Essentials of Blockchain Technology

At present blockchain is, perhaps, one of the most promising technologies, and it
possesses a very high potential to change today’s business models. It is essentially
a distributed database of records, or a public ledger of all transactions (or digital events)
that have been executed and shared among participating parties. Each transaction in the
public ledger is verified by the consensus of a majority of the participants’ computing
power in the entire system. Therefore, blockchain has the potential to significantly
change the way financial institutions, for example, operate today. As an early evidence
note that Bitcoin is one of the most commonly used applications based on blockchain
technology. Also, due to the attractive characteristic of decentralization, persistency,
anonymity, and auditability, it has further far-reaching implications in a wide range of
industries, sectors, and application areas, such as Internet of Things (IoT), medical
health, and smart contracts, respectively. As a result, blockchain technology has received
considerable attention in both the academic and the industrial communities.
The current book, Essentials of Blockchain Technology, covers the significant technical
aspects and applications of blockchain technology. As such, it gives real value for
individuals or organizations that attempt to understand the foundations and practical
applications in the field. The field, in turn, includes the areas of fundamental study,
practical applications, and other related areas on issues such as regulatory approaches.
Specifically, the fundamental study mainly consists of distributed consensus mechanisms,
validation services for permissioned blockchain, and privacy in blockchain; the
practical applications covers, among other areas, the areas of IoT, global health, car
registration, electronic voting machine.
In the field of fundamental study, this book includes a survey of distributed
consensus, which is at the heart of the blockchain-based systems. Distributed consensus
protocols glue individual computers together to provide a reliable service to the outside
world. According to the failure model, there are two types of distributed consensus, failstop-
tolerant consensus, and Byzantine-fault-tolerant consensus. Paxos and Raft, two
fail-stop-tolerant consensus protocols, are suitable for fail-stop systems in which the
nodes either work correctly or stop working. Practical Byzantine fault tolerance (PBFT)
and Nakamoto Consensus, two Byzantine-fault-tolerant consensus systems, are suitable
for Byzantine-fault system in which faulty nodes may even send malicious messages.
Since the Blockchain-based system should be Byzantine-fault-tolerant since motivation
of participants are unknown, the PBFT and Nakamoto protocols are highlighted in this
Blockchain is a decentralized, shared and public digital ledger that is used to record
transactions across many computers so that any involved record cannot be altered
retroactively without the alteration of all subsequent blocks. It provides us a new
system to record a public history of transactions without relying on any centralized
trusted party. The property of decentralization, openness, permissionless and
tamper-resistant has attracted considerable interest in both academic and industrial
communities.
As a promising technology to achieve decentralized consensus, blockchain is not only
limited in cryptocurrency but also critical to enterprises and creates extraordinary
opportunities for Digital Health, Supply Chain, Energy, IoT, Fintech, etc. Although
blockchain can maintain a secure public ledger by all participants through the distributed
network, how to apply in different industrial sectors flexibly is still a big challenge.
The current book, Essentials of Blockchain Technology, comes at the right time with the
right purpose and contains the following research ideas:
The chapter “Distributed Consensus and Fault Tolerance Mechanisms” discusses
consensus problems and consensus protocols in distributed systems, fault-tolerant
mechanisms in blockchain-based systems and tradeoff between consensus and performance.
Moreover, the related research on scalable consensus protocols for blockchainbased
systems is discussed.
The chapter “Validation Services for Permissioned Blockchains” discusses the needs,
methods, and implications of validating transactions before record on a permissioned
blockchain. It also compares permissioned and permissionless blockchains and discusses
why permissioned blockchains need validation services. Finally, implications for
accounting, auditing, and technology services are discussed.
The chapter “From Byzantine Consensus to Blockchains” introduces state-of-the-art
in the area of Byzantine consensus and its application in blockchains, from classical
algorithms to those used in blockchains and those that combine both approaches.
The chapter “Application of Blockchain and Smart Contract: Approaches and Challenges”
performs an in-depth survey of some recent examples and applications of Blockchain
and smart contracts. Moreover, the applications of Blockchain for Vehicular Ad-hoc
Network (VANET) and some current applications of blockchain in the cloud and education
area are also elaborated.