Blockchain Technology and the Internet of Things

Challenges and Applications in Bitcoin and Security

Rashmi Agrawal, Jyotir Moy Chatterjee, Abhishek Kumar, Pramod Singh Rathore, Rashmi Agrawal, Jyotir Moy Chatterjee, Abhishek Kumar, Pramod Singh Rathore

• Publisher: Apple Academic Press
• Year: 2020
• Print ISBN: 9781771888974
• eBook ISBN: 9781000038637
• Edition: 1
• Topic: Computer Science
• Subtopic: Application Development
• Index: Computer Science

This new volume looks at the electrifying world of blockchain technology and how it has been revolutionizing the Internet of Things and cyber-physical systems. Aimed primarily at business users and developers who are considering blockchain-based projects, the volume provides a comprehensive introduction to the theoretical and practical aspects of blockchain technology. It presents a selection of chapters on topics that cover new information on blockchain and bitcoin security, IoT security threats and attacks, privacy issues, fault-tolerance mechanisms, and more. Some major software packages are discussed, and it also addresses the legal issues currently affecting the field. The information presented here is relevant to current and future problems relating to blockchain technology and will provide the tools to build efficient decentralized applications.

Blockchain technology and the IoT can profoundly change how the world—and businesses—work, and this book provides a window into the current world of blockchain. No longer limited to just Bitcoin, blockchain technology has spread into many sectors and into a significant number of different technologies.

CHAPTER 1

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Introduction to Blockchain Technology

GEETA NIJHAWAN^1*, SHRUTI VASHIST², ANITA KHOSLA¹ and SIDDHARTH SAGAR NIJHAWAN³

¹MRIIRS, Faridabad, Haryana, India

²Manav Rachna University, Faridabad, Haryana, India

³Netaji Subhas University of Technology, New Delhi, India

^*Corresponding author. E-mail: [email protected]

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ABSTRACT

The 21st century has seen tremendous growth in terms of technology. In order to modernize and make life comfortable, people have widely accepted these technological advancements. Lately, technologies like controlling devices using remotes and using voice to give commands have become part of modern life. We have seen significant growth in the field of augmented reality and Internet of things (IoT) in the past decade. The recent addition to the list is blockchain technology. A blockchain can be described as a growing list of records, called blocks. These are linked using cryptography. Each block of blockchain contains a time stamp, transaction data and a cryptographic hash of the previous block. It is not possible to modify data in a blockchain.

Blockchain-based applications are fast growing up. It can be used in financial services, education system, healthcare, IoT, and many more. However, there are many challenges of blockchain technology which need to be addressed. The major ones are scalability and protection problems. The chapter gives an overview of the blockchain technology. The basic concepts and working of blockchain are discussed in detail. The challenges and applications of blockchain technology are also presented. Lastly, the future trends for blockchain are discussed.

1.1 INTRODUCTION

At present, the transaction of money between two parties is handled by third party. The control is not in the hands of the parties actually involved in the money transaction. If we want to make payment through digital mode then we need a middleman which can be a bank or credit card company to complete the transaction. The transaction is centralized and many a times we have to pay transaction fee to the bank or service provider. The same scenario exists in case of games, music, software, etc. This issue is addressed by blockchain technology. It creates a decentralized environment in which the third party is not in control of the transactions and data. Blockchain can be defined as a distributed database solution that keeps a record of continuously growing list of data records. The transactions are confirmed by the nodes participating in it. A public ledger is used to record all data which includes information of every completed transaction. In blockchain, the information regarding every completed transaction is shared and available to all nodes. Hence, it can be said that blockchains are more transparent than the third-party systems. Also, all the nodes in blockchain are anonymous. This makes the system all the more secure. Figure 1.1 shows the three types of systems, that is, centralized, decentralized, and distributed.

FIGURE 1.1 Evolution of networks: (a) centralized, (b) decentralized, and (c) distributed networks.

In centralized systems, several jobs are done on a particular central processing unit (CPU) whereas in decentralized systems, every node makes its own decision. The final behavior of the system is the aggregate of the decisions of the individual nodes. In distributed systems, jobs are distributed among several processors. The processors are interconnected by a computer network.

Architecture of Distributed System

• Peer-to-peer: all nodes are peer of each other and work toward a common goal.

• Client–server: some nodes become server nodes for the role of coordinator, arbiter, etc.

• N-tier architecture: different parts of an application are distributed in different nodes of the systems and these nodes work together to function as an application for the user/client.

The application that launched blockchain technology for the first time was bitcoin. A decentralized network was created by bitcoin for cryptocur-rency, where the participants can make transactions with digital money. However, there are still some technical issues with blockchain that required to be addressed. The security and privacy of nodes is required in order to prevent attacks by hackers which may disturb transactions in blockchain (Swan, 2015). Also, some amount of computational power is required while confirming transactions in the blockchain. To address these questions, this chapter presents a systematic introduction to blockchain and its working (Kitchenham and Charters, 2007).

The chapter is organized as follows: The background of blockchain and bitcoin is given in Section 1.2. Also, the technical aspects of blockchain technology are presented by discussing its history, structure, and functionality. Sections 1.3 and 1.4 deal with main characteristics and the working of blockchain. Real-world applications are discussed in Section 1.5. The limitations and challenges of blockchain technology are dealt in detail in Section 1.6. The conclusions are given in the end (Antonopoulos, 2007).

1.2 BASIC CONCEPTS OF BLOCKCHAIN

Until the blockchain was invented, it was not possible to do individual transactions over the Internet (Yli-Huumo et al., 2016). It required centralized monitoring and control to have non repudiation or disapproval of data. It was difficult to build trust between different parties. There were chances that one of the parties can modify the data for their advantage without the knowledge of the other party. A group consisting of distributed individuals required a centralized authority to verify their transactions. This situation is similar to the “Byzantine Generals Problem” (Wright and Filippi, 2015). This provided a solution to the problem that it is possible for distributed computers to make a decision against an attack from unwarranted parties without any centralized control (Boucher et al., 2017). It was assumed that Byzantine army has been divided into three parts and they are planning an attack at the enemy city. The leaders of three divisions are independent to take decisions but in order to take control of the city they have to reach a common consensus. The leaders can send communications through messenger only, but in between a traitor is trying to ruin the leaders’ moves to reach a common consensus so that they cannot attack the enemy unitedly. He does so, either by misguiding the leaders to attack the enemy before others or hiding some significant information (Wright and Filippi, 2015). One way to avoid tampering of data is to encrypt it before sending the message. A probabilistic approach is being used by blockchain for providing a solution to the problem of Byzantine Generals (Nakamoto, 2008). The transparency and reliability of data is increased when it moves through a network of computers. Hence, the chances of unauthorized attack are reduced significantly and it becomes difficult to manipulate a distributed database with spurious data. There is only one way to attack and that is when the attacker uses more computational power than that of the entire network. The protocols used in blockchain technology ensure that transactions are done correctly (Christidis and Devetsikiotis, 2008).

Imagine that everyone in the world one day decide that they will trade with a new currency. They do not want banks and their governments to have any control in this currency. The currency should be truly universal in all sense and making it digital would allow for the fastest transfers possible. Such a system was indeed created in 2009 by an anonymous person(s) called Satoshi Nakamoto. Bitcoin is the world’s first digital cryptocurrency. It does not have any central authority exercising control. Blockchain is the concept and bitcoin are the implementation (Nakamoto, 2008). The blockchain can be described as a chain of connected blocks where each block contains information about transactions. Each block contains the hash, time stamp and transactional data of the previous block (Fig. 1.2). When a block completes the transactions, a new block gets created. It has the same properties and hash as that of the preceding block (Crosby et al., 2016).

FIGURE 1.2 Connection of blockchain’s blocks (Holotescu, 2018).

The blockchain contains a database of transactions, which are recorded into blocks in chronological order and verified by other computers in the network. Also, each block is defined by a complex mathematical equation also called hash functions, which are responsible for data integrity and nonrepudiation (Holotescu, 2018). A copy of blockchain’s database is available with each participant in the network. The synchronization of the computers takes place at regular intervals so that all participants get the correct and original copy of the shared database. All transactions which occur in currency are recorded in the copy of blockchain. Blockchain participants are known as nodes. Each node has a unique network address at any timeframe. There is only one route or chain to the first block from any random block (Sultan, 2018). In a case when the...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• About
• Table of Contents
• Contributors
• Abbreviations
• Introduction to the Book
• Preface
• Acknowledgment
• 1. Introduction to Blockchain Technology
• 2. An Overview of Blockchain Technology: Architecture, Consensus Algorithm, and Its Challenges
• 3. Blockchain, Bitcoin, and the Internet of Things: Overview
• 4. Blockchain and Bitcoin Security
• 5. Blockchain Internet of Things
• 6. Securing IoT with Blockchains
• 7. Blockchain Technology and Internet of Things
• 8. Blockchain Internet of Things: Security and Privacy
• 9. Attacks on Blockchain-Based Systems
• 10. Blockchain and Bitcoin Security: Threats in Bitcoin
• 11. Security and Privacy Issues in Blockchain Technology
• 12. Blockchain with Fault Tolerance Mechanism
• 13. Controlling Blockchain Mechanism Using the Internet of Things Technology
• 14. A Study on Blockchain Technology: Application and Future Trends
• Index