System Integration through Blockchain Technology

AuthorBalakumar Janakiraman

CourseIT6423 — IT Systems Acquisition and Integration

InstitutionKennesaw State University, Georgia, USA

TypeIndependent Research Concept Paper

Abstract

Information technology systems will become obsolete for a period of time. New technology replaces old technology systems with better functionality, compatibility and user-friendliness. Blockchain is a revolutionary and emerging technology with the potential to perform any digital transaction. One of the critical issues for integrating business systems with new technology is that it creates a new level of trust and value for the business and its customers. This paper examines the impact of using blockchain in business and the benefits it delivers — providing input for companies seeking to implement blockchain technology.

Table of Contents

Introduction
Method of Approach
Findings — Ethereum Implementation
3.2 Developing Smart Contract for a Banking Transaction
Blockchain Creates Business Value
ROI and Net Present Value Analysis
Business Case Studies
Recommendations
Value Section
References and Bibliography
Acknowledgements

1. Introduction

The Blockchain integration technology is one of the latest development technologies that can eliminate fraudulent transactions, reduce transaction costs, provide smart contracts and decentralise data to improve security. Ethereum is actively used in blockchain systems. Ethereum is a decentralised, open-source blockchain with smart contract functionality.

"The Ethereum blockchain is powered by its native cryptocurrency ether (ETH) and enables developers to create new types of ETH-based tokens that power dApps through the use of smart contracts."

— Gemini Cryptopedia, 2021

The Blockchain will deliver competitive advantage and increase stakeholder value as it is cryptographically secure.

1.1 Blockchain Transaction Process

The figure below illustrates the complete blockchain transaction process from initiation to network update:

Fig. 1 — Blockchain Transaction Process Diagram

Fig. 1 — Blockchain Transaction Process Flow Diagram showing all stages from initiation to network update

Transaction Steps — Step by Step

The transaction is initiated and a block transaction is created containing the transaction data

The block is sent to each node (participant) in the network for validation

The node validates the transaction against consensus rules independently

The node receives a reward for proof of work in the form of cryptocurrency

The validated block is added to the existing blockchain permanently

The network is updated across all nodes and the transaction is complete

2. Method of Approach

In order to promote appropriate research, analysis and decision-making, create business value and provide a competitive advantage, information was gathered from published articles, company websites and tutorials. The following software tools were used:

Remix IDE — for developing and deploying Smart Contracts in Solidity
Python 3.6 — primary scripting language for transaction execution
Ganache CLI / Test RPC — a blockchain emulator for local testing environments
Web3 (Python library) — installed in Python 3.6 to interact with the Smart Contract

3. Findings

The Ethereum technology method was used in this project to send cryptocurrency and perform digital transactions. A smart contract is a computer program running on Ethereum, written in the high-level language Solidity using the REMIX IDE.

"Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network."

— Ethereum Documentation

By integrating the blockchain into the bank, transactions can be completed within 10 minutes. In this project, Ganache CLI v6.12.2 was used as Test RPC:

Fig. 2 — Ganache CLI Test RPC Overview

Fig. 2 — Ganache CLI Test RPC Environment Overview

3.1 Ganache Port & Gas Limit

Ganache CLI — Port & Gas Configuration

Gas Price
==================
20000000000

Gas Limit
==================
6721975

Call Gas Limit
==================
9007199254740991

Listening on 127.0.0.1:8545

3.2 Developing Smart Contract for a Banking Transaction

Smart contracts are developed and executed through IDEs, providing a secure platform to run the encryption certification system. The blockchain platform is programmed in Solidity — a high-level, statically-typed programming language designed for implementing smart contracts that run on the Ethereum Virtual Machine (EVM).

A smart contract was written in Solidity to perform bank transactions including deposit and withdrawal functions. The contract was compiled and deployed in REMIX IDE. The contract maintains an internal balance and exposes three core functions:

getBalance() — returns the current balance stored in the contract
deposit(uint amount) — adds the specified amount to the contract balance
withdraw(uint amount) — deducts the specified amount from the contract balance

Solidity — Smart Contract for Banking Transaction (REMIX IDE)

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

contract BankTransaction {
    uint private balance;

    constructor() {
        balance = 0;
    }

    function getBalance() public view returns (uint) {
        return balance;
    }

    function deposit(uint amount) public {
        balance += amount;
    }

    function withdraw(uint amount) public {
        require(amount <= balance, "Insufficient balance");
        balance -= amount;
    }
}

3.3 Ganache Available Accounts & Private Keys

Ganache CLI provides a set of 10 test accounts each pre-funded with 100 Ether and their corresponding private keys for use in the development blockchain environment.

The Compilation Details from REMIX IDE provide the ABI (Application Binary Interface) and bytecode required to deploy and call the contract from Python using the Web3 library:

Fig. 3 — Ganache Available Accounts and Private Keys

REMIX IDE Compilation Details showing ABI and Bytecode

—

3.4 Python Code to Interact with Smart Contract

To perform and integrate the smart contract banking transaction in Python 3.6, the following code is used. Python 3.6 is installed with the Web3 library to connect to the Ganache blockchain emulator:

Python 3.6 — Smart Contract Integration via Web3

import json
from web3 import Web3

# Connect to Ganache CLI local blockchain
ganache_url = "http://127.0.0.1:8545"
web3 = Web3(Web3.HTTPProvider(ganache_url))
web3.isConnected  # True
web3.api          # 5.17.0

# Set default account
web3.eth.defaultAccount = web3.eth.accounts[0]
abi = json.loads('')

# Connect to deployed smart contract
address = web3.toChecksumAddress(
    "0xbbDfeCDed38c042B1C0C3dB45Ead4Af4D7235F06"
)
contract = web3.eth.contract(address=address, abi=abi)

# Check initial balance
print(contract.functions.getBalance().call())

# Deposit and withdraw transactions
tx_hash = contract.functions.deposit(10000).transact()
tx_hash = contract.functions.withdraw(100).transact()
print(tx_hash)

# Wait for confirmation and print updated balance
web3.eth.waitForTransactionReceipt(tx_hash)
print('Updated Balance: ' + str(contract.functions.getBalance().call()))

3.5 Transaction Receipt Output

Outputs generated by Python 3.6 and REMIX IDE showing the integration of both systems to generate a transaction receipt:

Transaction Receipt — Python Output

AttributeDict({
  'transactionHash': HexBytes('0x3d87a7efc5c60d1c7dde7a3e24e638a75722a18c...'),
  'transactionIndex': 0,
  'blockHash': HexBytes('0xd487b417b23a95663b60ce04ddb8171777654a189f75f...'),
  'blockNumber': 8,
  'from': '0x044F8D7dD84D732313ba96Ff83F60e7B270b7548',
  'to': '0xbbDfeCDed38c042B1C0C3dB45Ead4Af4D7235F06',
  'gasUsed': 27237,
  'cumulativeGasUsed': 27237,
  'contractAddress': None,
  'logs': [],
  'status': 1
})

Updated Balance: 29901

The screenshot below confirms the balance of 29,901 is updated in REMIX IDE after executing the Python Web3 transaction:

Fig. 4 — REMIX IDE Compilation Details (ABI & Bytecode)

REMIX IDE showing balance updated to 29901

3.6 Processing a Transaction using Account and Private Key from Ganache CLI

Python 3.6 — Signed Transaction with Private Key

from web3 import Web3

ganache_url = "http://127.0.0.1:8545"
web3 = Web3(Web3.HTTPProvider(ganache_url))
print(web3.eth.blockNumber)

account_1 = "0x565962A7fC3A13BAF95751542eA77B8ceB2a9E1c"
account_2 = "0xC8E0A011b83F7336F61e84A1173D7361eb273B2a"
private_key = "0x98add5f8569d28570e999b7751b3bcf3c2d0d05c59ab764bb3d73bb229691fba"

# Getting the nonce
nonce = web3.eth.getTransactionCount(account_1)

# Building the transaction
tx = {
    'nonce': nonce,
    'to': account_2,
    'value': web3.toWei(1, 'ether'),
    'gas': 200000,
    'gasPrice': web3.toWei('50', 'gwei')
}

# Signing and sending
signed_tx = web3.eth.account.signTransaction(tx, private_key)
tx_hash = web3.eth.sendRawTransaction(signed_tx.rawTransaction)
print(tx_hash)

The account and private key are taken from the Ganache Test RPC. A nonce (number used once) prevents replay attacks. Value is converted to Wei — the smallest denomination of Ether — to execute the transaction.

Fig. 5 — Ganache CLI Transaction Confirmation

Fig. 5 — Ganache CLI showing the completed transaction and updated account balances

4. Blockchain Creates and Increases Business Value

Blockchain uses decentralised technology in which resource sharing can transfer control and decision-making power to a distributed network. Key business benefits include:

Reduces transaction time — payments are faster and more efficient
Reduces operational and transaction costs for end users across the value chain
Blockchain Procure-to-Pay (PTP) — connects client with service/product providers allowing identification and authentication of stakeholders, budgeting, service provision, invoicing and payment services
Eliminates fraudulent transactions through cryptographic verification at every stage
Increases stakeholder trust through complete transparency and immutability
Decentralises control — no single point of failure or central authority dependency

5. Return on Investment and Net Present Value Analysis

ROI = Net Benefits ÷ Total Cost

Net Benefits = Total Benefits − Total Cost

NPV = [(B₀−C₀)] + [(B₁−C₁)/(1+r)] + [(B₂−C₂)/(1+r)²] + [(B₃−C₃)/(1+r)³] + [(B₄−C₄)/(1+r)⁴] + [(B₅−C₅)/(1+r)⁵]

Blockchain Investment — Cost-Benefit Analysis
	Initial	Yr 1	Yr 2	Yr 3	Yr 4	Yr 5	Total
Total Costs	$50,000	$10,000	$10,000	$10,000	$10,000	$10,000	$100,000
Total Benefits	$0	$40,000	$40,000	$40,000	$40,000	$35,000	$195,000
Net Benefits	−$50,000	$30,000	$30,000	$30,000	$30,000	$25,000	$95,000
ROI = $95,000 ÷ $100,000 = 95%

NPV Discounted Cash Flow (Rate: 3.0%)
Period	Discount Factor	Denominator	Discounted Value
Initial Year	—	1.000	−$50,000
Year 1	r=3.0%	1.030	$29,126
Year 2	r²	1.061	$28,275
Year 3	r³	1.093	$27,447
Year 4	r⁴	1.126	$26,642
Year 5	r⁵	1.160	$21,552
Net Present Value (NPV)			$83,042

ROI of 95% and NPV of $83,042 confirm strong positive returns on the $50,000 initial blockchain investment.

6. Business Case Studies

Case 1 — Financial Institutions & Cross-Border Payments

Goldman Sachs, JP Morgan Chase, UBS, Bank of America, and Citigroup are working to implement blockchain platforms. ICICI Bank cooperated with UAE NBD to implement blockchain for international trade transactions — reducing settlement time from days to minutes and eliminating intermediary costs.

Case 2 — Public Records & Land Registry (Illinois)

The Cook County Recorder of Deeds in Illinois ran a successful blockchain pilot for land registry. The system was found resistant to alteration, even by government officials. As part of the Illinois Blockchain Project, an RFP was issued to digitise public records and reduce paper documents.

7. Recommendations

Table 2 — Blockchain Platforms Comparison
Platform	Consortium	Industry	Throughput (TPS)
R3 Corda	R3 Consortium	Financial Services	550 TPS
Quorum	Ethereum / JP Morgan Chase	Cross-Industry	600 TPS
IBM Hyperledger Fabric	Linux Foundation	Consortium Blockchain	2,000 TPS

Cost Reduction — US bank payments cost $25–35 per transaction; blockchain reduces this to under $2
Decentralisation — DLT works on a decentralised network to save costs and improve payment efficiency
Efficient Transaction — in consortium blockchain, transaction proof is obtained through authentication by authorised nodes only
Secure Transaction — Quorum is a private blockchain platform based on Ethereum using permissioned access
Taxation — per IRS Notice 2014-21, virtual currencies are property for US federal tax; blockchain audit trails simplify reporting
Consumer Protection — US Government studying blockchain benefits for consumer protection with the Federal Trade Commission

8. Value Section

8.1 RFP Application

This paper will help solve the mentioned needs and problems, and draft an RFP for the supplier to find the right blockchain solution. The methodology, ROI analysis, and case studies provide practical frameworks for evaluating vendor proposals.

8.2 Educational and Professional Value

This paper will increase the value of my education to enter leadership positions and build a successful startup business. It will promote innovation and growth and help regulated professionals to persuade business customers to adopt the latest technology for competitive advantage.

9. References and Bibliography

Gas and fees. ethereum.org. (2021). ethereum.org/en/developers/docs/gas/
Blockchain in Procurement and Supply Chain. GEP. (2016). gep.com
What Is Ethereum Blockchain and its Key Use Cases? Gemini. (2021). gemini.com/cryptopedia
Ethereum for Python Developers. ethereum.org
Koksal, I. The Benefits Of Applying Blockchain Technology In Any Industry. Forbes. (2019). forbes.com
Blockchain Consulting Services. Accenture. accenture.com
How does Ethereum work, anyway? preethikasireddy.com
Blockchain. Wikipedia. (2021). en.wikipedia.org/wiki/Blockchain
Ethereum. Wikipedia. (2021). en.wikipedia.org/wiki/Ethereum
Smart contract. Wikipedia. (2021). en.wikipedia.org/wiki/Smart_contract
A Policymaker Guide to Blockchain. ITIF. (2019). itif.org
Trade Finance. R3. (2021). r3.com
Guo, Y., Liang, C. Blockchain application and outlook in the banking industry. Financial Innovation. (2016). springeropen.com
Economic Justification ROI/CBA Tutorial. FGDC. fgdc.gov
Blockchain in Illinois. Illinois.gov. illinois.gov
The role of blockchain in banking. OMFIF. (2020). omfif.org
What Is a Wei? Investopedia. (2021). investopedia.com
Nonce. Investopedia. (2021). investopedia.com
Cryptocurrency and Blockchain Tax Issues. Deloitte. (2020). deloitte.com
Virtual Currencies. IRS. irs.gov
Web3.py documentation. web3py.readthedocs.io
Blockchain Innovation Act. Congress.gov. (2020). congress.gov

10. Acknowledgements

Dr. Halstead-Nussloch for the need to restructure the RFP objectives to implement technologies and suggestions given on concept paper outline and draft reports.