There are public, private, and consortium chains to consider as options for designing a blockchain. An overview of blockchain technology’s history highlights its significance over the years. Provably-fair gaming in 1995 came with a mathematical model determining fairness in gaming, yet there were no infinite digital coins until 2008 when Bitcoin tackled double-spending problems. Meanwhile, the designed peer-to-peer network allowed everyone to join, creating a transparent system and making it immutable. The first-ever Bitcoin blockchain was mined in January 2009. Since then, there have been 165 million Bitcoins mined. The rise in awareness of blockchain technology is mostly due to digital currency. The concern over digital trust in this technology-driven world motivates the exploration of blockchain applications. Applications on different industries are reviewed, with the aim of providing insights into how blockchain can address trust and authenticity issues through immutability and transparency in transactions and interactions. Having a digital transcript of a transaction ensures trust between parties. A digital certificate of ownership defines authenticity. The first subsection introduces the fundamentals of blockchain technology by explaining its decentralized nature and founding concepts. It also explains the importance of consensus algorithms in making decisions in a decentralized manner and how cryptography secures every block in a chain. The second subsection discusses various blockchain designs, focusing on public, private, and consortium chains. The third subsection focuses on the historical development of blockchain technology, emphasizing its significance over the years. Provably-fair gaming was introduced in 1995 as a mathematical model determining fairness in gaming systems. However, there were no infinite digital coins until the emergence of blockchain. In 2008, Bitcoin tackled double-spending problems by designing a peer-to-peer network allowing everyone to join, creating a transparent system and making it immutable (Dong et al., 2023).
Blockchain Applications in Finance
As one of the first industries to adopt information technology, the finance industry has the highest transaction volume and transactional currency. Financial transactions mostly involve banks, investment institutions, and other intermediaries. In general, individual transactions lower the overall speed and efficiency of financial transactions. However, with the application of blockchain technology, financial transactions can be instantly settled peer to peer without intermediaries, greatly improving the transaction speed and reducing transaction costs. Thus, its potential impact and transformative application in the finance industry have attracted the attention of researchers and practitioners (Wu et al., 2024).
In finance, blockchain technology has four primary applications. The first is the application of smart contracts in the financial industry. Smart contracts are automated programs based on blockchain technology that automatically execute transaction protocols when predefined conditions are met. The second is the decentralized finance (DeFi) platform. A DeFi platform based on blockchain technology provides a series of financial services such as trading, lending, investment, and insurance in a decentralized manner. Users can participate in various financial services directly through blockchain, which resolves many issues existing in current centralized financial services like liquidity and accessibility problems.
The third application is the trading system of digital assets. The trading system of digital assets typically includes three components: asset issuance, trading venues, and data recording and monitoring systems. Blockchain technology can be adopted to construct all three components of the digital asset trading system. The fourth application is the application of regulatory frameworks and compliance in blockchain finance. Integration of distributed ledger technology into existing financial systems creates a unique set of regulatory and compliance challenges. New approaches and methodologies are required to ensure the design, implementation, and operation of compliance-sensitive distributed ledger systems.
Cryptocurrencies
Cryptocurrencies, which first emerged in 2009 and have since become the most recognizable application of blockchain technology, began with the inception of Bitcoin. Cryptocurrencies emerged from the 2008 recession, hacker culture, and underlying dissatisfaction with government-backed currencies and financial institutions. Instead of relying on trust in a central authority, like a government or bank, cryptocurrencies offer a decentralized form of digital currency that is recorded on a blockchain network. Blockchains, the distributed ledgers at the foundation of cryptocurrencies, use cryptography to secure transactions and control the creation of new units, which then serve as public records of all transactions in an open network. Anyone with access to the internet can view these ledgers (Dong et al., 2023).
Blockchains are run collectively by nodes or computers that maintain copies of the same ledger. Every time new cryptocurrency units are created or transacted, that data is sent out to all nodes, which then verify and record the transaction. In return for their services, some nodes, known as miners, are rewarded with newly created cryptocurrency units. This process of validation and recording transactions is called mining, which is why many cryptocurrencies are dubbed “proof-of-work.” However, not all cryptocurrencies are mined; some have set limits on their total unit supply, while others have none at all.
Bitcoin was the first cryptocurrency and pioneered blockchain technology. The first-ever mined block, dubbed the “genesis block,” was created in January 2009. Bitcoin transactions were first recorded on this blockchain, marking the birth of the first cryptocurrency. In 2011, a group of developers created Litecoin as a “lighter” version of Bitcoin that can process transactions quicker due to shorter block generation times. In 2015, Ethereum was launched, extending blockchain capabilities beyond simple monetary transactions to programmable smart contracts executed automatically when conditions are met (Galavis, 2019).
Publicly used cryptocurrencies are often referred to as altcoins, short for alternative coins. Some cryptocurrencies try to obfuscate transaction data to enhance anonymity. Others create private blockchains for companies to transact each other without revealing data to the public. In May 2023, over 1,500 cryptocurrencies were traded with publicly available market data. Each cryptocurrency typically has a native unit represented by a ticker symbol, which is three or more uppercase letters. The most recognized and traded cryptocurrencies by market capitalization are Bitcoin, Ethereum, Tether, and Binance Coin. Bitcoin currently controls 46% of the cryptocurrency market, Ethereum’s market share is 19%, and Tether and Binance Coin control 4% and 3%, respectively.
Private, corporate-backed cryptocurrencies that display characteristics of traditional currencies have been proposed by companies. Cryptocurrencies advertise several advantages over government-backed currencies and traditional bank account transactions, including lower transaction fees, increased transaction speed, and protection from in-country currency devaluation and inflation. Recent events have spurred interest in the adoption of cryptocurrencies. However, cryptocurrencies are extremely volatile and thus have drawbacks compared to stability benefitting traditional currencies.
Governments worldwide are still figuring out how to regulate this emerging financial medium amid concern that unsupervised cryptocurrencies could help criminals launder money. An estimated 40% of Bitcoin transactions were conducted in criminal activity in 2013, and that percentage has since lowered, though the dollar amount increased. The proportion of Bitcoin activity from criminal sources fell dramatically. Still, an estimated $8.6 billion worth of cryptocurrencies laundered through the financial system in 2020.
Cryptocurrency use is growing rapidly in other world regions. In late 2021, 30% of adults in Latin America and the Caribbean had a cryptocurrency, and the region accounted for 29% of the world’s cryptocurrency activity by value. El Salvador became the first country to accept Bitcoin as legal currency in August 2021, a decision met with protests questioning government plans to build a “Bitcoin city” powered by volcanic energy. In June 2022, an estimated 27% of Turks used cryptocurrencies, the highest rate worldwide. Businesses have begun accepting cryptocurrency payments. Many states litigate against cryptocurrency to protect residents from scams while exploring their adoption in government finance. There is no one-size-fits-all approach to cryptocurrency regulation since its use varies widely across states.
Cryptocurrencies are novel digital assets and payment mediums, but concerns about their volatility persist. A significant plunge in purchasing power across the board came after the FTX exchange collapse, which fell instantly from a valuation of $32 billion to bankruptcy in November 2022 following revelations of misappropriated user funds. Recently, Bitcoin recovered from a 2022 low of $15,700 to surpass $30,000 due to optimism fueled by interest. The gradual adoption of cryptocurrencies in everyday use reconsidered by governments and states could prove instrumental in continuing their growth. Still, current trends point to cryptocurrencies being the next dot-com bubble.
Blockchain Applications in Supply Chain Management
Supply chain management has been identified as a key application area for blockchains . Conventional supply chains face several challenges, including limited transparency, insufficient information sharing, delays, fraud, and higher costs. Transparency is critical in supply chain management as it involves collaboration among multiple players. In conventional supply chains, transparency is provided by intermediaries who control the flow of information. However, it has been observed that a lack of transparency creates preconditions for frauds and other malpractice. With the advent of globalization, outsourcing, and offshoring, many supply chains have become long and complex. Products have to go through multiple hands before they reach the end consumer. Conventional supply chains are found to be inefficient and unable to deal with the complexity and length of modern supply chains.
The decentralized design of blockchains makes it possible to overcome the limitations of conventional supply chains. The core feature in blockchains is that it provides an immutable and tamperproof distributed ledger. Blockchains allow for the end-to-end visibility and traceability of goods as they move through the supply chain. All transactions are visible to all participants, and every action is recorded in the blockchain. The first case involves using blockchain to track the journey of a food product from source to consumer. Consumers can scan the QR code on the packaging to access longitudinal data on the product, including traceability and audit information. The second project is about tracking diamonds from the mine to the jeweler. The objective is to ensure that diamonds are conflict-free and have been acquired from legitimate sources. The blockchain keeps records of every transaction in the diamond’s lifecycle, including information about the seller, buyer, and value. The third case is the implementation of IBM Food Trust to track food products throughout the supply chain.
In addition to providing visibility, tracking technologies can use blockchain to ensure that participants cannot deny actions they have taken. Several applications of smart contracts in supply chains have been demonstrated. Smart contracts can be used to automatically trigger actions in response to events, such as validating an action. For instance, a delivery can automatically trigger an invoice once it has been confirmed in the blockchain. The automated invoicing is expected to reduce delays and disputes in payments. Another benefit is to enhance the relationship with suppliers. Currently, the retailers control the information and visibility, creating an asymmetry of power in favor of retailers. With blockchain, suppliers can gain a similar view as the retailers.
Smart contracts could automate processes with the suppliers, making it unnecessary to involve auditing companies in processes such as compliance, quality assurance, and invoicing. Blockchain creates a shared view of the supply chain and an opportunity to enhance trust between the parties. Improved trust reduces the need to control the counterpart and prevents abusive behavior. Hence, the auditing tasks could be minimized or eliminated altogether. Trust is particularly critical in food supply chains, where the consequences of malpractice could pose a threat to human health.
On the other hand, despite the obvious benefits, several potential hurdles need to be considered. The deployment costs may be higher than the benefits in small supply chains or individual applications. Many organizations have heavily invested in existing ERP systems, and integrating blockchain with them could be challenging. There is a risk that the blockchain implementation will be treated as an add-on instead of a way to redesign and improve processes. Therefore, organizations need to consider whether they are ready to transform existing processes. Organizations accustomed to a certain way of working could resist the changes implemented by blockchain.
Blockchain Applications in Healthcare
Innovative applications of blockchain technology in the healthcare industry have the potential to resolve prevalent issues related to data security, patient privacy, and interoperability. In order to provide a better healthcare experience, the issues of hacking patient records and the inaccessibility of data among different healthcare providers need to be resolved. Blockchain technology can ensure security for patient records and only allow healthcare professionals with the authority to access them. A shared registry could be created for all the healthcare providers, who would have access to an encrypted chain of patient information (J. Katuwal et al., 2018). This would eliminate the need for patients to disclose their history at every visit and reduce the chances of misdiagnosis. Several use-case scenarios could be implemented while using the blockchain network in healthcare. Patient data management can be streamlined by implementing a blockchain network that allows patients to control their own data. Patients can upload their medical records on the chain and provide access to doctors whenever necessary. Each entry in the blockchain would be time-stamped and immutable. Therefore, any data tampering would be easily detectable. Another pressing issue in the pharmaceutical industry is counterfeit drugs. A blockchain-based system could ensure drug traceability by creating a record of the entire supply chain from the manufacturing industry until it reaches the local pharmacy. Every time a drug is transferred from one entity to another, the transaction would be stored on the blockchain. Thus, drugs that cannot verify their transaction history would be considered counterfeit. Clinical trials are fundamental for the advancement of medical science. Blockchain technology could help make patient data in clinical trials more accessible and verifiable. With blockchain, trial results would be stored on a public ledger, which any party interested in verifying the result would have access to. Therefore, this would eliminate the possibility of manipulating results or hiding trials with negative outcomes. In clinical trials conducted on blockchain, patients could own their data, and researchers would have to provide proof of data usage to access it. Furthermore, modifying or deleting data would be impossible on the blockchain; thus, data integrity would be ensured. One of the biggest issues in healthcare is patient consent. The implementation of blockchain could simplify this process. Patients could grant consent to healthcare providers by signing their data with a private key. By doing this, consent would be stored on the blockchain and easily verifiable by anyone. For instance, suppose a patient provides a consent signature to a doctor but later wants to revoke it. In that case, the patient could simply invalidate the private key used to sign the consent, thus making it impossible to prove consent for that data. However, there are a few challenges to consider when implementing blockchain technology in the healthcare industry. First, like any emerging technology, blockchain has several technical complexities that need to be resolved prior to its adoption. Therefore, it would be unreasonable for healthcare industries to adopt blockchain technology until it matures. Second, many healthcare organizations are required to comply with regulations to ensure the privacy and security of health information. Since a public blockchain is open to everyone, it could not be displayed publicly unless regulations in the healthcare industry change. There could also be compliance issues with permissioned blockchains because patients’ identities need to be disclosed. Despite the issues and challenges, blockchain technology could be a crucial solution to many existing problems in the healthcare system.
Blockchain Applications in Voting Systems
Voting is one of the main pillars of democracy and societal development. In the modern world, the significance of voting keeps growing, as does the interest in its processes. However, the processes of voting often get challenged, along with the integrity of the results. Throughout history, traditional voting processes have been subjected to multiple frauds. Even with the introduction of more advanced systems of voting, the issues of fraud, trust, and transparency keep growing. In today’s world, where everything is going online, the most secure way to vote is with the aid of blockchain networks. The adoption of blockchain in voting would create tamper-proof voting records and ensure transparency, thereby increasing the public’s trust in electoral outcomes (Akbari, 2018).
Blockchain is a distributed and decentralized technology. A network of Blockchain consists of multiple nodes that maintain a shared tamper-proof ledger. Each transaction on the Blockchain network is securely validated using cryptographic signatures and is added to the ledger in blocks indexed with timestamps. The contents of each block are hashed, creating a chain of blocks. As the history of all transactions is maintained in multiple nodes and tampering any record requires altering all the records in the network, Blockchain creates a tamper-proof environment. Using this technology, multiple pilot projects have been conducted, and some countries have already implemented voting on Blockchain. There are numerous benefits regarding in-person voting displayed on the Blockchain. Firstly, the results could be instantly accessible after the elections, as the counting of votes would no longer require much time. Secondly, there would be no need for a third party to audit the results, as the votes would be public records stored in the Blockchain (Jafar et al., 2021).
Blockchain-based applications can enable voting remotely from a personal device, thus increasing accessibility. In emergency scenarios, such as the COVID-19 pandemic, online voting could help carry out elections. The 2020 elections in Spain were a challenge, as Catalonia’s parliament was unable to meet in person. Thus, a law was passed enabling a Blockchain-based voting system as alternative syntax for remote voting discussion. Implementation with the aid of Blockchain was viable since a number of guarantees increase the trust level in the voting process. However, it is still a challenge for digitally illiterate people or individuals belonging to age groups with lower technological literacy to implement Blockchain-based voting systems effectively. This issue needs to be addressed to avoid leaving a fraction of voters behind. Moreover, although it would be impossible to alter the results of an election, there could still be concerns regarding the hack of the system. Therefore, transparency in the technology used is a must. Aside from the need for voter education, there are also concerns regarding the legal framework of the state and the need to adapt its laws to allow for the use of Blockchain in voting.
Challenges and Future Trends in Blockchain Technology
As blockchain technology continues to grow, it faces challenges that need to be addressed for widespread use (Yang et al., 2018). Technological challenges include scalability and energy consumption. Initially, blockchain’s consensus mechanism focused on security, but as adoption increased, scalability became a concern. Solutions are being explored, such as developing off-chain solutions for increased transactions per second while keeping the chain secure. In public blockchain implementation, energy consumption is also critical. Bitcoin mining requires extensive computing power and electricity, leading to the development of new consensus mechanisms that are less energy-intensive. The blockchain network also needs to be interoperable with existing systems to attract potential businesses. Integration with legacy systems is a concern for many companies, necessitating research on building interoperable blockchain solutions.
Blockchain technology also faces regulatory challenges. While some countries embrace crypto and blockchain, others are cautious or ban its use. Regulatory uncertainty is a concern for companies looking to implement blockchain. Jurisdictions adopt diverse approaches regarding data privacy laws, which complicate compliance. Companies find it challenging to navigate the regulatory landscape. Additionally, public blockchains raise concerns over smart contract security and user privacy. The technology also faces issues regarding identity and security. Bitcoin’s pseudonymous nature raised concerns over illegal activities in the network, leading to discussions on accepting it as mainstream technology and potential security threats. New research and development are needed to keep blockchain secure and protect sensitive data while providing transparency and audit trails.
Regarding future trends, new consensus mechanisms for efficient and secure block validation will likely emerge in the next few years. Businesses may initially prefer permissioned blockchains with lower risks to explore the technology, and as the technology matures, permissioned networks may join public networks, enabling the sharing and securing of data across multiple industries. If blockchain addresses regulatory compliance concerns, governments may consider implementing the technology to increase transparency and trust. There will likely be increased collaboration between blockchain developers and regulatory bodies, with developers finding ways for the technology to innovate while ensuring compliance. Research addressing public perception will be necessary, as many industries may find it challenging to adopt blockchain without clear necessities. Trust is vital in blockchain solutions due to the complexity of the technology and its embedded security features, as demonstrated by trust issues in Bitcoin. Education will also play a critical role in ensuring regulators understand the technology and creating reasonable regulations to protect freedom while avoiding misuse.