Blockchain Technology: Open Access for Private Networks
This section is made up of three sub-sections: (1) Topic Area, (2) Research Question, and (3) Significance. The “Topic Area” subsection offers a broad overview of current research project’s primary interest area. The “Research Question” subsection offers a specific formulation of current research interest. The “Significance” subsection explains why chosen area of research interest is of particular significance to practicing professionals and broader community alike.
1.1. Topic Area
Virtual Money (VM) has received much attention in development and public circles alike. Offering viable alternatives not only to current cash- / card-based systems but also to current financial system, VM is good fodder for thought both for research and practical interest. More specifically, growing popularity of different forms of VM – including, most notably, Bitcoin – has made Bitcoin, based on Blockchain Technology (BCT), an up-and-coming force, initially, in financial service industry, and increasingly across different industries. However, Bitcoin is most often confused with BCT. Indeed, average users of Bitcoin system are more likely to confuse Bitcoin (only one application of BCT in financial service area) with BCT as an emerging innovation of substantial potential across industries (Marvin). As BCT goes more common, differences emerge as to how and whether BCT should be adopted instead of or in replacement of current systems adopted in industries of well-established players including, of course, financial industry. More specifically, as BCT has Bitcoin as one most successful application, more established players are finding a growing business opportunity to invest in BCT. This is evident, for example, in increasing attempts to commercialize Bitcoin system, for example, beyond current community-based consensus system (Marvin). Industry heavyweights, whether in ICT (IBM and Microsoft) or financial sectors (Bank of America Merrill Lynch), are supporting BCT, particularly in what is casually referred to as cloud-based private BCT networks. This increasing differentiation between industry (particularly by established financial institutions) and community (particularly what is casually referred to as core developers and programmers) segments finds new peak in a recent e-mail by leaders of several big Bitcoin companies (Popper). The e-mail highlights emerging divisions between established industry players and independent, community-oriented developers with established industry players pushing for more rapid adoption of BCT (for commercial purposes) and core developers resisting push based on concerns of undermining current system which, albeit slow and a bit more expensive, is more open and community-based. This division raises one primary question central to current research interest: how would for-profit- and community-oriented supporters of BCT reconcile differences into a more reliable consensus-building system based on BCT? (This question is further refined below into a primary research question around which current research project is based.) For current purposes, however, one area in current BCT emerging division is of primary interest. Namely, an effective consensus-building architecture or protocol might be required in order to close current emerging gap. More specifically, by addressing emerging concerns and challenges in consensus-building efforts using current BCT innovation, an open access for private networks (OAPN) architecture is proposed. This research project aims, hence, to propose an OAPN architecture by which current gaps architecture designs and offerings are addressed and, more importantly, in order to close growing gap between commercialized- and community-based applications of BCT across industries.
1.2. Research Question
In order to address current gaps in BCT adoption and implementations, a new OAPN is required. This OAPN would not only address several gaps in current protocol and architecture design offerings but also, probably more importantly, offer a feasible “way out” of current dilemma of whether to commercialize BCT (and hence, probably, eliminating one major benefit of BCT namely, decentralization) or to maintain current community-based structure (and hence decelerate potential faster growth rates of BCT with unlimited benefits across industries). This dilemma could, for current purposes, be formulated into a research question as follows:
RQ: Should OAPN architecture close current gap between community- and for-profit-based implementations across industries?
Digital transactions are, by and large, anonymous. True, credentials of one user or a group of users could be compromised by Third Party players. However, successful and effective implementations of online transactions, particularly financial ones, depend primarily on highly anonymized processes. To do so, secured and safe methods are required. Trust is, put differently, should be established in order for one or more communities to grow. In earlier implementations, encrypted protocols have been used in order to ensure digital transactions are performed according to well defined and established credentials. Predominantly, most “entrusted” digital transactions have been performed within specific organizational and/or protocol-specific standards. BCT is, in contrast, a promising innovation which, above anything else, universalizes trust beyond conventional organizational or protocol-specific standards. The significance of BCT cannot, accordingly, be overemphasized. Then again, significance of BCT, current or potential, is far more reaching and extends well beyond immediate trust mechanisms required for digital authentication purposes.
Trust Economy (in capitals) is another, emerging concept to watch. Piscini, Hyman and Henry point out, for example, to an emerging (global) culture of (digital) trust. Traditionally, conventional, established financial institutions (“Too Big To Fail”) have been used to establish trust between different financial transactors using a broad range of industry and regulatory methods including, most notably, banking systems, credit rating agencies and legal instruments. These methods, argue Piscini, Hyman and Henry, are shown to be not only expensive but also increasingly ineffective. (This is not to mention, in author’s opinion, missed business opportunities unaccounted for because of structural arrangements based on which current financial system is based.) The BCT innovation offers, in contrast, an unprecedented opportunity not only to (re)established trust by different means but also, more importantly, to cater to broader changes now undergoing in economy and beyond.
At a macro level, advanced economies, particularly in North America and Europe, are witnessing a major shift in economic orientation from a manufacturing-based to a knowledge-based economy. In contrast to conventional supply-and-demand economics, current (and future) economic activities are performed and are projected to continue to be performed based on information assets as opposed to goods, manufactured or not, as exchangeable for monetary and/or credit values. The undergoing shifts into knowledge-based economic activities can be evidenced in a broad range of emerging business models including, most notably, peer-to-peer (P2P) services (e.g. ride-hailing Uber and Lyft and accommodation-sharing Airbnb), cloud-based services (e.g. Software-as-a-Service or SaaS) and on-demand services (e.g. Netflix). This growing (global) community of service providers and recipients has further deepened earlier patterns of digital exchanges, including most notably in financial and gaming areas. The growing scope of and intensity in digital exchanges has, moreover, created a need for a more universally trusted and quick method in order to perform different digital exchanges more urgent. This has resulted in a gradual emergence of different forms of VM.
At a micro level, independent developers – led in 2008 by still-mysterious pseudo-named Satoshi Nakamoto, Bitcoin founder – have attempted to refine different BCT innovations with an ultimate aim of establishing a universal, community-based system trust system. Informed by broader economic (as well as social and cultural) shifts, BCT innovation can, accordingly, be understood as a response to actual and potential challenges in current (still largely corporate-controlled) exchange systems performed on- or offline.
Thus, current research project represents an attempt to understand, at an initial level, how current gap between community- and for-profit-based stakeholders can be narrowed down in order to address broader challenges of digital exchanges, at a next level of analysis.
- Literature Review
BCT is a characteristically unifying innovation. If anything, while earlier protocol standardization efforts have faced a similar challenge of authentication, particularly for credential establishment, BCT offers unlimited new potentials to build consensus not only within one or more specific architectural designs but, most interestingly, at an Internet level. Interestingly still, BCT also “stitches” incongruous applications into unprecedented, universal (or, hopefully so, in near future) platform. More specifically, while architecture design pre- requires, by definition, specific ecosystem for operation, BCT helps reconcile different architectural considerations including, for example, in areas of security, privacy, scalability and sustainability (Xu, Pautasso and Zhu). This architectural connectivity, so to speak, does not only offer a viable design alterative to more conventional solutions of data-storage sharing features, for example, but also sources design concepts and features from far more open contributors who collaborate on a P2P basis in a universal community. Thus, in reconciling architecture design efforts in open and community-based form, BCT helps meet growing demands for more open and constantly customizable design features which cater for rapidly changing individual and enterprise requirements. Then again, architecture design represents only one area of interest in current research project. For current purposes, consensus-building is, above anything else, of central interest since, as shown by Popper, consensus-building in a BCT ecosystem is one which is not limited to technical aspects but extends far beyond into organizational and legal areas.
The question of consensus-building has received much attention in BCT literature. Notably, blockchain security is one area which has been examined in BCT literature, particularly in securing financial transactions. For example, Watanabe, Fujimura and Nakadaira propose a new mechanism by which a blockchain could be secured for more secure contracts management including for digital rights management. The mechanism establishes, more specifically, a credibility score system by which a hybrid blockchain is created with an ultimate aim of pre-empting attempts by attackers to monopolize resources. This mechanism, i.e. credibility score system, amounts to a reputation management feature which is now adopted broadly in most, if not all, P2P, sharing economy services. Moreover, while a credibility system offers an additional security layer to existing timestamps, credibility remains short of appealing to broader user base required for a proposed OAPN. If anything, each approach to BCT is at extremes. More specifically, while a credibility system emphasizes security, an OAPN framework emphasizes access. Put differently, if a credibility system aims, ultimately, to ensure all transactions, particularly financial ones, are secure for all participants, an OAPN establishes a universal access platform by which security – and, for that matter, credentials – are not predetermined. The question of access, as opposed to security, is one most pressing one in current development phase of BCT. As is discussed in further detail under “Comparative Studies” subsection, automation might represent one initial, promising step into a broader access (and hence openness) of current BCT implementations.
The question of secure and universal BCT implementation is not, of course, new and has been covered extensively both in academic and practical literature. Sankar, Sindhu and Sethumadhavan offer, for example, of broad survey of consensus protocols on blockchain applications. Two protocols are of particular interest for current purposes: Hyperledger and Stellar Consensus Protocol (SCP).
The Hyperledger protocol is an open-source project by Linux Foundation implementing practical byzantine fault tolerance (BFT) concept and is, interestingly, a platform via which different consensus protocols and blockchain applications can be deployed in a plug and play manner (Sankar, Sindhu and Sethumadhavan). The Hyperledger protocol is, indeed, a promising platform and offers innovative solutions not only to consensus-building but also to architectural design challenges including in security. However, current Hyperledger protocol is controlled by a Linux project which is controlled, ultimately, by established, conventional financial institutions (Marvin) and is one reason why a recent division has emerged between for-profit- and community-oriented camps (Popper) with each camp attempting to establish his view of BCT. Therefore, much like similar BCT implementations, Linux’s Hyperledger remains well embedded in organizational structures – and, for that matter, regulatory and legal barriers by which major participants are bound by – which has lead, and more likely to lead, recent divisions instead of consensus.
The Stellar Consensus Protocol (SCP) offers, however, a more promising protocol offering. Consistent to an access-oriented approach, SCP, based on federation of quorum slices, enables individual users to build, piecemeal, a system-level consensus leading up, ultimately, to an Internet-level consensus (Mazi `Eres). Moreover, SCP offers a unique feature, unlike earlier BFT. Notably, SCP is not only independent of pre-determined assumptions about behavior of hackers / attackers but also does not presuppose a unanimously accepted membership list, a feature which enables and promotes organic growth. This is not to mention far fewer computing and financial requirements. These features, in sum, enables more open access compared to most current BCT implementations, particularly R3 protocol which is adopted by major, established enterprise-oriented solution providers including IBM. Indeed, SCP offers viable solutions which, by further enhancements, should not only enable more access and security but also makes decentralization an actual, working practice instead of current patterns which are, in fact, are more likely to replace conventional, centralized forms of regulation (particularly in financial service area) by more elusive forms of power and influence exercised by new centers of control. Indeed, a major vulnerability in current BCT implementations is not technical one per se but a regulatory one which centers on how access to community members should be P2P granted, on an organic manner, in order to ensure universality at least cost and highest speed. The promise of SCP centers on, accordingly, on accessibility and security features enabled at minimal computing and financial requirements and, most interestingly, with no pre-determined presuppositions and/or rationalizations of possible hackers / attackers and/or general user lists.
The subsequent sections highlight in more detail how, by building on current capabilities of SCP, an OAPN architecture design could be developed in order to balance out emerging for-profit- and community-oriented needs and requirements.
This section is made up of two subsections: (1) Comparative Studies and (2) Implementation. The “Comparative Studies” subsection offers a detailed account of proposed architecture design based on past and current propositions. The “Implementation” subsection offers a more detailed account on how proposed OAPN should be implemented, including discussions of project profile, approach and important milestones.
3.1. Comparative Studies
Given current literature on BCT and practical impregnations across different distribution systems, a number of approaches emerge which, albeit insightful, but lack proper features which enable a more accessible BCT implementation at an Internet level. Two main approaches are, for current purposes, of particular interest: automation and recovery.
For automation, one does not need to re-emphasize how current BCT implementations are “chained” into consensus-based (and slow) networks. This feature is, according to opponents, has made expansion of current user base mandatory, if only based on processing rationales. Frantz and Nowostawski offer, for example, one interesting mechanism by which smart contracts could be automated, or semi-automated, in order to enable wider access for a broader audience. More specifically, Frantz and Nowostawski propose an automated model by which smart contract components including, for example, real world institutions, are extracted using a domain-specific language. This approach has major benefits for a proposed OAPN. First, by automating contract process, sizeable volumes of smart contracts could be processed much faster. Second, automation does not only enhance processing capabilities, particularly for iterative processes, but also expands access in new ways. For example, in lieu of current human-based processing methods, an automated smart contract system is apt to increase business and market opportunities for financial institutions by, possibly, switching, partially or completely, to BCT-based platforms in lieu of current automated financial systems, expensive and, ironically, slow as are. Third, automation of smart contract processing economizes on resources, including time, required for users, individual or corporate, in order to authenticate (in)validity of a transaction. Then again, although automation enables faster processing, users – adapted to automated processes – are apt to let down security alertness, a syndrome, so to speak, which develops and deepens when a broad range of activities including, most notably, access is performed automatically. (Consider, for example, captchas. One benefit of captchas-enabled platforms and devices is, in addition to authentication / verification, enhanced security alertness of users, particularly when a certain devices or platform is accessed from an unconventional terminal or geographical location.) The proposed OAPN aims, or hopes, to avoid potential security vulnerabilities emerging from network-wide automation of services. Moreover, while automated smart contracts proposed by Frantz and Nowostawski are designed for a limited purpose, i.e. processing financial dealings, current proposed OAPN is designed to include, at least in an initial phase (since a separate platform would be created in order to include further design components required for different purposes), stock trading. The choice of stock trading purpose is justified be several reasons.
First, stock trading offers one ideal financial service area in which authentication is required in more automated manner but also in real-time. If anything, part of why high-volume data platforms and processes, covered under Big Data umbrella, assume increasing importance in recent years is attributed not only to volume but more importantly how reliable a system / platform is to process data in real time. Needless to say, data-processing in real time is not a novelty, particularly in stock business. The innovation in a BCT-based implementation resides, however, in how, by universalizing protocols, users / traders could perform different stock trading activities in unprecedented, decentralized manner. The proposed OAPN aims, or hopes, to enact an architecture which enables users to trade stocks in real time based on a BCT implementation informed by automation proposition of Frantz and Nowostawski.
Second, stock trading is characterized by high-volume data processing. This feature has, again, been available for a while for at least two decades now. However, current, conventional stock-trading platforms (e.g. TD Ameritrade) remain fundamentally rooted in organizational and regulatory barriers which BCT has emerged to overcome. Moreover, while stock-trading platforms – whether provided by established financial institutions or by independent, financial service startups – are controlled by intermediaries and include lags for “Trail” offerings, a proposed OAPN platform is not.
Thus, by combining automation and high-volume data processing features, current proposed OAPN is apt to overcome organizational / regulatory barriers in current BCT implementations.
Further, recovery remains one main area of interest in so far as data-processing using BCT is concerned. Indeed, while data recovery is a well covered area in distributed systems, how recovered data is archived using BCT remains, largely, a green field. More specifically, data recovery and archiving methods using BCT remain a new area subject to extreme experimentation and innovation. Watanabe, Fujimura and Nakadaira offer, for example, a new protocol by which (smart) contracts by which confirmation for a contractor’s consent is both obtained and archived. The proposed protocol remains, however, limited to architectural designs, let alone organizational and regulatory frameworks, in which all current BCT implementations are performed. True, current, proposed OAPN does not promise to overcome organizational and regulatory barriers, so far unresolved for reasons beyond scope of current research project. However, what OAPN promises to offer is much more modest. By combining automation and real-time design features using SCP, OAPN aims, or hopes, to provide a new architectural design by which stock traders exchange virtual assets (rated and recorded in above mentioned separate platform) for more open financial service management P2P system.
The proposed OAPN also aims, or hopes, to provide a fodder for thought for possible extensions of current research project to include stock trading activity beyond current adopted domain. This should ensure that OAPN is a genuinely universal platform which is not only community managed but, probably more importantly, embedded in globalized (block)chains of trust.
This subsection covers specific details of project profile, general approach and a proposed work frame.
Generally, current research project aims, or hopes, to offer a specific solution to one specific challenge in current BCT implementations: To develop an automated platform using SCP in order to manage financial services in more open way. This research project aims, more specifically, to develop a stock-trading platform to exchange virtual assets (rated and recorded as specified in next section). The initial phase of current research hopes, moreover, to be an initial part followed by subsequent phases including more feature enhancements informed by actual usability patterns. This project involves, however, at least two major limitations.
First, stock-trading represents only one financial activity of much more activities performed by “professional” and “non-professional” actors. The viability of stock trading resides, accordingly, in real-time and high-volume features to be examined by actual launch of proposed OAPN.
Second, stock trading activities are performed within a limited peer pool. That is, while OAPN’s most ambitious aim is to be a universal platform, resource limitations and a limited pool of volunteer peers might influence how gains and losses are valued and, more importantly, are representative of broader stock trading activities in more open trading platforms.
Based on current research scope and objectives, a domain-specific programming language most suits current interests. One possible suggestion is SQL. Needless to say, SQL, an open source and highly customizable language, fits in well with both immediate architectural design features and broader research objectives. From an architectural design perspective, SQL offers high flexibility in development of specific content management features for an activity, i.e. stock trading, characterized by constant dynamism. More broadly, SQL – and, for that matter, domain-specific languages in general – are best suited for specific implementations / projects of specific, pre-determined deliverables.
Two main resource categories are planned for use in current research project: (1) physical and (2) virtual. The physical resources include computers and desktop space, collaboration room (possibly, a quite area in university’s library). The virtual component includes, but is not limited to, open source BCT protocols (primarily SCP), different operating systems and a separate platform to document and record transactions performed on proposed OAPN.
This includes an in-depth description of proposed research project. Proposal Tile: Blockchain Technology: Open Access for Private Networks. Included Sections and Sub-Sections: 1. Introduction: 1.1. Topic Area. 1.2. Research Question. 1.3. Significance.2. Literature Review. 3. Methodology: 3.1. Comparative Studies. 3.2. Implementation: 3.2.1. Project. 3.2.2. Approach. 3.2.3. Timeline
Stock Trading Platform: Beta
This is an initial, experimental launch of proposed OAPN platform.
Stock Trading Platform: Operational
This is a “live” edition of proposed OAPN platform in which actual exchanges are performed.
This is a second reporting phase in project lifecycle. The findings and comments are documented in OAPN Document.
This is final delivery phase. This phase includes deliverables of: (1) Research Proposal and (2) OAPN Implementation.