Seite - 103 - in Digital Entrepreneurship - Impact on Business and Society

2.2 Foundations, Advantages andDisadvantages of Blockchain Technology The technologicalbasisof ablockchain is formedby theso-calleddatablocks: each block contains at least one data record (e.g. digitally recorded contents of a con- sultation), a timestamp (date and time of the conversation), transaction data (in the form of addresses of the parties involved, e.g. from consultant to client) and a cryptographically secure, so-called hash value of the previous block aswell as the verification sumof the entire blockchain. The hash value is a character string of a certain length that acts as a check value: the blocks that build on each other are cryptographically linkedusing thehashes to formachain (e.g. tomap the courseof a consultation over a longer period of time). This is where the name of the tech- nology is derived from (Swan 2015;Mougayar andButerin 2016) (Fig. 1). The entirety of these signed and sealedblocks is called ablockchain. It is stored on several network computers or nodes; thus, it is decentralised andhence aneutral system of information processing (Burgwinkel 2016). To participate in the block- chain, a software access, the so-called wallet, is required. Access is gained via digital keys: thepublic key is comparable to the international bankaccount number (IBAN) known from the banking sector, and the private key is like the secret personal identification number (PIN). The public key can, therefore, be easily communicated to third parties as an address for transactions,while the private key serves as an access password to thewallet and for transaction verification: in order for the participants in the public blockchain to agree on an identical version of the same block, a consensus must be reached—for this purpose, there are various mechanisms for signing or creating blocks.2 This process is calledmining. Those actorswho are involved in this process are calledminers—in the abovemetaphor, these are, so to speak, the accountants of the blockchain. The advantages offered by blockchain are numerous. First, the technology creates a new level of transparency, as all transactions can be monitored. Fur- thermore, the code of the blockchain is often freely available. Decentralisation 2Proof ofwork (PoW)means that theminersmust prove that theyhavemade a certain amount of effort in theverificationprocess.The idea is that theminerdemonstrates aconsciouswillingness to actively participate in the blockchain by using his own energy—i.e. electricity to operate one or more computers, aswell as time and equipment. In the PoW, numerous arithmetic operations are performed to create a chain of predefined length from a chain of characters of any length using mathematical hash functions. In this way, the legitimacy of the transaction is checked using resources. The first miner to find the solution is then rewarded (e.g. with a certain value of a cryptocurrency). In the case of PoW, the blockchain is vulnerable to the so-called 51%attacks: If an actor succeeds in controlling51%of thenodesor computingpower formining, the transaction history can bemanipulated—for example, by using the samemoney several times for purchases, e.g. ofBitcoin. This is not possiblewith the proof of stakemethodology. Inproof of stake (PoS), the blockchain network itself uses aweighted random selection to reach a consensus onwho can create a new block. Moderating aspects of the weighting are, for example, the duration of participation and/or the ability to participate (‘stake’)measured by the network resources applied. ThePoS thuscandowithoutmining. Inanycase, theconsensusalgorithmsenableeachparticipant to checkwhether his or her stored blockchain complies with the rules of thewhole. Blockchain as an Approach for Secure Data… 107