Due to the popularity of Bitcoin and other cryptocurrencies built on blockchain technology, blockchain technology is now at the center stage of the world. Several organizations have launched their blockchain applications. However, it is said that “the water that bears the boat is the same that swallows it up.” When the prices of Bitcoin and other cryptocurrencies crashed in Dec. 2017, the experts are reconsidering the value of blockchain applications [1]. Currently, blockchain application providers may need to convince their clients that they are not going blockchain for blockchain’s sake. In addition, researches shown the propose criteria to decide whether applications are suitable to use blockchain technology. For example, McAbee et al. mentioned critical factors to determine the adoption of blockchain technology in the military intelligence process [2].
This study refers to a blockchain application as an application founded on blockchain networks. A blockchain network is composed of several nodes (or participants). The application can send a request to a node in a blockchain network and delegate the node to execute the request on behalf of the application. The node further propagates the request or execution results to other nodes. Afterward, the nodes achieve consensus on the execution result of the request collaboratively. We can classify blockchain networks into public and permissioned blockchains [3]. In a permissioned blockchain network, only permitted nodes can join the network. Comparatively, a public blockchain network has no restriction on who can participate in the network.
This study focuses on the applications that rely on permissioned blockchain networks. If organizations establish applications on a public blockchain network, the application providers or application users may not be capable of affording the transaction fees in return for rewarding the node owners of the network to process the requests of the applications. Moreover, in the public blockchain networks, as nodes of the network spread around the world, the spreading needs a significant amount of time periods to achieve onsensus on the block data. Consequently, in addition to the applications related to cryptocurrency exchanges, organizations usually deploy their blockchain applications based on ermissioned blockchain.
To avoid a blockchain application from the criticism of blockchain for blockchain’s sake, the involved parties of people could dive into the key features of a blockchain network, and they can judge a blockchain application by evaluating whether the applications utilize the features of blockchain technology. From a technical perspective, comparing the blockchain technology with existing technologies such as PKI, distributed database, and high availability architecture, this study advocates that a permissioned blockchain network should at least have the following features: (1) having a friendly means for data verification; (2) letting more than one parties of authority to keep data replication and to endorse data integrity; (3) being able to tolerate a certain degree of failure.
When a blockchain application claim that it utilizes the above features of its blockchain network, users may be curious about whether the application provider manages its blockchain network properly. For example, a natural disaster may disable a blockchain network if all nodes are located in the same facility. Enabling users to trust that a blockchain application is managed appropriately is especially important to permissioned blockchain applications. Comparatively, a public blockchain application usually assumes that each node of the associated blockchain is untrustworthy. Therefore, users usually judge the blockchain with its algorithm and number of nodes in the blockchain. For example, in addition to regulation risks and market-related risks, Muller et al. propose a framework to evaluate risks of crypto tokens with the underlying technology, such as consensus protocols, cryptographic algorithms, and countermeasures to address cybersecurity attacks [4]. Islam et al. propose to assess the sustainability of blockchain networks on their mining schemes [5]. The number of nodes in a permissioned blockchain network is usually much less than the number of nodes in a public blockchain network. For example, attackers could just control a few nodes in a permissioned blockchain to influence data integrity [6]. Therefore, a security risk management scheme needs to be in place to help permissoned blockchain application providers to estimate the security risks of their applications and adopt measures to control the risks.
In light of this, this study proposes a security risk management framework for permissioned blockchain applications. Based on the implementation stacks of blockchain networks, the framework classifies security safeguards to protect permissioned blockchain applications into 6 categories. After collecting current information security practices and guidelines, such as ISO/IEC 27001, ISO/IEC 27002, PCI DSS, and CIS Controls, this study maps and practices to the categories and includes controls specific to permissioned blockchain applications. With the framework, application providers can evaluate the security risks of permissioned blockchain applications by determining whether the applications adopt appropriate controls to protect the applications. Moreover, interested parties can delegate auditors to use the framework to ensure permissioned blockchain applications have implemented the controls. Therefore, the framework can improve the trustworthiness of a permissioned blockchain applications. If people can trust the applications that adopted the framework, the paper can hopefully contribute to the adoption of permissioned blockchain technologies.