1 how blockchain technology came to be

BlockChain Technology in Artificial Intelligence
Josh Marvel, Aishwarya Iyer, Jay Johnson, Payne Lacsamana
Abstract ?—This research paper aims to explore how Blockchain technology in combination
with Artificial Intelligence can be applied to various problems in government, business and
finance. As well as looking at the history of how blockchain technology came to be and all
the technologies that were founded using the blockchain. Bitcoin and other cryptocurrencies
have splashed into the mainstream media and people are becoming more aware of the future
uses of these technologies. All these technologies also all for new artificial intelligence
technologies in helping to analyze how society can use these technologies ethically.

—————————— ? — —————————
Over the years, we’ve been making our lives easier through the use of technology. From emails to
books, contacting people from across the globe, technology has been a great helping hand in human
interaction. Nowadays, people are finding ways to create a currency that anyone can use that is readily
available via the Internet. Bitcoin technology is the newest solution for this goal. Alongside Bitcoin,
there are various other cryptocurrencies that are also ready to use. One way to make sure that currencies
are secure, is by creating blockchain technologies. Blockchain technologies have allowed for further
development of a variety of technologies other than Bitcoin. Some inventions that share blockchain
technology are smart contracts, digital identities, and lots of new cryptocurrencies.
1.1 What is Blockchain?
A blockchain is a digitized and public
“ledger” of all cryptocurrency transactions. Blocks
are recorded and added in chronological order and
allows users to keep track of each digital
cryptocurrency transaction made.10 Each node
gets an automatically downloaded copy of the
Blockchain technology works by using the
Blockchain – made up of an electronic chain of
hashes of digital signatures. Digital signatures are
a form of asymmetric cryptography (i.e. they use
one private key and one public key) for
demonstrating the authenticity of a digital
message or documents. A valid digital signature
gives a recipient reason to believe that the
message was created by a known sender (i.e. it is
authentic), that the sender cannot deny having sent
the message (i.e. it is non-repudiable) and that the

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was not altered in transit (i.e. that it has integrity).
Digital signatures are commonly used for software
distribution, financial transactions and in other
cases where it is important to detect forgery or
tampering.To avoid a situation wherein a party
could transfer an asset twice, the transactions are
broadcast out to a distributed network of nodes to
agree and approve the order of the transactions.
Nodes in the network collect the broadcasts of the
transactions into blocks, which are then hashed,
and receive a timestamp.
When a computer finds the proof, it
broadcasts the block to all nodes. Nodes accept the
block only if all transactions in it are valid. Nodes
express their acceptance of the block by working
on creating the next block in the chain, using the
hash of the accepted block as the previous hash.
Nodes work on a consensus system; that is,
together with little coordination. Their behavior is
such that they do not need to be identified, can
leave and rejoin the network at will, accept the
proof-of-work chain as proof of what happened
while they were gone and express their acceptance
of valid blocks by working on extending them and
can reject invalid blocks by refusing to work on
them. This process ultimately establishes a single,
but distributed, agreed history for each transaction
and creates a way for the receiver of an asset to
know that the previous owners did not sign any
earlier transactions. Advocates argue that trust is
increased among the parties because there is no
possibility for abuse by a node in a dominant
position, as there can be when a system relies
upon a single trusted third party that may be
breached or turned rogue. 15
This technology has proven itself and
particularly has the great potential to bring change
to fields of banking and finance. This technology
allows fields to be independent of third parties
which take huge fees in terms of transactions. 11
With blockchains, the individual can make a
transaction without acquiring a massive fee.
A block is a current part of a blockchain
which records all the recent transactions. Once
this is done, the block goes into the blockchain as
a permanent database. Each time a block is
complete, a new one will automatically be
generated. Each block contains a hash of the
previous block and has all the information of
different user addresses and balances.

The blockchain was mainly designed so
that these cryptocurrency transactions cannot be
deleted or misused. 8These blocks are added
through cryptography, which ensure they are not
tampered with. The data in each block can be
distributed, but cannot be copied for other
Currently Blockchains are being used with
Bitcoin. Bitcoin is a technology that allows users
to validate transactions, eliminating the need for a
third party to process payments. Each payment
made by Bitcoin is publicly stored in blocks and
eventually in blockchain. The blockchain database
for Bitcoin is shared by numerous nodes in the
system. When joining the system, each connected
computer will receive a copy of the blockchain.
Each block in a blockchain is made every 10
minutes through data mining.
Blockchain technology is not without its
issues though. Some vulnerabilities are as follows:
? ” A SYN Flood attack is a form of
Denial-of-Service attack in which an
attacker sends repeated, rapid SYN

requests to a target's system in an attempt
to consume enough server resources to
make the system unresponsive to
legitimate traffic. A SYN request is made
when a server requests a connection to
communicate with another server by
sending a SYN (synchronize) message to
the server. This is followed by a
"handshake" procedure in which the two
servers acknowledge one another. In a
SYN Flood attack the server receiving the
request is unable to complete the
handshake procedure before a new request
comes in, which ultimately floods the
server's resources with requests and causes
it to become unresponsive.” 15
? “A Sybil attack occurs when an attacker
fills a Blockchain mesh network with
nodes controlled by him, which increases
the probability of connecting only to
attacker nodes. This type of attack can
allow an attacker to refuse to relay blocks
and transactions, even disconnecting an
entry registration communication from the
network. It can also allow an attacker to
relay only blocks that he creates.”15
? Timing errors and attacks occurs if an
attacker slows down or speeds up a nodes
network time counter by connecting as
multiple peer nodes and reporting
inaccurate timestamps. In the blockchain,
each individual block contains a list of
transactions and a timestamp representing
the time a block was created. This allows
the system to generate proof of the
chronological order of the transactions as a
As Bitcoin was the first implementation of
Blockchains, the first models of this were easily
accessible by the Internet with no permissions
required. Since then, corporations have
implemented instances in permissioned context.
There are two types of blockchains that exist
currently: permissionless blockchains and
permissioned blockchains.
Public blockchains are a form of
peer-to-peer networking that allows nodes to take
part in performing transactions without replying
on third parties. These types of blockchains are
said to be permissionless since they do not require
access to specific nodes. As blockchains are used
to validate, store and maintain many records,
permissionless blockchains are stored on public
ledgers. Although this may seem very insecure,
the exchanging of data happens off-chain. Miner
nodes are forced to solve complex math problems
known as “proof of works”, which is when a block
is attached to a chain. 17. One very well known
permissionless blockchain is Ethereum
blockchain. This uses the Ether to allow the first
node to mine the block. Once this block is
validated and in the chain, it can never be deleted.
Deleting this block is very difficult for attackers to
The second type of blockchain is called
permissioned blockchains. There are two varieties
of permissioned blockchains, private blockchains
and consortium blockchains. Although there are
slight variations to both of these, there still is a
distinction between the two as they both run on
private networks. 17
Private blockchains are blockchains that
the write permissions are centralized to one entity
whereas the read permissions are public. These
blockchains are based solely on the fact that only
chosen participants can view Blockchain activity.
High privacy settings are also available to private
blockchains because of the restrictions on the read
and write permissions.17 Another advantage of
private blockchains over public blockchains are
that private blockchains can be easily modified

and transactions can be verified by chosen
Consortium blockchains are blockchains in
which the consensus process is mainly controlled
by a set of trusted nodes. A block will be added to
the chain once the consensus approves the
transaction. The right to read a blockchain may be
public or can be made private only for
participants. These blockchains are considered
decentralized because a blockchain model tends to
appeal to companies. 17
Cryptocurrency applications such as
blockchains are well established and known in
today’s day and age, but there are issues that come
with applications becoming popular. One of the
issues that is linked with blockchains, is trust.
The thought of having a autonomous and
self-validating application that does not depend on
any network communication is very difficult to
think about. In the past, many people have secured
their belongings, including money, in physical
safes or have had it hidden from the world. This
method is still useable in some forms of electronic
security, such as offline hardware. Unfortunately,
blockchain does not allow physical forms of
electronic security. Blockchain is solely
One of the main factors that attracts
crowds is the ease of workflows and
data-processing life-cycles. 16 Users mainly
look for methods that solve particular problems
without requiring additional efforts.

Blockchain technology has also paved the
way for a technology called smart contracts.
Blockchain smart contracts extend the
functionality of Blockchain technology and
expand the type of services facilitated through the
blockchain. A range of services, which are
inefficient and unsustainable, can be maintained
through the blockchain technology smart
contracts. New technology services within the
Internet of Things (IoT) can also benefit from and
accelerate through the automated management of
blockchain structured control conditions. The
structured conditions are referred to as ‘contracts’,
using the broader definition of this terminology
that is not restricted to legal contracts. The
counterparties can be institutions, individuals,
intelligent computing agents, or IoT devices.
Some aspects of this technology are as follows:

? “A security control mechanism that
permits or prohibits access to an off-chain
resource in an intelligent manner, and
allows contracts to be time-bound,
condition-bound, or open-ended and
? “A mechanism to hold a secure, public
record of contracts on the blockchain, in a
manner that allows automated
determination of their validity, and release
of their details to authorized entities upon

validation.” 9

In Order to keep records preserved, steps
need to be taken from the onset of their creation.
For example, standards for long term preservation
are relevant to systems of registering land titles
because of the long term value of these records to
society. long-term preservation of information in
digital form requires that technical dangers to the
longevity of authentic information be addressed.
This may include rapid changes to software,
hardware, network links to related information and
failure to capture or loss of semantic information.
In addition to technical issues there are also
organizational, legal, industrial, scientific and
cultural issues to be considered in protecting
records over the long term.

2 Blockchain in IoT
The Internet of things does not only
concern devices. Internet of things can be any
product that is given a digital identity, can be
tracked or verified. While the origin of a product
can be protected by writing to a certain block, it is
not true for the mechanism that is used to connect
to the real object. 11 Blockchains are mainly
designed as the basis for applications that involve
transactions and interactions. 14. These
applications include smart contracts or other
processes that support the Internet of Things.
There are three benefits of using blockchains for
IoT’s. The first is to build trust. Blockchains
intend to create a trust between parties and devices
and reduce the risk of collusions and tampering.
The second benefit of using blockchains is to
reduce the costs. This happens by removing
overhead which is associated with intermediaries.
And lastly to accelerate transactions from days to
near instantaneous. 14

3.1 What is Bitcoin?
Bitcoin was invented by Satoshi Nakamoto
in 2009. The goal of creating a bitcoin was to
create a new and innovative “electronic cash
system” (CNET) that was completely
decentralized with no servers or authority. Bitcoin
is simply, digital currency. This type of currency
is decentralized–meaning–there is no
involvement with the government-like institution
6 or any authority-like figures that control it. The
owners of the currency remain completely
anonymous, and the only way of identifying the
owner is through encryption keys–which are
unique to each individual. Each bitcoin is “mined”
by powerful and intelligent computers that are
connected to the Internet.
3.2 Current Uses
Nowadays, Bitcoin is a functional
currency, resulting in vendors allowing payments
to be made using this electronic currency.
3.2.1 Computers
Computers are one of the biggest products
that are bought with Bitcoins or other
cryptocurrencies. Newegg is one of the biggest
online retailers for computer parts. They currently
accept payment of bitcoins, and it’s as simple as
sending the correct amount of bitcoins to the their
receiving address.
3.2.2 Travel
For people who love to travel, another
product that can be purchased using Bitcoins is
airline tickets and hotel rooms 7. Although not
all airlines accept this currency, more and more
currently do. Bitcoin also makes the hassle of
currency conversion, making it easier to withdraw
money for purchasing travel necessities and
souvenirs. One can also purchase train tickets
using bitcoin.

3.2.3 Food
More and more food restaurants are also
beginning to accept Bitcoin as a way of
purchasing food. Bitcoin is an upcoming method
of purchase because of the fast and cheaper
process. The process could be as simple as Apple
pay where you are able to quickly pay with your

3.3 Consequences
Bitcoin is one of the first and most
publicly known cryptocurrencies around the
world. These technologies offer new ways for
economic empowerment to individuals around the
world. Even though the first recorded purchase
of an item was actually for pizza, the use of
bitcoin and other cryptocurrencies have been a
powerful tool for criminal activities such as
human trafficking and illegal weapons sales 12.
Because of the anonymity of bitcoin, it was being
used a lot as the primary currency for sales or
services on the deep web such as The Silk Road.
With these cryptocurrencies having so very
little guidelines and laws to follows it is up to the
developers and computer scientists to find ways to
better further develop bitcoin use with ethics.
Research is being done that aims to develop
autonomous ethically guided cryptocurrencies( or
AEGC)12. “The goal of AEGC is to possess a
type of artificial intelligence that senses its
environment, gathers and analyses data, and
autonomously makes decisions guided by

particular ethical principles. It also would
function as a digital cryptocurrency that can serve
as a medium of exchange, unit of account, and
store of value.”12 A cryptocurrency of this
magnitude would be huge as it would allow
artificial intelligence to play a big role as a sort of
judge to prevent lots of purchases of illegal items
or services with cryptocurrencies. The way it
seems that scientists are going about this is the AI
would gather data and make decisions based on a
fixed set of ethical principles that have been
programmed into it. This AI could hopefully even
be built on existing platforms such as Bitcoin.12

4.1 What is Cryptocurrency?
Cryptocurrency is a digital money system
that secures transactions. The most and
well-known type of cryptocurrency is Bitcoin. The
only difference between physical transactions and
electronic transactions is that electronic
transactions are decentralized and are not
controlled by the authority. Each company can
have their own version of a currency which is
called a token, which can be traded for various
goods or services that companies provide. In order
to purchase a cryptocurrency, you will need to
exchange real currency. Cryptocurrencies work
alongside a specific technology called

People can earn small amounts of
cryptocurrencies by using their computers to
process all the transactions on the blockchain.
Anyone with access to the internet and suitable
hardware can participate in mining. The process
involves compiling recent transactions into blocks
and trying to solve a computationally difficult
puzzle. The owner of the computer who solves
the puzzle is awarded the reward, which is the
transaction fee associated with transactions
compiled on the block.
Back in the early days of bitcoin, anyone
with a spare computer can mine with it. One just
needs their desktop CPU and GPU to solve the
computationally difficult puzzles to earn bitcoins.
Now that bitcoin has become the industry it is
today, it has become more complicated and more
expensive to mine bitcoins like before.

As the number of bitcoin miners
skyrocketed, the difficulty of the puzzles
increased. And the more difficult the puzzles, the
higher the value of bitcoin became. The bitcoin
miners found out that gaming systems did a better
job of solving the puzzles faster, and so more
people moved to that.
Now, mining bitcoins requires far more
than a gaming CPU to handle bitcoin mining since
the ones from before would easily overheat. Those
better hardware can cost thousands of dollars to
buy. That doesn’t include the cost to run the
hardware with its need for electricity, the

electricity to keep everything cool, and a strong
stable internet connection. Some would also take
up a lot of space, requiring more electricity and

And so, anyone interested in making a bitcoin
mining system should make sure that the cost of
the equipment doesn’t outweigh the earnings.

Of course, one who lacks the money, space, and
equipment can opt to mine on the cloud instead.
However, doing that will hold the same risks as
storing data on the cloud; even more so when it
comes to leaving currency in systems owned by
someone else. There’s also the matter of paying
for hosting and downtimes out of your control.
Right now, there are several providers that
specializes in cloud mining.

4.2 ICO’s
ICO’s stand for initial coin offerings.
They use blockchain technology to offer tokens to
investors. These tokens are essentially
cryptocurrency that will eventually be able to be
bought and sold. ICO’s were first started as a
way for individuals or companies to raise financial
support for new ideas. The public is able to
participate in ICO’s by establishing a blockchain
and sending Ethereum or bitcoin as a way of
investing in the technology 1. In return the
investors would receive a certain amount of tokens
depending on how much they invested. A token
could represent different things, it could be a
license to use a software program, membership
into a community, or a financial asset. The most
common one are the financial assets, these tokens
would have very little value until the coin was
released on the bigger cryptocurrency exchange
markets. However, once on the crypto exchange
markets the price of the tokens could greatly
increase or decrease depending on the technology
of the blockchain.
A good metaphor to explain this is the
same as investing in a business or startup You
invest a certain amount of money into a business
and in return you are given stock of that company.
This stock isn’t worth much at first but depending
on how the business does the stock could one day
be worth a lot. This is essentially the same as
ICO’s but with less regulations as their is very
little regulations of cryptocurrencies currently.
Blockchain technology has given us a new
way of creating many new technologies. These
technologies such as bitcoin could one day be
implemented to replace cash currency. The
further uses of blockchain technology also allows
for even further use in many different businesses.
It is important, however, that as we develop these
technologies we also take into account how as a
society we will use these technologies ethically for

the betterment of the community.

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