The dark side of blockchains: Threats, risks, ethics and biases in blockchain adoption

Closes:

Introduction

Blockchain technology (BCT), or distributed ledger technology, is a disruptive technology that has enabled organizations globally across all sectors with social and economic transformations (Denter et al., 2022). It is an emerging technology that has frequently been associated with trust and transparency in storing information securely between transactions approved by all connected entities (Raj Kumar Reddy et al., 2021). Blockchain technology has gained widespread acceptance across different spheres, such as healthcare (Yaqoob et al., 2022), finance (Grover et al., 2019), marketing (Peres et al., 2022), retail banking (Miraz et al., 2020), education (Steiu, 2020), supply chain management (Underwood, 2016) to name a few. Despite being in their infancy, blockchain technologies and Artificial Intelligence (AI) are gaining momentum across various verticals, where trust is the primary driving force (Kumar et al., 2022). Prior studies have discussed how BCT has helped firms improve efficiency in their processes  (Garg et al., 2021; Li et al., 2021; Nandi et al., 2020). Literature has pointed out that the offshoots of BCT in the form of cryptocurrency, non-fungible tokens, and decentralized processes aid businesses in achieving operational efficiency. The blockchain has attracted much interest from marketers, investors, financial institutions, public policymakers, politicians, and the government. The technology underpins the conception, design, and implementation of popular cryptocurrencies like Bitcoin, Litecoin, Ethereum and Ripple (Yuan & Wang, 2018).


Although blockchain brings innumerable benefits to a company, Tarafdar et al. (2013) have warned about the dark side of Information Technology (IT) use. Recent studies have highlighted particular concerns while implementing BCT (Yu et al., 2022). Some significant challenges include security, uncertain regulatory status, irreversibility, traceability and many more (Lee et al., 2019; Syed et al., 2019). Studies have examined the phenomena mentioned above at a cursory level; there is an urgent need to comprehend the negative aspects of BCT from both a theoretical and practical standpoint. The Special Issue aims to discuss themes and invite scholars to contribute theoretical and empirical validation of the threats, risks, ethics and biases in using BCT. 


Emerging digital transformation technologies such as AI, Blockchain, Internet-of-Things (IoT), and big data analytics are transforming relationships among businesses. While emerging technologies present exciting and myriad opportunities for organizations, these technologies have crucial dark side effects on privacy, security and provenance tracking, creating several challenges (Rana et al., 2022; Sangal et al., 2022). Cyber currencies (e.g. Bitcoins) have a significant level of anonymity which paves the way for illicit activities, making it difficult for law enforcement firms to trace illegal users and transactions (Irwin & Turner, 2018; Sun Yin et al., 2019). Bitcoins have been linked with money laundering (van Wegberg et al., 2018), online drug industry (Chawki, 2022), cybercriminal activity (Badawi et al., 2022), and ransomware attacks (Turner et al., 2022). The challenges of technical complexity and the concerns regarding deployment benefits have blunted blockchain adoption (Liang et al., 2021). The other challenges in using blockchain in business are related to the financial (e.g. weakness in exchanges), regulation (e.g. absence of universal principles; government regulations), operational (e.g. scalability issues, wasted resources) and adoption (e.g. interoperability standards) aspects (Ali et al., 2020). Financial challenges to blockchain adoption are data ownership of credit resources, point-to-point transactions, data protection, data sharing, and vulnerabilities of exchanges during transactions. Besides, there is an absence of laws that aid in regulating business transactions, especially for highly regulated industries (Trautman, 2014), security (Dasgupta et al., 2019), time expended for transaction verification 
Importance of understanding the dark side of blockchain
Blockchains integrated with other emerging technologies, such as AI and IoT, will revolutionize the next generation of organizational applications (Kumar et al., 2022). BCT offers several benefits; namely, explainability, privacy, trust, and AI can further enhance scalability, security and personalization. BCT aids organizations in executing, verifying, recording and transactions, thereby improving organization processes and information handling. The ability of BCT to be a versatile programmable platform to manage real-time, non-tamper contracts with an audit trail, append-only, immutable ledger containing verified and validated transactions forms a foundation of trust for businesses (Mattila, 2016). Blockchains can be viewed from two lenses a) Information Communication Technology (ICT) lens that records platform asset ownership and the "institutional technology" lens that decentralizes governance structures for effective co-ordination among organizations (Aste et al., 2017).


Conversely, cryptocurrencies are popular among hackers who use them as a new source of ransomware attacks and bribery (Katarzyna, 2019). Blockchains are prone to transaction malleability attacks where an attacker changes the transaction ID before it is confirmed. This results in modified cryptocurrencies being transferred to the hacker's account. The anonymity of the users' transactions cannot be assured entirely. Hackers can send digital coins to their personal addresses (Conoscenti et al., 2016). 


Conclusion

Essentially, blockchain technology creates an eternal and irreversible electronic record of all transactions involving one or more parties participating in business interactions. Blockchain technology has been discussed in the finance contexts in executing decentralized currencies and smart contracts to control intellectual assets, creating secure electronic health records (), and managing supply chain management (Wang et al., 2019). Blockchain technology is a technology whose adverse effects are not yet apparent, and adoption is yet uncertain for many organizations. In this special issue, we will discuss blockchain as an emerging technology for managing dark side effects in business transactions across organizations.  On the one hand, there is research that highlights the positives of using blockchains for business transactions, yet; there is a paucity of research that addresses the dark side of blockchains in the inter-organizational context, which this Special Issue (SI) aims to address (Gligor et al., 2021). It aims to showcase remarkable and exemplary research that analyses the complex and ambivalent blockchain usage leading to unintended, unbeneficial, and adverse effects. This SI attempts to cover the following topics (not limited to these only):

  • Role of organizational-level theories for mitigation of the dark sides of blockchain in organizations
  • Conceptual papers on the dark side of blockchain technology
  • The dark side of cryptocurrencies 
  • Data security in blockchains
  • Ethical and moral issues related to adopting blockchain technology 
  • Negative social implications of the use of blockchain technology
  • Interorganizational relationships of technology, governance and regulations in the context of government information systems  
  • Organizational readiness in implementing blockchain technology 
  • Blockchain innovation in banking: Automating banking services
  • Illiteracy and ignorance toward blockchain technology 
  • Case studies that highlight the failure stories of implementing blockchain technologies in organizations
  • Solutions to emerging problems with blockchain ethics

 

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