=Paper=
{{Paper
|id=Vol-2588/paper8
|storemode=property
|title=Practices of Using Blockchain Technology in ICT under the Digitalization of the World Economy
|pdfUrl=https://ceur-ws.org/Vol-2588/paper8.pdf
|volume=Vol-2588
|authors=Nataliia Kraus,Nataliia Andrusiak,Alina Savchenko,Maksim Iavich
|dblpUrl=https://dblp.org/rec/conf/cmigin/KrausASI19
}}
==Practices of Using Blockchain Technology in ICT under the Digitalization of the World Economy==
https://ceur-ws.org/Vol-2588/paper8.pdf
Practices of Using Blockchain Technology in ICT under
the Digitalization of the World Economy
Nataliia Kraus 1 [0000-0001-8610-3980], Nataliia Andrusiak 2 [0000-0001-8939-7750],
Alina Savchenko 3 [0000-0001-8205-8852], and Maksim Iavich 4 [0000-0002-3109-7971]
1
Borys Grinchenko Kyiv University, Kyiv, Ukraine,
kubg@kubg.edu.ua
2
Bohdan Khmelnytsky National University of Cherkasy, Cherkasy, Ukraine,
cic@cdu.edu.ua
3
National Aviation University, Kyiv, Ukraine
alina@inet.ua
4
Scientific Cyber Security Association, Tbilisi, Georgia
m.iavich@scsa.ge
Abstract. Pursuing the purpose of effective functioning in today's conditions,
the business is forced to transform rapidly, to modernize at all levels. The world
is changing, erasing the limits of its certainty. Companies need quality trans-
formations and strategies that are effective in the face of rapid change towards
"deep" digitization. Massive corporate management systems increasingly need
the flexibility to keep pace with change. And companies with an innovative cul-
ture are more in need of creative tasks than implementing detailed regulations.
In the post-industrial time of digital economy, issues related to the development
of the information sphere, the media and communications, the usage of modern
information systems to develop the economy and stabilize social development
as a whole, come first. The basic principles of practical application of Block-
chain are investigated in the work. The stages of development of Blockchain
technology, the stages of development of Blockchain technologies by time, the
application of distributed registry technology in Blockchain applications, the
principles of construction and operation of Blockchain have been specified. The
benefits of using NEM for business are substantiated and the components of
Proxima X technology, protocols and service layers, on-line and off-line proto-
cols, decentralized applications are exposed.
Keywords: information and communications technologies (ICT), blockchain
technology, E-commerce models.
1 Introduction
The formation and development of the digital economy depends on the implementa-
tion of such advanced technologies as nanotechnology, biotechnology, technology of
complex energy systems, quantum technologies. At the same time, it is difficult to
further development of the digital economy without the widespread adoption of in-
Copyright © 2020 for this paper by its authors. Use permitted under Creative Commons License Attrib-
ution 4.0 International (CC BY 4.0) CMiGIN-2019: International Workshop on Conflict Management in
Global Information Networks.
formation and communications (ICT) technologies, including cloud computing, big
data, mobile technology, Internet of things technologies, geolocation technologies,
distribution networking, etc. [1; 2].
In addition, digital technologies are evolving at an exponential rate, radically
changing the essence of business, dematerializing, demonetizing and democratizing
every industry. Due to modern technologies in Ukraine, successful businesses like
Augmented Pixels (known for developing augmented reality technologies and appli-
cations) are born of a simple idea; Paymentwall (provides over 120 payment methods
worldwide); Kwambio (3D Design Online Store) [3].
2 Related papers
The latest Blockchain technology (Fig. 1), which focuses on financial asset trading, is
potentially the most interesting for both the transactional banking and payment do-
main, and for processes within and between organizations. But, in fact, the needs of
the market have led to new terms. For example, the term “Value Web” for Blockchain
technologies was coined to Fintech by Chris Skinner, but the idea is also known as
“Internet values” for other applications. It is worth saying that "Internet Values" refers
to the next mass evolution of the Internet, which is expected to be characterized by a
combination of different technologies, and Blockchain will be the key. The “world of
finance” is expected to be different [4].
Fig. 1. Step-by-step scheme of Blockchain technology
To give an example from FINTECH, we add that the advent of Blockchain and fi-
nancial record sharing technologies, which offer new opportunities for decentralized
identity systems, may be beyond the control of any company or government, ultimate-
ly relying on massively used devices. FINTECH 2.0 is already considering a product
design focused on the support of the following solutions, which is highly dependent
on personal requests of users.
Blockchain is able to transform the payments ecosystem by improving the efficien-
cy of financial transactions around the world. Banks and other financial institutions
have the opportunity to improve operational efficiencies in cross-border transfers in
real time, but as transactions grow, Blockchain algorithms will be exposed to multiple
participants, which increase the risk. In the future, the realization of the potential will
require significant investment from participants to ensure the security and transparen-
cy of all agreements [5].
3 Outline of the main material of the research with full
justification of scientific results
Blockchain's innovative technology will determine the trend of the 21st century's
global economy, according to expert estimates, Blockchain will completely or partial-
ly change the industries that generate a fifth of GDP of USA (about $ 3.6 trillion) [6].
Table 1. Stages of Blockchain technologies development in the context of time.
Number of Time period Contents of the stage of development
stage Blockchain technologies
Analysis of Blockchain implementation opportunities for
Stage 1 2014–2016
the financial services industry.
Review of concepts that can influence business and
Blockchain decisions to secure the activities of financial
institutions. Today, experts identify seven promising areas
Stage 2 2017–2018 of implementation of Blockchain technologies, namely:
documentary transactions, syndicated borrowings,
clearing and mutual settlement, digital personal identity,
lending, contracts.
The appearance of shared infrastructure, APIs and
Stage 3 2019–2020
interfaces to extend the scope of Blockchain
Active development of Blockchain networks, completion
Stage 4 2021–2025 of formation and approval of standards of interoperability
and communication channels.
In essence, Blockchain technology provides a close link between the financial, logis-
tical and commercial components of trade and economic transactions with the ability
to unify the payments and delivery.
Blockchain algorithm is called the sequence of operations by which the infor-
mation content of multiple data structures in distributed peer systems is consistent
with each other like the system of democratic voting [7].
There is also a separate subtype of P2P systems that is "centralized peering sys-
tems", which have a central node that facilitates interaction between system members,
maintains directories describing the services provided by system nodes, or searches
and identifies system nodes [8].
Blockchain is a multifunctional and multilevel information and communication
technology that aims to make the accounting of various assets reliable and instantly
accessible. Reliable storage technology for keeping records of all transactions that
have been taken place. Blockchain is a chain of data blocks that is steadily increasing
by adding new blocks with recent transaction records. It is a chronological database,
that is, a database in which the time when the record was made is inextricably linked
to the data itself, making it non-commutative [9].
Data is represented by a sequence of records that can be supplemented. The records
together with the supporting information are stored in blocks. The blocks are stored as
a single list. Each participant is represented by a node (node), which stores all the
actual array of data and communicates with other nodes. Nodes can add new entries at
the end of the list, and notify each other of changes to the list.
Each member of the network, upon registration in it and installed the necessary
software, receives a set of two cryptographic keys to the workstation: the closed one -
for encryption of the transaction, and the open one - for verification of the transaction.
Each regular participant, sending the transaction to the next one, signs the hash of the
previous transaction and the public key of the next and adds this information at the
end of the transaction. In this way, the recipient can check the entire transaction chain
by checking all signatures of previous participants in the transaction.
The hash in this scheme is a data array transformed with the hash function. In the
case of crypto currency, this is transaction information; in more complicated systems
is information about smart contracts and the current status of Blockchain code. As a
result of the transformation, we get a virtually unique, except in the case of hash colli-
sions, alphanumeric string that characterizes the initial element, but cannot be con-
verted in the opposite direction. Cryptographic hash functions have the following
properties: rapid calculation of hash values for any data type, determinism, pseudo-
randomness, irreversibility, resistance to contradictions [10].
The combination of public and private keys together with hashes gives Blockchain
technology a high level of data security [8]. A summary of the principles of Block-
chain construction and operation is presented in Table 2.
Table 2. Principles of Blockchain construction and operation (compiled on the basis of
sources [11; 12])
Principle Content of the principle of Blockchain construction and
operation
The purpose of having confidence within the system is
Network integrity pursued and, in essence, the participants' consensus, their
equality, is mentioned.
Intensity partition Energy costs are distributed throughout the peering
network.
The system aligns the incentives of all stakeholders, means
Value as an incentive that participants are interested in developing technology and
maintaining its stability.
Principle Content of the principle of Blockchain construction and
operation
One of the principles of Blockchain is trust. Having this
Privacy and protection of principle eliminates the need to identify others to interact
rights with them.
In addition to the fact that each member of the network
Security must use encryption, security measures are built into the
network and provide privacy and authentication of the print.
Each user also has two keys: one for encryption, the other
for decryption.
One of the major benefits of Blockchain technology comes from the ability to speed
up processes and reduce transaction complexity and risk. New benefits will appear as
this technology can be integrated with outdated IT, legal laws and existing assets such
as currencies, stocks, bonds. For this reason, existing financial services can be
strengthened by blockchain systems, enabling financial institutions to enter into po-
tentially lower costs, better products and accelerate time to appear in the market [4].
Researcher and founder of the Blockchain Research Institute, Melanie Swan, iden-
tifies three conventional areas of application of this technology:
- Blockchain 1.0 is currency (crypto currency is used in various applications relat-
ed to financial transactions, such as wire transfers and digital payments);
- Blockchain 2.0 is the contracts (applications in the fields of economics, markets
and finance that deal with different types of instruments: stocks, bonds, futures, mort-
gages, legal documents, assets and contracts);
- Blockchain 3.0 is applications whose scope extends beyond financial transactions
and markets (extending to branches of government, health, science, education,
etc.) [13];
- Blockchain 4.0 is so-called industry infrastructure based Blockchain ecosystem.
Fig. 2. Evolution of Blockchain
The main advantage of Blockchain technologies from an economic point of view is
that it is a transparent, fast, cheap and secure way of conducting transactions with
electronic money. E-commerce models (e-commerce, e-trade), which use Blockchain
technology in particular, are gaining popularity not only in the world but also in
Ukraine, presented in Table 3 and Fig. 3. E-commerce or electronic commerce is an
intangible business platform which enables the individuals, business entities and
companies to sell their products or services and carry out various commercial activi-
ties, through an electronic network (Fig. 4).
Fig. 3. E-commerce models
The B2B model is the typical basis for the creation of a digital platform that provides
the opportunity to buy goods, services and works online from one business to another.
Another example of using this model is digital platforms that provide logistics, for
example, for the optimization of marine transport using "smart ships".
The B2C model is most often embodied in digital platforms that follow the logic of
an online store. The most well-known and capitalized digital venues of this type are
Amazon and Alibaba Group.
Fig. 4. E-commerce models
The B2G model implements digital procurement platforms.
The C2B model is about creating customer value for business. One example of this
model could be contextual advertising on consumer blogs and online resources (such
as Google AdSense). However, households are a provider of workforce resources for
businesses, and accordingly digital platforms that aggregate jobseekers 'and employ-
ers' registers can be seen as embodying a model of reconciling business and house-
hold needs.
Fig. 5. E-commerce today challenges
Table 3. E-Commerce models (E-commerce, E-trade) using Blockchain technologyv
The subject The object (consumers of goods and services)
(manufacturer of Consumers
goods and Business (households) Government
services)
Business-to- Business-to-customer Business-to-
business (B2B) (B2C) model. Government (B2G)
Business model. Online Stores (ex: model. Electronic
Electronic Alibaba, Amazon) government
government procurement
procurement
Model Customers Model Customer to Model Customer to
to Business Customers Government
(Customer-to- (Customer-to- (Customer-to-
Consumers business: C2B). Customer: C2C). Government:
(households) Contextual Digital sharing C2G). Digital
Business platforms (for petition platforms).
Advertising and example: blablacar;
Electronic Job Airbnb; eBay).
Exchanges (ex:
Google AdSense;
Work.ua)
Model Model Government to Model
Government to Customers Government to
Government Business (Government-to- Government
(Government-to- Customer: G2C). (Government-to-
Business: G2B). Government services Government:
Public services for for citizens. G2G).
business. E-government.
The C2C model is represented by digital sharing platforms (such as Airbnb) as well as
customers’ sales to one another (eg, eBay37).
The C2G model involves the interaction of households with public authorities, for
example, to get information on attitudes to particular initiatives (eg, e-petition plat-
forms).
The G2B model is implemented through digital public service delivery platforms
for business (tax collection, permitting and miscellaneous information, etc.).
The G2C model involves the interaction of households with public authorities, for
example, to pay taxes online or to obtain information in the form of certificates (ex-
tracts) from state registers.
The G2G model involves communication between government agencies and is of-
ten implemented in the context of e-government. In this case, the positive effect on
the national economy is due to the reduction of public spending on public administra-
tion.
Conclusions
Information and communication technologies transform all subsystems of society and
the state, affecting the growth of all sectors of the economy. To determine the current
stage of development of society and economy should use a system of categories: in-
formation society, digital economy.
The basic components of the digital economy that are evolving through its digitali-
zation today are infrastructure, e-business and e-commerce. The digital economy is
the result of the transformational effects of new general-purpose technologies in in-
formation and communication. Digital technologies are rapidly transforming society,
business relationships, and are an integral part of an innovative, nationally oriented
economy of the future. In the "old" economy, or the so-called "traditional economy,"
the flow of information was physical: cash, checks, invoices, way bills, reports, face-
to-face meetings, phone calls, in the new one - information in all its forms is reduced
to bits [14].
In the digital economy, e-products/services, produced by e-business and e-
commerce, dominate. Payments for services/products in the digital economy are most
often due to the use of electronic money.
Due to Blockchain technology [15-24], if used comprehensively, it can lead to the
transition to a digital person (personality), which will be the result from all transac-
tions involving the individual from the beginning of their birth recorded in the Block-
chain type [25-28].
Digitalization is a significant factor in technological evolution that will help manu-
facturers to overcome territorial constraints, reduce transaction costs of decision-
making transactions and formation of contracts, develop new business models based
on network effects, engage the customer in the process of creating benefits.
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