Introduction

Blockchains, also known as distributed ledgers, are a new technology that has attracted a lot of
attention from the academic world, national governments, financial organizations, and energy
supply companies. Blockchains are seen as having the potential to deliver important advantages
and innovation by many sources from these backgrounds. Blockchains, especially when
integrated with smart contracts, promise transparent, unchangeable, and secure platforms that can
enable innovative business solutions. It is the technology that underlies cryptocurrencies like
Bitcoin and is being used to power a new generation of digital currencies, digital exchanges, and
decentralized applications. This paper provides an overview of blockchain technology, what it is
and how it works. It also looks at why blockchains are used, their advantages and disadvantages.
Finally, it explains how blockchain technology is used in management field and what solutions it
provides for the filed.

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What is Blockchain?
Blockchain is a shared, unchangeable ledger (record) that enables the recording of transactions
and tracking assets in a business network in a way that makes it difficult or impossible to hack,
change or cheat the system. These assets could be tangible (a house, car, cash, land) or intangible
(intellectual property, patents, copyrights, branding). They can be tracked and listed on a
blockchain network, reducing risk and cutting prices.  

A blockchain is basically a digital ledger of transactions that is copied and distributed across the
entire network of computer systems on the blockchain. Each block in the chain contains a
number of transactions, and every time a new transaction occurs on the blockchain, a record of
that transaction is added to every participant’s record. This allows the database to be
decentralized and managed by multiple participants hence the name Distributed Ledger
Technology (DLT).

Blockchain consists of growing list of records, called blocks, that are securely linked together
using cryptography. Transactions in blockchain are recorded with an immutable
cryptographic signature called a  hash. Each block contains a timestamp and transaction
data of the previous block. The timestamp proves that the transaction data existed when the block
was created.  Blocks have certain storage capacities and, when filled, are closed and linked to
the previously filled block, forming a chain of data known as the blockchain. Since each block
contains information about the block previous to it, they form a chain with each additional block
linking to the ones before it. Therefore, blockchain transactions are irreversible. Once they are
recorded, the data in any block cannot be altered without altering all subsequent blocks.

It can also be explained as a distributed database shared among computer networks. Just like a
database, a blockchain stores information electronically in digital format but it is different from
a database in how the data is structured. A database usually structures its data into tables,
whereas a blockchain structures its data into blocks that are chained together. 

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How does blockchain work?
Blockchain functions as a result of three leading technologies:

 Cryptographic keys

 A peer-to-peer network containing a shared ledger (record)

 A digital ledger, to store the transactions and records of the network

Cryptographic keys consist of two keys – Private key and Public key. These keys help in
performing successful transactions between two parties. Each individual has these two keys,
which is used to produce a secure digital identity reference. This secured identity is the most
important aspect of Blockchain technology. In the world of cryptocurrency, this identity is
referred to as ‘digital signature’ and is used for authorizing and controlling transactions.

The digital signature is merged with the peer-to-peer network; a large number of individuals who
act as authorities use the digital signature in order agree on transactions and other issues. When
they authorize a deal, it is certified by a mathematical verification, which results in a successful
secured transaction between the two network-connected parties.

The record of this transaction is stored on a digital ledger. The digital ledger works like a
spreadsheet containing the history of all purchases made by each node. The information
contained in the digital ledger is highly secure and the digital signature safeguards it from being
altered. Anyone can see and access the data, but no one is able to corrupt it.

Thus in general, blockchain users employ cryptography keys to perform different types of digital
interactions over the peer-to-peer network. The transparency and distributed nature of blockchain
technology make it secure.

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To explain how blockchain works more clearly, we will take a closer look at blocks. Each block
contains some data, the hash of the block and the hash of the previous block. The data that is
stored inside a block depends on the type of blockchain.

The Bitcoin blockchain for example stores the details about a transaction in here, such
as the sender, receiver and amount of coins. A hash can be compared to a fingerprint. It identifies
a block and all of its contents and it's always unique, just as a fingerprint. Once a block is
created, it’s hash is being calculated. Changing something inside the block will cause the hash to
change.
So, in other words: hashes are very useful when one wants to detect changes to blocks.

The third element inside each block is the hash of the previous block.
This effectively creates a chain of blocks and it’s this technique that makes a blockchain secure.

For example, let’s assume we have a chain of 3 blocks. Each block has a hash and the hash of the
previous block. So, block number 3 points to block number 2 and number 2 points to number 1.

If for example someone tampers with the second block his causes the hash of the block to change
as well. In turn that will make block 3 and all following blocks invalid because they no longer

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store a valid hash of the previous block. So, changing a single block will make all following
blocks invalid.

But using hashes is not enough to prevent tampering. Computers these days are very fast and can
calculate hundreds of thousands of hashes per second. You could effectively tamper with a block
and recalculate all the hashes of other blocks to make your blockchain valid again. So to mitigate
this, blockchains have something called proof-of-work. It's a mechanism that slows down the
creation of new blocks. In Bitcoins case: it takes about 10 minutes to calculate the required
proof-of-work and add a new block to the chain.

This mechanism makes it very hard to tamper with the blocks, because if you tamper with 1
block, you'll need to recalculate the proof-of-work for all the following blocks. So, the security
of a blockchain comes from its creative use of hashing and the proof-of-work mechanism.

There is one more way that blockchains secure themselves and that's by being distributed.
Instead of using a central entity to manage the chain, blockchains use a peer-to-peer network and
anyone is allowed to join. When someone joins this network, he gets the full copy of the
blockchain. The node can use this to verify that everything is still in order.

When someone creates a new block that new block is send to everyone on the network. Each
node then verifies the block to make sure that it hasn't been tampered with. If everything checks
out, each node adds this block to their own blockchain. All the nodes in this network create
consensus. They agree about what blocks are valid and which aren't. Blocks that are tampered
with will be rejected by other nodes in the network. So, in order for someone to successfully
tamper with a blockchain they will need to tamper with all blocks on the chain, redo the proof-
of-work for each block and take control of more than 50% of the peer-to-peer network; which is
almost impossible to do.

What is blockchain used for?

Blockchains are best known for their key role in cryptocurrency systems, such as Bitcoin, for
maintaining a secure and decentralized record of transactions. This is because it guarantees the

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reliability and security of a record of data and generates trust without the need for a trusted third
party. In Bitcoin’s case, blockchain is used in a decentralized way so that no single person or
group has control rather, all users collectively hold control.

Different types of information can be stored on a blockchain, but the most common use so far is
as a ledger for transactions. Some other applications of blockchain technology are:

 Anti-money laundering tracking system

 NFT marketplaces

 Real-time IoT operating systems

 Cross-border payments

 Voting mechanism which is transparent and secure

 Supply chain and logistics monitoring

 Storing medical records

 Collecting taxes

 Tracking luggage, identifying passengers, making and accepting payments for flights
saving time, and reducing lines and wait times

 Banking

 Human resource management in workplaces

 Copyright protection

 Digital IDs

Advantages of Blockchain

 Better transparency

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With blockchain, members in the members-only network receive timely and correct information
about any changes and transactions. They are also able to validate changes with consensus and
each member keeps a copy of the transaction record. This allows for better transparency and
trust.

 Better security

As we discussed above, it is very hard to change or corrupt records in the blockchain. Consensus
on information accuracy is needed from all network members, and records are immutable. Thus,
it is protected from malicious acts, hacking and tampering making the technology more secure.

 Reduced Costs

By using blockchain, organizations can bring down a lot of costs associated with third party
vendors because it has no inherited centralized player, eliminating the need to pay for any vendor
costs. Additionally, there is less interaction needed to validate a transaction, which also reduces
the cost needed for that.

 Increased efficiency and speed

With a distributed ledger that is shared among members of a network, time-wasting record
checking and settlement is eliminated. Also, as it provides a single place to store transactions, the
streamlining and automation of processes makes everything highly efficient and fast.

 Immutability

Data cannot be tampered with in blockchain technology due to its decentralized structure so any
change will be reflected in all the nodes so one cannot do fraud, hence it can be claimed that
transactions are tamper-proof.

 Instant transactions

Blockchain technology transactions are completed in a few minutes.

Disadvantages of Blockchain

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  Scalability:
Blockchain technology cannot be scaled due to the fixed size of the block for storing
information. The block size is 1 MB due to which it can hold only a couple of transactions on a
single block.

 High energy Consumption

A lot of energy is used for verifying any transaction making it less efficient. This is because
every time a new node or block is created, it communicates with each and every other node at the
same time.
 Time-Consuming
To add the next block in the chain miners need to compute onetime values many times so this
is a time-consuming process.
 Legal Formalities
In some countries including Ethiopia, the use of blockchain technology applications is banned
like cryptocurrency due to legal issues.
 Storage
Since blockchain databases are stored on all the nodes of the network this creates an issue with
the storage, increasing number of transactions will require more storage. It is too large for
individuals to download and store.
 Immutability
This feature of blockchain is both an advantage and a disadvantage. The disadvantage is that it is
impossible to make revisions when needed, for instance, in case there is a need to make an
amendment to change payment.
 Loss of data
Loss of private key due to poor management, which means loss of data or money in case of
cryptocurrencies.
 Immaturity
Blockchain is only a few years old technology so it has not yet gained the confidence of people
and people are not ready to invest in it.

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Application areas of blockchain technology

Blockchain applications go far beyond cryptocurrency and bitcoin. There are different

application areas of blockchain technology that are currently being used worldwide from
personal contracts to government issues. But it is not popular in our country. Some application
areas are:

 Healthcare
One of the biggest issues with healthcare is the fragmentation of data across different providers
and clinics. Blockchain solutions in healthcare have shown the potential to reduce healthcare
costs, improve access to information across stakeholders and streamline progresses by making
medical records easily and safely accessible at one place. An advanced system for collecting and
sharing private information reduces cost and time consumption. For example, it provides services
like care plan information, medication protocols and appointment creation.

 Logistics
A major complaint in the shipping industry is the lack of communication and transparency due to
the large number of logistics companies crowding the space. Blockchain enables data
transparency by acknowledging data sources. The technology can also make the logistics process
leaner and more automated, saving the industry billions of dollars a year. It is not only safe, but a
cost-effective solution for the logistics industry.

 NFTs
Non-fungible tokens (NFTs) are simply digital items, like music, art, GIFs and videos that are
sold on a blockchain, ensuring that a sole owner can claim full rights to it. The blockchain
technology allows consumers to claim sole ownership over some of the most desirable digital
assets in the market.

 The Government

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Some state governments like are using blockchain technology to secure government documents,
but blockchain can also improve bureaucratic efficiency, accountability and reduce massive
financial burdens. Blockchain has the potential hold public officials accountable through smart
contracts and provide transparency by recording a public record of all activity. Blockchain may
also revolutionize elections. Blockchain-based voting could improve civic engagement by
providing a level of security and incorruptibility that allows voting to be done on mobile devices.

 Media
Many of the current problems in media deal with data privacy, royalty payments and piracy of
intellectual property. Blockchain has the ability to prevent a digital asset, such as an mp3 file,
from existing in multiple places. It can be shared and distributed while also preserving
ownership, making piracy virtually impossible through a transparent ledger system. Additionally,
blockchain can maintain data integrity, allowing advertising agencies to target the
right customers, and musicians to receive proper royalties for original work. It aids the Media
sector in issues like data rights, piracy and payments.

 Human Resources
Blockchain technology is a natural fit for improving time-consuming and costly HR procedures.
For example, it can eliminate the need to run individual verification checks on potential
employees since blockchain transactions can store data regarding identity and employment
history. It can also track payments and expenses, making things like paying taxes much easier for
both employers and employees.
 Management
So, how does blockchain technology apply to the field of management? How does management
use blockchain technology? Does blockchain technology help or hinder the processes of
management?

Blockchain technology is being used in the field of management to improve processes and make
businesses more efficient. For example, companies have used blockchain technology to store

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data, such as payroll records and invoices. This has enabled them to transparently share
information with employees and customers, without the risk of fraud. It has also enabled them to
automate complex processes, such as the administration of payroll and human resources
payments, without the need for a third-party.

The first company that was publicly using blockchain in the field of management was called The
DAO (Decentralized Autonomous Organization). The DAO was started by a non-profit
organization called The DAO Collective. It was built on top of the Ethereum platform and it let
people put money into a fund that was managed by a smart contract. Community members in
the DAO create proposals about the future operations of the protocol and then come together
to vote on each proposal. Proposals that achieve some predefined level of consensus are then
accepted and enforced by the rules expressed within the smart contract. This made
management easier.

Blockchain technology is serving in the field of management to improve the way that companies
operate. For example, blockchain technology is being used in the field of HR to improve the way
that companies manage their employee populations. Instead of using a traditional method of
finding and hiring employees (such as a job board), companies can use a dapp (decentralized
applications) to hire the best employees for the job without the need for a third-party.

It is also aiding in the field, enabling organizations to perform complex transactions and record
interactions with great transparency and efficiency. For example, a company could use a
blockchain to operate a peer-to-peer lending platform, where borrowers can borrow money from
other investors without needing to go through a traditional lending institution. This allows people
to interact with a shared digital ledger without the need for a centralized authority.

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Conclusion

Blockchain is a revolutionary technology with a huge impact on every sector. It is a digital ledger
system that allows people to use cryptography to secure and verify transactions safely and
automatically. Blockchain is able to provide tamper-proof tracking and encryption of
transactions, and provide an immutable ledger that is incorruptible and tamper-resistant. As
blockchain technology matures, we can expect to see a wide array of use cases for this new
technology in many different sectors.

The fact that everything is stored in a decentralized ledger also makes it easy for everyone to
trust each other. In short, blockchain utilizes its unique way of data storage to provide a highly
efficient process with trust, transparency, and immutability.

We have also seen that blockchain technology has the potential to revolutionize the way we
work, interact with customers and services, and use the internet.

The application of blockchain technology in the field of management is affecting how businesses
operate. It is enabling companies to store data and run applications with complete transparency,
keeping them safe and secure from cyber-attacks without any involvement of a third-party.

This technology has the potential to make complex processes such as record keeping and supply
chains much more efficient. The applications of blockchain technology in the field of
management are still being discovered, but their potential to revolutionize the way we do
business is becoming evident.

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changing money, business, and the world. Penguin, 2016,
4. Konashevych O. Advantages and current issues of blockchain use in microgrids
5. Back A, Corallo M, Dashjr L, Friedenbach M, Maxwell G, Miller A, et al. Enabling
blockchain innovations with pegged sidechains.Technological Forecasting and Social
Change Volume 166,  May 2021

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