UNIT 1

1. Write briefly about how blockchain works, and what benefits, features, and
limitations of blockchain.
Blockchain is a distributed ledger technology that allows multiple parties to securely
and transparently exchange data without the need for a centralized intermediary. Here's
a simplified explanation of how blockchain works:

- A transaction is initiated
- The transaction is verified
- The transaction is added to a block
- The block is added to the chain
- Consensus is maintained
- The blockchain is immutable

Benefits,

Decentralization

This is a core concept and benefit of blockchain. There is no need for a trusted third
party or intermediary to validate transactions; instead a consensus mechanism is used
to agree on the validity of transactions.

Transparency and trust

As blockchains are shared and everyone can see what is on the blockchain, this allows
the system to be transparent and as a result trust is established.

Immutability

Once the data has been written to the blockchain, it is extremely difficult to change it
back. It is not truly immutable but, due to the fact that changing data is extremely
difficult and almost impossible, this is seen as a benefit to maintaining an immutable
ledger of transactions.

High availability

As the system is based on thousands of nodes in a peer-to-peer network, and the data is
replicated and updated on each and every node, the system becomes highly available.
Highly secure

All transactions on a blockchain are cryptographically secured and provide integrity.

Simplification of current paradigms

The current model in many industries such as finance or health is rather disorganized,
wherein multiple entities maintain their own databases and data sharing can become
very difficult due to the disparate nature of the systems. But as a blockchain can serve
as a single shared ledger among interested parties, this can result in simplifying this
model by reducing the complexity of managing the separate systems maintained by
each

Faster dealings

In the financial industry, especially in post-trade settlement functions, blockchain can

play a vital role by allowing the quicker settlement of trades as it does not require a
lengthy process of verification, reconciliation, and clearance because a single version of
agreed-upon data is already available on a shared ledger between financial
organizations.

Cost saving

As no third party or clearing houses are required in the blockchain model, this can
massively eliminate overhead costs in the form of fees that are paid to clearing houses
or trusted third parties.

Features,

DISTRIBUTED CONSENSUS

Distributed consensus is the major underpinning of a blockchain. This enables a

blockchain to present a single version of the truth that is agreed upon by all parties
without the requirement of a central authority.

TRANSACTION VERIFICATION

Any transactions posted from nodes on the blockchain are verified based on a
predetermined set of rules and only valid transactions are selected for inclusion in a
block.
PLATFORMS FOR SMART CONTRACTS

A blockchain is a platform where programs can run that execute business logic on
behalf of the users. As explained earlier, not all blockchains have a mechanism to
execute smart contracts; however, this is now a very desirable feature.

TRANSFERRING VALUE BETWEEN PEERS

Blockchain enables the transfer of value between its users via tokens. Tokens can be
thought of as a carrier of value.

GENERATING CRYPTOCURRENCY

This is an optional feature depending on the type of blockchain used. A blockchain can
generate cryptocurrency as an incentive to its miners who validate the transactions and
spend resources in order to secure the blockchain.

SMART PROPERTY

For the first time it is possible to link a digital or physical asset to the blockchain in an
irrevocable manner, such that it cannot be claimed by anyone else; you are in full
control of your asset and it cannot be double spent or double owned.

PROVIDER OF SECURITY

Blockchain is based on proven cryptographic technology that ensures the integrity and
availability of data.Other security services such as nonrepudiation and authentication
are also provided by blockchain as all actions are secured by using private keys and
digital signatures.

IMMUTABILITY

This is another key feature of blockchain: records once added onto the blockchain are
immutable.

UNIQUENESS

This feature of blockchain ensures that every transaction is unique and has not been
spent already. This is especially relevant in cryptocurrencies where much desirable
detection and avoidance of double spending are a key requirement.
SMART CONTRACTS

Blockchain provides a platform to run smart contracts. These are automated

autonomous programs that reside on the blockchain and encapsulate business logic
and code in order to execute a required function when certain conditions are met.

Limitations,

1. Scalability: One of the biggest limitations of blockchain technology is scalability.

The process of verifying and adding transactions to the blockchain can be slow
and resource-intensive, which can limit the number of transactions that can be
processed per second.

Energy consumption: The process of verifying and adding transactions to the

blockchain requires a significant amount of computing power, which can result in
high energy consumption and carbon emissions.

Interoperability: Different blockchain networks can have different protocols and

standards, which can limit their ability to communicate and exchange data with
each other.

Data privacy: While blockchain technology provides a high level of security and
transparency, there are still concerns around data privacy, especially when it
comes to sensitive or confidential information.

Regulatory uncertainty: The regulatory environment surrounding blockchain

technology is still evolving, which can create uncertainty and legal challenges for
companies and developers.

User experience: Some blockchain applications can be complex and difficult for
users to understand and interact with, which can limit their adoption and use.

Governance: The decentralized nature of blockchain networks can make it

difficult to establish clear governance structures and resolve disputes.

Dependence on technology: Blockchain technology relies on complex algorithms

and sophisticated computing systems, which can be vulnerable to cyber attacks
and system failures.
 Cost: Implementing and maintaining blockchain technology can be expensive,
especially for smaller companies and organizations.

Adoption: Despite the potential benefits of blockchain technology, adoption is

still limited, and many companies and organizations are hesitant to invest in the
technology due to the above limitations and uncertainties.

2. What is the consensus mechanism in blockchain?

Consensus is basically a distributed computing concept that has been used in

blockchain in order to provide a means of agreeing to a single version of truth by all
peers on the blockchain network.

Roughly, the following two categories of consensus mechanism exist:

1. Proof-based, leader-based, or the Nakamoto consensus whereby a leader is elected

and proposes a final value

2. Byzantine fault tolerance-based, which is a more traditional approach based on

rounds of votes

PROOF OF WORK

This type of consensus mechanism relies on proof that enough computational resources
have been spent before proposing a value for acceptance by the network. This is used
in bitcoin and other cryptocurrencies. Currently, this is the only algorithm that has
proven astonishingly successful against Sybil attacks.

PROOF OF STAKE

This algorithm works on the idea that a node or user has enough stake in the system;
for example the user has invested enough in the system so that any malicious attempt
would outweigh the benefits of performing an attack on the system. This idea was first
introduced by Peercoin and is going to be used in the Ethereum blockchain.

DELEGATED PROOF OF STAKE

Delegated Proof of Stake (DPOS) is an innovation over standard PoS whereby each
node that has stake in the system can delegate the validation of a transaction to other
nodes by voting. This is used in the bitshares blockchain.

PROOF OF ELAPSED TIME

Introduced by Intel, it uses Trusted Execution Environment (TEE) to provide

randomness and safety in the leader election process via a guaranteed wait time. It
requires the Intel SGX (Software Guard Extensions) processor in order to provide the
security guarantee and for it to be secure.

DEPOSIT-BASED CONSENSUS

Nodes that wish to participate on the network have to put in a security deposit before
they can propose a block.

PROOF OF IMPORTANCE

This idea is important and different from Proof of Stake. Proof of importance not only
relies on how much stake a user has in the system but it also monitors the usage and
movement of tokens by the user to establish a level of trust and importance. This is
used in Nemcoin.

FEDERATED CONSENSUS OR FEDERATED BYZANTINE CONSENSUS

Used in the stellar consensus protocol, nodes in this protocol keep a group of publicly
trusted peers and propagates only those transactions that have been validated by the
majority of trusted nodes.

REPUTATION-BASED MECHANISMS

As the name suggests, a leader is elected on the basis of the reputation it has built over
time on the network. This can be based on the voting from other members.

PRACTICAL BYZANTINE FAULT TOLERANCE

Practical Byzantine Fault Tolerance (PBFT) achieves state machine replication, which
provides tolerance against Byzantine nodes. Various other protocols, including but are
not limited to PBFT, PAXOS, RAFT, and Federated Byzantine Agreement (FBA), are
also being
3. Explain the birth of the blockchain along with the history of the blockchain.

Blockchain technology was first introduced in 2008 with the publication of a whitepaper
titled "Bitcoin: A Peer-to-Peer Electronic Cash System" by an unknown person or group
of people using the pseudonym "Satoshi Nakamoto". The whitepaper described a
decentralized, digital currency system that would allow for secure, peer-to-peer
transactions without the need for a trusted third party such as a bank.

The first implementation of blockchain technology was the Bitcoin blockchain, which
was launched in 2009. The Bitcoin blockchain is a decentralized, public ledger that
records all Bitcoin transactions in chronological order. The ledger is maintained by a
network of users called "nodes" who validate and confirm transactions.

As the popularity of Bitcoin grew, other cryptocurrencies and blockchain-based systems

were developed, each with their own unique features and use cases. In 2015, the
Ethereum blockchain was launched, which introduced the concept of smart contracts.
Smart contracts are self-executing contracts with the terms of the agreement between
buyer and seller being directly written into lines of code, allowing for more complex and
automated transactions.

Since then, blockchain technology has been adopted in various industries, including
finance, supply chain management, healthcare, and more. It has also inspired the
development of new technologies and platforms, such as decentralized finance (DeFi)
and non-fungible tokens (NFTs).

4. What are blockchain and full ecosystem decentralisation?

In order to achieve complete decentralization, it is necessary that the environment

around the blockchain is also decentralized. Blockchain itself is a distributed ledger that
runs on top of conventional systems. These elements include storage, communication,
and computation. There are other factors, such as Identity and Wealth, that are
traditionally based on centralized paradigms and there's a need to decentralize these
aspects too in order to achieve a fully decentralized ecosystem.
Storage

Data can be stored directly in a blockchain, and with this, it does achieve
decentralization, but a major disadvantage of this approach is that blockchain is not
suitable for storing large amounts of data by design. It can store simple transactions and
some arbitrary data but is certainly not suitable for storing images or large blobs of data,
as is the case in traditional database systems. A better alternative is to use distributed
hash tables (DHTs). DHTs were originally used in peer-to-peer file sharing software,
such as BitTorrent, Napster, Kazaa, and Gnutella. BitTorrent turns out to be the most
scalable and fast network, but the issue is that there is no incentive for users to keep
the files indefinitely. Users do not usually keep files permanently, and if nodes leave the
network that has data required by someone, there is no way to retrieve it except having
the required nodes rejoin the network again so that the files become available once
more. Two main requirements here are high availability and link stability, which means
that data should be available when required and network links should also always be
accessible. Inter Planetary File System (IPFS) by Juan Benet possesses both of these
properties and the vision is to provide a decentralized World Wide Web by replacing the
HTTP protocol. IPFS uses Kademlia DHT and merkle DAG (Directed Acyclic Graph)
to provide the storage and searching functionality, respectively.

The incentive mechanism is based on a protocol known as Filecoin that pays incentives
to nodes that store data using the BitSwap mechanism. The BitSwap mechanism allows
nodes to keep a simple ledger of bytes sent or bytes received under a one-to-one
relationship. Also, a Git-based version control mechanism is used in IPFS to provide
structure and control over the versioning of data.

There are other alternatives, such as Ethereum swarm, storj, and maidsafe. Ethereum
has its own decentralized and distributed ecosystem that uses Swarm for storage and
the whisper protocol for communication. Maidsafe is aiming to provide a decentralized
World Wide Web. All these projects will be discussed later in the book in more detail.

BigChainDB is another storage layer decentralization project aimed at providing a

scalable, fast, and linearly scalable decentralized database as opposed to a traditional
filesystem. BigChainDB complements decentralized processing platforms and file
systems such as Ethereum and IPFS.

Communication

It is generally considered that the Internet (the communication layer in blockchain) is

decentralized. This is true to some extent as the original vision of the Internet was to
develop a decentralized system. Services such as e-mail and online storage are all now
based on a paradigm where the service provider is in control and users trust them to
give them access to the service when required. This model is based on the trust of the
central authority (the service provider) and users are not in control of their data; even
passwords are stored on trusted third-party systems. There is a need to provide control
to individual users in such a way that access to their data is guaranteed and is not
dependent on a single third party. Access to the Internet (the communication layer) is
based on Internet service providers (ISPs) that act as a central hub for Internet users. If
the ISP is shut down for political or any other reasons, then no communication is
possible in this model. An alternative is to use mesh networks. Even though they are
limited in functionality as compared to the Internet, they still provide a decentralized
alternative where nodes can talk directly to each other without a central hub such as an
ISP.

Now imagine a network that allows users to be in control of their communication; no one
can shut it down for political or censorship reasons. This could be the next step toward
decentralizing communication networks in the blockchain ecosystem. It must be noted
that this model may only be required in a jurisdiction where the Internet is censored and
controlled by the government.

As mentioned earlier, the original vision of the Internet was to build a decentralized
network; however, over the years, with the advent of large-scale service providers such
as Google, Amazon, and eBay, the control is shifting toward the big players. For
example, e-mail is a decentralized system at its core; anyone can run an e- mail server
with minimal effort and can start sending and receiving e-mails, but there is a better
alternative available that is already providing a managed service for end users, so there
is a natural inclination toward selecting a centralized service as it is more convenient
and free. Free services, however, are being offered at the cost of valuable personal data
and many users are not aware of this fact. This is one example that shows how the
Internet has moved toward centralization. Blockchain has once again given this vision of
decentralization to the world and now concerted efforts are being made to harness this
technology and gain the benefits that it can provide.

Computation

Decentralization of computing or processing is achieved by a blockchain technology

such as Ethereum, where smart contracts with embedded business logic can run on the
network. Other blockchain technologies also provide similar processing layer platforms
where business logic can run over the network in a decentralized manner.

The following diagram shows the decentralized ecosystem overview where, on the
bottom layer, Internet or Meshnets provides a decentralized communication layer, then
a storage layer uses technologies such as IPFS and BigChainDB to enable
decentralization, and finally, you see the blockchain that serves as a decentralized
processing layer. Blockchain can, in a limited way, provide a storage layer too, but that
seriously hampers the speed and capacity of the system; therefore, other solutions such
as IPFS and BigChainDB are more suitable to store large amounts of data in a
decentralized way. At the top, the Identity and Wealth layers are shown. Identity on the
Internet is a very big topic and systems such as bitAuth and OpenID have provided
authentication and identification services with varying degrees of decentralization and
security assumptions.

Blockchain is capable of providing solutions to various problems. A concept relevant to

Identity known as Zooko's Triangle requires that a naming system in a network protocol
be secure, decentralized, and meaningful to humans. It is conjectured that a system can
have only two of these properties simultaneously, but with the advent of blockchain, in
the form of Namecoin, this problem was resolved. This, however, is not a panacea and
comes with its own challenges, such as reliance on users to store and maintain private
keys securely. This opens up other general questions about the suitability of
decentralization. Perhaps decentralization is not appropriate in every scenario.
Well-reputed centralized systems tend to work better in many cases.

With the emergence of the decentralization paradigm, different terminologies and buzz
words are now appearing in the media and in academic literature. With the advent of the
blockchain technology, it is now possible to build software versions of traditional
physical organizations. In the context of decentralization, the upcoming concepts are
worth discussing.
 UNIT 2

1. How does the blockchain solve the Double-spend Byzantine generals’

problem?
2. What is Double Spending? Is it possible to double-spend in the blockchain
ecosystem?

(BOTH HAVE THE SAME ANSWER)

Even without considering the many possible uses of Bitcoin and blockchain technology,
Bitcoin, at its most fundamental level, is a core breakthrough in computer science, one
that builds on 20 years of research into cryptographic currency, and 40 years of
research in cryptography, by thousands of researchers around the world. Bitcoin is a
solution to a long-standing issue with digital cash: the double-spend problem. Until
blockchain cryptography, digital cash was, like any other digital asset, infinitely copiable
(like our ability to save an email attachment any number of times), and there was no
way to confirm that a certain batch of digital cash had not already been spent without a
central intermediary. There had to be a trusted third party (whether a bank or a
quasibank like PayPal) in transactions, which kept a ledger confirming that each portion
of digital cash was spent only once; this is the double-spend problem. A related
computing challenge is the Byzantine Generals’ Problem, connoting the difficulty of
multiple parties (generals) on the battlefield not trusting each other but needing to have
some sort of coordinated communication mechanism.

The blockchain solves the double-spend problem by combining BitTorrent peer-to-peer

file-sharing technology with public-key cryptography to make a new form of digital
money. Coin ownership is recorded in the public ledger and confirmed by cryptographic
protocols and the mining community. The blockchain is trustless in the sense that a user
does not need to trust the other party in the transaction, or a central intermediary, but
does need to trust the system: the blockchain protocol software system. The “blocks” in
the chain are groups of transactions posted sequentially to the ledger—that is, added to
the “chain.” Blockchain ledgers can be inspected publicly with block explorers, Internet
sites (e.g., www.Blockchain.info for the Bitcoin blockchain) where you can see a
transaction stream by entering a blockchain address (a user’s public-key address, like
1DpZHXi5bEjNn6SriUKjh6wE4HwPFBPvfx).
3. Outline about the cryptocurrency and the e-wallet, personal crypto security
work?

How a cryptocurrency works

Bitcoin is money, digital cash, a way of buying and selling things over the Internet. The Bitcoin
value chain is composed of several different constituencies: software developers, miners,
exchanges, merchant processing services, web wallet companies, and users/consumers. From
an individual user’s perspective, the important elements in transacting coins (I’ll use “coin” in the
generic sense here) are an address, a private key, and wallet software. The address is where
others can send Bitcoin to you, and the private key is the cryptographic secret by which you can
send Bitcoin to others. Wal‐ let software is the software you run on your own computer to
manage your Bitcoin. There is no centralized “account” you need to register with another
company; if you have the private key to an address, you can use that private key to access the
coin associated with that address from any Internet-connected computer (including, of course,
smartphones). Wallet software can also keep a copy of the blockchain—the record of all the
transactions that have occurred in that currency—as part of the decentralized scheme by which
coin transactions are verified.

E-wallet and personal crypto security

As responsible consumers, we are not used to many of the new aspects of blockchain
technology and personal cryptosecurity; for example, having to back up our money.
Decentralized autonomy in the form of private keys stored securely in your ewallet means that
there is no customer service number to call for password recovery or private key backup. If your
private key is gone, your Bitcoin is gone. This could be an indication that blockchain technology
is not yet mature enough for mainstream adoption; it’s the kind of problem that consumer-facing
Bitcoin startups such as Circle Internet Financial and Xapo are trying to solve. There is an
opportunity for some sort of standardized app or service for ewallet backup (for example, for
lost, stolen, bricked, or upgraded smartphones or laptop/tablet-based wallets), with which users
can confirm exactly what is happening with their private keys in the backup service, whether
they self-administer it or rely on external vendors. Personal cryptosecurity is a significant new
area for consumer literacy, because the stakes are quite high to ensure that personal financial
assets and transactions are protected in this new online venue of digital cash. Another element
of personal cryptosecurity that many experts recommend is coin mixing, pooling your coins with
other transactions so that they are more anonymous, and using services like Dark Coin, Dark
Wallet, and BitMixer. As the marketplace of alternative currencies grows, demand for a unified
ewallet will likely rise, because installing a new and separate wallet is required for most
blockchain-related services, and it is easy to have 20 different ewallets crowding your
smartphone.
Despite their current clunkiness in implementation, cryptocurrencies offer many great benefits in
personal cryptosecurity. One of the great advantages is that blockchain is a push technology
(the user initiates and pushes relevant information to the network for this transaction only), not a
pull technology (like a credit card or bank for which the user’s personal information is on file to
be pulled any time it is authorized). The credit card technology was not developed to be secure
on the Internet the way that blockchain models are developing now. Pull technology requires
having datastores of customer personal information that are essentially centralized honey pots,
increasingly vulnerable to hacker identity theft attacks (Target, Chase, and Dairy Queen are just
a few recent examples of large-scale identity-theft vendor database raids). Paying with Bitcoin
at any of the 30,000 vendors that accept it as of October 2014 (e.g., Overstock, New Egg, and
Dell Computer) means not having to entrust your personal financial information to centralized
vendor databases. It might also possibly entail a lower transaction fee (Bitcoin transaction fees
are much lower than merchant credit card processing fees).

UNIT 3

1. Explain the blockchain development platforms and APIs today

In addition to Blockchain 2.0 protocol projects, there are several developer platform
companies and projects offering tools to facilitate application development.
Blockchain.info has a number of APIs for working with its ewallet software (it’s one of
the largest ewallet providers) to make and receive payments and engage in other
operations. Chain has interfaces to make calls to the data available in full blockchain
nodes, and standard information queries such as the Bitcoin balances by address and
push notifications when there is activity with a certain address. Stellar is a
semidecentralized (maintained by gateway institutions, not miners) public ledger
platform and unified development environment (blockchain APIs, multisig APIs) linked to
the Stripe payment network.59 Related to Stellar are Block.io, Gem, and BlockCypher,
which have multisig wallet APIs.

More unified API development environments will be needed that include the many
diverse and growing parts of the blockchain ecosystem (storage, file serving,
messaging, wallet interactions, mobile payments, identity confirmation, and reputation).
There is also an opportunity to link blockchain development environments out to other
major segments like the machine-to-machine (M2M) communication and
Internet-of-Things (IoT) networks infrastructure for rapid application development. An
example of an advanced integrated application of this kind envisioned for the far‐ ther
future could be a smartwatch that can interact with smart-city traffic-sensor data to
automatically reserve and pay for lane space with a Bitcoin-denominated smart
contract.

2. Illustrate blockchain Ecosystem and the Mechanism of decentralization,

communications and computations?

There is a need for a decentralized ecosystem surrounding the blockchain itself for
full-solution operations. The blockchain is the decentralized transaction ledger that is
part of a larger computing infrastructure that must also include many other functions such as
storage, communication, file serving, and archiving. Specific projects that are developing
solutions for the distributed blockchain ecosystem include Storj for any sort of file storage (text,
images, audio, multimedia); IPFS for file serving, link maintenance, and storage; and Maidsafe
and Ethereum for storage, communication, and file serving. First, in terms of storage, perhaps
the most obvious need is for secure, decentralized, off-chain storage for files such as an
electronic medical record (EMR) or genome, or even any simple Microsoft Word document,
which would not be packed into the 40-byte (40-character) OP_RETURN field used for
transaction annotation (even in the case of Florincoin’s 528-character annotation field). File
storage could either be centralized (like Dropbox or Google Drive) or could be in the same
decentralized architecture as the blockchain. The blockchain transaction that registers the asset
can include a pointer and access method and privileges for the off-chain stored file.

Second, in the case of file serving, the IPFS project has proposed an interesting technique for
decentralized secure file serving. IPFS stands for InterPlanetary File System, which refers to the
need for a global and permanently accessible filesystem to resolve the problem of broken
website links to files, well beyond the context of blockchain technology for the overall
functionality of the Internet. Here, BitTorrent peer-to-peer file-sharing technology has been
merged with the tree and versioning functionality of Git (initially applied to software but
“confirmable versioning” as a concept is more widely applicable to any digital asset). IPFS, then,
is a global, versioned, peer-to- peer filesystem, a system for requesting and serving a file from
any of the multiple places it might exist on the Web (versus having to rely on a central
repository) per a hash (unique code) that confirms the file’s integrity by checking that spam and
viruses are not in the file.60 IPFS is congruent with the Bitcoin technical architecture and ethos,
rewarding file-sharing nodes with Filecoin.

Third, in the area of archiving, a full ecosystem would also necessarily include longevity
provisioning and end-of-product-life planning for blockchains. It cannot be assumed that
blockchains will exist over time, and their preservation and accessibility is not trivial. A
blockchain archival system like the Internet Archive and the Wayback Machine to store
blockchains is needed. Not only must blockchain ledger transactions be preserved, but we also
need a means of recovering and controlling previously recorded blockchain assets at later dates
(that might have been hashed with proprietary algorithms) because it is likely that certain
blockchains will go out of business. For example, it is great that someone established
proof-of-existence of her will on the Bitcoin blockchain in 2014, but how can we know that the
will can be rehashed and authenticated in 60 years when it needs to be verified? If blockchains
are to become the lingua franca archival mechanism for the whole of a society’s documents,
longevity, preservation, and access mechanisms need to be built into the value chain explicitly.
Further, the existence of these kinds of tools—those that archive out-of-use blockchains and
consider the full product lifecycle of the blockchain—could help to spur mainstream adoption.

3. What is an Ethereum virtual machine and explain it?

Blockchain technology is bringing together concepts and operations from several fields,
including computing, communications networks, cryptography, and artificial intelligence.
In Satoshi Nakamoto’s original plan, there were three steps, only two of which have
been implemented in Bitcoin 1.0. These are the blockchain (the decentralized public
transaction ledger) and the Bitcoin protocol (the transaction system to move value
between parties without third-party interaction). This has been fine for the Blockchain
1.0 implementation of currency and payment transactions, but for the more complicated
tier of Blockchain 2.0 applications such as the recording and transfer of more complex
assets like smart property and smart contracts, we need the third step—a more robust
scripting system—and ultimately, Turing completeness (the ability to run any coin,
protocol, or blockchain). Nakamoto envisioned not just sending money from point A to
point B, but having programmable money and a full feature set to enable it. One
blockchain infrastructure project aiming to deliver a Turing- complete scripting language
and Turing-complete platform is Ethereum.

Ethereum is a platform and a programming language for building and publishing dis‐
tributed applications. More fundamentally, Ethereum is a foundational general-purpose
cryptocurrency platform that is a Turing-complete virtual machine (meaning that it can
run any coin, script, or cryptocurrency project). Rather than being a blockchain, or a
protocol running over a blockchain, or a metaprotocol running over a protocol like other
projects, Ethereum is a fundamental underlying infrastructure platform that can run all
blockchains and protocols, rather like a unified universal development platform. Each
full node in the Ethereum network runs the Ethereum Virtual Machine for seamless
distributed program (smart contract) execution. Ethereum is the underlying
blockchain-agnostic, protocol-agnostic platform for application development to write
smart contracts that can call multiple other blockchains, protocols, and cryptocurrencies.
Ethereum has its own distributed ecosystem, which is envisioned to include file serving,
messaging, and reputation vouching. The first component is Swarm
(“Ethereum-Swarm,” not to be confused with the crowdfunding site Swarm) as a
decentralized file-serving method. A second component is Whisper
(“Ethereum-Whisper,” also not to be confused with other similarly named projects),
which is a peer-to-peer protocol for secret messaging and digital cryptography. A third
component is a reputation system, a way to establish reputation and reduce risk
between agents in trustless networks, possibly provided by TrustDavis, or ideas
developed in a hackathon project, Crypto Schwartz.

4. Explain about the solidity of smart contract and some attacks on smart
contracts.

Assignment 2

UNIT 4

1. Plug-and-play mechanisms for consensus smart contract evaluation.

Plug-and-play mechanisms for consensus smart contract evaluation refer to a

technique for evaluating the correctness of smart contracts on a blockchain network. In
this approach, different consensus mechanisms are used to evaluate the correctness of
the smart contract, and these mechanisms can be plugged in and out of the network as
needed.

One example of this approach is the use of formal verification, a mathematical

technique for verifying the correctness of software. Formal verification can be used to
check that a smart contract will behave as expected in all possible scenarios, ensuring
that it is free from errors or vulnerabilities.

Other approaches to plug-and-play mechanisms for consensus smart contract

evaluation include the use of testing and simulation techniques to identify potential
issues and validate the correctness of the smart contract. In addition, some blockchain
networks use a decentralized governance model, where the community of users can
vote on the correctness of smart contracts and resolve disputes.

2. Discus the Hyperledger fabric platform- Transaction Flow?

3. Illustrate Hyperledger Fabric Network Setup?
4. Explain about the Composer Application Development?
(All the above are in Assignment 2)

UNIT 5

1. Explain the E-Governance and other contract enforcement mechanisms

using blockchain.
2. Explain the Applications of blockchain in cyber security?

(All the above are in Assignment 2)

3. What is the limitation of blockchain in the supply chain?

While blockchain technology has the potential to transform supply chain management by
providing greater transparency and security, there are still some limitations that need to be
addressed. Here are some of the key limitations of blockchain in the supply chain:

1. Scalability: One of the biggest limitations of blockchain in the supply chain is scalability.
Blockchain networks can become slow and inefficient when processing large volumes of
data, which can make it difficult to scale up the network to accommodate a growing
number of transactions.
2. Interoperability: Another limitation is interoperability, which refers to the ability of
different blockchain networks to communicate with each other. Currently, there are many
different blockchain platforms being used in the supply chain, which can make it difficult
to share data and collaborate across different networks.
3. Data privacy: While blockchain technology can provide greater transparency and
security, there are still concerns around data privacy. Companies need to ensure that
sensitive data is not exposed on the blockchain, and that appropriate measures are in
place to protect confidential information.
4. Integration: Integrating blockchain technology into existing supply chain systems can
also be a challenge, as it requires significant changes to existing processes and systems.
5. Cost: Implementing blockchain technology can be expensive, especially for smaller
businesses that may not have the resources to invest in the technology.
4. Myths and reality of blockchain technology.

Myth 1: Blockchain is only used for cryptocurrencies.

Reality: While blockchain technology was originally created for Bitcoin, it has now been
adopted in various industries beyond cryptocurrency, including supply chain
management, healthcare, voting systems, and more.

Myth 2: Blockchain is completely anonymous.

Reality: While blockchain transactions are pseudonymous, meaning that they do not
reveal the user's identity, the transactions are still public and traceable. It is possible to
analyze the transaction history to uncover the identity of the user.

Myth 3: Blockchain is always more secure than traditional systems.

Reality: While blockchain is generally more secure than traditional systems, it is still
vulnerable to certain types of attacks. Additionally, the security of a blockchain network
depends on the implementation and the consensus mechanism used.

Myth 4: Blockchain is always faster than traditional systems.

Reality: While blockchain can be faster than traditional systems for certain use cases, it
can also be slower due to the decentralized nature of the network and the need for
consensus.

Myth 5: Blockchain is too complex for most people to understand.

Reality: While blockchain can be complex, there are many resources available that
explain it in simple terms. Additionally, many blockchain applications are designed to be
user-friendly.

Myth 6: Blockchain is completely decentralized.

Reality: While blockchain is decentralized in terms of the ledger, there are still
centralized elements in many blockchain networks, such as the development team or
the consensus mechanism.

Myth 7: Blockchain is always immutable.

Reality: While blockchain transactions are generally immutable, there are instances
where changes can be made to the ledger, such as through a hard fork or a 51% attack.
 Myth 8: Blockchain is only for large corporations.

Reality: Blockchain technology can be used by any organization, regardless of size.

Myth 9: Blockchain eliminates the need for intermediaries.

Reality: While blockchain can eliminate the need for intermediaries in some cases, such
as for peer-to-peer transactions, there are many use cases where intermediaries are still
necessary.

Myth 10: Blockchain is a solution for all problems.

Reality: While blockchain technology has many benefits, it is not a one-size-fits-all

solution for every problem. It is important to evaluate the specific use case and
determine whether blockchain is the appropriate solution.