Difference between revisions of "Ethics of Blockchain"

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=== Block ===
 
=== Block ===
  
Blockchain is a distributed ledger, which means that it doesn’t have a central authority maintaining all the information. Instead, information is stored in digital blocks. Each block stores information such as an ID, a timestamp, a cryptographic hash of the previous block, and some actual transactions such as “Alice sent 1 bitcoin to Bob”. A block may store a few transactions, but the collection of all blocks stores all of the transactions in such a database.
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Blockchain is a distributed ledger, which means that it doesn’t have a central authority maintaining all the information. Instead, information is stored in a collection of digital blocks. Each block stores information such as an ID, a timestamp, a cryptographic hash of the previous block, and some actual transactions such as “Alice sent 1 bitcoin to Bob”. A block may store a few transactions, but the collection of all blocks stores all of the transactions in the database.
 
[[File:BlockchainF1.png|thumbnail|How Blockchain Works (https://www.geeksforgeeks.org/how-does-the-blockchain-work/)]]
 
[[File:BlockchainF1.png|thumbnail|How Blockchain Works (https://www.geeksforgeeks.org/how-does-the-blockchain-work/)]]
  

Revision as of 20:36, 10 February 2023

With the growing computational power of computers and the continual expansion and adoption of the digital age, many new technologies have collected much buzz in the 21st century. One such technology that has attracted much attention in the past decade is blockchain. Blockchain, fundamentally, is a distributed database utilizing a distributed ledger. [1] A ledger is a record-keeping system associated with financial accounts. Blockchain implements such a record-keeping system for financial information by recording transactions in an electronic digital format that is distributed. Blockchain being a distributed ledger essentially means that there is no central authority like a bank that manages the data with every user’s account and transaction history. Instead, the distributed ledger of blockchain ensures that this information is stored on every computer that is running blockchain. This is called a decentralized architecture. [1] Blockchain’s technology is secure despite there not being a central authority, and the lack of a central authority is why many people have taken an interest in blockchain.

Although blockchain originally arose as a mechanism to record asset transactions, the fundamental technology of blockchain has many other applications that are being considered and realized in the present day. Some examples include distributed virtual private networks, web3.0, and medical record-keeping. However, a number of ethical considerations also arise as the adoption of blockchain across society increases. Major ethical considerations include its high energy usage and privacy concerns associated with the permanence of data that blockchain records.

History

Origin of Idea

Blockchain was first introduced in 2008 by someone, or some group, under the name of Satoshi Nakamoto. [2] However, origins of a distributed ledger have surfaced as early as 1982 by a University of California, Berkeley, graduate David Chaum. [3] In 1982, David Chaum published a paper for his PhD dissertation titled Computer Systems Established, Maintained and Trusted by Mutually Suspicious Groups, and in which he first outlined the idea for blockchain. [4] In the abstract of the paper, David proposed that “a number of organizations who do not trust one another can build and maintain a highly-secured computer system that they can all trust (if they agree on a workable design).” [4] However, the adoption of blockchain did not start until 2008.

Idea Development and Adoption

In 2008, someone by the name of Satoshi Nakamoto published a paper online titled "Bitcoin: A Peer-to-Peer Electronic Cash System". [3] In the paper, he described in detail the structure of such a blockchain system. [3] Satoshi Nakamoto solved something that previously remained a flaw for blockchain technologies, that of double spending. [3] Double spending is when users spend the same digital currency twice, and Satoshi Nakamoto solved this problem through his creation of a secure verification system. [3] This improvement allowed for the adoption of blockchain, and, most notably, Bitcoin, which was the first largely adopted cryptocurrency.

Implementation

The implementation of blockchain can be broken down into “block”, and “chain”.

Block

Blockchain is a distributed ledger, which means that it doesn’t have a central authority maintaining all the information. Instead, information is stored in a collection of digital blocks. Each block stores information such as an ID, a timestamp, a cryptographic hash of the previous block, and some actual transactions such as “Alice sent 1 bitcoin to Bob”. A block may store a few transactions, but the collection of all blocks stores all of the transactions in the database.

Chain

The collection of blocks, altogether, form chain(s), hence the name “blockchain”. Blockchain is made up of individual blocks that connect together through cryptographic hashes. [1] Each block connects to a previous block through a cryptographic hash. In aggregate, chains of blocks are formed. Because there is always a way to connect to the previous block in the chain, we can traverse all the way back to the first block ever, known as the “genesis block”. The longest chain in the blockchain is what is collectively agreed upon as the set of information that is legitimate.

Proof of Work

As mentioned before, what makes blockchain secure is the proof of work mechanism. Since there is no central authority, we need a secure mechanism to verify the legitimacy of any transaction. If anyone were allowed to add blocks to the chain, any user “Tom” could simply just add a block with information such as “Alice sent 100 bitcoins to Tom” and “Bob sent 100 bitcoins to Tom”. Blockchain’s architecture counteracts this by requiring a “proof-of-work” to verify new transactions. [5] Other blockchain users compete against each other to “mine” this new block by guessing random numbers that results in a hash starting with a bunch of 0’s. Because the hashing algorithm is one-way, there is no way to figure out a correct number algorithmically, and it can only be guessed correctly after many many tries. [5] Once someone guesses correctly, other users verify that this block’s transactions are legitimate. This prevents someone from creating fake transactions unless they control the majority of the users of blockchain, which would require billions of dollars.

Applications

Cryptocurrency is a major use case for blockchain. Most cryptocurrencies are implemented with blockchain. Some notable cryptocurrencies used today include Bitcoin (BTC), created in 2009 by Satoshi Nakamoto with a present-day market cap of $440.5 billion, Ethereum (ETH), a present-day market cap of $199 billion, and Tether (USDT), a cryptocurrency that is pegged to the value of $1 USD. [6] As a frame of reference, one Bitcoin costs about $23,095 today. [6]

There are numerous other use cases of blockchain, but all of them revolve around the idea of decentralization. Decentralized VPNs, Web3.0, and healthcare are some other technologies that can be implemented with a blockchain. [7]

Decentralized VPNs

A normal virtual private network (VPN), allows users of the VPN additional privacy and security by encrypting communications and sending them through a secure tunnel managed by a VPN service provider. [8] However, there is still someone managing the secure tunnel and maintaining central control over it. However, with decentralized VPNs, there is no single entity that maintains centralized control. Instead, the secure tunnel is created by a set of users who offer their unused network traffic. [8] In this way, people who use decentralized VPNs are both users as well as service providers. They can both use network traffic offered by others and become a node in this network that allows others to use. [8]

Web3.0

The first web pages were static web pages. [9] A static website is a website where users can only read information but cannot modify, edit, or change anything that allows others to see their changes. The content on the page is the same for each user who visits that page and will not change. [9] This is not very useful because it does not allow any interactivity.

Dynamic sites soon arose which is the way the web works right now. Users can edit webpages and others can see their changes. This is known as Web2.0. [9]

Web3.0 represents an effort to decentralize the architecture of the web. Prior to web3.0, the web operated on entities such as google.com, chrome, Facebook, Youtube, and others. Supporters of web3.0 believe that shifting the control from big tech companies into the masses will enhance the privacy, transparency, and ownership of individual users. [9]

Other applications

Other applications of blockchain include voting, by eliminating the possibility of voter fraud through secure authentication and complete transparency, and even healthcare, through enabling completely secure medical record-keeping. [10]

Ethical Considerations

There are a number of ethical considerations associated with blockchain. One of the main ethical issues involves the enormous amounts of environmental issues that blockchain, specifically mining, causes. It is estimated that between mid-2021 and 2022, cryptocurrency mining contributed to 27.4 million tons of excess carbon dioxide emissions. [11] To put it into perspective on a smaller scale, a single Bitcoin transaction costs about $176 of power. That’s enough to power an average U.S. household’s electricity usage for 6 weeks. [12]

In the sector of healthcare, blockchain poses ethical questions to be grappled with as well. It is impossible to remove any block on a blockchain. Therefore, once information is added to the blockchain, there is no way to discard it. [13] If we choose to record medical information inside a blockchain, all information added to the blockchain will stay there forever, and there is no way for individuals to request their medical data be deleted. [13]

References

  1. 1.0 1.1 SoFi. (2022, November 21). Distributed Ledger Technology (DLT) vs. Blockchain. SoFi. Retrieved January 27, 2023, from https://www.sofi.com/learn/content/dlt-vs-blockchain/
  2. History of blockchain. ICAEW. (n.d.). Retrieved January 27, 2023, from https://www.icaew.com/technical/technology/blockchain-and-cryptoassets/blockchain-articles/what-is-blockchain/history
  3. 3.0 3.1 3.2 3.3 3.4 A brief history of blockchain technology everyone should read. Kriptomat. (2022, March 17). Retrieved January 27, 2023, from https://kriptomat.io/blockchain/history-of-blockchain/
  4. 4.0 4.1 Publications. chaum.com. (2022, November 9). Retrieved January 27, 2023, from https://chaum.com/publications/
  5. 5.0 5.1 https://www.forbes.com/advisor/investing/cryptocurrency/proof-of-work/
  6. 6.0 6.1 Royal, J. (n.d.). 12 most popular types of cryptocurrency. Bankrate. Retrieved January 27, 2023, from https://www.bankrate.com/investing/types-of-cryptocurrency/
  7. SoFi. (2022, December 1). 9 blockchain uses and applications in 2022. SoFi. Retrieved January 27, 2023, from https://www.sofi.com/learn/content/blockchain-applications/
  8. 8.0 8.1 8.2 What are decentralized vpns? possible benefits and risks - atlas VPN. atlasVPN. (n.d.). Retrieved January 27, 2023, from https://atlasvpn.com/blog/what-are-decentralized-vpns-possible-benefits-and-risks
  9. 9.0 9.1 9.2 9.3 Ashmore, D. (2023, January 9). A brief history of web 3.0. Forbes. Retrieved January 27, 2023, from https://www.forbes.com/advisor/investing/cryptocurrency/what-is-web-3-0/
  10. SoFi. (2022, December 1). 9 blockchain uses and applications in 2022. SoFi. Retrieved January 27, 2023, from https://www.sofi.com/learn/content/blockchain-applications/
  11. The environmental impacts of cryptomining. Earthjustice. (2022, September 23). Retrieved January 27, 2023, from https://earthjustice.org/features/cryptocurrency-mining-environmental-impacts#:~:text=Top%2Ddown%20estimates%20of%20the,in%20the%20U.S.%20in%202021
  12. Calhoun, G. (2022, October 27). The ethics of crypto: Good intentions and bad actors. Forbes. Retrieved January 27, 2023, from https://www.forbes.com/sites/georgecalhoun/2022/10/11/the-ethics-of-crypto-sorting-out-good-intentions-and-bad-actors/?sh=36e9e7815c49
  13. 13.0 13.1 Leonid. (2022, April 28). Blockchain in Healthcare: Ethical Considerations. CIFS Health. Retrieved January 27, 2023, from https://cifs.health/backgrounds/blockchain-in-healthcare-ethical-considerations/