22

Current Landscape and What's Next

Blockchain technology is changing rapidly, and it will continue to affect the way we conduct our day-to-day business as new developments emerge. It has challenged existing business models, and promised great benefits such as cost-saving, efficiency, and transparency. So far in this book, we've explored the technical underpinnings of blockchain technology, such as cryptography, consensus mechanisms, and distributed systems concepts. We've looked at cryptocurrencies such as Bitcoin, Litecoin, and Zcash, explored Ethereum in detail, and learned how to write smart contracts and DApps. We also saw applications of blockchain technology in the Internet of Things (IoT) and the finance, government, and media sectors, and learned how blockchain technology can address challenges in these industries and others. Moreover, we examined Hyperledger, and some innovative enterprise blockchains such as Quorum and Corda. Finally, we looked at some scalability, privacy, and security challenges faced by proponents of blockchain technology, and considered how these challenges can be tackled.

This chapter will explore the latest developments, emerging trends, issues, and future predictions about blockchain technology. We'll also present some topics related to open research problems and improvements related to blockchain technology. Along the way, we'll cover the following main topics:

• Emerging trends
• Areas to address
• Blockchain research topics
• Blockchain and AI
• The future of blockchain

With the advancement of blockchain technology and the rigorous research being conducted in this space, various developments have been seen in recent months and years. We'll explore these emerging trends in the next section.

Emerging trends

Blockchain technology is in a period of rapid change and intense development, due to the deep interest in it by the academic and commercial sectors. As the technology has become more mature, a few trends have started to emerge. For example, private blockchains have recently gained a lot of attention due to their specific use cases in finance organizations. Similarly, enterprise blockchains aim to develop blockchain solutions that meet enterprise-level efficiency, security, and integration requirements. For an in-depth exploration of the technical details and features of some alternative blockchains, and their relevant platforms, take a look at this book's bonus online content pages here: https://static.packt-cdn.com/downloads/Altcoins_Ethereum_Projects_and_More_Bonus_Content.pdf. These are out of the scope of this chapter, but it is highly recommended to access these pages to explore some recent blockchain solutions in more detail. Now, some of the broader trends are listed and discussed in the following sections.

New implementations of blockchain technology

Since the invention of Bitcoin, new blockchains are being developed at a rapid rate. We'll introduce some of these new trends as follows.

Application-specific blockchains

Currently, an inclination toward application-specific blockchains (ASBCs) is evident, whereby a blockchain or distributed ledger is specially developed or makes use of an already existing blockchain platform but with only one application in mind and is focused on a specific industry.

For example, Everledger (https://www.everledger.io) is a blockchain solution that has been developed for the sole use of providing an immutable tracing history and audit trail for diamonds and other high-value items. This approach thwarts any fraud attempts because everything related to ownership, authenticity, and item value is verified and recorded on the blockchain. This ability would be invaluable for insurance and law enforcement agencies were it to be widely adopted.

Another example of an ASBC is Digital Trade Chain (DTC), in which a group of seven banks agreed to simplify the trade finance process by directly connecting the parties involved in a trade transaction.

Concrete, real-life, end-to-end implementations of blockchain technology are also now becoming available, even in the finance industry, such as Australian Securities Exchange (ASX) replacing its legacy post-trade system (its system to support trade processing after completion, also referred to as trade settlement) with blockchain.

Start-ups

In recent years, many technology start-ups have emerged that are working on blockchain projects. There has also been a significant increase in the number of start-ups that are offering blockchain consultancy services and solutions specific to this technology.

Technology improvements

As well as innovative implementations of blockchain technology, a lot of effort is being made to improve the technology and infrastructure itself. Some of these efforts are listed in the following sections.

Standardization

Blockchain technology is not yet mature enough to be able to readily integrate or interact with existing systems or other blockchains, and as it stands, no two blockchain networks can easily interact with one another. Standardization will help to improve interoperability, adoption, and integration aspects of blockchain technology.

Some attempts have been made recently to address this, the most notable of which being the establishment of ISO/TC 307, which is a technical committee with the aim of standardizing blockchain and associated distributed ledger technology. The aim of the committee revolves around increasing interoperability and data interchange between users, applications, and systems.

Hyperledger, on the other hand, has a reference architecture that can be used to build blockchain systems based on the same modular architecture. Hyperledger is supported by the Linux Foundation and many other participants from the industry, which is a good omen for the progress of blockchain standardization.

Some work on smart contract templates was started with the publication of a seminal paper authored by Christopher D. Clack, Vikram A. Bakshi, Lee Braine et al., which formally defined smart contract templates. It also presented a vision for future research and stipulated certain necessities in smart contract development.

All of the efforts mentioned here are a clear indication that in the near future, clearly defined standards will emerge that will further advance the adoption of blockchain technology. Standardization will also result in exponential growth of the blockchain industry by eliminating hurdles such as interoperability.

Consortia

Recent years have seen the startup of various consortia and shared open source efforts. This trend is expected to grow in the coming years, and more and more consortia, committees, and open source efforts towards blockchain advancement will likely emerge soon. A prime example is R3, which developed Corda with a consortium of some of the world's largest financial organizations.

Enhancements

Various enhancements and suggestions to further develop existing blockchains have been made over the last few years. Most of these suggestions have been made in response to specific security vulnerabilities and to address inherent limitations in blockchain technology. There are certain limitations in blockchain technology, such as scalability, privacy, and interoperability, which need to be addressed before it can be adopted as a mainstream field of technology.

Recently, there have been tremendous efforts made toward addressing scalability issues in blockchain technology, which were discussed in Chapter 21, Scalability and Other Challenges. Also, blockchain-specific improvement proposals such as Bitcoin Improvement Proposals (BIPs) and Ethereum Improvement Proposals (EIPs) are regularly made by developers to address various concerns in these systems.

Moreover, recent advancements such as state channels, an off-chain scalability solution discussed in Chapter 21, Scalability and Other Challenges, are evidence of the fact that blockchain technology is improving rapidly, and will, in time, evolve into a mature and practical technology. Using state channels, the Bitcoin Lightning network and Ethereum's Raiden have been developed to enable near-instant, low-fee, scalable payments that could help address the scalability issue on future blockchain projects.

Limitations around the interoperability of blockchains have also resulted in changes oriented toward the development of systems that can work across multiple blockchains. Some examples of these systems are Interledger, Polkadot and Cosmos. Interledger has also been implemented in Java as Hyperledger Quilt: https://www.hyperledger.org/use/quilt.

Moreover, various new blockchain solutions to the privacy issue have emerged, such as Kadena, which directly addressed blockchain confidentiality issues. Other concepts such as Zcash, CoinJoin, Zether, bulletproofs, and confidential transactions have also been developed to address existing blockchain privacy challenges.

Another necessary enhancement is to reduce electricity consumption. It is evident from the global electricity usage of Bitcoin's blockchain that Proof of Work (PoW) mechanisms are very inefficient. Of course, this computation secures the Bitcoin network, but there is no other benefit of this computation, and it wastes a lot of electrical energy. To reduce this waste, there has been more focus on greener options such as Proof of Stake (PoS) algorithms, which do not need enormous reserves of resources, like Bitcoin's PoW algorithm does. This trend is expected to grow, especially with the implementation of a PoS mechanism in Ethereum 2.0.

This trend of addressing technical challenges is expected to continue to develop in years to come, and even if almost all fundamental challenges are addressed in blockchain technology, further enhancements and optimization research will continue.

Ongoing research and study

Blockchain technology has stimulated intense research interest, both in academia and the commercial sector. In recent years, interest has dramatically increased, and now major institutions and researchers around the world are exploring this technology. This growth in interest is primarily because blockchain technology can help to make businesses and their operations more efficient, cheaper to run, and more transparent.

The bulk of academic interest lies in addressing problems in the fields of cryptography, consensus mechanisms, and performance limitations in blockchains. As blockchain technology comes under the broader umbrella of distributed systems, many academic researchers focused on distributed computing research have focused their research on blockchain technology. For example, University College London (UCL) has a dedicated department, the UCL Research Centre for Blockchain Technologies, which focuses on blockchain technology research.

Another example of academic groups conducting blockchain research is the ETH Zurich distributed computing group (https://disco.ethz.ch), who have published seminal research regarding blockchain technology. A recent journal called the Ledger Journal has recently published its first issue of research papers. It is available at http://www.ledgerjournal.org/ojs/index.php/ledger. Another organization, called the Initiative for Cryptocurrencies & Contracts (IC3), is also researching smart contract and blockchain technologies. IC3 aims to address performance, confidentiality, and safety issues in blockchains and smart contracts, and runs multiple projects to address these issues.

As well as those mentioned here, there are now teams and departments dedicated to blockchain research and development in various academic and commercial institutes. Although the initiatives mentioned here are not an exhaustive list by any stretch of the imagination, it is still a solid indication that this is a subject of extreme interest for researchers, and more research and development is expected to be seen in 2020 and beyond.

With the progress of blockchain adoption, research in different areas of cryptography has been conducted, with the aim of addressing challenges such as privacy. Some of these research directions are discussed in the following sections.

Cryptography

Even though cryptography was an area of keen interest and research for many decades before Bitcoin's invention, blockchain technology has resulted in a renewed interest in this field. With the advent of blockchains and related technologies, there has been a simultaneous and significant increase in the interest in cryptography. New research is being carried out and published regularly, especially in the area of financial cryptography.

Technologies such as zero-knowledge proofs (ZKPs), fully homomorphic encryption, and functional encryption are being researched for their potential use in blockchains. Already, ZKPs have been implemented for the first time at a practical level in the form of Zcash, which has addressed privacy issues in cryptocurrency networks. It's evident that blockchains and cryptocurrencies have helped with the advancement of cryptography, especially financial cryptography.

Other developments such as Zether, zk-SNARKs, zk-STARKs, bulletproofs, the Aztec protocol (https://www.aztecprotocol.com), Nightfall and Zokrates (https://zokrates.github.io) are only the foundations of what the future holds for blockchain cryptography!

Cryptoeconomics

New fields of research are emerging with blockchains, most notably, cryptoeconomics, which is the study of protocols governing the decentralized digital economy. With the continuing development of blockchains and cryptocurrencies, research in this area has also grown. Cryptoeconomics has been defined by Vitalik Buterin as a combination of mathematics, cryptography, economics, and game theory.

Hardware development

When it was realized in 2010 that contemporary methods were no longer efficient for mining bitcoins, miners shifted toward optimizing available mining hardware. These initial efforts included the use of GPUs, and then Field-Programmable Gate Arrays (FPGAs) were used after GPUs reached their hash rate limit.

Very quickly after that, Application-Specific Integrated Circuits (ASICs) emerged, which increased mining power significantly. This trend is expected to grow further with research into optimizing ASICs by parallelizing and decreasing their die sizes. Such optimizations will make ASICs even faster and more efficient.

Moreover, GPU programming initiatives are also expected to grow, with the regular emergence of new cryptocurrencies, many of which make use of PoW algorithms that can benefit from GPU processing capabilities. For example, recently Zcash has spurred interest in GPU mining rigs and related programming using NVIDIA CUDA and OpenCL. The aim with Zcash is to use multiple GPUs in parallel to optimize mining operations.

Also, some research has been done in the field of trusted computing hardware such as Intel's Software Guard Extensions (SGX) to address security issues on blockchains. Intel's SGX has also been used in a novel consensus algorithm called Proof of Elapsed Time (PoET), which was discussed in Chapter 17, Hyperledger. Another project, the 21 Bitcoin Computer, was developed, which serves as a platform for developers to learn about Bitcoin technology and develop applications for the Bitcoin platform.

Hardware research and development is expected to continue, and soon many more hardware applications will be explored. Some examples include physical unclonable functions, the acceleration of blockchain processes (such as cryptography), IoT hardware, and hardware security module integration for key management.

Formal methods and security

With the realization of security issues and vulnerabilities in smart contract programming languages, and generally in blockchain protocols, there is now a keen interest in the formal verification and testing of smart contracts and other blockchain components before production deployments. For this, various efforts are already underway, many of which we discussed in Chapter 21, Scalability and Other Challenges.

New programming languages

There is also an increased interest in the development of programming languages for developing smart contracts. Efforts are more focused on domain-specific languages, for example, Solidity for Ethereum and Pact for Kadena. This is just a start, and many new languages are likely to be developed as the available technology advances.

Education and employment within blockchain

While blockchain technology has spurred a great interest among technologists, developers, and scientists throughout almost every industry around the world, initially there was a lack of formal learning resources and educational material available for aspiring blockchain professionals. However, there has been a recent trend emerging in job markets, whereby recruiters are seeking blockchain programmers and developers. This is especially relevant to the finance industry, in which many start-ups and even large organizations have started to hire blockchain specialists.

There is also concern about the lack of blockchain developers, which will undoubtedly be addressed as the technology progresses, and more developers either gain experience on a self-learning basis or gain formal training from training providers. Consequently, many educational institutes around the world now offer certificates and courses with a focus on blockchain technology. This trend is, of course, expected to grow as the technology matures and is applied in more commercial use cases.

Innovative blockchain applications

Some new ideas for improving the efficacy of blockchains have emerged with the unprecedented development of blockchain technology. Some of these are listed in the following sections.

Blockchain as a Service

With the current maturity level of cloud platforms, many companies have started to provide Blockchain as a Service (BaaS). The most prominent examples are Microsoft's Azure, in which the Ethereum blockchain is provided as a service, and IBM's Cloud platform, which provides IBM's blockchain as a service. This trend is only expected to grow in the next few years, and more companies will likely emerge that provide BaaS to consumers.

Electronic Government as a Service (eGaaS), which is in fact a form of BaaS, provides application-specific blockchains for governance functions (http://egaas.org). This project aims to organize and control activities without document circulation and bureaucratic overhead.

Convergence with other technologies

The convergence of other technologies with blockchain offers major benefits to both technologies. At their core, blockchains provide resilience, security, and transparency, which, when combined with other technologies, results in a very powerful complementary technology. For example, the IoT stands to gain major benefits such as integrity, decentralization, and scalability when implemented via a blockchain. Artificial Intelligence (AI) is expected to gain numerous benefits from the implementation of blockchain technology: in fact, within blockchain technology, AI can be implemented in the form of Autonomous Agents (AAs), which can make rational decisions on behalf of humans. Some ideas of the benefits that the convergence of AI and blockchain can provide are listed as follows:

• The blockchain can share machine learning models in a secure and peer-to-peer (P2P) manner.
• The blockchain can serve as an auditing layer for decisions made by AI.
• As AI and machine learning capabilities grow, blockchain can provide a mechanism to monitor and control any malicious behavior that an AI may manifest. While AI can be used for good, it can also be used by malicious actors. In this case, the blockchain can serve as a control mechanism to thwart any attacks. For example, all agents on a blockchain can be controlled under a consensus mechanism, and malicious Byzantine behavior can be handled as per the blockchain consensus protocol.
• AI can also benefit blockchain technology by enabling artificially intelligent smart contracts.
• AI can be applied to other components of a blockchain to achieve, for example, adaptive consensus mechanisms. These can, based on network conditions, readjust fault-tolerance requirements and as a result enable a more efficient consensus mechanism.

There are of course many more examples of innovative applications of blockchain in combination with the aforementioned technologies. Some of these will be discussed in detail in the Blockchain and AI section of this chapter.

Alternatives to blockchains

With the advancement of blockchain technology in recent years, researchers have started to think about the possibility of creating platforms that can provide guarantees and services that a blockchain provides, but without the need for an actual blockchain. This has resulted in the development of R3's Corda, which is not really a blockchain, since it is not based on the concept of blocks containing transactions. Instead, it is based on the concept of a state object that transverses throughout the Corda network, according to the requirements and rules of the network participants that represent the latest state of the network.

Other examples include IOTA, an IoT blockchain that makes use of a Directed Acyclic Graph (DAG) as a distributed ledger named Tangle, instead of a conventional blockchain formed of blocks. This ledger is claimed to have addressed scalability issues and implemented high-level security features that even protect against quantum computing-based attacks. It should be noted that Bitcoin is also somewhat protected against quantum attacks, because quantum attacks can only work on exposed public keys, which are only revealed on the blockchain if both send and receive transactions are made. Therefore, if the public key is not revealed, which is the case in unused addresses or addresses that may have only been used to receive bitcoin, then quantum safety can be guaranteed. In other words, using a different address for every transaction protects against quantum attacks (to a degree). Also, in Bitcoin, it is relatively easy to change to another quantum signature protocol if required.

Hedera Hashgraph is another alternative to traditional blockchain. It is a distributed ledger that runs an asynchronous Byzantine fault tolerant (ABFT) protocol for achieving consensus. It is claimed to be a faster and more efficient alternative to traditional sequential blockchain.

Some debatable ideas

As with every new idea, some debate is inevitable. Some of the topics that have sparked debate are discussed as follows.

Public versus private on the blockchain

Although private and enterprise blockchains are seen as a solution to achieving privacy, and a way to address other enterprise concerns such as scalability and governance, some blockchain purists are not convinced, since centralization is viewed as a deviation from the core philosophy of blockchains. Decentralization proponents envisage that in the future, public blockchains will be able to provide all of the features that are desirable in enterprise use cases such as privacy, scalability, and governance. Using the Ethereum mainnet for enterprise use cases is also possible—there have been some high-profile activities performed on the public Ethereum network, such as bond settlement.

With Ethereum 2.0, the need for enterprise blockchains may diminish as the mainnet becomes capable of providing all required enterprise services. Also, with the availability of privacy solutions such as Nightfall, Aztec, and Zether, public blockchain may become the tool of choice for enterprise use cases one day, and private blockchains may not be as necessary as they were initially thought to be.

On the other hand, there are a number of advantages that private and enterprise blockchains provide, as discussed in Chapter 20, Enterprise Blockchain. Therefore, it is not entirely true that private blockchains are redundant. Decentralization is seen as a concern by enterprises, and public chains, with their fully decentralized nature, are deemed unsuitable for enterprise use cases. In traditional systems or enterprise blockchains, participants can be held accountable for their actions, but in public blockchains, there is no centralized control or governance, meaning that in cases of disputes, nobody can be held accountable.

This clash of interests might change, however, if public blockchains could introduce an optional governance mechanism to support enterprise governance needs. This feature could be achievable using smart contracts, where a governance layer is provided on top of the underlying blockchains in order to meet enterprise requirements such as access control, auditing, and security.

Central bank digital currency

With the advent of blockchain and tokenization, there is now a lot of interest in digital currencies issued by central banks. This is a somewhat controversial subject amongst regulators, technologists, and economists, but nevertheless something that could soon be a reality. The key difference between cryptocurrencies and central bank digital currency (CBDC) is that CBDC is issued by a central bank as legal tender, declared by a country's government. It is a digital form of fiat money, whereas cryptocurrency is more of a decentralized token of value, which is not backed by government regulation, law, or any monetary body.

As well as the topics we've discussed in this section, there are some further notable projects and relevant development tools that have emerged as a result of rapid development in blockchain technology that are beyond the scope of this chapter. Readers can explore some of these by referring to the bonus content repository for this book at https://static.packt-cdn.com/downloads/Altcoins_Ethereum_Projects_and_More_Bonus_Content.pdf.

In the next section, we'll introduce some challenges and areas of concern that need to be addressed in order to achieve the mainstream adoption of blockchain technology.

Areas to address

Apart from security and privacy, which were discussed at length in Chapter 21, Scalability and Other Challenges, several other less technology-based obstacles should be addressed before broad adoption of blockchains can be achieved. We'll introduce some of these more specific areas to address in the following sections.

Regulation

Regulation is considered one of the most significant challenges to blockchain development. The core issue is that blockchains, and their associated cryptocurrencies, are not recognized as legal systems or forms of currency by any government. Even though in some cases, blockchain tokens have been classified as having monetary value, for example in the US and Germany, they is still far from being accepted as regular currencies. Moreover, blockchains in their current state are not recognized by financial regulatory bodies as platforms that are stable or reliable enough to be used by financial institutions.

There have been, however, various initiatives proposed by regulatory authorities around the world to research and set regulations. Bitcoin in its current state is fully unregulated, even though some attempts have been made by governments to tax it. In the UK, under the EU VAT directive, Bitcoin transactions are exempt from Value Added Tax (VAT). This may change after the finalization of Brexit, but Capital Gains Tax (CGT) may still be applicable in some scenarios. Some attempt by financial regulatory authorities to regulate blockchain technology is expected very soon, especially after the recent announcement by the UK's Financial Conduct Authority (FCA) that it may approve some companies that are using blockchain for their business services.

Another regulatory concern is that blockchain technology is not ready for production deployments. Even though the Bitcoin blockchain has evolved into a solid blockchain platform and is used in production, it is not suitable for every scenario. This is especially true in the case of sensitive environments such as finance and health. However, this situation is changing very quickly and this chapter has already explored various examples of new blockchain projects that have been implemented in real life, such as the ASX blockchain post-trade solution. This trend is expected to grow as efforts are made to improve the associated technology, and address technical limitations such as scalability and privacy.

Security is also another general concern that has been highlighted by many researchers, which is especially applicable to the finance and health sectors. A report by the European Union Agency for Network and Information Security (ENISA) has highlighted some distributed ledger-specific concerns, including the need for regulation, auditing, control, and governance.

Some concerns highlighted in the report also include smart contract management, key management, Anti Money Laundering (AML) regulations, and anti-fraud tools. Clearly, while blockchain is generally seen as a solution to many technical business challenges, it can also be misused. In the next section, we'll see some scenarios in which cryptocurrencies and blockchain networks are being used for illegal activities.

Illegal activity

With the key attributes of censorship-resistance and decentralization, blockchain technology can help to improve transparency and efficiency in many walks of life. However, the somewhat unregulated nature of blockchain technology means that it has the potential to be used for illegal activity. For example, consider a scenario where illegal content is published over the internet. Normally, it can be immediately shut down by approaching the relevant authorities and website service providers, but this is not possible in blockchains. Once something is there on the blockchain, it is almost impossible to revert.

This means that any unacceptable content, once published on the blockchain, cannot be removed. If the blockchain is used for distributing immoral or illegal content, then there is no way for anyone to prevent it. This fact poses a serious challenge, and it seems that some regulation and control would be beneficial in this scenario, but it provokes the critical question: how can a blockchain be regulated? In this case, it may not be prudent to create regulatory laws first, and then see if blockchain technology adapts, because this might disrupt innovation and progress. It may be more sensible to let the blockchain technology grow first in a similar, organic manner to the internet. Then, when its user base reaches a critical mass, governing bodies can call for the application of regulations around the implementation and usage of blockchain technology.

There are various real-life examples where the dark web is used in conjunction with Bitcoin to perform illegal activities.

One example is the Silk Road online marketplace, which was used to sell illegal drugs and other contraband over the internet. It used Bitcoin for payments and was hosted on the dark web using URLs only visible with a browser called Tor. Although the Silk Road was shut down after years of effort by law enforcement agencies, other sites have emerged that offer similar services; as such, this activity remains a major concern. Imagine that an illegal website was hosted on IPFS, a P2P distributed and decentralized storage network built on a blockchain; there would be no easy way of shutting it down. It is clear that the absence of control and regulation can encourage illegal activity, meaning criminal enterprises like the Silk Road will keep appearing. Further development of totally anonymous transaction capabilities such as Zcash, while useful in various legitimate scenarios, could provide another layer of protection for criminals.

Clearly, it depends on who is using the technology; anonymity can be good in many scenarios, for example in the health industry, where patient records should be kept private and anonymous. However, it may not be appropriate if it can also be used by criminals to hide their activities. One solution might be to introduce intelligent bots, AAs, or even contracts that are programmed and embedded with regulatory logic. They would most likely be programmed by regulators and law enforcement agencies, and live on the blockchain as a means to provide governance and control. For example, a blockchain could be designed in such a way that every smart contract has to go through a controller contract, which scrutinizes the code logic and provides a regulatory mechanism to control the behavior of the contract.

It may also be possible to get each smart contract's code to be inspected by regulatory authorities, and once a smart contract's code has a certain level of authenticity attached to it in the form of certificates issued by a regulator, it will be deployed on the blockchain network. This concept of binary signing is akin to the already established concept of code signing, whereby executables are digitally signed as a means to confirm that the code is bona fide and not malicious. This idea is more applicable in the context of semi-private or regulated blockchains, where a certain degree of control is required by a regulatory authority; for example, in finance. It means, however, that some degree of trust is required to be placed in a trusted third-party regulator, which may not be desirable due to the deviation from full decentralization.

However, to address this, the blockchain itself can be used to provide a decentralized, transparent, and secure certificate issuing and digital signing mechanism.

Privacy or transparency

There needs to be a fine balance between privacy and transparency. Too much transparency can result in undermining personal privacy, however, too much privacy can result in the loss of transparency. The choice between privacy and transparency is use case dependent, however, a state of equilibrium is highly desirable to provide the best solution for both requirements.

Now, let's consider some research topics that are currently being explored by researchers in this space. Any student or researcher could use this list of topics as a starting point for their research.

Blockchain research topics

While some major innovations have been made in blockchain technology in recent years, the area is still ripe for further research. Some selected research topics are listed in this section, with some information about existing challenges and the latest developments. Some ideas are also presented on how to address the issues facing these topics.

Smart contracts

Significant progress has been made in this area, aimed at defining the key requirements of smart contracts, and developing templates for their production. However, further research is required in this area, in order to make smart contracts safer and more secure.

Cryptographic function limitations

Cryptography used in the Bitcoin blockchain is exceptionally secure and has stood the test of time. In other blockchains, similar security techniques are used, which are also very secure. However, specific security issues, such as the possibility of the generation and use of duplicate signature nonces in elliptic curve digital signature schemes (leading to private key recovery attacks), collisions in hash functions, and vulnerability to quantum attacks (that could break the underlying cryptographic algorithms), remain an exciting area of research.

Consensus algorithms

Research in PoS algorithms, or other alternatives to PoW, is also an important area of research. This is especially relevant due to the fact that the Bitcoin network's power consumption is expected to reach almost 69 TWh by the end of 2020, which is equivalent to entire nations in terms of electricity consumption. Alternatives such as PoS algorithms have already gained a lot of traction and are due to be implemented in major blockchains, such as Ethereum's Casper. However, so far, PoW remains the best option for securing a public blockchain. It has also been suggested that instead of performing an inefficient or single-purpose form of work, as is the case with Bitcoin's PoW, the power of the network can be used to solve useful mathematical or scientific problems.

Scalability

A detailed discussion on scalability has already been carried out in Chapter 21, Scalability and Other Challenges; briefly, it is sufficient to say that while some progress has already been made, there is still a need for more research in order to enable on-chain scalability, and further improve off-chain solutions such as state channels. Some initiatives, like increasing block size and using transaction-only blockchains (without blocks), have been proposed that increase the capacity of the blockchain itself to address scalability issues instead of using side channels.

Examples of implementations without blocks include the previously-mentioned Tangle. This utilizes a DAG to store transactions, as compared to traditional blockchain solutions where a block is used to store transactions. This makes it inherently faster as compared to block-based blockchains such as Bitcoin, where the waiting time between block generations is currently approximately 10 minutes. The performance increase comes from the fact that instead of mining a block, in a DAG-based system, transactions are linked to one another and are used for confirming and verifying the next transactions, instead of mining and verifying blocks.

Code obfuscation

Code obfuscation, using indistinguishability obfuscation, can be used as a means to provide confidentiality and privacy in the blockchain. However, this is still not practical due to prohibitive computational complexity, and some major research efforts are required to achieve this. Now, let's return to the subject of blockchain technology's convergence with the IoT and AI for a more in-depth analysis.

Blockchain and AI

It is envisaged that other technologies, such as IoT and AI, will converge for the mutual benefit and wider adoption of both blockchain and the other given technology.

The convergence of blockchain with IoT has been discussed at length in Chapter 21, Scalability and Other Challenges. Briefly, it can be said that due to blockchain's authenticity, integrity, privacy, and shared nature, IoT networks would benefit greatly from making use of blockchain technology. This can be realized in the form of an IoT network that runs on a blockchain, and makes use of a decentralized mesh network for communication in order to facilitate Machine-to-Machine (M2M) communication in real time.

All of the data that is generated as a result of M2M communication can be used in machine learning processes to augment the functionality of artificially intelligent DAOs or simple AAs. These AAs can act as agents in a blockchain-provided Distributed Artificial Intelligence (DAI) environment, which can learn over time using machine learning processes. This would enable them to make better decisions for the good of the blockchain.

AI is a field of computer science that endeavors to build intelligent agents that can make rational decisions based on the scenarios and environment that they observe around them. Machine learning plays a vital role in AI technology, by making use of raw data as a learning resource. A key requirement in AI-based systems is the availability of authentic data that can be used for machine learning and model building. Therefore, the explosion of data coming out of IoT devices, smartphones, and other means of data acquisition means that AI and machine learning is becoming more and more powerful. There is, however, a requirement for data authenticity, which is where the convergence with blockchain comes in. Once consumers, producers, and other entities are on a blockchain, the data that is generated as a result of interaction between these entities can be readily used as an input to machine learning engines with a guarantee of authenticity.

It could also be argued that if an IoT device is hacked, it could send malformed data to the blockchain. This issue would be mitigated using blockchain technology, because an IoT device would be part of the blockchain (as a node) and would have the same security properties applied to it as a standard node in the blockchain network. These properties include the incentivization of good behavior, rejection of malformed transactions, strict verification of transactions, and various other checks that are part of blockchain protocol. Therefore, even if an IoT device is hacked, it would be treated as a Byzantine node by the blockchain network and would not cause any adverse impact on the network.

The possibility of combining intelligent oracles, intelligent smart contracts, and AAs will give rise to Artificially Intelligent Decentralized Autonomous Organizations (AIDAOs) that can act on behalf of humans to run entire organizations on their own. This is another side of AI that could potentially become normal in the future. However, more research is required to realize this vision.

The convergence of blockchain technology with various other fields, such as 3D printing, virtual reality, augmented reality, spatial computing, and the gaming industry, is also envisaged. For example, in a multiplayer online game, blockchain's decentralized approach allows more transparency, and can ensure that no central authority is gaining an unfair advantage by manipulating game rules. Each of these topics are currently active areas of research, and more interest and development is expected.

Now, let's discuss the future of blockchain technology, and make some predictions about its development.

The future of blockchain

The year 2019 saw the move from the theoretical Proof of Concept (PoC) stages to the production of some real-life blockchain environments. 2019 was also considered the year of enterprise blockchain, and it is expected that before the end of 2020, we will see more organizations implementing full-scale enterprise blockchain-based projects. The start of 2021 will likely see a significant rise in tokenization and ecosystems built around tokens. A prime example of mainstream tokenization use is DeFi, which currently has billions of dollars' worth of value locked in its ecosystem. In the years to come, this technology is only expected to grow.

In this section, to round off the chapter and give an idea of the scope of blockchain development, there are a few careful predictions, based on current advancements and the speed of progress. All of these predictions are likely to be realized between the years of 2020 and 2050:

• The IoT will run on multiple blockchains and will give rise to an M2M economy. This will include energy devices, autonomous cars, and household accessories.
• Central bank-issued digital currencies will become a reality, and will be applied in day-to-day use within the next two to five years.
• Within the next three to five years, DeFi will be regulated, having become part of regular financial activities, and will have hundreds of billions of dollars' worth of value locked within its ecosystem.
• Medical records will be shared securely, while preserving patient privacy, between various private blockchains run by a consortium of health providers. It may well be a single private blockchain shared among all service providers, including pharmacies, hospitals, and clinics.
• Elections and voting systems will be managed transparently and securely via decentralized web applications, making use of a backend of blockchain technology.
• Financial institutions will run a multitude of private blockchains to share data between participants and to manage internal processes.
• Financial institutions will make use of semi-private blockchains that will provide identity information for controls and functions such as AML and Know Your Customer (KYC). This will be shared between other financial institutions around the world.
• Immigration, passport control, and border control-related activities will be recorded and conducted on a blockchain, shared between all ports of entry and border agencies around the world.
• Governments will run interdepartmental blockchains to provide core services such as pension and benefits disbursement, and to monitor land ownership records, birth registrations, and other database services. This way, auditability, trust, and a sense of security will develop between citizens and their governments.
• Publicly available, regulated blockchains run by governments will be used on a day-to-day basis by citizens in order to manage their digital identities, and perform their day-to-day activities; for example, tax payments, TV license registrations, and marriage registrations.
• Research in cryptography and distributed systems will reach new heights, and universities and other educational establishments will offer dedicated courses on cryptography, cryptoeconomics, and blockchain technology.
• Artificially intelligent DAOs will become part of blockchains, which will make rational decisions on behalf of humans for the good of the system that they are part of.
• BaaS will be provided as standard to anyone who wishes to run their business or day-to-day transactions on a blockchain. In fact, it's entirely possible that just like the internet, blockchains will seamlessly integrate into our daily lives, and people will use them without knowing anything about the underlying technology or infrastructure.
• Blockchains will commonly be used to provide Digital Rights Management services for media and the arts, and will be used to deliver content directly to consumers. This will enable direct communication between the consumer and producer, eliminating the need for a central party to govern the licensing and rights management of valuable goods.
• Existing cryptocurrencies such as Bitcoin will continue to grow in value. With the availability of state channels and scalability efforts, this trend is only expected to grow. Bitcoin's value will likely reach tens of thousands of US dollars per BTC. As a result, cryptocurrency investment will greatly increase, and a new cryptoeconomic system will emerge.
• Financial institutions and clearing houses will start to introduce blockchain-based solutions as part of the normal process for their customers.

Blockchains are going to change the world. The revolution has already begun, and it is only expected to continue.

Summary

First in this chapter, a few trends were discussed that are expected to continue as the technology progresses. We also explored some areas outside technology that will have to be addressed before the blockchain is accepted into society, such as its use in illegal activity. Some research topics were suggested that are being pursued by researchers and organizations around the world, and should be considered for personal research by any student or academic. Furthermore, convergence with other fields such as the IoT and AI were also explored. Finally, some predictions regarding the growth and adoption of blockchain technology were made. Most of these predictions are likely to come true within the next decade or so, while some may take longer.

Blockchain technology has the potential to change our lives, and the impact is already noticeable. This growth is evident in the form of successful PoC implementations and production deployments. Moreover, the number of enthusiasts and developers taking an interest in this technology is increasing, a reflection of the fact that blockchains are becoming intertwined with our lives just as the internet has been for decades. This chapter was only a modest overview of the vast and tremendous potential of blockchains, and further adoption and applications of this technology are inevitable as it matures.

In this book, we have explored the technical foundations of blockchain, and learned how to build practical real-world decentralized applications. We've explored cryptocurrencies, alternative blockchains, enterprise blockchains, scalability, and privacy, and examined the underlying mechanics of blockchain technology. We've combined these theoretical foundations with practical development, design, and deployment of blockchain networks, smart contracts, and decentralized applications. We learned how to use Truffle, Ganache, Drizzle, and other tools and techniques to build DApps. Moving forward, detailed accounts of tokenization, consensus mechanisms, and recent developments such as Ethereum 2.0 were provided.

Blockchain can arguably be considered the most innovative technology of this decade, and as we've seen throughout this book, it is one of the most active areas of study by researchers, academics… and now, you! You are now capable of applying the knowledge from this book, and continuing your learning to try your hand at entry-level blockchain development or architecture. With the material provided in this book, you are equipped with the necessary skills and knowledge of blockchain technology to participate in further research and development concerning this amazing technology, and be part of the blockchain revolution!