Blockchain E-Book

Matthieu Quiniou

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 157

Veröffentlichungsjahr: 2019

Beschreibung

The dominance of trusted intermediaries could be weakened by blockchain, a distributed ledger technology, one of the functions of which is to constitute timestamped proofs by replacing inter-individual trust with algorithmic trust. Blockchain self-executing smart contracts allow us to rethink the practice in the domain of e-commerce, interbank communication, fundraising (and ICOs), justice (timestamping evidence, acts authenticated by blockchain) and businesses in numerous sectors (entertainment, AI, health, real estate, tourism, transport, etc.) which attempt to propose new services by benefiting from blockchains. This book aims to put into perspective the technical innovations and the uses brought about by blockchain, by identifying that which has a medium- or long-term impact, all while taking into account the social, economic, judicial and administrative resistances that are likely to develop.

Leseprobe

Table of Contents

Cover

Introduction

Part 1: The Blockchain: a Tool for Non-centralization and Disintermediation

Introduction to Part 1

1 Non-centralized Architecture

1.1. Certified timestamping of transactions, operations, and events in a non-centralized registry

1.2. Encryption, anonymity, transparency, and verifiability in a non-centralized network

1.3. The implications of a non-centralized model

2 The Dynamics of Disintermediation

2.1. Self-execution of smart contracts

2.2. Decentralized Applications (dApps) and Decentralized Autonomous Organization (DAO)

2.3. Disintermediation and reduction of transaction costs

3 Blockchain Prospects and Ongoing Improvements

3.1. Scalability

3.2. Blockchain interoperability

3.3. The junctions between the blockchain, the Internet of Things, and artificial intelligence

Part 2: Blockchain Technology for a New Socio-economic Paradigm

Introduction to Part 2

4 Toward a Social Smart-contract?

4.1. Disintermediated direct democracy: perspectives opened by the blockchain

4.2. Participation, voting, and DAOs

4.3. Registries, administration, and blockchain

5 Proteiform and Multi-sectoral Transformations

5.1. Tokenization of the economy and bartering

5.2. Interbank transactions and blockchain

5.3. Fundraising and ICOs

5.4. Legal and judicial evidence and timestamping by blockchain

5.5. The renewal of the cadastral system by the blockchain

5.6. The use of blockchain in the entertainment industry

Conclusion

References

Index

End User License Agreement

List of Illustrations

Chapter 1

Figure 1.1. Paul Baran’s distributed system typology.

Figure 1.2. Decentralized system. For a color version of this figure, see www.is...

Figure 1.3. Non-centralized egalitarian system

Figure 1.4. A non-centralized system with variable and multi-level weighting. Fo...

Figure 1.5. Bitcoin timestamping system.

Figure 1.6. Storj encryption system. Source: [WIL 16, p. 3]. For a color version...

Figure 1.7. Privacy Model schemas.

Figure 1.8. Oraclize ecosystem.

Chapter 2

Figure 2.1. The State of the dApps website. For a color version of this figure, ...

Figure 2.2. Ethlance homepage. For a color version of this figure, see www.iste....

Figure 2.3. MetaMask connection to Ethlance. For a color version of this figure,...

Figure 2.4. MetaMasks connected to Ethlance. For a color version of this figure,...

Figure 2.5. Ethereum DAO. For a color version of this figure, see www.iste.co.uk...

Chapter 3

Figure 3.1. Source: https://komodoplatform.com/interoperability-cross-chain-smar...

Figure 3.2. Source: https://www.iota.org/get-started/what-is-iota. For a color v...

Figure 3.3. Source: https://iotex.io/. For a color version of this figure, see w...

Figure 3.4. Source: https://oceanprotocol.com/#project. For a color version of t...

Figure 3.5. Source: https://www.cortexlabs.ai/.

Figure 3.6. Source: [CHO 17, p. 18]. For a color version of this figure, see www...

Chapter 4

Figure 4.1. Source: https://voteflux.org. For a color version of this figure, se...

Figure 4.2. Source: https://voteflux.org/about/how/

Figure 4.3. Source: https://e-resident.gov.ee/

Chapter 5

Figure 5.1. Source: https://ripple.com/. For a color version of this figure, see...

Figure 5.2. Source: https://www.stellar.org/. For a color version of this figure...

Figure 5.3. Source: Ethereum website, https://www.ethereum.org/

Figure 5.4. Reasons cited by project leaders for launching an ICO (by a number o...

Figure 5.5. Source: https://ec.europa.eu/digital-single-market/en/news/5meu-priz...

Figure 5.6. Source: https://www.blocknotary.com/timestamp

Figure 5.7. Source: https://www.blocknotary.com/vermont-law

Figure 5.8. Source: https://stampd.io/

Figure 5.9. Source: https://singulardtv.com/. For a color version of this figure...

Guide

Cover

Table of Contents

Begin Reading

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Series EditorImad Saleh

Blockchain

The Advent of Disintermediation

Matthieu Quiniou

First published 2019 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:

ISTE Ltd

27-37 St George’s Road

London SW19 4EU

UK

www.iste.co.uk

John Wiley & Sons, Inc.

111 River Street

Hoboken, NJ 07030

USA

www.wiley.com

© ISTE Ltd 2019

The rights of Matthieu Quiniou to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

Library of Congress Control Number: 2019936981

British Library Cataloguing-in-Publication Data

A CIP record for this book is available from the British Library

ISBN 978-1-78630-403-2

Introduction

The blockchain’s current visibility is due to the intensity of speculative movement on crypto-assets in recent years, particularly since 2017. Speculation related to crypto-assets may appear to be a gregarious phenomenon fueled, in particular, by the media and by the recent interest shown by powerful institutions or companies wishing to take advantage of this technology by implementing it or at least by discussing it in the wake of this phenomenon. This craze, which has been greatly amplified in recent months, and the significant fluctuation in the price of these crypto-assets have had the effect of restricting the focal length linked to the blockchain to the speculative bubble.

Nevertheless, the blockchain technology and the first uses resulting from it deserve real attention, and the paradox lies in the fact that the main use of this technology is to enable disintermediated transactions to be carried out and, therefore, to a certain extent to speculate with great fluidity.

Before studying in detail the uses resulting from the blockchain, it is necessary to focus on it as a technology, to include it in its technological historical lineage and also in its own technical system [GIL 78, GIL 79].

Blockchain technology is particularly in line with ledgers on clay, papyrus or paper tablets. The main purpose of the first forms of writing was to create ledgers. Uruk’s protocuneiform clay tablets, dated to 3400 or 3300 BCE, traditionally presented as the first traces of writing, are mainly composed of ledgers, listing livestock, and goods [GAR 84, KEI 63, LEE 90]. These traces of the use of clay tablet ledgers have made it possible, for example, for researchers to conduct studies on the price structure and evolution of the price of barley in relation to silver in the neo-Sumerian economy based on the analysis of these tablets [CRI 17]. One fragment of an ancient ledger shares structural and functional characteristics with the blockchain [QUI 17], the Inca Khipu. Khipu is a public ledger in the form of a necklace composed of knotted strings ordering information in an encrypted manner, which is difficult to alter, with, according to recent advances in decoding the strings [MED 18], specific color codes to add information after the previously entered code.

Beyond the type of need to which the blockchain technology structurally responds, this technology belongs to the field of computing, as a technical system. The word Bitcoin is also a reference to the bit, an abbreviation of binary digit, the basic unit of measurement in computing composed of 0 and 1. The bit referred to in Bitcoin is that of the SHA-256 data block hash function, designed by the National Security Agency and used to secure the Bitcoin protocol by ensuring the validity of the blocks through the Proof-of-Work (PoW) method or work proof. These hash and security systems can be fallible. Security breaches in the SHA-256 system could have destructive consequences for Bitcoin. In 2005, Chinese researchers at Shandong University demonstrated that it was possible to bypass the safety of the predecessor of the SHA-256, the SHA-1, by causing collisions, i.e. by obtaining the same signature (an identical hash, i.e. the same bit string) for two different blocks [WAN 05]. In 2017, Google succeeded, in practice, with colossal computing power to achieve a collision with the SHA-1 system1.

In the same vein, some researchers have been interested in increasing computing power due to advances in quantum computers with quantum bits (qubits) on the durability of Bitcoin’s PoW system [AGG 18]. It should also be noted that the PoW system has been abandoned by several blockchain projects, including the Proof of Stake (PoS), such as Ethereum. The PoS or PoS grants, generally according to a weighted random draw system, the right to create the next block to an active validator on the network that has deposited units of the crypto-currency of this blockchain. Several blockchain projects, such as the Particl project, study the techniques to make the blockchains resistant to quantum computer attacks by enhancing the security of the PoS block validation method.

Within the technical information system, the blockchain can be described as a subcategory of the distributed ledger technology. The specific features of these computerized ledgers are that they do not have a central administrator and do not depend on a single storage entity. In order to ensure the consistency of the stored data, consensus systems are necessary; as a distributed registry technology, the blockchain has the specificity of using a consensus system working with blockchains. The blockchain thus allows the certification of histories and the validation of flows.

The blockchain technology responds to a need for recording data and information in ledgers to carry out the transactions. This technology, the main foundations of which were designed, patented2, and partially [PRE 96] tested in the 1990s, was popularized with Bitcoin, in practice, from 2009 onward, at a time when consumers were very reluctant to use their credit card numbers to make purchases on the Internet, for the fear of being hacked. The seminal article on Bitcoin published in 2009, entitled “Bitcoin: a Peer-to-Peer Electronic Cash System” [NAK 09] is, as its title indicates, focused on the deployment of a peer-to-peer electronic money system. This article is not a cypherpunk manifesto but a scientific article in computer science dealing mainly with the presentation of a security procedure to be put in place for payments by political signature.

Solutions such as PayPal, a company created in 1998 and acquired by eBay in 2002, already existed when Bitcoin was created in 2009. In a debate on the CNBC channel on August 14, 2018, the former President of PayPal, Bill Harris, described the blockchain and all crypto-currencies as totally useless, insisting that other technologies were more efficient in meeting the need for money transfer and that the only criterion to be taken into account was the speed of the network3.

The difference with these technical currency transfer solutions is that the blockchain, including that of Bitcoin, because of its technological specificities, is not limited to the transfer of pre-existing currencies but proposes a new paradigm that is both non-centralized and distributed. The blockchain technology is a profound response to the notion of “paradigm” in the Kuhnian4 sense, in that it brings together a community of researchers (and entrepreneurs) around a scientific consensus. Consensus is also a central aspect in the very development of blockchains, which are generally participatory, and their code can only be modified if the majority of the community agrees.

Currently, an ecosystem of transaction and operation recording solutions is being developed based on these two main axes of the blockchain, non-centralization and disintermediation, and could transform uses. The emergence of the blockchain as a technology is significantly changing the economic balance of power and the central position currently occupied by intermediaries (financial, legal, institutional, editorial, etc.) who are trying to reposition themselves to preserve their acquired advantages in these fields of activity. If this innovation did indeed lead to important uses [EDG 98], some might interpret it as a new form5 of technical determinism or at least a decisive element in disrupting pre-existing power relations. This technology is, thus, in the process of “socialization”, to use the notion of the science historian François Russo6 or to use a more common term, in the process of being adopted by society and its institutions.

The gradual de-indexing of the currency, of the cryptocurrencies, should transform the way people consume and invest, with the change in the purchasing behavior depending on the payment method, as shown by numerous “pain of paying” studies according to which, for example, people buy more easily with prepaid cards or bet larger amounts with casino chips and are willing to pay a higher price for the same product with a bank card than with cash [MON 97, RAG 08, SOM 01, VAN 13]. For the moment, no study has been carried out on the comparative purchasing behavior with crypto-currencies, which can be explained by the difficulty in paying them as it stands. However, without carrying out in-depth studies, the behavior at the ICOs showed that holders of crypto-currencies invested with great ease in projects allocating them new tokens; without drawing hasty conclusions on this point, it could be interesting to study whether investing with cryptocurrencies limits the risk aversion in relation to foreign currency investment.

The blockchain represents a new step in Internet-related transformations with the improvement of encryption, data sharing systems, and the increase in the computing power of personal computers. The uses permitted by the advent of the blockchain could have a significant societal impact by significantly reducing the role of “trusted” intermediaries.

Some intermediaries, whose added value was more due to the strict selective linking from internalized databases than to the trust inspired, were weakened by the first uses of the Internet for the general public and then the smartphones. The role of real estate agents or marriage agencies, for example, has been greatly weakened with the emergence of platforms for connecting individuals and then applications such as swipe and match, i.e. selection on the fly. Some intermediaries between companies and consumers have also been weakened or replaced, such as travel agencies or taxi booking centers.

The place of trusted intermediaries or trusted third parties could be weakened with the blockchain, one of whose functions is to massively constitute evidence by replacing inter-individual trust by systemic trust [LUH 06] or more specifically by algorithmic trust. In many countries, or more precisely in many legal systems, intermediaries or trusted third parties are public institutions, powerful companies at the heart of ecosystems, and regulated professions (agents, representatives, lawyers, notaries, financial intermediaries, institutions for the filing of intellectual property rights, etc.).

Nevertheless, significant acculturation would be necessary for disintermediated operations by digital proof via the blockchain to replace, even in part, the operations carried out on the basis of inter-individual trust or that granted to certain institutions or professions. A transition from the written contract to the smart contract, i.e. to the algorithmic contract operating on a blockchain protocol, could be even more difficult than the transition from the oral contract to the written contract. The practice does not systematically align itself with technical possibilities and traditions or habits may persist due to cultural and civic roots.

By reasoning from a Western perspective, where the written contract plays a central role in interactions, operations, and transactions and where trust is more closely linked to the bodies responsible for authenticating deeds or ensuring their enforceability, the main obstacles to adoption of the blockchain is that the enforceability of operations is recognized outside the virtual world.

From an Asian perspective, particularly from a Chinese perspective, cultural barriers could limit the use of selfexecuted smart contracts. Indeed, Chinese society remains very much attached to the relationship of trust between individuals, transcribed in particular by the notion of the Guanxi 关系 (trust network)7. Some Western commentators have been able to point out this cultural difference at the stage of contractual formalization and execution of contracts. For example, a leading American specialist in Chinese law, Stanley Lubman, pointed out that “Chinese businesses rely on relationships rather than legal bonds. A contract is worth only the paper it is written on; the real contract exists in the minds of the parties and its strength consists in their relationship and whether they believe they can trust each other” [LUB 06]. While this position may seem radical, and while Chinese society is evolving and adopting certain Western business practices with the country’s openness to globalization and economic development, the fact remains that the disintermediation borne by the blockchain may not be compatible with certain aspects of Chinese business culture or Maoism, or with the authoritarian and planning aspects of the socialist market economy.

It therefore seems useful to identify current or potential changes in use linked to the blockchain and the social, economic, legal, and administrative resistance that may arise.

The aim of this book is to discuss the possible uses of the blockchain technology based on an analysis of two of its fundamental characteristics, disintermediation and noncentralization (Part 1) and concrete cases in several sectors that make it possible to design a new socio-economic paradigm (Part 2).

1

Details of the experience can be found at:

https://security.googleblog.com/2017/02/announcing-first-sha1-collisionhtml

; and

https://shattered.io/

.

2