Blockchain technology as a means of sustainable development

Abstract

Blockchain technology is a novel computing model and ecosystem for trusted digital services. The technology promotes trust and decentralization, which has inspired new ways to develop smart digital business, engage communities, and automate societies. This makes it a typical multidisciplinary technology enabler for sustainable development with unique properties including trust, automation, decentralization, immutability, and resilience. This Primer aims to emphasize the potential role of blockchain technology in assisting a transition to a sustainable society through shedding light on the rationale behind blockchains, their core properties, and the available variants to get started. The article also conveys the main challenges impeding blockchain technology from attaining its full potential. Therefore, we encourage researchers, professionals, and enthusiasts from different sectors to continue exploring blockchains and investigate their potential for multidisciplinary applications while raising awareness about the considerate and wise use of this technology. Blockchain technology is a novel computing model and ecosystem for trusted digital services. The technology promotes trust and decentralization, which has inspired new ways to develop smart digital business, engage communities, and automate societies. This makes it a typical multidisciplinary technology enabler for sustainable development with unique properties including trust, automation, decentralization, immutability, and resilience. This Primer aims to emphasize the potential role of blockchain technology in assisting a transition to a sustainable society through shedding light on the rationale behind blockchains, their core properties, and the available variants to get started. The article also conveys the main challenges impeding blockchain technology from attaining its full potential. Therefore, we encourage researchers, professionals, and enthusiasts from different sectors to continue exploring blockchains and investigate their potential for multidisciplinary applications while raising awareness about the considerate and wise use of this technology. Blockchain technology has disrupted the digital computing world and is considered by many to be the “next Internet” of trusted services. Having trust at its core, blockchain has inspired new ways to build multidisciplinary digital services spanning diverse life aspects including economy, industry, finance, smart cities, public services, society, and organizations. As depicted in Figure 1, blockchain technology suggests itself as a strong enabler for sustainable development given its unique characteristics: trust, automation, decentralization, transparency, provenance, and resilience. Interestingly, it is fairly easy to implement new applications on top of a blockchain system, provided that the latter is already implemented as a black-box or a ready-to-use platform. The notable interest in blockchain started with the hype of cryptocurrencies (the most famous blockchain application), whose global market cap is currently around USD$2 trillion. This investment is also surging beyond financial technology (Fintech). Bloomberg reported that a single top-five cryptocurrency will have a market capitalization greater than 80% of the companies in the Standard and Poor's 500—the 500 largest companies listed in the stock exchange. The Forbes Blockchain 50 list features 50 high-valuation companies investing in diverse blockchain market sectors; the list includes the Industrial and Commercial Bank of China, Facebook, Google, Baidu, Amazon, Boeing, and Daimler, among others. The Ethereum platform alone features around 3,000 blockchain applications of different businesses. This interest in blockchain is not going to stop soon. Gartner's forecasts estimate that blockchain's innovation business value add will exceed $3.1 trillion by 2030. Despite this remarkable investment, blockchain technology is still immature for mainstream adoption in production systems beyond the Fintech sector. This is due to many challenges that are attributed to understanding the complex technology itself, legal and regulatory issues, and technical challenges. In particular, there is a continuous quest for applications in different sectors in which the core blockchain features (e.g., trust and decentralization) are really required and justified. In addition, there are still legal barriers to governance, tax regulation, and illegal “black trade” control. Furthermore, there are technical challenges (e.g., latency) impeding the desired scalability of the technology, and some are rather controversial regarding the sustainability potential given its extremely high carbon footprint. For instance, the most prominent variant of blockchain protocols, called proof of work (PoW), consumes as much energy as a country such as the Netherlands. This Primer aims to raise awareness regarding the sustainable and wise multidisciplinary use of blockchain technology. In this vein, we attempt to gently demystify the most common blockchain design and properties by emphasizing the rationale behind its existence. Our purpose is to facilitate the feasibility assessment of using blockchain for multidisciplinary applications. We pave the way to getting started with blockchain by surveying the main blockchain variants and available ready-to-use platforms for a smooth start. We also mention the key challenges faced in moving toward more mature blockchains for sustainable development. This article appeals for more research and experimentation on the blockchain ecosystem. In particular, there is a need to engage non-technical blockchain researchers and enthusiasts in different sectors to understand the full potential of blockchain applications and to identify existing gaps. The trust, automation, and decentralization features can undoubtedly inspire and enable novel applications in various sectors that have not yet been explored. This assists the blockchain technical community to bridge the existing gaps and answer the wider business and market needs. A blockchain is a distributed system for trusted computing in untrusted environments. Together with “trusted computing,” a blockchain system provides unique properties for modern digital services including automation, decentralization, traceability, immutability, and security. This makes blockchain technology a promising enabler for sustainable development through facilitating digital transformation, transparency, provenance, and balanced development across communities and multidisciplinary services. To explain the rationale behind blockchain, we draw an analogy with conventional computing (CC), e.g., a computer or cloud computing. As depicted in Figure 2A, an application or service logic can be implemented in a digital form as a set of logical procedures or steps (i.e., a program) with the use of known programming languages. Any user or stakeholder's request (i.e., a transaction) to the service is executed (by the CPU) in this program code. The locally confirmed outcome is then stored in a database (e.g., on a hard drive), which can also be accessed at any point. The primary issue with this centralized system is that the different stakeholders of the running service have to trust it and its operators. Unfortunately, this trust is unrealistic and leads to serious ramifications:•Integrity: if the execution is erroneous or manipulated (by an attacker), the outcome will be wrong (and can be devastating).•Availability: the system itself might be unreachable by the stakeholders or be at risk (e.g., as a result of damage or theft).•Immutability: the database can be modified (mutated) by the system operator or an attacker. Therefore, as a result of the illegitimate abuse or malicious behaviors, neither the CC system nor its operators can be trusted. A blockchain computing (BC) system, shown in Figure 2B, provides a promising solution to the above issues via replication: having a large set of the CC-like replicas to execute the same transactions simultaneously and retain an identical copy of the database. Replication is key because it provides a sufficiently high number of witnesses to both the transaction execution and the storage. Therefore, each blockchain replica functions similarly to the CC system, as in Figure 2A, but its components now have a replication flavor. The program code again executes transactions, but it is now called a “smart contract” because it automates services exactly as a normal program does—and it has nothing to do with the “smartness” notion in the Internet of Things or artificial intelligence. The smart contract is executed by the local replica, and its outcome (packaged in a block for efficiency) is a candidate to be stored in what is now called a blockchain database. Contrary to CC, because the replica is not trusted, the execution outcome (i.e., the block) remains a “candidate” until it is confirmed by enough (typically a majority of) witness replicas. The main difference with the CC system, as Figure 2 shows, is thus the “decision” component, whereby replicas try to reach agreement on a candidate block that is then added to the blockchain database. Without agreement, the database copies on different replicas will diverge by having different transactions and blocks in different orders, and thus trust is violated. For instance, in cryptocurrencies, a unique resource (e.g., a coin) could be consumed twice to buy two different items as a result of two simultaneous transactions (this is called double spending). Given that reaching agreement per transaction is very costly, as explained below, transactions are packaged in the coarse-grained blocks, on which agreement is more efficient. In general, agreement can be achieved through simply appointing a leader for the replicas who decides the next lucky candidate block to be added to the blockchain database. Here, however, there are two obstacles. The first is that achieving agreement is proved to be impossible in such environments with hostile connectivity (e.g., the Internet) or machines (the replicas). The second is that we do not trust a specific replica to be the leader, and therefore a randomly fair scheme to elect a leader at a time is preferred. The Bitcoin blockchain agreement protocol, called PoW, is the first practical protocol to solve majority agreement at a global scale—under some assumptions to circumvent the theoretical “impossibility results.” Nevertheless, PoW needs extreme computational resources, which had led to the quest for less costly alternatives as explained below. For now, the first two properties have been achieved (to a high extent), namely, (1) availability, given that any replica can provide access to contract execution and the blockchain data, and (2) integrity, given that there is a majority agreement of witnesses that the execution outcome is identical. The remaining immutability property is then solved by the blockchain database itself. A blockchain database—from which a blockchain system adopts its name—is a data structure designed as a chain of blocks. In general, any block with a unique identifier (i.e., a cryptographic signature) represents a coarse-grained package of transactions and a reference to the preceding agreed block via the inclusion of its signature (see Figure 2). Immutability is then guaranteed through ensuring two parts. First, the content of each individual block is protected from tampering with a cryptographic hash. (A cryptographic hash is generated by a one-way mathematical function, f(i,j,k) = y, whose inputs i, j, and k always result in a unique output y, whereas it is computationally infeasible to guess the input (i, j, and k) given the output y. In other words, the inverse function g(y) = (i,j,k) does not exist.) This means that any modification to the content results in a different signature from the one previously published and agreed upon. Second, the chain (or sequence) of blocks is protected from tampering by cryptographic hashing, as well through including the signatures of the preceding blocks in the current block. This protects against reordering the blocks in the chain, removing a block, or injecting a new forged block in the middle of the chain. Remember that it is only allowed to add blocks to the most recently agreed block, i.e., the head of the chain, after extensive computational work. It has been proved that an adversary needs to have access to computational power that is higher than half of the entire blockchain system to be able to forge a recent block; consequently, it is nearly impossible to tamper with earlier blocks in the chain. Given that any replica can hold the entire blockchain database, it is now possible for stakeholders to verify its integrity and ensure immutability. The aforementioned technical properties enrich blockchain systems with other properties that have received attention in the research and practice communities in the context of sustainable development. We briefly mention some of these properties that play different roles in enabling the UN Sustainable Development Goals (SDGs) in Table 1.Table 1Blockchain properties and their role in enabling the UN SDGsPropertyDescriptionSDGsAutomationsmart contracts allow for automating new types of applications, such as trusted supply chains and smart arbitration8, 9, 11, and 12Accountabilityimmutability and block chaining facilitate accountability, provenance, and transparency11–13 and 15–17Fairnessdecentralization enables and promotes new services that are inclusive, democratic, and equality driven1–5, 10, 11, and 17Privacyuser anonymity or pseudonymity paves the way for privacy-aware services such as voting, property management, shared health and diagnostics, and donation3, 11, 16, and 17Sharingdecentralization and P2P communication encourage shared services, collaborative work, social cooperation, and information sharing1, 2, 4, 5, 8–11, 16, and 17 Open table in a new tab The rich set of blockchain properties and broad application feasibility result in a notable number of variants that are best suited for different situations. Despite this, there are four major categories of blockchain types depending on their openness and restrictions. A blockchain can be public or private if the access (often read only) to the blockchain is open to any unknown user or restricted to selected known identities, respectively. It can also be permissioned or permissionless depending on whether the privileges on the blockchain maintenance, hosting, and modification are open to any user or to known members (e.g., part of a consortium). Nevertheless, the two binary combinations “public-permissionless” and “private-permissioned,” summarized in Figure 3, are by far the most prominent ones given their reasonable applications. Here, we focus on these two variants as a typical starting point, but the interested reader can consult the supporting material in the last section for more variants. We frame the explanation of the aforementioned variants within four main phases through which a blockchain project’s life cycle should be considered:•Preparation: defining or choosing the consortium and stakeholders.•Installation: building the blockchain-hosting infrastructure, system, and protocols.•Implementation: implementing the application or service running on the blockchain.•Execution: the computational model and expected performance of the service. This is the original type of blockchain that has been adopted and thus accelerated by the cryptocurrency and Fintech applications and originally introduced by Bitcoin. It promotes decentralization, openness, and “democracy” because it tries to engage participants without restrictions, which is typical for community-based applications. Public-permissionless blockchains are usually the quickest way to build applications because there are several ready-to-use platforms available for public use, and therefore the overheads of preparation and installation are avoided. Nevertheless, starting a new platform requires substantial effort. Preparation will need community-based publicity and promotion campaigns, and installation starts as simply as running an application on a commodity computer, but it quickly becomes demanding for huge computational and storage capabilities to keep up with the growth of the system. However, there are open-source blockchain software suites recommended for installation and use instead of building the software from scratch, which is highly costly and complex. The implementation phase incurs coding the application logic in a smart contract. This is fairly easy in that it is agnostic to the complexity of the underlying blockchain infrastructure's platform. Most modern smart contracts support what is called “Turing-complete” implementations, making them similar to conventional programs. For instance, it is possible to create a new cryptocurrency on top of the Ethereum platform by implementing a simple smart contract that does not exceed one page of code. The execution phase in a public-permissionless blockchain requires careful consideration. The blockchain database and the execution of any transaction are done on all (hundreds of thousands) system replicas according to a peer-to-peer (P2P) blockchain protocol. This brings high security and availability but has two main drawbacks. The first is that the common P2P protocols impose high latency by design (e.g., seconds to minutes), which does not make them suitable for latency-sensitive applications. The second is that these protocols can require more computation and storage than necessary, which makes their carbon footprint extremely high. There are recent alternatives to PoW, e.g., proof of stake, which are gaining traction, but these cannot maintain the same PoW security guarantees. This blockchain type is mainly restricted to a well-defined private consortium with known participants. Apart from avoiding a single trust authority, it is not too disruptive to the classical business, policies, and expected performance. Contrary to public-permissionless blockchains, the preparation and installation phases cannot be avoided. Preparation requires defining the consortium or federation of business stakeholders, e.g., supply-chain partners and suppliers or collaborative research-project entities. This consortium then builds and hosts the blockchain infrastructure and protocols as part of the installation phase. The infrastructure can be well defined a priori because it is possible to assess the business demands of the consortium. However, it is more complex than public-permissionless in the early stages because it often requires a cluster of servers with large computational and storage capacities. Again, it is recommended to reuse available open-source software projects to avoid the software development cost and complexity. The implementation phase is very similar to that of the public-permissionless blockchain because most private-permissioned blockchains support Turing-complete smart contracts. Finally, the execution phase is the most appealing in a private-permissioned blockchain because its latency and carbon footprint are close to those of CC thanks to the use of “Byzantine agreement” protocols that have been well studied in academia for several decades. Unfortunately, these protocols are less secure than P2P PoW protocols, but they are potentially acceptable given that one could reasonably assume more trust in a majority of business partners than in unknown participants, as in public-permissionless blockchains. Blockchain is a promising technology for sustainable trustworthy development. It has the potential to have an undisputed impact on numerous sectors within technology, Fintech, humanities, and public services, among others. Unfortunately, despite huge efforts, the technology remains immature with respect to becoming a mainstream technology that satisfies the desired goals for sustainable development. In this section, we shed light on the three most significant challenges toward the maturity and adoption of the technology. The aim is to raise awareness while experimenting with blockchains and to encourage the research community to identify new gaps, interesting observations, and potential applications. Scalability is the most technical challenge in blockchains, especially the P2P-based model. The main challenge is achieving latency as the number of participants grows. Although cluster-based blockchains, based on Byzantine agreement, achieve latency close to that of CC, the latency in P2P-based variants can be on orders of tens of seconds or minutes. This makes the latter impractical for modern applications that are latency sensitive. Recent P2P alternatives (e.g., proof of stake) managed to reduce the latency significantly at the cost of some security guarantees. From an application perspective, blockchain is a key enabler for sustainable development in line with the UN SDGs. However, from a technical perspective, the most secure P2P blockchains (i.e., the PoW-based ones) are extremely energy hungry, which is highly problematic regarding the need to transition to a low-carbon economy. This concern has been discussed extensively and has accelerated research in several directions. The first is to use cluster-based protocols (with Byzantine agreement) when possible. The second is to introduce Byzantine-P2P hybrid protocols that use PoW when necessary (e.g., to limit abusers), secure hardware, or a reduced number of storage or computational witnesses. The third direction is to replace the cryptographic puzzle (i.e., the work) in PoW with a more useful puzzle that can help in other orthogonal areas (e.g., find new prime numbers or solve scientific problems such as genome structure). The distributed, decentralized, and multinational nature of blockchains necessitates internal and external governance rules and regulations to control the running services. Internal regulations and policies are generally easy to define by the consortium, although it could lead to some conflicts of interest, such as those in the Facebook Libra currency. The external regulations, mainly governmental, are, however, more challenging and could represent a barrier in some domains. The most salient challenge is in the Fintech area, where governments are still reluctant to recognize or regulate blockchain-based Fintech applications (e.g., cryptocurrencies) because they are hard to control. This dispute is likely to prevail for years given that decentralization (and thus lack of central control) is a core feature in blockchain-based Fintech. Other blockchain applications include taxing regulations, data privacy, the dark market, and accountability. These challenges are expected to be resolved together with the technical challenges, provided that more research efforts are dedicated toward that purpose. The potential of blockchain technology as an enabler of trusted multidisciplinary services is clear. There are, however, several challenges to reaching the desired maturity and satisfying the sustainability goals, among them the latency- and energy-related issues. This requires more interdisciplinary research and experimentation that can lead to better understanding and use of the technology. Applications that can trust a service provider are unlikely to need a blockchain (although it can be used at a high cost); otherwise, there are a wide range of blockchain variants to be explored. However, the most common variants are the private-permissioned and public-permissionless blockchains for closed (e.g., supply-chain) and open (e.g., community) applications, respectively. In either case, it is recommended to start with an existing open-source implementation to reduce the development efforts and ensure a minimum level of verified security.