The Emerald Handbook of Blockchain for Business

Cover
The Emerald Handbook of Blockchain for Business
Series Page
The Emerald Handbook of Blockchain for Business
Copyright
Table of Contents
List of Figures
List of Tables
Acknowledgments
About the Editors
About the Contributors
List of Contributors and Institutions
I. Blockchain: History and Background
1. Blockchain: An Overview
Abstract
Introduction
About This Book
Purpose
Distinguishing Features
Intended Audience
Structure of the Book
Part I – Blockchain: History and Background
Chapter 2 – History of Distributed Ledgers and Blockchain (Joey Ryan and Sean Stein Smith)
Chapter 3 – Review of Blockchain and Emerging Applications (Timothy Grief and Ehsan Nikbakht)
Chapter 4 – Technical Aspects of Blockchain (Hak J. Kim)
Part II – Types of Blockchain
Chapter 5 – Public Blockchains and Applications (Hugo Benedetti)
Chapter 6 – Private and Hybrid Blockchains and Applications (Gina Pieters and Sean Stein Smith)
Chapter 7 – Consensus Mechanisms and Related Issues (Deniz Appelbaum)
Chapter 8 – Token Economies (Alim Khamisa)
Chapter 9 – Proposed Modifications to Spur Consumer Adoption of Blockchain (Katherine McKechnie, Alexandra M. Dunn, and Say ...
Part III – The Frontier of Blockchain Technology
Chapter 10 – Blockchain: Speed, Efficiency, Decreased Cost, and Technical Challenges (Amanda Wilke and Sean Stein Smith)
Chapter 11 – The Importance of Interoperability, Decentralization, and Choice (Kirk Phillips)
Chapter 12 – Convergence with Artificial Intelligence and Other Related Concepts (Lian Duan)
Chapter 13 – Risk Management and Transference Issues in Blockchain Technologies (Joseph Brunsman)
Chapter 14 – Legal and Regulatory Issues in the Temporary Regime (J. Scott Colesanti)
Chapter 15 – Regulator Ambiguity and Its Impact on Blockchain (Shehan Chandrasekera)
Part IV – Blockchain Applications in Business
Chapter 16 – Considerations for Blockchain Adoption and Integration (Michael Nizich and Michael Campisi)
Chapter 17 – Blockchain Applications in Finance (Steven Cosares, Kristin Kalish, Thomas Maciura, and Andrew C. Spieler)
Chapter 18 – Blockchain Applications in Healthcare (Alevtina Dubovitskaya)
Chapter 19 – Blockchain Applications in Real Estate (Joshua Harris and Ehsan Nikbakht)
Chapter 20 – Blockchain Applications in Supply Chain (Kaushik Sengupta)
Chapter 21 – Crypto Accounting Valuation, Reporting, and Disclosure (Sean Stein Smith)
Chapter 22 – Auditing and Examining Blockchain Information (John “Jack” Castonguay)
Summary and Conclusions
References
2. History of Blockchain
Introduction
Blockchain Components
Cryptocurrency Terminology
Blockchain and the History of Money
Borderless Money
Blockchain Consensus
Why Blockchain
Blockchains Importance in the Internet Age
Different Models of Blockchain
The Promise of Blockchain
Obstacles to Blockchain Adoption
Interoperability
Cybersecurity
Blockchain Implementation
Summary and Conclusions
Discussion Questions
References
3. Review of Blockchain and Emerging Applications
Introduction
Review of Blockchain and Emerging Applications
Credit Scoring
Managing Water Usage during Climate Change
Managing Food Supply
Sharing Services: Contributing to Smart Cities
Real-time Accounting and Credit-risk Modeling
Blockchain for Sustainable Development
Business Process Improvement
Blockchain and the Healthcare Industry
Fraud Detection Using Blockchain Technology
Predicating Customer Default in E-commerce
Blockchain as a Tool to Break the Poverty Chain
Summary and Conclusions
Discussion Questions
References
4. Technical Aspects of Blockchain
Introduction
Overview of Blockchain
Concepts
Types of Blockchain Networks
Key Properties of Blockchain
Decentralization
Immutability
Architecture of Blockchain Network
Block
Node and Miner
Blockchain Technologies
Cryptographic Hashing
Merkle Hash Tree and Root
Distributed Ledger
Consensus Algorithms
Proof of Work
Proof of Stake
Proof of Elapsed Time
Byzantine Fault Tolerance
Operational Procedure and Technical Challenges
Operational Procedure
Technical Challenges
Summary and Conclusions
Discussion Questions
References
II. Types of Blockchain and Related Issues
5. Public Blockchains and Applications
Introduction
Background on Public Blockchains
Cryptoeconomics and Consensus Protocol
Common Attributes of Public Blockchains
Potential Benefits and Challenges of Public Blockchains
Examples of Public Blockchains
Bitcoin
Ethereum
Zcash
EOSIO
Sia
Summary and Conclusions
Discussion Questions
References
6. Private and Hybrid Blockchains and Applications
Introduction
Defining Blockchain Layers
Private Blockchains
Comparing Private and Public Blockchains
Motivating Hybrid Blockchains
Data Immutability
Data Privacy and Anonymity
Applications
Stablecoins
Central Bank Digital Currencies
Payment System Projects by Monetary Authorities
Private Payment System Issuances: Libra
Transportation Tracking
Identity Verification Projects by Public/Private Partnerships
Key Considerations When Evaluating a Non–Public Blockchain
Summary and Conclusions
Discussion Questions
References
7. Consensus Mechanisms and Related Issues
Introduction
Background of Consensus Mechanisms
Proof of Work
Hashing Explained
Secure Hashing Algorithms
Bitcoin Blockchain and Proof of Work Example Case
Related Issues of Proof of Work Consensus Mechanisms
Power Requirements
Hardware Demand
Centralization of Mining and Mining Pools
Additional Concerns with Proof of Work
Race Attack
Finney Attack
Vector 76 Attack
Alternative History Attack
Majority Attack
Denial of Service Attack
Sybil Attack
Selfish Mining Attack
Proof of Stake
Related Issues of Proof of Stake Consensus Mechanisms
Nothing-at-Stake Attack
Long-range Attack
Precomputing (Grinding) Attack
51% Attack
Sybil Attack
Bribery or Short-range Attack
Liveness/Denial of Service Attack
Other Consensus Mechanisms
Delegated Proof of Stake
Proof of Work/Proof of Stake Hybrid
Programmatic Proof of Work
Proof of Elapsed Time
Proof of Storage
Proof of Retrievability
Proof of Activity
Proof of Burn
Proof of Capacity
Byzantine-Fault Tolerance Method, Practical Byzantine Fault Tolerant, and Delegated Byzantine Fault Tolerant
Summary and Conclusions
Discussion Questions
References
8. Token Economies
Introduction
Web 3.0
Evolution of the Web: From Web 2.0 to Web 3.0
Stateful Web and the Web 3.0 Stack
Token Fundamentals
Token Taxonomy
SoV and MoE Tokens
Utility Tokens
Token Standards
Token Economy Design
Cryptoeconomics
Token Engineering
Summary and Conclusions
Discussion Questions
References
9. Proposed Modifications to Spur Consumer Adoption of Blockchain
Introduction
Government Applications
Functions in Government
Why Blockchain Is an Improvement
Business Applications
Positive Disruptions in Business Practices
Business-to-Business Transactions Made Secure and Simple
Consumer Applications
Effect on Individuals
Summary and Conclusions
Discussion Questions
References
III. The Frontier of Blockchain Technology
10. Blockchain: Speed, Efficiency, Decreased Costs, and Technical Challenges
Introduction
Five Elements of Blockchain
The Promise of Blockchain
Efficiency
Transparency
Traceability
Decreased Costs
Technical Challenges
Speed and Scalability
Lack of Standardization
Interoperability
Regulatory Ambiguity
Summary and Conclusions
Discussion Questions
References
11. The Importance of Interoperability, Decentralization, and Choice
Introduction
The State of Blockchains and Decentralization
Early Internet Lessons
Second Chance
Bitcoin Background Economics and Limitations
De Facto Interoperability
Interoperability Blockchains (Interopchains)
Cosmos
Polkadot
Cross-chains
Chain-split Refresher
Sidechains
The Liquid Sidechain
RSK Sidechain
Token Bridge
The RSK-ETH Bridge
Oracles
Tellor
Chainlink
Wallet Standards
Foundation for Interwallet Operability (FIO)
Other Innovations in Interoperability
Atomic Swaps and Lightning
Summary and Conclusions
Discussion Questions
References
12. Convergence with Artificial Intelligence and Other Related Concepts
Introduction
Basic AI Techniques
System Infrastructure
Data Capture
Data Storage
Data Computing
Data Analytics
Descriptive Analytics
Association Rules
Clustering
Predictive Analytics
Prescriptive Analytics
AI Applications with Database and Extension with Blockchain
AI in Finance
AI in Healthcare
AI in Other Domains and Extension with Blockchain
Summary and Conclusions
Discussion Questions
References
13. Risk Management and Transference Issues in Blockchain Technologies
Introduction
Commercial Crime Insurance Policies
Computer Fraud
Commercial General Liability Policies
Cyber Insurance Policies
Hope for the Future and Other Solutions
Summary and Conclusions
Discussion Questions
References
14. Legal and Regulatory Issues in the Temporary Regime
Introduction
Application of the Securities Laws
Forced Fit to Cryptocurrency and Blockchain
SEC Disciplinary Cases
Class Action Litigation
Timeline of SEC Pronouncements
Other Pending Solutions
Summary and Conclusions
Discussion Questions
References
15. Regulatory Ambiguity and Its Impact on Blockchain
Introduction
Tax Implications of Virtual Currency
General Treatment
Investors
Miners
Payer/Payee
Like Kind Exchange
Charitable Contributions of Virtual Currencies
Airdrops and Forks
Schedule 1: “Virtual Currency” Question
Regulatory Ambiguities
2019 Virtual Currency Guidance May Not Be Binding
Are Frequently Asked Questions Applied Retroactively or as of the Date of Issuance?
Hard Forks and Airdrops
Interpreting Third-party Information Reporting Standards
Foreign Reporting Guidance Is Unclear from the Internal Revenue Service and Financial Crimes Enforcement Network
Staking Reward Taxation
Schedule 1: Virtual Currency Question
Taxation Related to Capital Formation Is Nonexistent
Why Crypto Tax Compliance Is so Low?
Poor to No Information Reporting
Reconciliation Burden
Ideology
Summary and Conclusions
Discussion Questions
References
IV. Blockchain Applications in Business
16. Considerations for Blockchain Adoption and Integration
Introduction
Preparing for Blockchain Implementation
Blockchain Technology Background
Identifying the True Purpose for Implementing Blockchain
Identifying the Real Cost of Implementing Blockchain
Hardware Costs
Software Costs
Data Conversion and Programming Costs
Adapting Internal Procedures and Processes
Attracting and Retaining Qualified People
Selecting a Blockchain Network Model
Evaluating Organizational Capabilities
Technical and Organizational Capability
Personnel Qualifications
Implementation Risks
Total Cost of Ownership
Decision Metrics
Maintaining the Blockchain
Challenges and Considerations to Blockchain Implementation
Technological Challenges
System Throughput Challenges
System Latency Challenges
Data Size and System Bandwidth Challenges
System Scalability Challenges
Data Malleability Challenges
Transaction Authentication Challenges
System Security Challenges
Life Cycle Approach to Implementation
Planning Phase
Systems Analysis and Requirements Phase
Systems Design Phase
Development Phase
Integration and Testing Phase
Implementation Phase
Operation and Maintenance Phase
Summary and Conclusions
Discussion Questions
References
17. Blockchain Applications in Finance
Introduction
Opportunities and Limitations of Blockchains
Shareholder Voting
Electronic and Paper Voting
Depository Trust Company
Share Classes
Complications
Blockchain for Voting
Insurance Applications
Application in Flight Insurance
Application in Risk-pooling
FX Trading
Key Participants
Instruments
FX Operations
Blockchain Applications in FX
Hyperledger
Blockchain in Practice for FX
Blockchain in Real Estate
Blockchain for Listings
Digitizing Identities on the Blockchain for Real Estate
Blockchain for Dividend Payments
Summary and Conclusions
Discussion Questions
References
18. Blockchain Applications in Healthcare
Introduction
Motivation and Advantages of Using Blockchain in Healthcare
Requirements
Applying Blockchain in Different Healthcare Scenarios
Blockchain-based Healthcare Data Management: Technical Aspect
Managing Data On- and Off-chain
Combining Artificial Intelligence and Blockchain for Managing and Monetizing Healthcare Data
Blockchain Adoption
Barriers
Toward Blockchain-based Healthcare Systems
Summary and Conclusions
Discussion Questions
References
19. Blockchain Applications in Real Estate
Introduction
Issues and Challenges
The Case of Parcel Location and Data Management
Chain of Title and Proof of Claim of Real Property Assets
Parties with Interests or Obligations to Real Property Assets
Blockchain-powered Real Property Records
Blockchain Applications for the Main Areas of Real Estate Transactions
Blockchain Applications for Real Estate Finance
Blockchain Applications for Mortgage Originations
Blockchain Applications for Mortgage Servicing
Blockchain Applications for Secondary Market Operations
Blockchain Applications to Real Estate Operations
Blockchain Applications for Property Management and Leasing
Blockchain Applications for Physical Maintenance and Monitoring
Blockchain Applications for Investment Management and Reporting
Summary and Conclusions
Discussion Questions
References
20. Blockchain Applications in Supply Chain
Introduction
Blockchain in the Supply Chain Context
Areas of Benefits and Improvements
Product Safety and Recalls
Global Shipping and Cross-border Logistics
Current and Emerging Adoption and Implementation Issues
Role of Existing Technologies
RFID
ERP Systems
Transaction Automation through Smart Contracts
Trust among Supply Chain Partners
Top Management Support
Summary and Conclusions
Discussion Questions
References
21. Crypto Accounting Valuation, Reporting, and Disclosure
Introduction
Accounting for Crypto Assets
Intangible Classification
Crypto Asset Volatility
Complicating Factors
Valuation of Crypto Assets
Stablecoin Reporting
Stablecoin Considerations
Custody
Wallet Definitions
Governmentally Managed Crypto Assets
Government Crypto Asset Example
Disclosure
Accounting Example
Control Disclosures
Smart Contracts
Summary and Conclusions
Discussion Questions
References
22. Auditing and Examining Blockchain Information
Introduction
External Auditing and Assurance
Auditing Digital Assets on the Blockchain
Valuation
Rights
Internal Controls Over Financial Reporting
Blockchain Governance
Access and Validation Controls
Smart Contract Testing
Limitations and Challenges to Auditors
Summary and Conclusions
Discussion Questions
References
A Glossary of Blockchain Terms
Discussion Questions and Answers (Chapters 2–22)
Index