Fluent Essays

The vast majority of the population associates Blockchain with cryptocurrency Bitcoin; however, there are many other uses of blockchain; such as Litecoin, Ether, and other currencies. In this discussion, please describe at least two cryptocurrencies with applicable examples. Discuss some similarities and differences. Lastly, discuss if you have any experience using any cryptocurrencies.Please make your initial post and two response posts substantive. A substantive post will do at least TWO of the following:Ask an interesting, thoughtful question pertaining to the topicAnswer a question (in detail) posted by another student or the instructorProvide extensive additional information on the topicExplain, define, or analyze the topic in detailShare an applicable personal experienceProvide an outside source (for example, an article from the UC Library) that applies to the topic, along with additional information about the topic or the source (please cite properly in APA)Make an argument concerning the topic.At least one scholarly source should be used in the initial discussion thread. Be sure to use information from your readings and other sources from the UC Library. Use proper citations and references in your post.Please follow the readingsStoyanovich, M., & Tanz, F. E. (2019). Coming to Grips with Blockchain. Benefits Magazine, 56(5), 20-25. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=shib&db=f5h&AN=135900272&site=eds-liveWaldo, J. (2019). A Hitchhiker’s Guide to the Blockchain Universe. Communications of the ACM, 62(3), 38–42. Retrieved from https://doi.org/10.1145/3303868Burns, S. (2019). Blockchain: Hype Vs Reality. Computer Weekly, 21-24. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=shib&db=f5h&AN=138564674&site=eds-live blockchain_hype_vs_reality.pdf blockchain_presentation.ppt blockchain.pdf coming_to_grips_with_blockchain.pdf Unformatted Attachment Preview BUYER’S GUIDE TO BLOCKCHAIN TECHNOLOGY | PART 1 OF 3 I Blockchain: ndustry experts believe blockchain is a technology that has the potential to affect the business of most IT professionals in the next five years. Analyst Gartner has forecast that by 2023, blockchain will support the global movement and tracking of $2tn of goods and services. It is regarded by many industry watchers as a disrupting force in the financial world. A PwC global financial technology (fintech) survey found that 56\% of respondents recognise the importance of blockchain. At the same time, however, 57\% admit to being unsure about or unlikely to respond to this trend. hype vs reality Regarded by many as a disruptive force in finance and beyond, blockchain technology presents a number of complex challenges that must be overcome before it can truly deliver on its promises. Stuart Burns reports IURIIMOTOV/ADOBE HOME Start with the hash Blockchain is effectively a shared ledger between a group of people – for example, a group of companies that work together to produce a service or product. What makes blockchain different is the fact that the history of the changes – past transactions, for example – are immutable. Essentially, the historical entries become read-only and unchangeable. This is due to the fact that each blockchain entry relies on the hash – a computed value including part of a previous block as part of its hashing calculation for the current block. This means that if a previous block is somehow modified or corrupted, its hash value will change and therefore the values after that point become broken, making the tampering evident for all to see. One example where blockchain technology can be used is where several companies come together to provide or consume computerweekly.com 10-16 September 2019 21 BUYER’S GUIDE Home News HMRC under fire over ‘scaremongering’ IR35 letters targeting GSK contractors Ransomware has evolved into a serious enterprise threat How Defra has been preparing its IT systems for any Brexit eventuality Editor’s comment Buyer’s guide to blockchain Chasing down hackers through security analytics How councils are using technology to support adult social care Downtime services, usually under long-term contracts. It can be complex the inefficiencies of traditional international trade and brought and cumbersome to manage contracts involving several individucompletion timescales down from weeks to a few hours. It is als, when multiple documents are involved and everyone needs not hard to see how the use of blockchain could be extended to to agree on the same contract versions and details. Over time, include many different types of information, eventually encomchanges will occur that also need to be managed and agreed on. passing the general public. Managing contracts in blockchain, however, means that rather For instance, an article by McKinsey estimates that using blockthan physical bits of paper being passed around, it becomes possichain to sign up new retail banking customers has the potential to ble to mathematically guarantee the create up to $1bn of savings in opercontract documents are as intended ating costs globally and reduce regdistributed ledger requires and the appropriate (digital) signulatory fines by between $2bn and off is a part of the chain. That chain $3bn. “In addition, we expect blockthe recording and replicating can be verified by any of the parties chain solutions to reduce annual as required. This is a key part of the losses from fraud by $7bn to $9bn,” of data in a secure manner his whole blockchain concept. McKinsey stated. A .T An early trial is a complex mechanism with significant computational load. Management challenges In 2016, Barclays and Wave comHowever, setting up and managing pleted what they described as a blockchain is a complex process s such blockchain has rather “world first” by using blockchain that requires skilled design. As large scalability issues technology to handle the docuGartner notes, a distributed ledger mentation to approve a fund transrequires the recording and replicataction, which was made through the Society for Worldwide ing of data in a secure manner. This is a complex mechanism Interbank Financial Telecommunication (Swift). The letter of with significant computational load (called mining). As such, credit transaction between Ornua (formerly the Irish Dairy blockchain has rather large scalability issues. Verification of Board) and Seychelles Trading Company used distributed ledger blocks can take several minutes, which makes blockchain inaptechnology via the Wave platform to enable all parties involved propriate for real-time transactions. to see the documents they needed and transmit them where Each blockchain consumer may need to verify an entire transrequired on a decentralised network. This removed some of action history, which is very inefficient and requires a high A , computerweekly.com 10-16 September 2019 22 BUYER’S GUIDE Home News HMRC under fire over ‘scaremongering’ IR35 letters targeting GSK contractors Ransomware has evolved into a serious enterprise threat computational workload. New platforms are being developed that explore alternative approaches to verifying the integrity of blockchain transactions. These include massively diverse public ledgers for verifying historic transactions. Other ideas include having a random pool of machines that validate the blockchain and publicly announce the results of the validation, saving everyone repeating the same compute-intensive functions. The very nature of these random machines and frequency with which they are rotated means that discovering and trying to attack verification hosts should be extremely difficult. All current blockchain systems have some limitations in terms of scaling. So, such techniques may not scale to the level needed for blockchain to be a viable replacement to existing payment processing networks. However, there is now growing interest in new distributed processor workload platforms, such as Golam, and the use of hardware-based acceleration, application-specific IURIIMOTOV/ADOBE How Defra has been preparing its IT systems for any Brexit eventuality Editor’s comment Buyer’s guide to blockchain Chasing down hackers through security analytics How councils are using technology to support adult social care All current blockchain Downtime systems have some limitations in terms of scaling computerweekly.com 10-16 September 2019 23 BUYER’S GUIDE Home News HMRC under fire over ‘scaremongering’ IR35 letters targeting GSK contractors Ransomware has evolved into a serious enterprise threat How Defra has been preparing its IT systems for any Brexit eventuality Editor’s comment Buyer’s guide to blockchain Chasing down hackers through security analytics How councils are using technology to support adult social care Downtime integrated circuits (Asics) and graphics processing units (GPUs), all of which aim to accelerate processing for blockchain. Another area of concern is the privacy of financial transactions. According to PwC, the business benefits for many players, or even the industry, will not materialise if the “trust issue” is not Beyond business contracts addressed effectively. For PwC, the hurdles that lie ahead include There are many uses for blockchain technology in finance and understanding whether or not the public ledger can be hacked. beyond, but currently most of these technologies, with the From a privacy perspective, if several different organisations exception of cryptocurrencies, are aimed squarely at the busiare involved in a transaction that uses blockchain, not all group ness to business market (B2B). members should have access to For blockchain to move beyond the data held within the blockchain. small-scale trials and experimentaHowever, they still need to verify the he business benefits tion, the whole software and hardblockchain’s integrity. Such secrecy of blockchain will not ware infrastructure stack needs to flies in the face of the classic blockscale to support larger and larger chain ethos. materialise if the trust issue volumes of transactions. Any transactions that go through In 2018, a KPMG paper looking Bitcoin or other cryptocurrencies is not addressed effectively at uses for blockchain described are recorded as part of the blockthe challenges of integrating chain process. Information such as urdles include understanding blockchain into existing, legacy wallet transactions, IP address and whether or not the public processes. The paper warned that other details are collected. Being organisations need to be aware able to trace all wallet transactions ledger can be hacked that their legacy systems may not could allow any interested parties be designed to interact with blockto infer not only spending patterns, chain systems or capitalise on the advantages they offer. but also socio-economic status and similar. It may not give away “Comprehensive examination of interoperability and integraexactly what is being purchased, but this information can help tion is essential,” the KPMG paper stated. “Given the immutabuild an overall picture of someone’s online spending habits. bility of transactions, it is essential that the proper mechanisms Today, it is very much an exploration of what is possible. As with are in place to prevent incorrect data from being written onto any technology, over time blockchain will become more refined and the blockchain.” mature, and no doubt privacy capable and expandable as needed. n T H . computerweekly.com 10-16 September 2019 24 Copyright of Computer Weekly is the property of TechTarget, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holders express written permission. However, users may print, download, or email articles for individual use. Impact of Blockchain on IT Audit Agenda ➢ Blockchain Technology Overview ➢ Three Levels of Blockchain, Tokens ➢ Alliances and Industry Adoption ➢ Smart Contracts ➢ Identity Management ➢ Criticism and Challenges ➢ Impact on the IT Audit Function ➢ Learning and Engagement Blockchain Overview Blockchain technology is a digital innovation that is poised to significantly alter financial markets within the next few years, within a cryptographic ecosystem that has the potential to also significantly impact trusted computing activities and therefore cybersecurity concerns as a whole. Student Exposure How many of you: • Have heard of bitcoins? • Own cryptocurrency? • Feel you understand the underlying blockchain technology? • Feel you can summarize for us the benefits of the “trust economy”? • Are involved in projects that involve blockchain technology implementation or related activities? Where It All Started Blockchain technology was first introduced in a whitepaper entitled: “Bitcoin: A Peer-to-Peer Electronic Cash System,” by Satoshi Nakamoto in 2008. • No reliance on trust • Digital signatures • Peer-to-peer network • Proof-of-work • Public history of transactions • Honest, independent nodes control majority of CPU computing power • Nodes vote with CPU computing power • Rules and incentives enforced through consensus mechanism https://bitcoin.org/bitcoin.pdf Cryptocurrency Summarized • Bitcoin was the first digital, i.e., cryptocurrency • A maximum of 21 million Bitcoins can be generated • Just as with real world mining, energy must be invested to solve complex mathematical problems by which systems earn Bitcoins • https://www.cryptocoincharts.info/coins/info claims to be indexing 4,220 cryptocurrencies • Most circulated: Bitcoin, Ethereum, Litecoin The Technology Behind Bitcoin • Think of Bitcoin as an electronic asset (as well as a digital currency) • A network of computers keeps track of Bitcoin payments, and adds them to an ever-growing list of all the Bitcoin payments that have been made, called “The Bitcoin Blockchain” • The file that contains data about all the Bitcoin transactions is often called a “ledger” • Bitcoin value is created through transaction processing, referred to as “mining,” which is performed by distributed processors called “nodes” of the peer-to-peer network A Gentle Introduction to Bitcoin by Antony Lewis, https://bravenewcoin.com/assets/Reference-Papers/AGentle-Introduction/A-Gentle-Introduction-To-Bitcoin-WEB.pdf Mining Evolution • Mining is the process whereby value is created through transaction processing that occurs on nodes of the network. • In 2009, one could mine 200 Bitcoins with a personal, home computer. In 2015, it would take about 98 years to mine just 1 Bitcoin. • Today there is almost no money to be made through traditional home mining. • ASIC (Application Specific Integrated Circuit) has been designed strictly for mining Bitcoins. • Groups of miners have formed mining pools, with each being paid their relative share for their contribution to the work performed. My Dirty Little Bitcoin Secrets by Ofir Beigel, www.99bitcoins.com Three “Levels” of Blockchain 1. Storage for digital records 2. Exchanging digital assets (called tokens) 3. Executing smart contracts - Ground rules – Terms & conditions recorded in code - Distributed network executes contract & monitors compliance - Outcomes are automatically validated without third party Tech Trends 2017, The Kenetic Enterprise, “Blockchain: Trust economy”, Deloitte University Press, 2017 A General Discussion about Tokens • A broader use is supported by the digital infrastructure introduced through Bitcoin, as represented by “tokens”. • A “token” can be defined as a “scarce digital asset based on underlying technology inspired by Bitcoin.” • Tokens may use similar codebases but different blockchain databases. • Ethereum was Bitcoin-inspired but has its own blockchain and is engineered to be more programmable. Tokens can be issued on top of the Ethereum blockchain. • Token buyers are buying private keys, which are similar to API keys, but can be transferred to other parties without consent. “Thoughts on Tokens”, Balaji S. Srinivasan and Naval Ravikant Tokens, continued • Tokens have a value and therefore a price. • Tokens are a new model for technology and can be an alternative to equity-based financing. • Tokens do not dilute capital. They introduce a huge increase to buyer base and time-to-liquidity. • Token launches differ from equity sales; however, they can be issued as a way to share profits. • Tokens can be sold internationally over the internet and are always open for business. • Tokens decentralize the process of funding technology. Thoughts on Tokens, Balaji S. Srinivasan and Naval Ravikant Tokens, continued • Tokens enable a better-than-free new business model. • Tokens will introduce the rise of the “tech savvy senior executive.” • Tokens accommodate immediate custody without an intermediary. • Tokens can be extended to hardware, as part of the internet of things. Thoughts on Tokens, Balaji S. Srinivasan and Naval Ravikant Smart Contracts Current paper-based systems drive $18 trillion in transactions per year. Consensus protocols are key to determining the sequence of actions resulting from the contract’s code. This enables peer-to-peer trading of everything from renewable energy to automated hotel room bookings. “Contracts Get Smarter with Blockchain”, CIO Journal, The Wall Street Journal, World Trade Organization, International Trade Statistics 2015, 2015, p. 41. Hyperledger • Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation, including leaders in finance, banking, IoT, supply chain, manufacturing, and technology. • Business Blockchain Frameworks are hosted with Hyperledger. • Hyperledger addresses important features for a cross-industry open standard for distributed ledgers. The Linux Foundation hosts Hyperledger as a Collaborative Project under the foundation. • To learn more, visit: https://www.hyperledger.org/. www.hyperledger.org Hyperledger Projects A few of the Hyperledger Projects include: • Hyperledger Burrow – Permissible smart contract machine with a modular blockchain client, built in part to the specification of the Ethereum Virtual Machine (EVM) • Hyperledger Fabric – Foundation for developing plug-n-play solutions within a modular architecture • Hyperledger Iroha – Simple and easy blockchain framework designed to be incorporated into infrastructure projects requiring distributed ledger technology • Hyperledger Sawtooth – A modular platform for building, deploying, and running distributed ledgers Ethereum Alliance Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third party interference. The Ethereum project was bootstrapped via an ether pre-sale during August 2014 by fans all around the world. It is developed by the Ethereum Foundation, a Swiss nonprofit, with contributions from individuals and organizations across the globe. www.ethereum.org Ethereum Tools Several Ethereum offerings include: • The Ethereum Wallet, which is a gateway to decentralized applications on the Ethereum blockchain, allowing users to hold and secure ether and other crypto-assets built on Ethereum, as well as write, deploy and use smart contracts • Design and issue your own cryptocurrency/traceable token • Kickstart a project with Crowdsale www.ethereum.org What is Ether? • Ether is the crypto-fuel for the Ethereum network. • Ether is a necessary element – a fuel – for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations, functioning as the incentive that ensures that developers will write quality applications, and that the network remains healthy. • The total supply of ether and its rate of issuance was decided by the donations gathered on the 2014 presale. • Developers who intend to build apps that will use the Ethereum blockchain need ether. • Users who want to access and interact with smart contracts on the Ethereum blockchain also need ether. www.ethereum.org Cross-Industry Adoption Sectors leading the way in blockchain implementation: • • • • • • • Consumer products Manufacturing Technology Media Telecommunications Health care Life sciences Thirty-nine percent of the senior executives at large U.S. companies initially surveyed indicate they have little or no knowledge about blockchain technology. Many deemed it to be crucial for their companies and industries. Forty-two percent believe it will disrupt their industries. “Blockchain Adoption Varies by Industry”, CIO Journal, The Wall Street Journal Financial Services Industry • As noted by A. Michael Smith in “Creating Assurance in Blockchain,” trust and efficiency are the main value drivers for any use case. The finance world is driven by technology. • Tracking risk and monitoring compliance with laws and regulations within an increasingly complex cybersecurity environment requires considerable time and resources. • The financial services industry immediately saw opportunities in blockchain and has been investing heavily in its usage, primarily as a part of private implementations. Creating Assurance in Blockchain, Volume 2, 2017, by A. Michael Smith Banking on change: How to respond to new expectations for audit committees by PWC Internal Audit Foundation, Douglas Anderson, CIA, CRMA, Cassian Joe, and Klaas J. Westerling Identity Management The IT audit is br ... 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