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International Journal of Information System and Engineering

www.ftms.edu.my/journals/index.php/journals/ijise

Vol. 5 (No.1), April, 2017 ISSN: 2289-7615 DOI: 10.24924/ijise/2017.04/v5.iss1/57.65

This work is licensed under a Creative Commons Attribution 4.0 International License.

Review Paper

THE BLOCKCHAIN REVOLUTION AND HIGHER EUCATION

Muhammad Mannir Ahmad Getso Master in Computer Systems Engineering

University of East London manniru@gmail.com mannir@mannir.net

Mr. Zainudin Johari School of Computing, Information Technology, Engineering

FTMS College, Cyberjaya zainudin@ftms.edu.my

Abstract

What will be the most important technology to change higher education? In our view, it is not big data, the social web, MOOCs, virtual reality, or even artificial intelligence. We see these as components of something new, all enabled and transformed by an emerging technology called the blockchain. The blockchain is a relatively new technology used to verify and store transaction records for online cryptocurrencies like Bitcoin. The system is redundant and distributed, making it difficult for transactions to be rescinded, duplicated, or faked. Beyond online currencies, the blockchain has potential uses in health care, education, and many other fields. This column will briefly describe what the blockchain is and how it is being used, potential future uses that may be of interest to librarians and medical practitioners, and some of the problems with the system.

Keywords: Bitcoin, blockchain, cryptocurrency, libraries, medical records

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1. Introduction

The Internet today connects billions of people around the world, and certainly it’s great for communicating and collaborating online. But because it’s built for moving and storing information rather than value, it has done little to change how we do business. When professors send their students information such as an e-mail, lecture notes, a PowerPoint presentation, or an audio recording of a lecture, they’re really sending a copy, not the original. It’s OK (and indeed advantageous) for people to print a copy of their PowerPoint file, but it’s not OK to print, say, money or diplomas. So with the Internet of information, we have to rely on powerful intermediaries to exchange things of value. Governments, banks, digital platforms (e.g., Amazon, eBay, and AirBnB), and colleges and universities do the work of establishing our identity, vouching for our trustworthiness, and helping us to acquire and transfer assets and settle the transactions. Overall, they do a pretty good job—but there are limitations. They use centralized servers, which can be hacked. They take a piece of the value for performing this service—say, 10 percent to send some money internationally. They capture our data, not just preventing us from using it for our own benefit but often undermining our privacy. These intermediaries are sometimes unreliable and often slow. They exclude two billion people who don’t have enough money to justify a bank account, let alone an education. Most problematic, they are capturing the benefits of the digital age asymmetrically. What if there was an Internet of value—a global, distributed, highly secure platform, ledger, or database where we could store and exchange things of value and where we could trust each other without powerful intermediaries? That is the blockchain. Collective self-interest, hard-coded into this new native digital medium for value, would ensure the safety, security, and reliability of our exchanges online. Trust is programmed into the technology, which is why we call blockchain the Trust Protocol. Why should you care? Maybe you’re a music professor who wants artists to make a living off their art. Perhaps you’re an immigrant who is sick of paying big fees to send money home so that your children can go to college in your ancestral land. Or maybe you’re a parent fed up with the lack of transparency and accountability of the politicians and political appointees responsible for higher education in your state. Or perhaps you’re a social media user who thinks all the data you generate might be worth something—to you—and that your privacy matters. Even as we write, innovators are building blockchain-based applications that serve these ends. And these apps are just the beginning. It turns out that every business, institution, government, and individual can benefit in profound ways. How about the corporation, a pillar of modern capitalism? With the rise of a global peer-to-peer platform for identity, trust, reputation, and transactions, we will be able to reengineer deep structures of the firm, for innovation and shared value creation. We’re talking about building 21st-century companies that look more like networks than the vertically integrated hierarchies of the Industrial Age. The whole financial services industry is already being reinvented by the blockchain, and others will soon follow. How well does today’s college or university prepare students for such a future?

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How about the Internet of Things? In the not-too-distant future, billions of smart things in the physical world will be sensing, responding, communicating, sharing important data, and generating, buying, and selling their own electricity, doing everything from protecting our environment to managing our health. It turns out that this Internet of Everything will need a Ledger of Everything. One of the biggest opportunities of the blockchain is to free us from the grip of a troubling prosperity paradox. The economy is growing, but fewer people are benefiting. Rather than trying to solve the problem of growing social inequality through redistribution alone, we can change how wealth—and opportunity—is predistributed in the first place, as people everywhere, from farmers to musicians, can use this technology to share more fully in the wealth they create. 2. Literature Review In this section, we review some broad definitions of the blockchain, going further than the cryptocurrency aspect. Two major streams exist in the blockchain literature, one advocating for a definition where blockchain is not dependable on the monetary sphere and the other stating that blockchain cannot exist without an underlying token. Let us start with a definition set forward by Vitalik Buterin, co-founder of Ethereum, a blockchain platform featuring smart contracts1, capturing the broad sense of what a blockchain is: “A blockchain is a magic computer that anyone can upload programs to and leave the programs to self-execute, where the current and all previous states of every program are always publicly visible, and which carries a very strong cryptoeconomically secured guarantee that programs running on the chain will continue to execute in exactly the way that the blockchain protocol specifies.” (Buterin 2015, 1) Pilkington (2015) argues that this definition lacks scientific rigor, as “magic computer” is a debatable term. It conveys the idea that applications running on such a platform have a global reach: “without national or geopolitical boundaries, and extend without bound into the future” (Davidson, De Filippi en Potts 2016, 8). However, this definition is of interest for the features it omits. The abstract use of such a definition enables Buterin to emphasize the idea that blockchain is “informational and processual” (Pilkington 2015). Furthermore, the definition lacks of any financially-charged terms as well as any technical-process related terms2, such as: ledger, money, cryptocurrency, transactions and hash rate. Buterin complements his own definition by saying “… they’re [Blockchains] about creating the freedom to create a new mechanism with a new ruleset extremely quickly and pushing it out. They’re Lego Mindstorms for building economic and social institutions.” (Buterin 2015, 1). What is important with Buterin’s overall vision is that blockchains do not need to relate to a monetary sphere. As Pilkington explains, the concepts of “cryptoeconomy” and “payment finality” do not define blockchain, but are fundamental characteristics of blockchain applications. Consequently, Buterin’s vision predicates that blockchains may exist without underlying tokens. There is a nuance however: “currency is necessary to make cryptoeconomic blockchains work … but the currency is there simply as economic plumbing to incentivize consensus participation, hold deposits and pay transaction fees,

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not as the center-stage point of speculative mania, consumer interest and excitement.” (Buterin 2015, 1). Gideon Greenspan supports Buterin’s vision, stating: “If we modify our “database” schema so that each row can represent multiple assets, rather than the blockchain’s native currency, then we can rid ourselves of that currency entirely. This leaves us with a blockchain as a way to achieve consensus and security in a peer-to-peer financial application for any class of asset.” (Greenspan 2015, 1). Anyhow, not all experts agree with this definition of the blockchain. Many seem to argue that blockchains without underlying tokens cannot exist. “The coin is an integral part of the network’s incentive mechanism to maintain its security; the two have an existential symbiotic relationship.” (Swanson 2015, 8). Similarly, Jeremy Allaire says “There has to be an underlying value to the token that’s used to move value…” (Allaire 2015). Although the debate has not been closed yet, one could argue that the latter is closing down the topic, and leaves little or no room for the expansion of blockchain into non-finance related applications. These definitions narrowing blockchains down to a monetary sphere have less interest for blockchain 3.0 applications. Nonetheless, all seem to agree that currency is an important aspect in blockchains, whether it serves only as “an economic plumbing to incentivize consensus participation” or plays an unseperable and fundamental part of the process. For the sake of research and intellectual reasoning, this paper considers Buterin’s definition as a basis for blockchain technology, while not undermining the importance of currency in the propagation of the technology in non-financial applications. This issue is furthered in chapter 7, section 7.4. 3. Blockchain Applications In the previous, we have discussed features of blockchain 1.0. In this chapter, we deal with some applications that constitute the evolution of blockchain 1.0 to blockchain 2.0.

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Fig 1. Bitcoin Blochchain, Source (www. bitsonblocks.net) 3.1 Basic Concepts It would be good to know some of these terms: Public Key Cryptography. Alice has a public key and private key. She can use her private key to create a digital signature, and Bob can use Alice’s public key to verify that a signature is really from Alice’s private key, i.e., really from Alice. When you create an Ethereum or Bitcoin wallet the long ‘0xdf…5f’ address is a public key and the private key is stored somewhere. A Bitcoin wallet service like Coinbase stores your wallet’s complementary private key for you, or you can store it yourself. If you lose your private key for a wallet with real funds you’ll lose all your funds forever, so it’s good to back up your keys. It hurts to learn this the hard way! I’ve done it. Peer-to-Peer Networking. Like BitTorrent, all Ethereum nodes are peers in a distributed network, there’s no centralized server. [In the future, there’ll be hybrid semi-centralized services for Ethereum as a convenience to users and developers, more on that later.] Blockchain. Like a global ledger or simple database of all transactions, the entire history of all transactions on the network. Ethereum Virtual Machine. So you can write more powerful programs than on top of Bitcoin. It refers to the blockchain, what executes smart contracts, everything. Node. Using this to mean you can run a node and through it read and write to the Ethereum blockchain, i.e., use the Ethereum Virtual Machine. A full node has to download the entire blockchain. Light nodes are possible but in the works. Miner. A node on the network that mines, i.e., works to process blocks on the blockchain. You can see a partial list of live Ethereum miners here: stats.ethdev.com. Proof of Work. Miners compete to do some math problem. The first one to solve the problem (the next block on the Blockchain) wins a reward: some ether. Every node then

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updates to that new block. Every miner wants to win the next new block so are incentivized to keep up to date and have the one true blockchain everybody else has, so the network always achieves consensus. [Note: Ethereum is planning to move to a Proof of Stake system without miners eventually, but that’s beyond noob scope.] Ether. Or ETH for short. It’s a real digital currency you can buy and use! Here’s a chart from one of several exchanges for it. At the time of writing, 1 ETH is worth about 65 cents in USD. Gas. Running and storing things on Ethereum costs small amounts of ether. Keeps things efficient. DApp. Decentralized App, what applications using smart contracts are called in the Ethereum community. The goal of a DApp is (well, should be) to have a nice UI to your smart contracts plus any extra niceties like IPFS (a neat way to store and serve stuff in a decentralized network, not made by Ethereum but a kindred spirit). While DApps can be run from a central server if that server can talk to an Ethereum node, they can also be run locally on top of any Ethereum node peer. [Take a minute: unlike normal webapps, DApps may not be served from a server. They may use the blockchain to submit transactions and retrieve data (important data!) rather than a central database. Instead of a typical user login system, users may be represented by a wallet addresses and keep any user data local. Many things can be architected differently from the current web.]

Fig 2. Blockchain Architecture

4. Conclusion We presented a number of HIT use cases that can be solved with the help of a blockchain infrastructure. The blockchain technology is still in its infancy but some of the world’s leading financial institutions and technology companies have setup experimental testbeds to identify the usage scenarios for different industry verticals. Through this whitepaper, we hope to solicit ONC’s feedback on the proposed scenarios

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and also solicit technology partners within the HIT space, who may be willing to partner with us to pilot these use cases 5. Future Works We proffer that blockchain is a technology that enables new societal forms to be constructed, based upon a universal shared social value. ‘Social value’ is problematic to define but may be explained by the tautology of “something (or someone) that has value to society”. That ‘value’ is socially constructed and is not necessary to explicate: its nature and extent is, arguably, only determined by the society within which it is enacted. The defining characteristic of a blockchain is that it is a trustworthy open ledger of work or transactions that are independently verified by multiple agents. Independent verification imbues the blockchain with a degree of robustness that enables its contents to be trusted. While blockchains may be built that comprise records of any form of activity, the majority currently record financial transactions: as would perhaps be expected in a fiscally dominated societal paradigm. However, a blockchain could be constructed that comprised records of other forms of activity, such as instances of voluntariness or exchange and barter between individuals or groups. Such acts may be recorded within a blockchain and form an approach by which individuals accrue recognition of their acts that are beneficial to their society. Other individuals within the society would act as independent verifiers of those acts and thus provide robust and trusted confirmation of the blockchain records. Social blockchains would then act as open ledgers of people or groups that have value to society. Individuals or groups would obtain increased social value by engaging in acts that were sociably valuable. These may be acts of provision of hygiene factors such as shelter, sustenance or support. However, where those basic needs are already fulfilled then what are deemed sociably valuable acts may mature into efforts such as the provision of knowledge and skills so that others may be able to satisfy their own immediate hygiene factors on an ongoing basis. Unlike monetary systems that are artificially manipulated to alter the value of exchange, such as hedging against future fluctuations in exchange, social value that is underpinned by trusted blockchain ledgers automatically adjusts according to immediate social needs. Thus, the true value of individuals is determined by the society in which they live and by the actions that they make within that society.

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Blockchain Technology and Its Applications

Andy Wang, College of Applied Sciences and Arts