When deciding whether to utilize a blockchain, one must take into consideration additional factors and determine if these factors limit one’s ability to use a blockchain or a particular type of blockchain: • Data Visibility o Permissioned blockchain networks may or may not reveal blockchain data publicly. The data may only be available to those within the blockchain network. Consider scenarios where data may be governed by policy or regulations (such as Personally Identifiable Information (PII) or General Data Protection Regulation (GDPR) regulations). Data such as this may or may not be appropriate to store even within a permissioned blockchain network. o Permissionless blockchain networks can allow anyone to inspect and contribute to the blockchain. The data is generally public. This leads to several questions that must be considered. Does the data for the application need to be available to everyone? Is there any harm to having public data? • Full transactional history – Some blockchain networks provide a full public history of a digital asset – from creation, to every transaction it is included in. This feature may be beneficial for some solutions, and not beneficial for others.
• Fake Data Input – Since multiple users are contributing to a blockchain, some could submit false data, mimicking data from valid sources (such as sensor data). It is difficult to automate the verification of data that enters a blockchain network. Smart contract implementations may provide additional checks to help validate data where possible. • Tamper evident and tamper resistant data – Many applications follow the “CRUD” (create, read, update, delete) functions for data. With a blockchain, there is only “CR” (create, read). There are methods that can be employed to “deprecate” older data if a newer version is found, but there is no removal process for the original data. By using new transactions to amend and update previous transactions, data can be updated while providing a full history. However, even if a new transaction marked an older transaction as “deleted” – the data would still be present in the blockchain data, even if it is not shown within an application processing the data. • Transactions Per Second – Transaction processing speed is highly dependent on the consensus model used. Currently transactions on many permissionless blockchain networks are not executed at the same pace as other information technology solutions
due to a slow publication time for blocks (usually in terms of seconds, but sometimes minutes). Thus, some slowdown in blockchain dependent applications may occur while NISTIR 8202 BLOCKCHAIN TECHNOLOGY OVERVIEW 45 This publication is available free of charge from: https://doi.org/10.6028/NIST.IR.8202 waiting for data to be posted. One must ask if their application can handle relatively slow transaction processing? • Compliance – The use of blockchain technology does not exclude a system from following any applicable laws and regulations. For example, there are many compliance considerations with regards to legislation and policies tied to PII or GDPR that identify that certain information should not be placed on the blockchain. In addition, certain countries may limit the type of data that can be transferred across its geographic boundary. I
n other instances, certain legislation may dictate that the “first write” of financial transactions must be written to a node which is present within their borders. In any of these cases, a public, permissionless chain may be less appropriate, with a permissioned or hybrid approach required to satisfy regulatory needs. An additional example of laws and regulations are for any blockchain network which manages federal records. Federal records are subject to many laws and regulations.11 Federal agencies themselves must follow specific federal guidelines when utilizing blockchain technology.12 • Permissions – For permissioned blockchain networks,
there are considerations around the permissions themselves o Granularity – do the permissions within the system allow for enough granularity for specific roles that users may need (in a manner like Role-Based Access Control methods) to perform actions within the system Permissioned blockchain networks allow for more traditional roles such as administrator, user, validator, auditor, etc. o Administration –
who can administer permissions? Once permissions are administered to a user, can they easily be revoked? • Node Diversity – A blockchain network is only as strong as the aggregate of all the existing nodes participating in the network. If all the nodes share similar hardware, software, geographic location, and messaging schema then there exists a certain amount of risk associated with the possibility of undiscovered security vulnerabilities. This risk is mitigated through the decentralization of the network of heterogeneous devices, which may be defined as “the non-shared characteristics between any one node and the generalized set” 11 Such as found in the National Archives and Records Administration handbook https://www.archives.gov/recordsmgmt/handbook/records-mgmt-language.html 12 Such as found in the National Archives and Administration policy guide https://www.archives.gov/recordsmgmt/policy/universalermrequirements
NISTIR 8202 BLOCKCHAIN TECHNOLOGY OVERVIEW 46 This publication is available free of charge from: https://doi.org/10.6028/NIST.IR.8202 9 Conclusions Blockchain technology is a new tool with potential applications for organizations, enabling secure transactions without the need for a central authority. Starting in 200913, with Bitcoin leveraging blockchain technology, there has been an increasing number of blockchain technology-based solutions.
The first applications were electronic cash systems with the distribution of a global ledger containing all transactions. These transactions are secured with cryptographic hashes, and transactions are signed and verified using asymmetric-key pairs. The transaction history efficiently and securely records a chain of events in a way that any attempt to edit or change a past transaction will also require a recalculation of all subsequent blocks of transactions. The use of blockchain technology is still in its early stages, but it is built on widely understood and sound cryptographic principles. Currently, there is a lot of hype around the technology, and many proposed uses for it. Moving forward, it is likely that the hype will die down, and blockchain technology will become just another tool that can be used. As detailed throughout this publication, a blockchain relies on existing network, cryptographic, and recordkeeping technologies but uses them in a new manner. It will be important that organizations are able to look at the technologies and tolerant proof of stake consensus model
A proof of stake consensus model where the blockchain decides the next block by allowing all staked members to “vote” on which submitted block to include next. Centralized network A network configuration where participants must communicate with a central authority to communicate with one another. Since all participants must go through a single centralized source, the loss of that source would prevent all participants from communicating. Chain-based proof of stake consensus model A proof of stake consensus model where the blockchain network decides the next block through pseudo-random selection, based on a personal stake to overall system asset ratio. Checksum Value computed on data to detect error or manipulation. Confirmed State of a transaction or block when consensus has been reached about its status of inclusion into the blockchain. C
onflict One or more participants disagree on the state of the system. Conflict resolution A predefined method for coming to a consensus on the state of the system. For example, when portions of the system participants claim there is State_A and the rest of the participants claim there is State_B, there is a conflict. The system will automatically resolve this conflict by choosing the “valid” state as being the one from whichever group adds the next block of data. Any transactions “lost” by the state not chosen are added back into the pending transaction pool. Consensus model A process to achieve agreement within a distributed system on the valid state.
Also known as a consensus algorithm, consensus mechanism, consensus method. Cryptocurrency A digital asset/credit/unit within the system, which is cryptographically sent from one blockchain network user to another. In the case of cryptocurrency creation (such as the reward for mining), the publishing node includes a transaction sending the newly created cryptocurrency to one or more blockchain network users. These assets are transferred from one user to another by using digital signatures with asymmetric-key pairs. NISTIR 8202 BLOCKCHAIN TECHNOLOGY OVERVIEW 51 This publication is available free of charge from: https://doi.org/10.6028/NIST.IR.8202 Cryptographic hash function A function that maps a bit string of arbitrary length to a fixed-length bit string. Approved hash functions satisfy the following properties: 1. (Preimage resistant) It is computationally infeasible to compute the correct input value given some output value (the hash function is ‘one way’). 2. (Second preimage resistant) One cannot find an input that hashes to a specific output.
(Collision resistant) It is computationally infeasible to find any two distinct inputs that map to the same output. See the NIST SP 800-175B Guideline for Using Cryptographic Standards in the Federal Government: Cryptographic Mechanisms, http://dx.doi.org/10.6028/NIST.SP.800-175B. Cryptographic nonce An arbitrary number that is used once. Decentralized network A network configuration where there are multiple authorities that serve as a centralized hub for a subsection of participants. Since some participants are behind a centralized hub, the loss of that hub will prevent those participants from communicating. Digest See hash digest
Digital asset Any asset that is purely digital, or is a digital representation of a physical asset Digital signature A cryptographic technique that utilizes asymmetric-keys to determine authenticity (i.e., users can verify that the message was signed with a private key corresponding to the specified public key), non-repudiation (a user cannot deny having sent a message) and integrity (that the message was not altered during transmission).
Distributed network A network configuration where every participant can communicate with one another without going through a centralized point. Since there are multiple pathways for communication, the loss o
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