The Phenomenon of Blockchain Technology and the Future of Self-Stabilising and Self-Adaptive Systems of Systems

The Phenomenon of Blockchain Technology and the Future of Self-Stabilising and Self-Adaptive Systems of Systems

Ben van Lier (Centric, The Netherlands)
DOI: 10.4018/978-1-7998-1879-3.ch008

Abstract

Thinking in terms of blockchain technology has developed rapidly over the past decade, with the focus primarily being on all the new possibilities created by this essentially technology-driven development. At its core, blockchain technology consists of a combination of reliable communication mechanisms between systems and the performance of joint decision-making processes by these systems. Consensus algorithms enable combinations of hardware, algorithms, and software (i.e., cyber-physical systems) to operate in networks and engage in secure intercommunication and interaction in these networks. Thanks to intercommunication, cyber-physical systems are able to reach consensus on decisions on information transactions to perform. This, in turn, empowers interconnected systems to increase their level of autonomy and adapt their individual and joint operations to changes that emerge from within them or from their environment.
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Introduction

In 2008, Satoshi Nakamoto published a paper entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System.’ Nakamoto’s paper gave birth to the bitcoin cryptocurrency and the network within which bitcoins are produced and bitcoin transactions are performed. For the purposes of my essay, the manifestation of bitcoin as a cryptocurrency is irrelevant, as I will primarily go into the technology behind bitcoin and explore the historical backgrounds to this technology. In his paper, Nakamoto shares that there were two important reasons that drove him to publish his paper. Firstly, there was the given that “commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments” (Nakomoto, 2008, p. 1). Nakamoto highlights that online commerce, both goods and services, has become an important factor in society. Commerce is now largely taking place on the Internet, which is a network of interconnected electronic systems that, in turn, are made up of combinations of hardware, algorithms and software. Commerce through a combination of networked electronic systems, i.e. generally online, takes places between electronic systems owned and operated by persons and companies (online stores, marketplaces, platforms, etc.) in the form of data or information transactions. These data and information transactions between parties are processed and goods are transferred after the financial side of the transaction has been completed through a reliable third party, i.e. a financial institution such as a bank. According to Nakamoto, banks’ growing role in these transactions is having too much of an influence on the costs involved. He argues that what is needed for the financial settlement of the transaction is “an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party” (Nakomoto, 2008, p. 1). Nakamoto assumes that such an electronic payment system needs to be available to all systems operating online to facilitate any commercial activity on the Internet. In designing his system, Nakamoto had to take into account that combinations of random systems that want to engage in commercial transactions with each other are, in fact, unknown to each other and return to being strangers to each other as soon as a transaction has been completed. On this point of the randomness of nodes, Nakamoto (2008) states the following in his paper: “Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone.” (p. 8). For the purposes of this essay, what I want to pick up on from Nakamoto’s train of thought is his assumption of participating systems accepting what has taken place previously in the network before proceeding to take part in new transactions. Nakamoto (2008) also says about these systems that “they vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them” (p. 8). This voting on data and information transactions between electronic systems’ processing units was, when Nakamoto wrote his paper, already a known phenomenon used mainly in the development and application of distributed systems. The execution of voting rounds enables interconnected electronic systems to jointly reach a decision on transactions to perform. In the final sentence of his paper, Nakamoto (2008) says that “any needed rules and incentives can be enforced with this consensus mechanism” (p. 8), closing his paper with the introduction of a consensus mechanism for decision-making by distributed systems in the processing of transactions. For Nakamoto, there can be no mistake about it that these consensus mechanisms can be used for much more than only the electronic payment system he envisioned. In this essay, I will first touch on the phenomenon of technology from a philosophical perspective, followed by an analysis of how technology is currently driving the rapid development of the (Industrial) Internet of Things and cyber-physical systems. Next, the focus will shift to where these consensus mechanisms originally came from and what possibilities they create in terms of facilitating decision-making processes between interconnected electronic systems. The concept of the consensus mechanism will be analysed here based on the inception and development of the Paxos algorithm, which the US National Institute of Standards and Technology (NIST, 2018) considers the cornerstone of consensus algorithms. And finally, I will address the question whether interconnected cyber-physical systems making decisions by consensus can help shape capabilities such as self-stabilisation and self-adaptation in the functioning of these systems of systems. This essay will close with conclusions and recommendations for further research.

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