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Forbes Blockchain 50 2023
Despite 2022’s crypto market collapse, dozens of enterprises around the world are still investing in blockchain, the distributed-database technology that underpins the entire sector because it helps their businesses operate better, faster or cheaper.
Edited by Nina Bambysheva and Michael del Castillo
Reported by Nina Bambysheva, Michael del Castillo, Steven Ehrlich, Chris Helman, Jeff Kauflin, Maria Gracia Santillana Linares, Emily Mason, Rosemarie Miller, Javier Paz, Jon Ponciano, David Westenhaver
Illustration by Lena Weber for Forbes
Crypto is in the toilet. Even after a January rally that saw prices jump by a third or more, the cryptocurrency market is still down 38% over the last 12 months, wiping out some $630 billion of wealth. Faddish bits of the market, like NFT digital collectibles, have done even worse. Prominent prophets like Sam Bankman-Fried have been exposed as incompetent at best, criminal at worst. Despite it all, dozens of enterprises around the world are still quietly investing in blockchain, the distributed-database technology that underpins the entire sector. These mostly big, mostly smart firms aren’t throwing good money after bad. They’re doing it because blockchain helps their businesses operate better, faster or cheaper.
AI50
Alphabet
Mountain View, California
Through its venture capital arms, Alphabet has invested in blockchain firms like Fireblocks, Dapper Labs and Digital Currency Group. In addition, Google’s Cloud division last January formed a specialized team devoted to helping companies access crypto market data more quickly and launch blockchain-based products. Via Coinbase, Google will soon start accepting cryptocurrency as payment for cloud services.
Key Leaders: Amit Zavery, Google Cloud; Sunita Verma, Labs at Google
Ant Group
Hangzhou, China
Alibaba’s giant fintech affiliate has a proprietary blockchain running more than 50 apps. One of them, called the Treasure Project, helps museums and galleries popularize their collections by creating and distributing copies of ancient Chinese artifacts in the form of digital collectibles that are similar to NFTs. Ant has also developed an engine that it says is 15 times more efficient at storing blockchain data than mainstream providers. Topnod, a digital collectibles platform powered by Ant, is already using it and saves 75% on storage costs.
Key Leaders: Geoff Jiang, Intelligent Technology Business Group
Aon
London
Many organizations test job candidates. In June, the global professional services firm launched a blockchain service that enables job seekers to store and share the results of their assessments (say, an IQ test or a coding exercise) with multiple employers, eliminating the need to take the test more than once. Aon will apply the service to the 30 million assessments it administers annually.
Key Leaders: Greg Case, CEO; Christa Davies, CFO
Apollo
New York
In April, the $500 billion (assets under management) private equity manager hired JPMorgan’s cryptocurrency guru, Christine Moy, who wants to use blockchain to improve visibility into alternative investments like mortgages. In March the firm bought its first mortgage tracked on a blockchain, reducing the weeks-long settlement time to seconds.
Key Leader: Christine Moy, head of digital assets
Christine Moy, head of digital assets at Apollo
Courtesy Christine Moy
“Crypto encompasses many things. We’re focused on the technologies that can be applied and can scale, whether that’s capital raising, securitization, even trading. It’s rooted in real-world use cases that will make our business faster, more efficient, more accessible.”
—Christine Moy
Baidu
Beijing
Baidu’s new blockchain platform XuperAsset helps more than 400 companies issue digital collectibles—essentially Chinese NFTs, but because crypto trading is illegal in China, these nonfungible assets go by a different name there and resale is prohibited. Nearly 1 million copyrighted goods, mostly artwork and videos, have been created, generating around $35 million in fees for Baidu in the last 12 months. Outside of these non-NFT NFTs, more than 30,000 blockchain developers worldwide use Baidu’s open-source code.
Key Leader: Xiao Wei, Baidu Blockchain
BlackRock
New York
Last summer, BlackRock began offering direct investment in bitcoin for clients. It is also the primary manager of stablecoin USDC reserves (see story) .
Key Leaders: Robert Mitchnick, Digital Assets; Adam Salvatori, Digital Assets Lab
Block
San Francisco
In addition to giving away its code to bitcoin developers, Block is working with Coinbase and Circle to build a way to prove one’s identity without middlemen. Think using Facebook’s login for other websites without handing Mark Zuckerberg your private information. It’s part of Jack Dorsey’s big vision to create an open-source “financial substrate” that could lie at the foundation of Square and Cash App (it generated $1.8 billion in bitcoin revenue in Q3).
Key Leader: Jack Dorsey, CEO
Jack Dorsey, CEO of Block
Marco Bello/AFP/Getty Images
“The internet requires a currency native to itself. And in looking at the entire ecosystem of technologies to fill this role, it’s clear that bitcoin is currently the only candidate. It has proven resilience over a decade.”
—Jack Dorsey
BNY Mellon
New York
In addition to providing custody services for crypto assets (see story), it’s also working with the New York Fed on a digital dollar pilot project.
Key Leaders: Roman Regelman, Securities Services and Digital; Caroline Butler, CEO of Digital Assets; Michael Demissie, Head of Innovation and Advanced Solutions
Broadridge
Lake Success, New York
The financial technology company is modernizing the repurchase agreement (repo) market by automating the life cycle of these contracts. Instead of manually booking transfers of collateral across each institution’s systems, asset managers, banks and hedge funds can now transact with one another using a shared ledger. Launched in June 2020, Broadridge’s blockchain platform is now averaging $50 billion in daily trading volume for users like Société Générale.
Key Leaders: Germán Soto Sanchez, Corporate Strategy; Prakash Neelakantan, Blockchain Strategy
Chainalysis
New York
At least $3 billion worth of crypto was stolen last year, and Chainalysis specializes in finding it. The 700-person firm scours blockchain transactions and smart contract data for the electronic footprints of hackers and scammers. More than 1,000 firms including Robinhood, Bitfinex and BNY Mellon, plus a slew of three-letter agencies such as the SEC, DEA and FBI, are customers
Key Leaders: Michael Gronager, CEO; Jacob Illum, chief scientist
Coinbase
San Francisco
Coinbase had a dismal 2022, losing 85% of its market value. Still, it remains the U.S.’s largest crypto exchange, holding $101 billion in assets for more than 100 million clients worldwide.
Key Leader: Brian Armstrong, CEO
China Construction Bank
Beijing
The world’s second-largest bank by assets is using blockchain to connect lenders with investors (see story).
Key Leader: Hao Tan, CCB Fintech
CME Group
Chicago
The old-school futures trading exchange trades lots of crypto derivatives in a highly regulated environment. This reliability gives it a leg up over sloppy and bug-prone exchanges and Web3 projects (see story).
Key Leader: Tim McCourt, Equity Index and FX Products
De Beers
London
De Beers, which sources diamonds in Canada, Botswana, Namibia and South Africa, has been using blockchain since 2019 to track the gems as they’re mined, cut, polished and sold, and is now processing more than 100,000 stones a month. Overall, its Tracr blockchain keeps tabs on 600,000 registered diamonds, roughly 15% of the world’s production—a haul of precious stones worth more than $2 billion.
Key Leader: Wesley Tucker, Digital Transformation
Estée Lauder Companies
New York
People care about what they put on their skin, so cosmetics behemoth Estée Lauder Companies is blending blockchain technology with its brands like Aveda to track components such as vanilla extract and pomegranate seed oil, whose supply chains are vulnerable to environmental and labor issues.
Key Leader: Christine Hall, Aveda R&D
ExxonMobil
Irving, Texas
When Exxon contemplates drilling a new oil well with a partner or expanding a joint-venture pipeline, it’s put up for a vote. For the past 100 years this process has involved distributing round after round of paper ballots. Exxon’s pilot project with GuildOne uses Corda blockchain to speed the process, eliminate disputes and save on mailings. Another pilot with the Blockchain for Energy consortium aims to simplify the often complex process of royalty payments to landowners.
Key Leaders: Raj Rapaka, Digital Transformation; Adam Brown, intellectual property counsel
Fidelity
Boston
In November, just as the demise of crypto exchange FTX was panicking investors, solid-as-a-rock mutual fund giant Fidelity, already a digital asset custodian for institutions, announced it would soon let its 36 million retail customers buy and sell bitcoin and ether, commission-free.
Key Leaders: Abigail Johnson, CEO; Tom Jessop, Digital Assets
FIS
Jacksonville, Florida
This large Florida payment processor has been handling debit card transactions for Coinbase customers since 2017. FIS also works with Binance and Kraken, and in 2021 it facilitated $30 billion worth of card-to-crypto transactions (merchants are paid in U.S. dollars out of customers’ crypto balance). In April 2022, it partnered with Circle to let merchants settle with each other using stablecoin USDC, which is pegged one-to-one to the U.S. dollar.
Key Leader: Himal Makwana, Product Strategy and Web3
Franklin Templeton
San Mateo, California
Building on its $100 million Franklin OnChain U.S. Government Money Fund, which is tracked on a blockchain, in April 2022 the $1.4 trillion (assets) asset manager invested an undisclosed sum in Eaglebrook Advisors, a Miami-based startup that creates crypto portfolios (both actively and passively managed) for investment advisors and institutions.
Key Leader: Roger Bayston, Digital Assets
Fujitsu
Tokyo
The electronics powerhouse runs a blockchain innovation lab in Brussels for more than 50 clients including Italian carmaker Iveco and beer giant Anheuser-Busch. In July, it partnered with Tokyo chemical conglomerate Teijin to create a blockchain for manufacturers looking to offset their carbon footprint by using recycled materials. The software verifies the origin of recycled materials and then tracks a firm’s carbon footprint over time—making it difficult to falsify or greenwash data.
Key Leaders: Frederik De Breuck, Enterprise Blockchain Solution Center; Shingo Fujimoto, Fujitsu Research
Genentech
San Francisco
Since 2018, Genentech has been working with blockchain builder Chronicled on MediLedger, a distributed ledger that helps pharma fight counterfeit medicines and increase the speed of drug delivery to patients by enabling manufacturers, distributors and group purchasing organizations quickly process large amounts of product-related data. MediLedger is also being used by companies such as Pfizer, Johnson & Johnson and AstraZeneca.
Key Leader: David Vershure, vice president, channel and contract management
Goldman Sachs
New York
Blockchain is helping the Wall Street titan dramatically speed bond underwriting (see story).
Key Leader: Mathew McDermott, Digital Assets
HSBC
London
The British bank is using blockchain to increase the efficiency of foreign-exchange flows among its global branches. Since 2019, its FX Everywhere platform, which now also includes Wells Fargo, has settled trades with a nominal value of more than $4.6 trillion. Blockchain technology is also enabling HSBC to reduce bond settlement time from about four days to one.
Key Leader: Mark Williamson, FX Trading and Risk Management
Industrial and Commercial Bank of China
Beijing
The $5 trillion (assets) bank has more than 100 blockchain products either rolled out or in development, but its work on Chinese digital currency—RMB smart contracts—stands out for the way in which it helps protect customers’ funds for digital transactions. For example, a villager in Chengdu received his payment in digital RMB through a smart contract that ensured it came through as soon as he had finished planting his quota of trees.
Key Leader: Chaowei Liu, principal manager
JPMorgan
New York
Last Halloween, Onyx, its business unit that focuses on cutting-edge technologies, ran its first decentralized finance transaction on a public blockchain, using Ethereum to exchange Japanese yen for Singaporean dollars. Settlement time dropped from two days to mere seconds, and the tech enabled participants to prove their identities without needing to reveal them on the public blockchain. Additionally, JPMorgan has used blockchain to execute repurchase agreements (see story) and has transferred $25 billion using the JPM Coin network.
Key Leader: Umar Farooq, CEO of Onyx by JPMorgan
Umar Farooq, CEO of Onyx by JPMorgan
JPMORGAN
“We believe blockchain has the potential to rewire the core infrastructure of financial services.”
—Umar Farooq
Kakao
Jeju, South Korea
Despite a roughly 50% drop in NFT sales for the last six months of 2022 versus the previous year, Kakao’s NFT marketplace has 2 million registered users and is available to anyone who uses Kakao Talk, which is about 90% of South Korea’s 52 million people. Around 60 games are in development on Klaytn, Kakao’s blockchain.
Key Leader: Sangmin Seo, Klaytn Foundation
KKR
New York
In September the storied private equity firm partnered with digital asset securities company Securitize to open one of its funds for sale on the Avalanche blockchain, reducing costs to outside investors (see story).
Key Leader: Dan Parant, U.S. Private Wealth
Line
Tokyo
Japan’s leading messenger app helps create NFTs for 26 big customers including SoftBank, South Korea’s Naver search engine and Visa on a new global NFT platform called Dosi. Despite the NFT bust, more than 100,000 people have registered on Dosi as of November 2022 to collect things like images of K-pop stars since September.
Key Leaders: Youngsu Ko, Line Next; Inkyu Lim, Line Xenesis; Woosuk Kim, Line Tech Plus and Line Next
Mastercard
Purchase, New York
The payments company is all in when it comes to Web3. In 2021 it acquired crypto security firm CipherTrace, which fights fraud by identifying risky cryptocurrency transactions. In 2022, 35 crypto companies, including Binance and Nexo, issued debit cards emblazoned with the Mastercard logo (see story).
Key Leader: Raj Dhamodharan, head of crypto and blockchain
Raj Dhamodharan, global head of crypto and blockchain at Mastercard
Mastercard
“We enable people to spend crypto using their Mastercards and help banks understand crypto transactions through our blockchain analytics. When consumers want to cash out to a bank account, our Mastercard Send network enables this. The trust of our network is paramount.”
—Raj Dhamodharan
McCormick & Company
Hunt Valley, Maryland
The spice and seasoning giant is using QR codes connected to a blockchain to ensure that the vanilla it sources from Madagascar is free of any connection to deforestation. So far, the project is limited to France and Switzerland, but the blockchain-traced vanilla still ends up in more than 3,400 stores.
Key Leaders: Clare Menezes, Global Food Integrity & Risk Management; Iwona German, Western Europe marketing director
Meta
Menlo Park, California
Since its October 2021 rebranding, Meta has spent billions on its Reality Labs division attempting to give the “metaverse” a pulse. By CEO Mark Zuckerberg’s own estimation, losses will continue for years. In the here and now, Meta is giving users the tools to create and share (but not buy and sell) their own NFTs across Facebook and Instagram.
Key Leaders: Mark Zuckerberg, CEO; Andrew Bosworth, CTO
National Basketball Association
New York
The league’s Top Shot platform, a digital collectible marketplace, was one of the great early NFT success stories, banking $1 billion–plus in sales since it launched in 2020. Outside of Top Shot, which has seen its trading volume crater to just $3 million in January, the NBA is working to increase fan engagement by handing out free NFTs to all 9,000 fans attending a July WNBA game in Chicago. It also hosts a free NFT fantasy basketball league created by French startup Sorare.
Key Leaders: Adrienne O’Keeffe, Global Partnerships and Media; Amy Brooks, chief innovation officer
Adrienne O’Keeffe, head of digital consumer products at the NBA
National Basketball Association
“The future of basketball and the NBA will be defined by digital innovation and our ability to reach fans on their preferred device and language. We are truly just scratching the surface with regard to what we can accomplish in the Web3 space.”
—Adrienne O’Keeffe
Nike
Beaverton, Oregon
In December 2021, Nike acquired RTKFT, the virtual clothing startup that helped launch Cryptokicks. Collectors can now own both physical and digital versions and wear them in Nikeland in the Roblox metaverse. The sneaker giant’s Cryptokicks “forges” NFTs to its shoes by fitting each pair with a tiny chip linked to a blockchain. Next up: Swoosh, which will let customers design—and trade—their own digital kicks.
Key Leaders: Steven Vasilev, Benoit Pagotto and Chris Le, RTFKT cofounders
Steven Vasilev, cofounder of RTFKT
NIKE
“The future will be built by internet/technology native kids. We aim to empower the next generation of creators and democratize access through creation. In the future people will care more about their virtual items than their physical items.”
—Steven Vasilev
NTT
Tokyo
The data and IT consulting subsidiary of Nippon Telephone & Telegraph, NTT Data, helped create an interbank reconciliation tool for Italian lenders called Spunta Banca. Built on the Corda distributed ledger platform and coordinated by ABI Lab, the research and innovation centre of the Italian Banking Association, it has handled 623 million transactions for roughly 100 Italian banks since March 2020, performing real-time checkups to ensure there are no mismatches in bank transfers.
Key Leader: Shinichi Yamashita, Blockchain Strategy
Oracle
Austin, Texas
India’s Delhi University awarded digital degrees to 170,000 students in 2022 and distributed the diplomas on a blockchain to ensure authenticity. Keep Sea Blue, a nonprofit based in Athens, Greece, helps partners verify removed and recycled plastic waste from the Mediterranean via a blockchain. Global Shipping Business Network, a consortium whose members handle one in every three shipping containers in the world, increases the efficiency and visibility of shipments. All used Oracle’s OCI Blockchain Platform.
Key Leader: Wei Hu, High Availability Technologies
PayPal
San Jose, California
The payment giant, which started offering access to crypto in October 2020, charges as little as 49 cents for smaller transactions. Crypto users, according to the company, visit PayPal twice as frequently as other users. It invested in Aptos Labs, parent of fast blockchain Aptos, created by Facebook veterans, last spring.
Key Leader: Dan Schulman, CEO
Repsol
Madrid
Spain’s oil giant is building a platform called VEIA Digitalis, which enables users to store things like driver’s licenses, security badges and passports in a blockchain-based “self-sovereign” wallet. The point is to allow people—mostly Europeans who live in government-intensive societies—to control which parts of their identity they want to share, and with whom. The project began in 2019 through Repsol’s work with the global blockchain consortium Alastria.
Key Leader: Nuria Avalos, digital consortium director
Robinhood
San Francisco
The zero-commission broker offers crypto trading to 23 million accounts, and as of last September, the company was a custodian for $9.4 billion worth of crypto. Robinhood Wallet is its proprietary Web3-friendly self-custody wallet for users who want to have full control of their assets, which more do in the wake of the FTX bankruptcy. More FTX fun: Some 7% of Robinhood stock tied to Sam Bankman-Fried was seized by the Department of Justice in January.
Key Leaders: Vlad Tenev, CEO; Johann Kerbrat, GM of Robinhood Crypto
Samsung Group
Seoul
It’s best known for smartphones and flat screens, but Samsung is also a leader in developing blockchain products and services. For example, AIA, the largest insurance company in the Asia-Pacific region, uses Samsung SDS’s blockchain Nexledger to quickly access clients’ personal information and process consent forms including insurance agents’ electronic signatures, reducing related costs by more than half. More than 150,000 Samsung employees use the in-house blockchain service to store things like product design documents and salary contracts; one big benefit is that they can’t be easily altered or deleted.
Key Leader: Yoensoo Kim, Blockchain Development Team Leader
Signature Bank
New York
Signet, Signature Bank’s Ethereum-based payments network for commercial customers, instantaneously processed $464 billion worth of digital transactions last year. One-fifth of Signet’s 2022 volume came from the logistics industry. Due to market volatility, the bank capped its crypto deposits at 20% of its total assets under management.
Key Leader: Frank Santora, chief payments officer
Société Générale
Paris
The financial giant is helping other institutions use public blockchains to record information about who owns registered bonds. In October it became the first bank in France to receive permission to handle assets issued on a blockchain.
Key Leader: Jonathan Benichou, CFO, SG Forge
Sotheby’s
New York
The NFT market is in a depression, but Sotheby’s still has a dedicated team of 20 focused on digital collectibles. It will soon launch a curated secondary market built on Ethereum and Polygon in which a rotating list of ten handpicked artists will sell their NFTs, with Sotheby’s taking a cut.
Key Leaders: Stefan Pepe, CTO; Sebastian Fahey, Sotheby’s Metaverse
Tech Mahindra
Pune, India
This IT conglomerate has partnered with ten major Indian telecoms—which collectively provide service to 1 billion customers—to use blockchain to fight spam calls and unwanted texts. If one telecom operator receives a complaint, all operators are alerted—and thanks to the magic of blockchain they don’t need to share sensitive customer info.
Key Leader: Rajesh Dhuddu, Blockchain and Metaverse
Rajesh Dhuddu, SVP and global business head, blockchain and metaverse at Tech Mahindra
Tech Mahindra
“We continue to work hard to further empower individual users to not only safeguard their individual data but also have complete control over who accesses it and how it gets democratized and monetized.”
—Rajesh Dhuddu
Tencent
Shenzhen, China
The owner of China’s ubiquitous social platform WeChat is using blockchain tech to help Chinese companies cut costs and speed up business. Using Tencent’s software, thousands of Chinese companies have been able to move their products through customs up to 50% faster. Additionally, about 400 million users in nearly a dozen Chinese cities use Tencent’s blockchain to pay taxes, settle medical bills and even process donations.
Key Leader: Powell Li, Tencent Cloud Blockchain
Ticketmaster
Los Angeles
Through its NFL partnership, Ticketmaster is giving football fans who attend games commemorative NFTs—a blockchain option for avid ticket collectors.
Key Leader: Brendan Lynch, Enterprise and Revenue
Visa
San Francisco
Like Mastercard, Visa allows users to pay with their crypto holdings. Some of the cards even offer cash-back or, bitcoin-back deals. It rolled out 10 cards last year, including one for now-bankrupt FTX. Five were from entities outside the U.S., including Ripio and Lemon Cash in Argentina.
Key Leader: Cuy Sheffield, VP Crypto
Walmart
Bentonville, Arkansas
America’s superstore—and largest grocer—uses blockchain to track the farm-to-store journey of 1,500 food products from 70 suppliers, which makes it easier to spot cases of contamination or spoilage. Walmart is also experimenting with blockchain-based invoices, which quicken the process from some three months to near real time.
Key Leaders: Archana Sristy, Blockchain Platforms; Tejas Bhatt, Global Food Safety Innovation
Archana Sristy, senior director II, blockchain platforms, Walmart Global Tech
Walmart
“Customer trust and safety are paramount; that’s why we’re committed to developing industry-leading blockchain platforms that allow us to quickly identify potentially contaminated products at any point of their journey across our entire supply chain ecosystem.”
—Archana Sristy
Warner Music Group
New York
The label behind Lizzo and Chris Stapleton is working with blockchain game developer Splinterlands (1.8 million users) to create arcade-style games that reward players with in-game items and a cryptocurrency called dark energy crystals, which has a market value of some $700 million.
Key Leader: Oana Ruxandra, chief digital officer
WeBank
Shenzhen, China
To process loans, banks typically require customers to produce reams of documents including titles and credit reports. It’s an area of friction in finance. WeBank’s new information verification platform, launched in April and used by roughly 2.5 million people, connects the notary office and borrowers via a single blockchain-based network to speed up and improve the application process. Approval rates for online auto loans requested by car buyers, for one, have gone from 20% to 80%.
Key Leader: Henry Ma, CIO
Wipro
Bengaluru, India
The Indian technology and consulting firm has created a blockchain platform that combats data tampering to help prevent identity fraud. Since September, some 1.6 million people have used it to share information with banks, colleges and other organizations.
Key Leader: Varun Dube, Blockchain
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The introduction of the link and reputation evaluation concepts aims to improve the stability and security of the consensus mechanism, decrease the likelihood of malicious nodes joining the consensus, and increase the reliability of the selected consensus nodes.
The link model structure based on joint action
Through the LINK between nodes, all the LINK nodes engage in consistent activities during the operation of the consensus mechanism. The reputation evaluation mechanism evaluates the trustworthiness of nodes based on their historical activity status throughout the entire blockchain. The essence of LINK is to drive inactive nodes to participate in system activities through active nodes. During the stage of selecting leader nodes, nodes are selected through self-recommendation, and the reputation evaluation of candidate nodes and their LINK nodes must be qualified. The top 5 nodes of the total nodes are elected as leader nodes through voting, and the nodes in their LINK status are candidate nodes. In the event that the leader node goes down, the responsibility of the leader node is transferred to the nodes in its LINK through the view-change. The LINK connection algorithm used in this study is shown in Table 2, where LINKm is the linked group and LINKP is the percentage of linked nodes.
Table 2 LINK connection algorithm.
Node type
This paper presents a classification of nodes in a blockchain system based on their functionalities. The nodes are divided into three categories: leader nodes (LNs), follower nodes (FNs), and general nodes (Ns). The leader nodes (LNs) are responsible for producing blocks and are elected through voting by general nodes. The follower nodes (FNs) are nodes that are linked to leader nodes (LNs) through the LINK mechanism and are responsible for validating blocks. General nodes (N) have the ability to broadcast and disseminate information, participate in elections, and vote. The primary purpose of the LINK mechanism is to act in combination. When nodes are in the LINK, there is a distinction between the master and slave nodes, and there is a limit to the number of nodes in the LINK group (NP = {n1, nf1, nf2 ……,nfn}). As the largest proportion of nodes in the system, general nodes (N) have the right to vote and be elected. In contrast, leader nodes (LNs) and follower nodes (FNs) do not possess this right. This rule reduces the likelihood of a single node dominating the block. When the system needs to change its fundamental settings due to an increase in the number of nodes or transaction volume, a specific number of current leader nodes and candidate nodes need to vote for a reset. Subsequently, general nodes need to vote to confirm this. When both confirmations are successful, the new basic settings are used in the next cycle of the system process. This dual confirmation setting ensures the fairness of the blockchain to a considerable extent. It also ensures that the majority holds the ultimate decision-making power, thereby avoiding the phenomenon of a small number of nodes completely controlling the system.
After the completion of a governance cycle, the blockchain network will conduct a fresh election for the leader and follower nodes. As only general nodes possess the privilege to participate in the election process, the previous consortium of leader and follower nodes will lose their authorization. In the current cycle, they will solely retain broadcasting and receiving permissions for block information, while their corresponding incentives will also decrease. A diagram illustrating the node status can be found in Fig. 1.
Election method
The election method adopts the node self-nomination mode. If a node wants to participate in an election, it must form a node group with one master and three slaves. One master node group and three slave node groups are inferred based on experience in this paper; these groups can balance efficiency and security and are suitable for other project collaborations. The successfully elected node joins the leader node set, and its slave nodes enter the follower node set. Considering the network situation, the maximum threshold for producing a block is set to 1 s. If the block fails to be successfully generated within the specified time, it is regarded as a disconnected state, and its reputation score is deducted. The node is skipped, and in severe cases, a view transformation is performed, switching from the master node to the slave node and inheriting its leader’s rights in the next round of block generation. Although the nodes that become leaders are high-reputation nodes, they still have the possibility of misconduct. If a node engages in misconduct, its activity will be immediately stopped, its comprehensive reputation score will be lowered, it will be disqualified from participating in the next election, and its equity will be reduced by 30%. The election process is shown in Fig. 2.
Figure 2
Incentives and penalties
To balance the rewards between leader nodes and ordinary nodes and prevent a large income gap, two incentive/penalty methods will be employed. First, as the number of network nodes and transaction volume increase, more active nodes with significant stakes emerge. After a prolonged period of running the blockchain, there will inevitably be significant class distinctions, and ordinary nodes will not be able to win in the election without special circumstances. To address this issue, this paper proposes that rewards be reduced for nodes with stakes exceeding a certain threshold, with the reduction rate increasing linearly until it reaches zero. Second, in the event that a leader or follower node violates the consensus process, such as by producing a block out of order or being unresponsive for an extended period, penalties will be imposed. The violation handling process is illustrated in Fig. 3.
Figure 3
Violation handling process.
Comprehensive reputation evaluation and election mechanism based on historical transactions
This paper reveals that the core of the DPoS consensus mechanism is the election process. If a blockchain is to run stably for a long time, it is essential to consider a reasonable election method. This paper proposes a comprehensive reputation evaluation election mechanism based on historical records. The mechanism considers the performance indicators of nodes in three dimensions: production rate, tokens, and validity. Additionally, their historical records are considered, particularly whether or not the nodes have engaged in malicious behavior. For example, nodes that have ever been malicious will receive low scores during the election process unless their overall quality is exceptionally high and they have considerable support from other nodes. Only in this case can such a node be eligible for election or become a leader node. The comprehensive reputation score is the node’s self-evaluation score, and the committee size does not affect the computational complexity.
Moreover, the comprehensive reputation evaluation proposed in this paper not only is a threshold required for node election but also converts the evaluation into corresponding votes based on the number of voters. Therefore, the election is related not only to the benefits obtained by the node but also to its comprehensive evaluation and the number of voters. If two nodes receive the same vote, the node with a higher comprehensive reputation is given priority in the ranking. For example, in an election where node A and node B each receive 1000 votes, node A’s number of stake votes is 800, its comprehensive reputation score is 50, and only four nodes vote for it. Node B’s number of stake votes is 600, its comprehensive reputation score is 80, and it receives votes from five nodes. In this situation, if only one leader node position remains, B will be selected as the leader node. Displayed in descending order of priority as comprehensive credit rating, number of voters, and stake votes, this approach aims to solve the problem of node misconduct at its root by democratizing the process and subjecting leader nodes to constraints, thereby safeguarding the fundamental interests of the vast majority of nodes.
Comprehensive reputation evaluation
This paper argues that the election process of the DPoS consensus mechanism is too simplistic, as it considers only the number of election votes that a node receives. This approach fails to comprehensively reflect the node’s actual capabilities and does not consider the voters’ election preferences. As a result, nodes with a significant stake often win and become leader nodes. To address this issue, the comprehensive reputation evaluation score is normalized considering various attributes of the nodes. The scoring results are shown in Table 3.
Table 3 Comprehensive reputation evaluation.
Since some of the evaluation indicators in Table 3 are continuous while others are discrete, different normalization methods need to be employed to obtain corresponding scores for different indicators. The continuous indicators include the number of transactions/people, wealth balance, network latency, network jitter, and network bandwidth, while the discrete indicators include the number of violations, the number of successful elections, and the number of votes. The value range of the indicator “number of transactions/people” is (0,1), and the value range of the other indicators is (0, + ∞). The equation for calculating the “number of transactions/people” is set as shown in Eq. (1).
$$A_{1} = \left\{ {\begin{array}{*{20}l} {0,} \hfill & {{\text{G}} = 0} \hfill \\ {\frac{{\text{N}}}{{\text{G}}}*10,} \hfill & {{\text{G}} > 0} \hfill \\ \end{array} } \right.$$
(1)
where N represents the number of transactional nodes and G represents the number of transactions. It reflects the degree of connection between the node and other nodes. Generally, nodes that transact with many others are safer than those with a large number of transactions with only a few nodes. The limit value of each item, denoted by x, is determined based on the situation and falls within the specified range, as shown in Eq. (2). The wealth balance and network bandwidth indicators use the same function to set their respective values.
$${A}_{i}=20*\left(\frac{1}{1+{e}^{-{a}_{i}x}}-0.5\right)$$
(2)
where x indicates the value of this item and expresses the limit value.
In Eq. (3), x represents the limited value of this indicator. The lower the network latency and network jitter are, the higher the score will be.
The last indicators, which are the number of violations, the number of elections, and the number of votes, are discrete values and are assigned different scores according to their respective ranges. The scores corresponding to each count are shown in Table 4.
$$A_{3} = \left\{ {\begin{array}{*{20}l} {10*\cos \frac{\pi }{200}x,} \hfill & {0 \le x \le 100} \hfill \\ {0,} \hfill & {x > 100} \hfill \\ \end{array} } \right.$$
(3)
Table 4 Score conversion.
The reputation evaluation mechanism proposed in this paper comprehensively considers three aspects of nodes, wealth level, node performance, and stability, to calculate their scores. Moreover, the scores obtain the present data based on historical records. Each node is set as an M × N dimensional matrix, where M represents M times the reputation evaluation score and N represents N dimensions of reputation evaluation (M < = N), as shown in Eq. (4).
$${\text{N}} = \left( {\begin{array}{*{20}c} {a_{11} } & \cdots & {a_{1n} } \\ \vdots & \ddots & \vdots \\ {a_{m1} } & \cdots & {a_{mn} } \\ \end{array} } \right)$$
(4)
The comprehensive reputation rating is a combined concept related to three dimensions. The rating is set after rating each aspect of the node. The weight w and the matrix l are not fixed. They are also transformed into matrix states as the position of the node in the system changes. The result of the rating is set as the output using Eq. (5).
$$\text{T}=\text{lN}{w}^{T}=\left({l}_{1}\dots {\text{l}}_{\text{m}}\right)\left(\begin{array}{ccc}{a}_{11}& \cdots & {a}_{1n}\\ \vdots & \ddots & \vdots \\ {a}_{m1}& \cdots & {a}_{mn}\end{array}\right){\left({w}_{1}\dots {w}_{n}\right)}^{T}$$
(5)
Here, T represents the comprehensive reputation score, and l and w represent the correlation coefficient. Because l is a matrix of order 1*M, M is the number of times in historical records, and M < = N is set, the number of dimensions of l is uncertain. Set the term l above to add up to 1, which is l1 + l2 + …… + ln = 1; w is also a one-dimensional matrix whose dimension is N*1, and its purpose is to act as a weight; within a certain period of time, w is a fixed matrix, and w will not change until the system changes the basic settings.
Assume that a node conducts its first comprehensive reputation rating, with no previous transaction volume, violations, elections or vote. The initial wealth of the node is 10, the latency is 50 ms, the jitter is 100 ms, and the network bandwidth is 100 M. According to the equation, the node’s comprehensive reputation rating is 41.55. This score is relatively good at the beginning and gradually increases as the patient participates in system activities continuously.
Voting calculation method
To ensure the security and stability of the blockchain system, this paper combines the comprehensive reputation score with voting and randomly sorts the blocks, as shown in Eqs. (3–6).
$$Z=\sum_{i=1}^{n}{X}_{i}+nT$$
(6)
where Z represents the final election score, Xi represents the voting rights earned by the node, n is the number of nodes that vote for this node, and T is the comprehensive reputation score.
The voting process is divided into stake votes and reputation votes. The more reputation scores and voters there are, the more total votes that are obtained. In the early stages of blockchain operation, nodes have relatively few stakes, so the impact of reputation votes is greater than that of equity votes. This is aimed at selecting the most suitable node as the leader node in the early stage. As an operation progresses, the role of equity votes becomes increasingly important, and corresponding mechanisms need to be established to regulate it. The election vote algorithm used in this paper is shown in Table 5.
Table 5 Election vote counting algorithm.
This paper argues that the election process utilized by the original DPoS consensus mechanism is overly simplistic, as it relies solely on the vote count to select the node that will oversee the entire blockchain. This approach cannot ensure the security and stability of the voting process, and if a malicious node behaves improperly during an election, it can pose a significant threat to the stability and security of the system as well as the safety of other nodes’ assets. Therefore, this paper proposes a different approach to the election process of the DPoS consensus mechanism by increasing the complexity of the process. We set up a threshold and optimized the vote-counting process to enhance the security and stability of the election. The specific performance of the proposed method was verified through experiments.
The election cycle in this paper can be customized, but it requires the agreement of the blockchain committee and general nodes. The election cycle includes four steps: node self-recommendation, calculating the comprehensive reputation score, voting, and replacing the new leader. Election is conducted only among general nodes without affecting the production or verification processes of leader nodes or follower nodes. Nodes start voting for preferred nodes. If they have no preference, they can use the LINK mechanism to collaborate with other nodes and gain additional rewards.
View changes
During the consensus process, conducting a large number of updates is not in line with the system’s interests, as the leader node (LN) and follower node (FN) on each node have already been established. Therefore, it is crucial to handle problematic nodes accurately when issues arise with either the LN or FN. For instance, when a node fails to perform its duties for an extended period or frequently fails to produce or verify blocks within the specified time range due to latency, the system will precisely handle them. For leader nodes, if they engage in malicious behavior such as producing blocks out of order, the behavior is recorded, and their identity as a leader node is downgraded to a follower node. The follower node inherits the leader node’s position, and the nature of their work is transformed as they swap their responsibilities of producing and verifying blocks with their original work. This type of behavior will not significantly affect the operation of the blockchain system. Instead of waiting until the end of the current committee round to punish malicious nodes, dynamic punishment is imposed on the nodes that affect the operation of the blockchain system to maintain system security. The view change operation is illustrated in Fig. 4.
Figure 4
In traditional PBFT, view changes are performed according to the view change protocol by changing the view number V to the next view number V + 1. During this process, nodes only receive view change messages and no other messages from other nodes. In this paper, the leader node group (LN) and follower node group (FN) are selected through an election of the LINK group. The node with LINKi[0] is added to the LN leader node group, while the other three LINK groups’ follower nodes join the FN follower node group since it is a configuration pattern of one master and three slaves. The view change in this paper requires only rearranging the node order within the LINK group to easily remove malicious nodes. Afterward, the change is broadcast to other committee nodes, and during the view transition, the LINK group does not receive block production or verification commands from the committee for stability reasons until the transition is completed.
LiquidFi Founder Ian Ferreira Sees Huge Potential in Blockchain Despite Hype around technology is dead.
“Blockchain technology has been a buzzword for a long time, and it shouldn’t be,” Ferriera said. “It should be a technology that lives in the background, but it makes everything much more efficient, much more transparent, and ultimately it saves costs for everyone. That’s the goal.”
Before founding his firm, Ferriera was a portfolio manager at a hedge fund, a job that ended up revealing “interesting intricacies” related to the mortgage industry.
Being a mortgage trader opened Ferriera’s eyes to a lot of the operational and infrastructure problems that needed to be solved in the mortgage-backed securities industry, he said. That later led to the birth of LiquidFi.
“The point of what we do is to get raw data attached to a resource [a loan] on a blockchain so that it’s provable. You reduce that trust problem because you have the data, you have the document associated with that data,” said the LiquidFi CEO.
Ferriera spoke with National Mortgage News about the value of blockchain technology, why blockchain hype has fizzled out, and why it shouldn’t.
The Department of Veterans Affairs would have to evaluate how blockchain technology could be used to improve benefits and services offered to veterans, according to a legislative proposal introduced Tuesday.
The bill, sponsored by Rep. Nancy Mace, R-S.C., would direct the VA to “conduct a comprehensive study of the feasibility, potential benefits, and risks associated with using distributed ledger technology in various programs and services.”
Distributed ledger technology, including blockchain, is used to protect and track information by storing data across multiple computers and keeping a record of its use.
According to the text of the legislation, which Mace’s office shared exclusively with Nextgov/FCW ahead of its publication, blockchain “could significantly improve benefits allocation, insurance program management, and recordkeeping within the Department of Veterans Affairs.”
“We need to bring the federal government into the 21st century,” Mace said in a statement. “This bill will open the door to research on improving outdated systems that fail our veterans because we owe it to them to use every tool at our disposal to improve their lives.”
Within one year of the law taking effect, the Department of Veterans Affairs will be required to submit a report to the House and Senate Veterans Affairs committees detailing its findings, as well as the benefits and risks identified in using the technology.
The mandatory review is expected to include information on how the department’s use of blockchain could improve the way benefits decisions are administered, improve the management and security of veterans’ personal data, streamline the insurance claims process, and “increase transparency and accountability in service delivery.”
The Department of Veterans Affairs has been studying the potential benefits of using distributed ledger technology, with the department emission a request for information in November 2021 seeking input from contractors on how blockchain could be leveraged, in part, to streamline its supply chains and “secure data sharing between institutions.”
The VA’s National Institute of Artificial Intelligence has also valued the use of blockchain, with three of the use cases tested during the 2021 AI tech sprint focused on examining its capabilities.
Mace previously introduced a May bill that would direct Customs and Border Protection to create a public blockchain platform to store and share data collected at U.S. borders.
Lawmakers also proposed additional measures that would push the Department of Veterans Affairs to consider adopting other modernized technologies to improve veteran services.
Rep. David Valadao, R-Calif., introduced legislation in June that would have directed the department to report to lawmakers on how it plans to expand the use of “certain automation tools” to process veterans’ claims. The House of Representatives Subcommittee on Disability Assistance and Memorial Affairs gave a favorable hearing on the congressman’s bill during a Markup of July 23.
TDR’s Three Takeaways: California DMV Uses Blockchain to Fight Fraud
- California DMV uses blockchain technology to manage 42 million auto titles.
- The initiative aims to improve safety and reduce car title fraud.
- The immutable nature of blockchain ensures accurate and tamper-proof records.
The California Department of Motor Vehicles (DMV) is implementing blockchain technology to manage and secure 42 million auto titles. This innovative move aims to address and reduce the persistent problem of auto title fraud, a problem that costs consumers and the industry millions of dollars each year. By moving to a blockchain-based system, the DMV is taking advantage of the technology’s key feature: immutability.
Blockchain, a decentralized ledger technology, ensures that once a car title is registered, it cannot be altered or tampered with. This creates a highly secure and transparent system, significantly reducing the risk of fraudulent activity. Every transaction and update made to a car title is permanently recorded on the blockchain, providing a complete and immutable history of the vehicle’s ownership and status.
As first reported by Reuters, the DMV’s adoption of blockchain isn’t just about preventing fraud. It’s also aimed at streamlining the auto title process, making it more efficient and intuitive. Traditional auto title processing involves a lot of paperwork and manual verification, which can be time-consuming and prone to human error. Blockchain technology automates and digitizes this process, reducing the need for physical documents and minimizing the chances of errors.
Additionally, blockchain enables faster verification and transfer of car titles. For example, when a car is sold, the transfer of ownership can be done almost instantly on the blockchain, compared to days or even weeks in the conventional system. This speed and efficiency can benefit both the DMV and the vehicle owners.
The California DMV’s move is part of a broader trend of government agencies exploring blockchain technology to improve their services. By adopting this technology, the DMV is setting a precedent for other states and industries to follow, showcasing blockchain’s potential to improve safety and efficiency in public services.
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