Blockchain: Capabilities, Economic Viability, and the Socio-Technical Environment

Description

Blockchain is widely considered a new key technology. The Foundation for Technology Assessment (TA-SWISS) has proposed a comprehensive assessment of blockchain technologies. With this publication, TA-SWISS provides the much-needed social contextualisation of blockchain. The first, more technical part of the study takes an in-depth look at how blockchain functions and examines the economic potential of this technology. By analysing multiple real-world applications, the study sheds light on where the blockchain has advantages over traditional applications and where existing technologies continue to be the better solution. The second part of the study examines how blockchain became mainstream. It explores the origins of blockchain in the early history of information technology and computer networks. The study also reveals the impact blockchain has on industrial and public spaces. Finally, it discusses the social implications and challenges of blockchain against the background of a new socio-technical environment. Blockchain: Capabilities, Economic Viability, and the Socio-Technical Environment Preface Vorwort Préface Premessa Table of Contents Figures Tables The Technical Capabilities of Blockchain and its Economic Viability Summary Zusammenfassung Résumé Sintesi 1. Introduction 2. Basics of Cryptography 2.1. Hashing 2.2. 2 256 or the power of big numbers 2.3. Public key crypto systems and digital signatures 2.3.1. Public key cryptosystems 2.3.2. Digital signatures in blockchain technology 2.3.3. Safety of private keys 2.4. Zero-knowledge proof 2.4.1. Zero-knowledge proof explained 2.4.2. Zk-Snarks and blockchain 2.5. Quantum computing 2.6. Conclusion 3. Blockchain Technology 3.1. The origin of blockchain technology 3.2. How a blockchain works 3.2.1. The genesis block 3.2.2. Participating in a blockchain 3.2.3. Relaying transactions in the network 3.2.4. Validation 3.2.5. Multi-signatures 3.2.6. Creating a block 3.2.7. Building the chain 3.2.8. Reaching consensus 3.3. Who can participate? 3.3.1. Permissionless chains 3.3.2. Permissioned chains 3.3.3. Software protocol governance 3.4. Incentives 3.4.1. Transactions fees 3.4.2. Block rewards 3.5. Consensus protocols 3.5.1. Proof-of-work (PoW) 3.5.2. Proof-of-stake (PoS) 3.5.3. Proof-of-authority (PoA) 3.5.4. Practical Byzantine Fault Tolerance (PBFT) 3.6. Smart contracts 3.7. Scalability 3.8. Interoperability of blockchains 3.9. Privacy versus transparency 3.10. Patents 4. Potential Benefits 4.1. Where blockchains can generate trust in business processes 4.1.1. Replacing intermediaries 4.1.2. Automating the verification processes 4.2. How relationships are typically affected 4.2.1. Business to business relationships (B2B) 4.2.2. Business to consumer relationships (B2C) 4.2.3. Consumer to consumer relationships (C2C) 4.2.4. Government to Citizen relationships (G2C) 4.3. Transaction cost theory 4.3.1. Financial transaction costs 4.3.2. Costs of legal certainty 4.3.3. Time costs 5. Technical Challenges 5.1. Tokenisation of assets 5.1.1. Tokenisation for different asset types 5.1.2. Tokenisation processes 5.1.3. Cryptocurrencies 5.1.4. Fiat currencies and lifecycle-less assets 5.1.5. Assets with a lifecycle 5.2. Delivery versus payment 5.3. Voting 5.3.1. Voting tokens 5.3.2. Open voting 5.3.3. Confidential voting 5.3.4. Anonymous voting 6. Use Cases 6.1. Pure blockchain use cases 6.1.1. Public register (land and commercial registers) 6.1.2. Cryptocurrencies 6.1.3. Crowdfunding (Initial Coin Offering) 6.1.4. Private payment systems (World Food Programme) 6.2. Blockchain with smart contracts 6.2.1. Gambling (vDice) 6.2.2. Insurance (Etherisc) 6.2.3. e-ID (City of Zug) 6.2.4. Public e-voting (Follow my Vote) 6.2.5. Trade financing (Batavia) 6.2.6. Exchanges (Lykke) 6.3. Blockchain with smart contracts and IOT 6.3.1. Proof of provenance (Provenance, Ambrosus, Chronicled) 6.3.2. Energy (Brooklyn Microgrid and Tal.Markt/Elblox) 7. Legal, Social, Political, and Ecological Aspects 7.1. Legal aspects 7.1.1. MME: Framework for legal and risk assessment 7.1.2. FINMA: Applicability of financial regulation for ICOs 7.1.3. Transfer of tokens on the blockchain 7.1.4. Economic reflections 7.2. Ecological aspects 7.2.1. Main ecological problem: proof-of-work-based mining 7.2.2. Potential ecological gains through accountability 7.3. Social and political aspects 7.3.1. Change in trust 7.3.2. Transparency 7.3.3. Missing intermediaries 7.3.4. Collective ownership 7.3.5. Decentralisation 7.3.6. Participation Conclusions Appendices Blockchain: A New Socio-Technical Environment Summary Zusammenfassung Résumé Sintesi 8. Blockchain as a Historical Construct 8.1. Cryptography and decentralised networks in the post-war period 8.2. Consequences of the growth of electronic communications 8.3. Designing privacy 8.4. Consequences of public access to the global computer network 9. The Design and Implementation of the Bitcoin Protocol 9.1. The publicising of the Bitcoin project 9.2. The collective design process of the Bitcoin protocol 9.3. Community ownership of the Bitcoin project 10. Blockchain as a Distributed Ledger Technology 10.1. Other applications of the Bitcoin protocol 10.2. The objectification of blockchain 10.3. The emergence of permissioned distributed ledger techniques 10.4. Other distributed ledger techniques 11. Blockchain Socialisation Patterns 11.1. Exogenous socialisation patterns 11.2. Endogenous socialisation patterns 12. Designing Through Blockchain 12.1. The emergence of a new sector 12.2. New regulation techniques 12.3. Identity paradigms Conclusions Contributors Glossary References Supervisory Group Project Management TA-SWISS