thinking of using an automobile manufacturer-sponsored supply chain Blockchain, it is necessary to trust how the sponsoring party is administering the private Blockchain.

Section snippets

What Is Blockchain Technology?

Blockchain technology is a software protocol which enables the secure transfer of money, assets, and information via the Internet, without the need for a third-party intermediary such as banks or other financial institutions [3]. Transactions are validated, executed, and recorded chronologically in an append-only and tamper-resistant database, where they remain always available on the Internet 24/7 for on-demand lookup and verification. Blockchain technology is what underpins applications such

Ethereum Decentralized Application Platform

This section discusses Ethereum, drawing from the Ethereum Project [9], BlockGeeks [10], StackExchange [11], the Berkeley Blockchain Club [12], and Silicon Valley Ethereum [13]. Ethereum is a decentralized platform designed to run smart contracts (computational registration and execution of contractual arrangements). Ethereum is a public Blockchain network for which anyone can download a wallet and use. There is no single point of control or failure, and Ethereum is censorship-resistant.

Enterprise Blockchain Systems in Financial Services

This section provides an overview of private Blockchain systems intended for use in business, industrial, and government use cases, particularly a look at the technical specifications, operation, and implementation of enterprise Blockchain solutions in the first and largest sector of their implementation, the financial services industry. The enterprise-class financial services industry private Blockchain projects are in the process of being realized by groups of financial institutions and

Business Analytics, Artificial Intelligence, and Deep Learning Chains

Considering the topic of big data analytics for Blockchain, Blockchain both produces and facilitates data standardization and analytics. Blockchain is the disruptive enterprise software of the current moment and the near-future (with 57% of large worldwide firms investigating and implementing the technology [2]). Blockchain adoption is in the bigger frame of contemporary reality that is constituted by big data. Since the beginnings of the Internet, modernity has been marked as regime of big

Blockchain Business Networks

This section describes Blockchain business networks, and how their implementation might unfold in the corporate, industrial, and government environment. The first industry-wide process change that is a precondition for Blockchain business networks is the digitization of assets. The new mode of business practice may involve registering assets to Blockchains for administration, ownership confirmation, transfer (buying and selling), audit tracking, and compliance. Some of the first kinds of this

Conclusion

This chapter discusses Blockchain distributed ledgers as one of the fastest-adopted technologies in human history, with 57% of large global entities considering or involved in their implementation. Blockchains are an important advance, but not an IT panacea. They are good in use cases involving secure real-time monetary asset and information transfer among multiple parties in a business network. There are many risks to consider with Blockchain technologies. Practitioners should always ask why

Melanie Swan is a Technology Theorist in the Philosophy Department at Purdue University. She is the founder of several startups including the Institute for Blockchain Studies, DIYgenomics, GroupPurchase, and the MS Futures Group. Ms. Swan's educational background includes an MBA in Finance from the Wharton School of the University of Pennsylvania, an MA in Philosophy from the New School for Social Research in New York, NY, an MA in Contemporary Continental Philosophy from the Centre for

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    Melanie Swan is a Technology Theorist in the Philosophy Department at Purdue University. She is the founder of several startups including the Institute for Blockchain Studies, DIYgenomics, GroupPurchase, and the MS Futures Group. Ms. Swan's educational background includes an MBA in Finance from the Wharton School of the University of Pennsylvania, an MA in Philosophy from the New School for Social Research in New York, NY, an MA in Contemporary Continental Philosophy from the Centre for Research in Modern European Philosophy at Kingston University London and Université Paris 8, and a BA in French and Economics from Georgetown University. She is a faculty member at Singularity University and the University of the Commons, an Affiliate Scholar at the Institute for Ethics and Emerging Technologies, and an invited contributor to the Edge's Annual Essay Question.

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