Blockchain for SMEs: Threats, Opportunities, and Future Research Trajectories

Background: The Blockchain Technology

The blockchain was essentially invented to solve problems related to electronic transactions. The creator developed two ideas that would have had a huge impact by offering the opportunity for more innovations. The first was related to the “bitcoin”, a digital currency which works on a peer-to-peer network and is decentralized, cryptographically secure, immutable, without any kind of central support. The second was the introduction of blockchain. The blockchain is defined in different ways: the mainly diffused definition is that it consists of a digital ledger (i.e., a record of all transactions of payment) open, shared, decentralized, and distributed in which transactions and related data the parties involved in the transaction are recorded and added chronologically to create permanent and tamper-proof records (Nakamoto, 2008). It falls within the scope of Distributed Ledger Technology (DLT) which generally refers to technologies that permit the spread of information across multiple nodes, countries, or institutions. Blockchains are made up of “nodes” located on a network that uses some accepted communication protocols: each node on the network stores a copy of the transaction and a consensus function is implemented to verify transactions to preserve the immutability of the chain so that transactions can’t be modified (Sarmah, 2018).

Blockchain doesn’t need a centralized server to collect and maintain data. If the network maintains consensus on which transactions have occurred in the past, it acts collectively from servers to host the data (Patrickson, 2021). If a fraudulent participant decides to change the data, the majority of the nodes of the network are able to quickly excludes it (Hughes, Park, Kietzman & Brown, 2019). Blockchain is different from systems design existing information because is based on four key characteristics: a) non-localization; b) security; c) verifiability; d) smart execution (Saberi, Kouhizadeh, Sarkis & Shen, 2018). As said, a blockchain is a digital ledger that is stored on multiple computers on a public or private network. Whenever a transaction is verified, it is inserted in a “block”; each one of them is linked to the previous and the sequent to form an immutable chain in which each transaction is locked.