Distributed Ledger Technology, Blockchain, and Finance

Developments in artificial intelligence (AI) and distributed ledger technology (DLT) currently lead to lively debates in academia and practice. AI processes data to perform tasks that were previously thought possible only for humans. DLT has the potential to create consensus over data among a group of participants in untrustworthy environments. In recent research, both technologies are used in similar and even the same systems. This can lead to a convergence of AI and DLT, which in the past, has paved the way for major innovations of other information technologies. Previous work highlights several potential benefits of a convergence of AI and DLT but only provides a limited theoretical framework to describe upcoming real-world integration cases of both technologies. In this research, we review and synthesize extant research on integrating AI with DLT and vice versa to rigorously develop a future research agenda on the convergence of both technologies. In terms of integrating AI with DLT, we identified research opportunities in the areas of secure DLT, automated referee and governance, and privacy-preserving personalization. With regard to integrating DLT with AI, we identified future research opportunities in the areas of decentralized computing for AI, secure data sharing and marketplaces, explainable AI, and coordinating devices. In doing so, this research provides a four-fold contribution. First, it is not constrained to blockchain but instead investigates the broader phenomenon of DLT. Second, it considers the reciprocal nature of a convergence of AI and DLT. Third, it bridges the gap between theory and practice by helping researchers active in AI or DLT to overcome current limitations in their field, and practitioners to develop systems along with the convergence of both technologies. Fourth, it demonstrates the feasibility of applying the convergence concept to research on AI and DLT.

The paper presents the main approaches to the construction of the PKI public key architecture divided into basic, two-level, and multi-level hierarchies. Modern methods of attacks on existing public key infrastructures, protocols for building secure connections of both wired and wireless systems are considered. The basics of the class of attacks on PKI infrastructures are defined, of which the main attention is paid to the most dangerous class of attacks – man-in-the-middle (MITM-attacks). The paper provides models of various classes of MITM attacks, their details and existing methods of reducing the risks of their implementation. Existing examples of successful attacks on enterprises and various organizations that implemented MITM attack models at the application, network, and physical levels of the network interaction model are also given. For the PKI infrastructure, one of the options is its segmentation, which allows to reduce the scope of attacks on the key certification center. The paper also provides an alternative way to protect against MITM attacks using distributed micro ledger technology (DLT) to create a decentralized cryptographic key distribution system (DKMS). The solution is based on the use of micro ledgers (distributed ledger technology – DMLT). Using DMLT to create a DKMS allows protection against additional classes of MITM attacks.

Blockchain in the built environment and construction industry: A systematic review, conceptual models and practical use cases

Distributed ledger technology (DLT), including blockchain, enables secure processing of transactions between untrustworthy parties in a decentralized system. However, DLT is available in different designs that exhibit diverse characteristics. Moreover, DLT characteristics have complementary and conflicting interdependencies. Hence, there will never be an ideal DLT design for all DLT use cases; instead, DLT implementations need to be configured to contextual requirements. Successful DLT configuration requires, however, a sound understanding of DLT characteristics and their interdependencies. In this manuscript, we review DLT characteristics and organize them into six groups. Furthermore, we condense interdependencies of DLT characteristics into trade-offs that should be considered for successful deployment of DLT. Finally, we consolidate our findings into DLT archetypes for common design objectives, such as security, usability, or performance. Our work makes extant DLT research more transparent and fosters understanding of interdependencies and trade-offs between DLT characteristics.

This research project has successfully built a Distributed Ledger Technology (DLT) based prototype using R3 Corda open source. Its purpose applies in the oil & gas underground injection control (UIC) operations for the underground aquifer protection. This DLT prototype is a permissioned network that allows oil & gas companies to create, disseminate, and trace immutable records. The network enables oil and gas companies, government regulatory agency, and all other participants to share secure records such as well information while maintaining data integrity, traceability, and security. The purpose is to create a network of trust among all the stakeholders in the UIC processes for underground aquifer protection. In this DLT network, a company submits well information, which will be digitally signed and notarized. Unauthorized changes to the information, ownership, or history will become infeasible, thanks to the underlying cryptographic technologies of DLT. The network designs so that information stored and communicated will have a high level of trustworthiness. Every participant in the network can get simultaneous access to a common view of the data. Corda platform also provides multiple functionalities, e.g., Smart contract, Vault, Identity Management, Scheduler, Notary Services, etc. Many of the functionalities automate the data processing within the DLT databases. This project's results expect to enhance public safety and improve the aquifer protection review and operational processes. Kern County uniquely poises for a project to develop more streamlined, effective, and entirely digitized DLT-based workflows that will secure regional environmental data integrity. Water contamination is a primary concern in a region where water and petroleum play vital roles in the economy. Both industries and regulatory agencies pay close attention to environmental quality. Data integrity is a primary issue concern for those that monitor and analyze environmental data. Monitoring and forecasting based on available immutable data are imperative to mitigate complications. We have changed the manual workflow into DLT applications which takes advantage of built-in functionalities. The new review process can avoid repetitive reviews among all participants and shorten the approval time. The embedded smart contracts on the DLT network will also help automate the workflows, and therefore, will be able to help eliminate human errors and improve the turnaround time. The prototype model proves the concept of using DLT. Our research work demonstrates DLT successfully implement into energy technology. The prototype model will further expand to all the UIC processes, such as thermal, wastewater disposal, waterflood, gas injection & disposal, etc. It is a substantial cost and time savings for all the oil and gas companies. The results of this analysis could provide the government with valuable information for significant policy and regulation decisions to further benefit the community and society.

Distributed ledger technology (DLT), including blockchain, enables secure processing of transactions between untrustworthy parties in a decentralized system. However, DLT is available in different designs that exhibit diverse characteristics. Moreover, DLT characteristics have complementary and conflicting interdependencies. Hence, there will never be an ideal DLT design for all DLT use cases; instead, DLT implementations need to be configured to contextual requirements. Successful DLT configuration requires, however, a sound understanding of DLT characteristics and their interdependencies. In this manuscript, we review DLT characteristics and organize them into six groups. Furthermore, we condense interdependencies of DLT characteristics into trade-offs that should be considered for successful deployment of DLT. Finally, we consolidate our findings into DLT archetypes for common design objectives, such as security, usability, or performance. Our work makes extant DLT research more transparent and fosters understanding of interdependencies and trade-offs between DLT characteristics.

This study investigated the effect of distributed ledger technology (DLT) factors on eliminating financial reporting errors (FREs) in quoted Nigerian banks. Using an exploratory survey design, data was collected from 300 employees of 14 quoted banks involved in financial reporting. DLT factors of public, private, hybrid, and blockchain were examined as independent variables affecting the dependent variable of FRE elimination. Descriptive analysis showed that all DLT types were perceived as highly effective for error reduction. Correlation analysis revealed strong positive relationships between DLT factors and FRE mitigation. Regression modeling found that hybrid DLT had the largest impact on error elimination, followed by private, public, and blockchain DLT. Together, the DLT factors explained 98.1% of the variance in FRE reduction. The results statistically established the significant positive effects of DLT factors on eliminating prevalent FREs like principle, omission, entry, disclosure, and reversal errors. Key contributions include providing robust empirical evidence that leveraging DLT, especially hybrid DLT, can eliminate common financial reporting errors in Nigerian banks. The pioneering study expands conceptualizations, theories, and literature regarding DLT's potential to comprehensively transform financial reporting accuracy. It offers important implications for policy, practice, and research on regulating, adopting, and studying DLT solutions to address persistent financial statement errors undermining stakeholder trust in Nigeria's banking sector. The study concludes by strongly recommending for policy and, in practice, the regulation and full adoption of DLT for the elimination of FREs in Nigeria.

Industries are now deploying smart initiatives and innovative business models towards digital transformation. One of such initiatives is the adoption of distributed ledger technology (DLT) which promises to support smart industrial revolution. DLT facilitates non trusted entities to communicate and achieve a consensus in a fully distributed method through an immutable and cryptographically secure ledger. DLT ensures traceability and secure exchange of information while ensuring confidentiality and portability of data. However, only fewer studies have explored the extent to which DLT can support digitalization to achieve smart industrial process. Besides, the governance role of DLT in industrial sectors is still considered a nascent domain of research and DLT governance design and archetypes for smart industries are still in the early stage. Also, there are fewer studies in the literature that presents consensus mechanisms for integrating DLT for digitalization of smart industries. Grounded on the secondary data this study examines the practical benefits and challenges faced in achieving a smart industrial operation. Findings from this study identifies governance and security issues that influences DLT deployment in industrial sectors. More importantly, several factors that impacts the deployment of DLT for smart industries are presented. Implications from this study will be useful for industrial regulators, practitioners and researchers interested in gaining innovative insights about how smart industries can leverage DLT to create value for competitive advantage.

Do you need a blockchain in construction? Use case categories and decision framework for DLT design options

This paper analyses the reluctance towards the implementation of blockchain in financial markets and post-trade. It discusses possible barriers to replacing current post-trade systems with blockchain and distributed ledger technology (DLT). It focuses on the regulatory challenges facing post-trade operations. Blockchain and DLT have created considerable disruption to financial markets. Although the technologies increase efficiency, reduce costs and increase security, blockchain and DLT raise many challenges that work against current processes and regulations. It has been identified that post-trade functions potentially benefit from the implementation of new technologies such as blockchain and DLT. Many markets have launched different types of initiatives and pilots to test the application of blockchain or DLT. Many real final products on blockchain and DLT are, however, still in pilot stages. Of the various challenges impeding successful implementation, the highest identified obstacle relates to regulatory challenges. Regulatory challenges facing post-trade functions can sound the death knell as post-trade functions are highly regulated and very critical to the securities market. Legal concerns about the implementation of blockchain and DLT vary between the need for solutions and the need for upgrades in regulations. Some points require further investigations and analysis to solve such legal concerns. On the other hand, some points require the current regimes to upgrade and incorporate the new structure that blockchain and DLT follow. The new regulations need to create adequate governance on the new database and workflow to define processes and definitions that build trust in the new system and protect investors and data. All regulators need to investigate the need to update current regulations and introduce new regimes to govern the use of blockchain and DLT in current trades and trade processes.

This study of the literature delves into the complex area of medical systems interoperability, focusing on mitigating variables that impact security and data transfer at the structural and semantic levels. In the era of digital healthcare, the secure sharing of medical data is crucial, and this study looks at how Distributed Ledger Technologies (DLTs) can play a major role in addressing these challenges. Complex interoperability issues that come from differences in communication protocols, data formats, established data structures, data models, and data meaning and codification methodologies face the healthcare industry. These problems typically impede the seamless transmission of electronic medical records between healthcare systems. Because of their decentralized structure and cryptographic foundation, DLTs offer a workable solution to these issues. By critically evaluating previous research and case studies, DLTs may be able to lessen these interoperability issues, as this literature review illustrates. Since DLTs provide an immutable and secure platform for the transmission of medical data, guaranteeing data integrity and confidentiality, they are a natural fit for the sensitive nature of healthcare data. Their importance in creating safe communication protocols, enhancing the meaning of data, and defining models and formats for data is emphasized in this review. A comprehensive architecture for DLT interoperability in healthcare is also recommended by the research. This framework encourages the development of DLT integration, shared data models, standardized data formats, and governance and policy. By implementing this strategy and strengthening secure medical data sharing, healthcare organizations and governments may increase the efficiency, precision, and speed of healthcare delivery. The crucial role that DLTs play in removing the structural and semantic barriers to safe medical systems interoperability is highlighted in the conclusion of this literature review. By adopting DLTs, the healthcare sector may usher in a new era of standardized, safe, and efficient medical data transmission, which will ultimately benefit both patients and healthcare providers. This study shows how distributed ledger technologies (DLTs) have the potential to revolutionize the healthcare industry by enabling the secure and meaningful exchange of medical data between different systems, thereby improving patient care and healthcare outcomes.

Over the last decade, information technology has contributed significantly to the evolution of financial markets, without, however, revolutionising the way in which financial institutions interact with one another. This may be about to change, as some market players are now predicting that new database technologies, such as blockchain and other distributed ledger technologies (DLTs), could be the source of an imminent revolution. This paper analyses the main features of DLTs that could influence their potential adoption by financial institutions and discusses how the use of these technologies could affect the European post-trade market for securities. The original protocol underlying DLTs has its roots in the anarchic world of virtual currencies, which operate outside the conventional financial system. The public debate on DLTs has also been very much focused on the revolutionary potential of the technology. This paper concludes that, irrespective of the technology used and the market players involved, certain processes that feature in the post-trade market for securities will still need to be performed by institutions. DLTs could, however, stimulate a reorganisation of financial markets, which could in turn: (i) reduce reconciliation costs, (ii) streamline the post-trade value chain, and (iii) allow more efficient use to be made of collateral and regulatory capital. It should, nevertheless, be remembered that research into DLTs and their uses is at an early stage. The scope for financial institutions to adopt DLTs and their potential impact on mainstream financial markets are still unclear. This paper discusses three potential models of how market players could adopt DLTs for performing core post-trade functions. The DLT could be adopted either: (i) in clusters, (ii) collectively, or (iii) peer to peer. The evaluation of the three adoption models assumes that they are all equally compatible with the regulatory framework. It shows that, assuming this to be the case, they would each have different advantages and costs.

Over the last decade, information technology has contributed significantly to the evolution of financial markets, without, however, revolutionising the way in which financial institutions interact with one another. This may be about to change, as some market players are now predicting that new database technologies, such as blockchain and other distributed ledger technologies (DLTs), could be the source of an imminent revolution. This paper analyses the main features of DLTs that could influence their potential adoption by financial institutions and discusses how the use of these technologies could affect the European post-trade market for securities. The original protocol underlying DLTs has its roots in the anarchic world of virtual currencies, which operate outside the conventional financial system. The public debate on DLTs has also been very much focused on the revolutionary potential of the technology. This paper concludes that, irrespective of the technology used and the market players involved, certain processes that feature in the post-trade market for securities will still need to be performed by institutions. DLTs could, however, stimulate a reorganisation of financial markets, which could in turn: (i) reduce reconciliation costs, (ii) streamline the post-trade value chain, and (iii) allow more efficient use to be made of collateral and regulatory capital. It should, nevertheless, be remembered that research into DLTs and their uses is at an early stage. The scope for financial institutions to adopt DLTs and their potential impact on mainstream financial markets are still unclear. This paper discusses three potential models of how market players could adopt DLTs for performing core post-trade functions. The DLT could be adopted either: (i) in clusters, (ii) collectively, or (iii) peer to peer. The evaluation of the three adoption models assumes that they are all equally compatible with the regulatory framework. It shows that, assuming this to be the case, they would each have different advantages and costs. JEL Classification: G21, G23, L15, O33

The ongoing push for the 4th industrial revolution is setting the stage to digitise, persist and verify identity along with credentials. Academic and skills credentials are currently verified manually and have much scope for automation using cryptographic techniques but requires standardisation to facilitate future systems interoperability. The Distributed Ledger Technology (DLT) and World Wide Web Consortium (W3C) Verifiable Credentials (VC) standards presents the possibility to achieve this credential verification automation. To accomplish this, an understanding of various DLTs and requirements for a viable skills tracking system is important. Therefore, this research aims to access the selected DLTs against the assessment criterion presented and an analysis has been completed to determine which DLT is suitable for the proposed system. The DLTs are assessed in terms of their ability to support the rapid prototyping of such a system and provide recommendations to guide a future development path from the perspective of standards compliance. We conclude that few DLTs possess the maturity to provide proper requirements coverage due to the emergent nature of the DLT space. Additionally, this paper presents the high-level requirements to achieve a minimally viable solution that can demonstrate such digital credential verification in the academic and skills tracking context.

The construction industry is known for its intricate and fragmented nature, often plagued by inefficient processes and data management challenges. Distributed Ledger Technology (DLT) presents a promising solution, potentially revolutionizing data sharing, transparency, and security. However, the successful adoption of DLT necessitates a comprehensive understanding of its implications, effective organizational changes, and strategic implementation strategies. This study examines the critical factors in adopting DLT into construction processes and workflows. A mixed-methods approach was employed, combining quantitative surveys and qualitative interviews with key stakeholders in the Nigerian construction industry. The findings emphasize the importance of educating staff about DLT’s benefits, strategic planning aligned with business goals, collaboration with DLT experts, universities, and industry partners, careful planning and robust security measures, and organizational changes such as dedicated DLT teams and engaging suppliers. Recommendations include prioritizing continuous improvement, investing in training programs, and exploring integration with emerging technologies. The study provides empirical insights into DLT adoption challenges and strategies, synthesizing these findings with existing literature, and offers a roadmap for construction firms, policymakers, and researchers seeking to leverage DLT for enhanced efficiency and innovation in the construction industry.