PEER-TO-PEER BLOCKCHAIN PROGRAMMING WITH PYTHON

Introduction
Before we look at the various aspect of peer to peer blockchain programming, let us
understand the meaning. According Toshendra (2021) Peer to peer network,
commonly known as P2P is a decentralized network communications model that
consists of a group of devices (nodes) that collectively store and share files where
each node acts as an individual peer. In this network, P2P communication is done
without any central administration or server, which means all nodes have equal
power and perform the same tasks.
P2P architecture is suitable for various use cases and can be categorized into
structured, unstructured, and hybrid peer-to-peer networks. The unstructured peer-
to-peer networks are formed by nodes randomly from connection to each other, but
they are inefficient than structured ones. In structured peer-to-peer systems, the
nodes are organized, and every node can efficiently search the network for the
desired data. Hybrid models are actually a combination of P2P and client-server
models, and when compared to the structured and unstructured P2P systems, these
networks tend to present improved overall performance.
Today, P2P networks are the foundation of most of the cryptocurrencies, thus,
making up a significant portion of the blockchain industry. Every transaction in a
blockchain works in a distributed Peer-to-Peer (P2P) network that has no central
authority to control data. It allows everyone (having access) to join the blockchain,
and every computer added to the network is a node.
So, when a user creates a new block, it goes to each user on the network, and each
node must verify this new block to ensure no one has altered it. When the
verification is complete, each node starts adding the new block directly to their
blockchain.
All the nodes present in the network make a consensus, confirming the validity of
blocks and rejecting the tampered ones.
Our discussion will be centered on the following four Layers of Blockchain
Application / Services Layer
 Side Chain
 Smart contract
 Cryptocurrency
 Digital Copy

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Blockchain Consensus Layer
 Proof of Stake (PoS)
 Delegated Proof of Stake (DPoS)
 Proof of Work (PoW)
Data Layer
 Data Storage
 Merkle tree
 Block
Network Layer
 Communication Mechanism
 Peer-to-Peer (P2P) Network

Blockchain on P2P Network

P2P is a technology that is based on a very simple principle, and that is the concept
of decentralization. The peer-to-peer architecture of blockchain allows it to run on
the peer-to-peer network which enables all cryptocurrencies to be transferred
worldwide, without the need of any middle-man or intermediaries or central server.
With the distributed peer-to-peer network, anyone who wishes to participate in the
process of verifying and validating blocks can set up a Bitcoin node.
In simple term blockchain is just a collection of digital information stored on a public
database. The data is referred to as the block while the database is the chain of
blocks. By this understanding we can define Blockchain as a chain of linked blocks,
where each block stores a transaction made with specific parameters. Blockchain is
a decentralized ledger tracking of one or more digital assets on a peer-to-peer
network. The beauty of blockchain technology is that it is open and distributed
ledger system that can document transactions between parties. These transactions
are efficiently and verifiably recorded permanently. Consequently, blockchain
technologies are coded in open-source protocols through public and private chains.
As such, the distributed ledger transactions are recorded and shared by several
participants in the blockchain system, without full control of a single entity. The
superiority of blockchain technology is that since it is decentralized peer-to-peer
network where all the computers are connected in some way, and where each
maintains a complete copy of the ledger and compares it to other devices to ensure

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the data is accurate. This is unlike a bank, where transactions are stored privately
and are managed only by the bank.

Figure I: Blockchain
blockchain, is the solution, where transactions are maintained in a distributed shared
ledger and replicated across a global P2P network; security and privacy are ensured
with cryptographic technologies, and transaction integrity is achieved through a
consensus mechanism.
As new transactions are made, they are broadcasted to all network nodes, and over
time all transactions that have occurred are sequenced together in the public ledger
and made available in all replicated network nodes, as shown in the following
diagram below

Figure II: Transactions on distributed blockchain

Versions of Blockchain
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1. BlockChain 1.0 (Cryptocurrency)
BlockChain Version 1.0 was introduced in 2005 by Hall Finley, who implements DLT
(Distributed Ledger Technology) represents its first application based on Crypto
currency. This allows Financial Transaction based on BlockChain technology or DTL
which is executed with the help of BitCoin. This type of Version is permissionless as
any participant will perform valid transaction of Bitcoin. This type is mainly used in
Currency and Payments.
2. BlockChain 2.0 ( Smart Contracts)
The new Version of BlockChain come because there is a problem in version 1.0 which
was Mining of BitCoin was Wasteful and there was also lack of Scalability of Network
in it. So problem is improved in Version 2.0. In this version, the BlockChain is not just
limited to Cryptocurrencies but it will extend up to Smart Contracts.Thus, Small
Contracts are Small Computer’s which live in the Chains of Blocks. These Small
Computer’s are free computer programs that executed automatically, and check the
condition defined earlier like facilitation, verification or enforcement and reduce
transactions cost efficiency. In BlockChain 2.0, BitCoin is replaced with Ethereum.
Thus, BlockChain 2.0 was successfully processing high number of Transactions on
Public network rapidly.
3. BlockChain 3.0 (DApps)
After Version 2.0, new version was introduced which includes DApps which is known
as Decentralized Apps. A DApp is like a conventional app, it can have frontend
written in any language that makes calls to its backend, and its backend code is
running on decentralized Peer-To-Peer Network. It makes use of decentralized
storage and communication which can be Ethereum Swarm etc.
There are many decentralized Applications like BitMessage, BitTorrent, Tor, Popcorn,
etc.
The bottlenecks with the preceding versions building up to Blockchain 3.0
Blockchain 3.0 targets to address the scalability, sustainability, cost, interoperability,
and security related dilemmas that we had with blockchain 1.0 and 2.0, promising
better solutions with a refined framework. Before we give you concrete details about
blockchain 3.0, we will first have to make you understand what dragged blockchain
experts to think about blockchain version upgradation? To know why, we will have to
go back to the time when Satoshi Nakamoto wrote a whitepaper on bitcoin back in
the year 2009. This was when blockchain 1.0 came into existence. The excitement
around bitcoins grew tremendously then. The concept that any middlemen do not
back this digital currency (read, government), unlike fiat currencies, grabbed
everyone’s attention. More to it, everyone was thankful for the underlying
technology, blockchain, that facilitated a secure, efficient, and transparent

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environment for carrying transactions, cutting down the middlemen and double-
spending. But a common question, where do this extraordinary cryptocurrency come
from, arose? For bitcoins, miners have to solve a highly complex math problem, so
difficult that it is impossible to solve the problem by us. Hence, miners had to use
high-powered computers, and the likelihood of the problem getting solved was 1 in 7
trillion. Beyond the wastage of resources, bitcoins possessed scalability issues, having
transaction processing speed capacity between 3.3 and 7 transactions per second.
Soon, the limitations were taken into consideration, which was why professionals
launched blockchain 2.0. In this version, we saw Ethereum bragging its transaction
processing speed, which is roughly 15 transactions per second (double of bitcoins
TPS).
Blockchain 2.0 saw the birth of smart contracts, computer programs that execute
autonomously when a predefined condition meets, staying on the blockchain
network. Though the second version was far better and quicker than the first version,
it tremendously failed really to meet the pace of the centralized payment mediums
like Visa and PayPal (how is explained later). Both the versions were an unfeasible,
unsecured (remember 51% attack?), and expensive solution. And, such a serious
situation opened opportunity doors for blockchain 3.0. Let's see what Blockchain 3.0
is. fintech players. And for this to happen, the scalability issues had to be first
considered and solved. Blockchain 3.0 is an upgraded version of blockchain 2.0, built
to improve the technology’s capabilities and solve the existing problems, while
facilitating speedier, cost-effective, and efficient transactions. One of the things that
make blockchain 3.0 notable and viable is DAG (Directed Acyclic Graph). Let’s first
understand the logic behind the data structure, DAG. As the name implies, the
information on a DAG-based network flows acyclically. So, this means that the
information cannot be sent back to the sender. The information will flow in only one
direction. It makes sure that nodes are not connected to any previous ones. Such a
structure eliminates the block times, which is 10 minutes for bitcoins and 20 seconds
for Ethereum, thereby allowing transactions to get processed almost in real-time.
DAG is being used by IoT chain (ITC) and it processes 10,000 transactions per second,
which is far more than Visa.
Blockchain 3.0: The Newcomers Welcomed
As Blockchain 1.0 and Blockchain 2.0 tremendously failed in its endeavors to gain
mass confidence, we have a new era of the technology waiting for us to embrace it
- BLOCKCHAIN 3.0.Cardano - Spearheaded by Charles Hoskinson (one of the co-
founders of Ethereum), Cardano is an advanced blockchain platform, that includes
smart contracts, transaction systems, and Dapps, developed out of scientific
philosophy and high-level research. Pioneering an altogether new approach for

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digital currencies, Cardano is leading the charge of Blockchain 3.0. Let’s see how
Cardano is better than Ethereum.
 Cardano uses Haskell programming language, whereas Ethereum uses Solidity.
Haskell is a universally accepted programming language with non-strict
semantics, whereas Solidity is a contact-oriented language explicitly built for
writing smart contracts. Haskell enables developers to write codes precisely,
enabling them to establish efficient and secure protocols. Solidity, on the
other hand, possess serious security issues.
 Cardano uses a proof of stake consensus mechanism, whereas Ethereum
uses proof of work. Instead of miners wasting their resources for computing
the math problem, the POS system relies on factors such as the wealth of the
creator and complexity levels in the network at that time. POS consensus
mechanism not only saves energy resources but also reduces the risks of 51%
attack (because, an attacker trying to purchase 51% of coins will automatically
see the coin’s cost appreciation).

Types of Blockchains

Figure III: Types of blockchain

Blockchain is of different types, and users leverage this technology for many use
cases depending upon its type. So, different types of blockchains are:
Public Blockchains

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Blockchains facilitate a decentralized, open network of multiple computers that
anyone can access to request or verify a transaction for accuracy. It allows users to
create new blocks, access all the blocks in the blockchain, and validate the data.
As they are open and need excellent security, they use concepts like proof of stake or
proof of work. The block miners who validate transactions are rewarded financially.
Public blockchains are mainly used for mining and exchanging cryptocurrencies.
Examples: Bitcoin, Litecoin, and Ethereum blockchains.
Private Blockchains
Private blockchains are centralized and governed by a person or organization that
decides who can access the blockchain, be added as a node, and verify records.
Unlike public blockchains, private blockchains aren’t open and offer access
restrictions. If anyone wants to join a private blockchain, they must obtain
permission from the administrator.
Example: B2B virtual currency exchanges like Hyperledger.
Consortium Blockchains
A group of companies or organizations govern these permissioned blockchains
instead of one individual. They are more decentralized than a private blockchain to
enjoy more security. It allows limited access and the present nodes determine the
consensus process.
Furthermore, it constitutes a validator node to initiate, receive, and verify
transactions while member nodes have permission to initiate or accept transactions.
Here, users can transfer digital assets from one blockchain to another with improved
efficiency and scalability.
Example: Consortium blockchains are used in payments and banking, such as
Quorum and Corda.
Hybrid Blockchain
Hybrid blockchains combine the attributes of private and public blockchains. They
can be centralized or decentralized and allow organizations to set up a permission-
based private blockchain along with a public blockchain. Thus, the organizations can
control the data access in the blockchain and what data to access publicly.
Example: It’s used in real estate and retail industries, such as IBM Food Trust.
In this article we will dwell more on public blockchain, owing to the fact that they are
more popular than the private block, notwithstanding I would like to use e-naira as a
case study for private blockchain before we continue with public blockchain.

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E-Naira on private blockchain
Before we give a detailed description of how e-naira works on the private blockchain,
I want to emphasize that e-naira is not a cryptocurrency but the digital equivalent of
hard printed naira. Transactions with crypto on public blockchain is immutable and
unchangeable due to consensus algorithms that validates transactions, those on the
private blockchain like e-naira can be manipulated.
A private blockchain is accessible and controlled by a single entity, organization, or
enterprise. The Hyperledger Fabric, chosen to run the e-naira by the CBN, is an
example of a private blockchain. Hyperledger Fabric is a modular blockchain
framework that acts as a foundation for developing blockchain-based products,
solutions, and applications using plug-and-play components that are aimed for use
within private enterprises. They’re also known as permissioned blockchains. A
trusted intermediary can choose to grant full or partial access to another entity if it
deems fit.
Bitcoin made blockchain technology famous, so like the cryptocurrency, the tech is
associated with decentralization and openness. But private blockchains are the
opposite. Although it’s the same tech, there’s no form of decentralization; a single
entity control everything. Blockchain is a database or a record book, if you like, that
stores data. It is a distributed ledger that stores transactions that have been
validated on a blockchain network.
Validated transactions are aggregated and stored in a block; this block is added to
previous blocks creating a chain, hence the word blockchain. This means the CBN will
have total control. A trusted intermediary can either build the entire blockchain
software from scratch or license it from a third party like the Hyperledger Fabric, as
the apex bank did.

The private blockchain network is set up using nodes that run this software. A node is
simply a system that validates transactions in a blockchain network. The CBN will run
the validator nodes itself or use a subsidiary — most likely BItt Inc. It will also create
an app with which users — Nigerians — can interface with these nodes. Once you
carry out a transaction on the app, it is relayed to the CBN who validates them.

Also, there are two major ways to set up a private blockchain: distributed ledger
model, and shared ledger model.

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From the presentation by the CBN containing the role of strategic stakeholders in the
e-Naira launch, it can be inferred that the regulator will most likely use the shared
ledger model.
Backdrop with e-naira
Some of the reasons people run a private blockchain is to remove the need for
transparency, to be able to scale, increase transaction speed with reduced energy
consumption, and reduce the need for numerous gadgets in terms of nodes
manipulation of information is possible on a private blockchain.

Properties of a blockchain
A blockchain is essentially a decentralized distributed database or a ledger and
transactions are immutable as follows:
Decentralization: In simple terms, it means that the application or service continues
to be available and usable even if a server or a group of servers on a network crashes
or is not available. The service or application is deployed on a network in a way that
no server has absolute control over data and execution, rather each server has a
current copy of data and execution logic.
Distributed: This means that any server or node on a network is connected to every
other node on the network. Rather than having one-to-one or one-to-many
connectivity between servers, servers have many-to-many connections with other
servers.
Database: This refers to the location for storing durable data that can be accessed at
any point in time. A database allows storage and retrieval of data as functionality and
also provides management functionalities to manage data efficiently, such as export,
import, backup, and restoration.
Ledger: This is an accounting term. Think of it as specialized storage and retrieval of
data. Think of ledgers that are available to banks. For example, when a transaction is
executed with a bank—say, Tom deposits 100 naira in his account, the bank enters
this information in a ledger as a credit. At some point in the future Tom withdraws 25
naira. The bank does not modify the existing entry and stored data from 100 to 75.
Instead it adds another entry in the same ledger as a debit of 25 naira. It means a
ledger is a specialized database that does not allow modification of existing data. It
allows you to create and append a new transaction to modify the current balance in
the ledger. The blockchain is a database that has the same characteristics of a ledger.
It allows newer transactions to be stored in an append-only pattern without any
scope to modify past transactions. It is important here to understand that existing

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data can be modified by using a new transaction, but past transactions cannot be
modified. A balance of 100 naira can be modified at any time by executing a new
debit or credit transaction, but previous transactions cannot be modified.
Immutability: Blockchain is an immutable (unchangeable) and shared digital ledger
that stores records or transactions in several places on a network of computers.
Here, each verified transaction is added in a space called a block that links with other
subsequent blocks with the help of cryptography, forming a chain.

What Are the Building Blocks of Blockchain?

Block
As explained above, blockchain refers to a chain of different blocks that contain data
or records. And the data in each block is based on the kind of blockchain. For
example, a banking blockchain will have blocks containing information such as
account number, account holder’s name, branch name, etc.
The first block in a blockchain is known as the Genesis block, and all the blocks
contain valid records encoded and hashed. Each block has a cryptographic hash of its
own and that of the previous block in the same blockchain, linking them and forming
a chain. This iterative process validates the previous blocks’ integrity with digital
signatures. Types of information stored in a block
The blocks store key information like the date and time of a transaction. It also stores
the amount of money transferred at that instant. Now, this is added with a digital
signature before storing it in a block. This digital signature serves as your username,
claiming that the data in the block belong to you.
Each block is given a unique cryptographic code referred to as a Hash. This allows
you and other users to differentiate blocks from each other

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Figure IV: Components of a blockchain
Merkle Tree

A Merkle tree, also known as a Merkle Patricia tree, is a type of data structure that comprises
multiple hashes or timestamps stored in the blockchain. As you can probably guess from its name,
it’s a method of storing data in the blockchain by using hashes. What’s great about this method is
that it allows for the problem of having duplicate entries in the chain to be eliminated and that all
transactions are verified at all times. This way, you don’t have to trust your wallet provider to be
keeping up-to-date transaction histories. Instead, you can verify all of your transactions manually at
any time. No one can alter the blockchain. They could create a false record that’s easily detected due
to being in a different place in the chain. We will discuss more about this in hash function.

Blockchain Consensus algorithm

A consensus algorithm inside a blockchain is the set of rules of the house about how
the blockchain is governed, how users formulate and agree on the rules, and how
transactions happen. Governance is an important aspect for a blockchain because it
determines how decentralized or centralized the network is.
For instance, blockchain consensus algorithms allow any user to propose changes to
the network and all others to vote on these proposals. In the delegated versions,
users select delegates who make rules and govern the network on behalf of other
users.
Some versions allow users to contribute to governance based on the number of
resources (compute or amount of cryptocurrencies) they contribute. In Bitcoin, for
instance, miners vote on changes based on the number of computer resources or
computing power they contribute to support the network and approve transactions.
In proof of Work algorithm, miners compete to create a block and the one who
creates a block successfully is rewarded with the cryptocurrency after creation.
Miners vote to allow or reject proposals of upgrades forwarded by other users.
Blockchain Nodes

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A blockchain exists out of blocks of data. These blocks of data are stored on nodes.
Nodes can be any kind of device (mostly computers, laptops or even bigger servers).
Nodes form the infrastructure of a blockchain. All nodes on a blockchain are
connected to each other and they constantly exchange the latest blockchain data
with each other so all nodes stay up to date. They store, spread and preserve the
blockchain data, so theoretically a blockchain exists on nodes. A full node is basically
a device (like a computer) that contains a full copy of the transaction history of the
blockchain.
What do nodes do?
When a miner attempts to add a new block of transactions to the blockchain, it
broadcasts the block to all the nodes on the network. Based on the block’s legitimacy
(validity of signature and transactions), nodes can accept or reject the block. When a
node accepts a new block of transactions, it saves and stores it on top of the rest of
the blocks it already has stored. In short, here is what nodes do:
 Nodes check if a block of transactions is valid and accept or reject it.
 Nodes save and store blocks of transactions (storing blockchain transaction
history).
 Nodes broadcast and spread this transaction history to other nodes that may
need to synchronize with the blockchain (need to be updated on transaction
history).

Who can run a node?

Some blockchains have thousands of nodes simultaneously online. Anyone can run a
node by simply downloading the transaction history of a blockchain. Many crypto
and blockchain enthusiasts are running nodes voluntarily. They do this to contribute
to a blockchains community, its development, security and integrity, but also simply
because it’s their hobby and makes them feel part of the project. Running a node is
considered fairly simple for someone slightly tech savvy, and does not require a lot of
resources. Some blockchains however, now contain such a large amount of
transaction data that it actually requires a lot of memory on a device to run a full
node. Many crypto users who just want to use a blockchain therefore use wallet
applications. These applications allow them to broadcast transactions from their
wallet without being required to download the entire blockchain history on their
own device.
What are master-nodes?

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And finally, some blockchains also feature master-nodes. Master-nodes are usually
heavier equipped than normal nodes. Next to validating, saving and broadcasting
transactions, master-nodes sometimes also facilitate other events on the blockchain
dependent on their nature, such as governing voting events, providing execution of
protocol operations and enforcing the laws of the according blockchain. Master-
nodes are generally always online (24/7), and facilitate much more memory than
normal nodes. You could say a master-node is like hosting a very large server on the
network. Because hosting a master-node usually requires much more resources
(electricity, up-time, maintenance, storage space, memory), hosting one generally
provides payment in the form of interest.
How are blocks related to each other?
In blockchain and Ethereum every block is related to another block. There is a
parent-child relationship between two blocks. There can be only one child to a
parent and a child can have a single parent. This helps in forming a chain in
blockchain.
blocks are shown—Block 1, Block 2, and Block 3. Block 1 is the parent of Block 2 and
Block 2 is the parent of Block 3. The relationship is established by storing the parent
block's hash in a child's block header. Block 2 stores the hash of Block 1 in its header
and Block 3 stored the hash of Block 2 in its header. So, the question arises—who is
the parent of the first block? Ethereum has a concept of the genesis block also
known as first block. This block is created automatically when the chain is first
initiated. You can say that a chain is initiated with the first block known as the
Genesis Block and the formation of this block is driven through the genesis.json file.
Let's take a look at the following diagram:

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Mining
The act of producing units of a cryptocurrency (such as bitcoins) through some kind
of effort. The effort is required so that people can't just create infinite amounts of
the digital currency, which would devalue it. In bitcoin, mining requires computing
power. Here is a detailed description of how mining works. Bitcoin mining is the
process of making computer hardware do mathematical calculations for the Bitcoin
network to confirm transactions and increase security. As a reward for their services,
Bitcoin miners can collect transaction fees for the transactions they confirm, along
with newly created bitcoins. Mining is a specialized and competitive market where
the rewards are divided up according to how much calculation is done. Not all Bitcoin
users do Bitcoin mining, and it is not an easy way to make money.
Smart contracts
Smart contracts are simply programs stored on a blockchain that run when
predetermined conditions are met. They typically are used to automate the
execution of an agreement so that all participants can be immediately certain of the
outcome, without any intermediary’s involvement or time loss. They can also
automate a workflow, triggering the next action when conditions are met. A smart
contract is also a self-executing contract with the terms of the agreement between
buyer and seller being directly written into lines of code. The code and the

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agreements contained therein exist across a distributed, decentralized blockchain
network.
Sidechain
Sidechain is a separate blockchain that acts as an extension to the parent
blockchain, often referred to as the mainchain. To create a sidechain, it is necessary
to introduce an off-chain process that will propagate the data between both
blockchains. This will allow for the transfer of the assets or synchronization of any
kind of data between the blockchains.
Proof of Work
This algorithm is based on the idea of solving a complex mathematical puzzle to give
a solution block. It requires a lot of computational power and the miner who solves
the puzzle to mine a block and gets rewarded by Bitcoins. For moving forward with
this step miners are required to solve the complex mathematical problem.
Computers with high computational powers are used for solving complex problems.
This entire process of solving the problem is known as mining.
Mining is the key to unlock the entry of a new block in the database system. Miners
are the people who perform mining. The mining process is extremely excruciating for
the miners, but the ones who perform it well get rewards in bitcoin.
Validation
A group of miners collectively share their rewards that they have obtained via solving
the mathematical problems. As the network size increases it becomes even more
difficult to add blocks. The equation keeps on expanding in size and further validation
keeps getting complex too. Every new block is then validated multiple times before
making them a part of the chain.
The monopoly soon starts taking in and a lot of blocks are refrained from entering.
Power of mining also becomes concentrated in the hands of a few.
Staking the Cryptocurrency in the Proof of Stake
This algorithm validates a block, with the block creator being selected based on the
number of coins saved on the wallet. They then get rewarded for finding the block. In
other words, the algorithm computer code awards the highest chance of mining
most transactions and therefore the block, to the person with the highest amount of
coins in the validator’s pool.
In the next rounds of validation, the chances for the previously selected validator
keep reducing until other validators also get the chance to verify a block. Only the
ones with cryptocurrency can make the changes. Staking the cryptocurrency is the

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last step in the transaction process. In this step, the users who are willing to make
changes to the blockchain network must hold any specific cryptocurrency.
Proof of Stake eradicates the need for proof of work. Mining takes a back seat when
this step is put in action. Users can make changes without solving the complex tasks.
It also helps in saving energy.
Delegated Proof-of-Stake (DPoS)
In Delegated Proof-of-Stake (DPoS), stakers select delegates and outsource validation
of the block to them. Stakeholders will cast a vote to select delegates.
Other algorithms include Delegated Proof-of-Stake (DPoS), stakers select delegates,
and outsource validation of the block to them. Stakeholders will cast a vote to select
delegates; Byzantine Fault Tolerance (BFT) which select validators of blocks based on
their reputation by leveraging their real identities.
The trustworthy validators are pre-approved and selected by participants to act as
moderators. Others are Practical Byzantine Fault Tolerance (pBFT); Federated
Byzantine Agreement (FBA); and Delegated Byzantine Fault Tolerance (dBFT).
Some blockchains use hybrid algorithms to leverage the benefits of more than one
algorithm.

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Figure V: Proof of Work versus Proof of stake

How Does a Blockchain Transaction Work?

This is how a typical transaction occurs in a blockchain:
Step 1: Transaction request
First, an individual request a transaction involving real estate, banking,
cryptocurrency, records, contracts, etc.
Step 2: Distribution

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The transaction requested gets broadcasted in the peer-to-peer network through
nodes located across the globe.
Step 3: Validation
The nodes in the network validate the transaction using algorithms and solving
complex equations. If they find the transaction legitimate, the records are entered
inside blocks.
Step 4: Adding blocks to the blockchain
After the transaction completes, the newly created block is chained with the previous
block with cryptography and encryption. It has a hash code and contains the hash
code of the previous block. Once this block has filled its allocated space, the next
block starts filling and attaching to the previous block; hence a long chain of
transactions is formed. This is immutable and transparent for everyone in the
blockchain.
The steps are further explained below

Figure VI:Phases of blockchain transaction

Factors that contribute to the popularity of Blockchain

The following factors contribute immensely to the popularity of blockchain:
Trust: Blockchain helps in creating applications that are decentralized and collectively
owned by multiple people. Nobody within this group has the power to change or

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delete previous transactions. Even if someone tries to do so, it will not be accepted
by other stakeholders.
Autonomy: There is no single owner for blockchain-based applications. No one
controls the blockchain, but everyone participates in its activities. This helps in
creating solutions that cannot be manipulated or induce corruption.
Intermediaries: Blockchain-based applications can help remove the intermediaries
from existing processes. Generally, there is a central body, such as vehicle
registration, license issuing, and so on, that acts as registrar for registering vehicles
as well as issuing driver licenses. Without blockchain-based systems, there is no
central body and if a license is issued or vehicle is registered after a blockchain
mining process, that will remain a fact for an epoch time-period without the need of
any central authority vouching for it.
Fundamental Blockchain programming Terminologies
Hash Function
A hash function transforms input string of any size into a fixed-length string output
(called as the hash) such as 32-bit or 64-bit or 128-bit or 256-bit depending on what
hash function is used. Hash Functions can be defined as a type of encryption that
doesn’t make use of keys. It uses a cipher to generate a hash value of a fixed length
from the plaintext. It is nearly impossible for the contents of plain text to be
recovered from the ciphertext.
Hashing is the process of transforming any input data into fixed length random
character data, and it is not possible to regenerate or identify the original data from
the resultant string data. Hashes are also known as fingerprint of input data. It is next
to impossible to derive input data based on its hash value. Hashing ensures that even
a slight change in input data will completely change the output data, and no one can
ascertain the change in the original data. Another important property of hashing is
that no matter the size of input string data, the length of its output is always fixed.
For example, using the SHA256 hashing algorithm and function with any length of
input will always generate 256-bit output data. This can especially become useful
when large amounts of data can be stored as 256-bit output data. Ethereum uses the
hashing technique quite extensively. It hashes every transaction, hashes the hash of
two transactions at a time, and ultimately generates a single root transaction hash
for every transaction within a block. In nutshell the hash is the cryptographic by-
product of the hash algorithm which is a one-way function, meaning it can’t be
possible to reverse output into inputs again. The algorithm also produces one unique
output. These properties are very essential for instance in cryptocurrency Bitcoin
where it is used in its consensus mechanism.

19
Figure VII: Hash Function

The Concept of Cryptography

Cryptography is the science of converting plain simple text into secret, hidden,
meaningful text, and vice-versa. It also helps in transmitting and storing data that
cannot be easily deciphered using owned keys.
There are the following two types of cryptography in computing:
Symmetric
Asymmetric
Symmetric encryption and decryption
Symmetric cryptography refers to the process of using a single key for both
encryption and decryption. It means the same key should be available to multiple
people if they want to exchange messages using this form of cryptography.
Asymmetric encryption and decryption
Asymmetric cryptography refers to the process of using two keys for encryption and
decryption. Any key can be used for encryption and decryption. Message encryption
with a public key can be decrypted using a private key and messages encrypted by a
private key can be decrypted using a public key. Let's understand this with the help
of an example. Tom uses Alice's public key to encrypt messages and sends it to Alice.
Alice can use her private key to decrypt the message and extract contents out of it.
Messages encrypted with Alice's public key can only be decrypted by Alice as only
she holds her private key and no one else. This is the general use case of asymmetric
keys. There is another use which we will see while discussing digital signatures.
The key pair generated by this algorithm consists of a private key and a unique public
key that is generated using the same algorithm. It is also called Public-Key
Cryptography.

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Figure VIII:Cryptography in blockchain

Application of Asymmetric cryptography to Digital Signature

Digital signatures
Earlier, we discussed cryptography using asymmetric keys. One of the important
cases for using asymmetric keys is in the creation and verification of a digital
signature. Digital signatures are very similar to a signature done by an individual on a
piece of paper. Similar to a paper signature, a digital signature helps in identifying an
individual. It also helps in ensuring that messages are not tampered with in transit.
Let's understand digital signatures with the help of an example.
Alice wants to send a message to Tom. How can Tom identify and ensure that the
message has come from Alice only and that the message has not been changed or
tampered with in transit? Instead of sending a raw message/transaction, Alice
creates a hash of the entire payload and encrypts the hash with her private key. She
appends the resultant digital signature to the hash and transmits it to Tom. When
the transaction reaches Tom, he extracts the digital signature and decrypts it using
Alice's public key to find the original hash. He also extracts the original hash from the
rest of the message and compares both the hashes. If the hashes match, it means
that it actually originated from Alice and that it has not been tampered with.
Digital signatures are used to sign transaction data by the owner of the asset or
cryptocurrency, such as Ether.
Programming Languages for Blockchain Development
1. Solidity
Influenced by JavaScript, Powershell, and C++, Solidity is the first blockchain
programming language that one must learn. Especially when you want to develop
dApps or are looking to get into the ICO development game.

21
The Solidity blockchain programming language was developed by Vitalik Buterin, the
mastermind behind Ethereum. It serves blockchain development firms with a myriad
of benefits, such as:-
 Developer-friendliness,
 Accessibility to JavaScript infrastructures, debuggers, and other tools,
 Statically typed programming,
 Possibility of inheritance properties in smart contracts,
 Precise accuracy
2. Java
Java, the official language of Android mobile app development and a preferred
option for backend development, is also considered one of the top blockchain
programming languages used for Blockchain development.
The language is derived from C-syntax and is widely chosen for building
sophisticated smart contracts and dApps because of its following properties: -
 Robust support for OOP (Object-Oriented Programming) methodology,
 Ease of memory cleaning
 Availability of ample libraries
 As Java is static, so it makes the maintenance of code a piece of cake for
anyone.
 Code portability and flexibility is possible by using the Java Virtual Machine.
 Availability of a large number of Java libraries offers a pluggable architecture
to the developers.
 Java is a recommended programming language for Ethereum blockchain
which involves cryptocurrencies.

Some of the best examples of Blockchain solutions developed using Java are NEM,
IOTA, NEO, and Hyperledger Fabric.
3. Python
Blockchain programming in Python has not only ruled the world of app
development, IoT app development, and network servers’ development, but is also
proving to be an asset in the Blockchain-as-a-service arena.

22
The language, created in 1991, is widely used for dApps and Smart Contracts
development because of the exceptional features it offers. Some of those features of
blockchain coding in Python include:
 Blockchain programming in Python language is easy to learn
 Access to dynamic architecture
 Perfect for both base and scripting approaches,
 Open-source support
 Blockchain coding in python is efficient for prototyping
Steem, Hyperledger Fabric, and NEO are a few popular Python–based Blockchain
projects that are prevailing in the industry.
4. JavaScript
JavaScript is the most known artificial language nowadays. Despite the issues that
triggered the creation of add-ons like CoffeeScript, Flow, and matter, JS continues to
be the foremost asked for in several areas.
It is widely glorious for adding interactive parts to net applications and browsers.
Most front-end developers like JS. However, the Node.js runtime provides
considerably additional options than simply front-end development
JavaScript is the widely liked language, in step with a Stackoverflow survey. A similar
survey showed that sixty-six of respondents prefer to work with JS. 17.8% of
respondents need to master JS.
Considered for a wide range of app and game development needs, JavaScript is also
one of the best Blockchain programming languages to keep an eye on.
The language, in the form of frameworks like Node.js framework, offers innumerable
benefits to developers benefits, such as:
 Blockchain programming with javascript enables easier and earlier entry to
market
 Blockchain programming with javascript enhances scalability
 Availability of multiple Blockchain JavaScript frameworks
 No hassle of integration of respective resources, and more
5. C++
C++ is very popular in the technology world and this is true for Blockchain
technology also. C++ is popular for blockchain because of its versatile inclinations like

23
move semantics, primitive control over memory, advanced multi-threading, and
other object-oriented features like function overloading, runtime polymorphism,
etc.
These varied OOPS peculiarities of C++ enable Blockchain developers to effortlessly
mold data and functions together in a single module, just like Blockchain molds the
blocks with cryptographic chains. C++ is also popular in Bitcoin (Blockchain
technology), a cryptocurrency. The first-ever implementation of Blockchain was
originally written in C++.
6. Simplicity
Created by Russell O’ Connor, Simplicity may be a high-level Blockchain cryptography
language that hit the market in November 2017.
The Simplicity programming language is predicated on Hedera helix and works with a
Haskell-like syntax that makes cryptography easier and effective. Besides, it’s
extremely mathematical in nature and makes the code line human-readable.
attributable to that, it’s extremely used for developing good Contracts and
blockchain solutions that job with each Bitcoin and Ethereum Virtual Machine (EVM).
7. Golang
Go has been designed and developed at Google by Henry M. Robert Griesemer, Rob
Pike, and Ken Thompson. The language is very versatile and straightforward to be
told, that makes it compatible with Blockchain, Big Data, Machine Learning, etc.
Offering high quantifiability and optimum speed performance. Go may be a statically
typewritten programing language and prove its value within the following ways:
 It is syntactically the same as C, which suggests veteran Blockchain developers
will simply comprehend the code.
 It comes with memory safety which suggests the app is safe from software
bugs once accessing the memory.
 Its readability, additionally as usability, is analogous to Python and Java, that
ends up in high quantifiability and higher speed performance.

Coding a P2P blockchain in Python

Creating the Block class
Import hashlib, a module that lets us create one-way encrypted messages.
Cryptography techniques like hashing make Blockchain create secure transactions.

24
A hash function is an algorithm that takes some data (usually an encoded string) and
returns a unique identifier, often named “digest” or “signature.” This last part is vital;
with a hash function, a slight difference in the input produces a radically different
identifier as an output. We’ll see this in action later on.
For now, just import the built-in module hashlib:
import hashlib
This module includes most of the hashing algorithms you’ll need. Just keep in mind
we’ll be using the hashlib.sha256() function.
class CoinBlock:

def __init__(self, previous_block_hash, transaction_list):

self.previous_block_hash = previous_block_hash
self.transaction_list = transaction_list
self.block_data = f"{' - '.join(transaction_list)} - {previous_block_hash}"
self.block_hash = hashlib.sha256(self.block_data.encode()).hexdigest()
GeekCoinBlock Class Explanation
First, we create a class named CoinBlock, a wrapper for objects that will have certain
characteristics (attributes) and behaviors (methods).
Then we define the __init__ method (also named constructor), which gets invoked
each time a GeekCoinBlock object gets created.
This method has three parameters:
 self (the instance of each object)
 previous_block_hash (a reference to the previous block)
 transaction_list (a list of transactions made in the current block).
We store the previous hash and transaction list and create an instance
variable block_data as a string. This doesn’t happen with real cryptocurrencies, in
which we store that kind of data as another hash, but for simplicity purposes, we’ll
store every block of data as a string.
Finally, we create the block_hash, which other blocks will use to continue the chain.
Here’s where hashlib comes in handy; instead of creating a custom hash function, we
can use the pre-built sha256 to make immutable blocks.

25
This function receives encoded strings (or bytes) as parameters. That’s why we’re
using the block_data.encode() method. After that, we call hexdigest() to return the
encoded data into hexadecimal format.
Using our Block Class
Let’s use our Block class to create a chain of blocks (Blockchain).
In the same file, create a couple of transactions made up of simple strings stored in
variables, for example:
class CoinBlock:
...
t1 = "Nancy sends 8 GC to May"
t2 = "Mandy sends 6.3 GC to James"
t3 = "Jay sends 5.2 GC to Alisson"
t4 = "Alice sends 2.1 GC to Noah"

Now, build the first block of our Blockchain by using the CoinBlock class and print its
attributes. Take into account that the previous_hash parameter of the genesis block
(first block that precedes other blocks) will always be some arbitrary string or hash,
in this case, “firstblock.”
block1 = GeekCoinBlock('firstblock', [t1, t2])

print(f"Block 1 data: {block1.block_data}")

print(f"Block 1 hash: {block1.block_hash}")

Then, we do the same with the second block, but passing the first block hash as
the previous_hash argument.
block2 = CoinBlock(block1.block_hash, [t3, t4])

print(f"Block 2 data: {block2.block_data}")

print(f"Block 2 hash: {block2.block_hash}")

26
Note that if we run the program at this point and try to change the value of coins
that Noah sent to 8 it will generate a different hash function
The complete Python code Explained above
import hashlib
class OlaCoinBlock:

def __init__(self, previous_block_hash,

transaction_list):

self.previous_block_hash = previous_block_hash
self.transaction_list = transaction_list

self.block_data = f"{' -
'.join(transaction_list)} - {previous_block_hash}"
self.block_hash =
hashlib.sha256(self.block_data.encode()).hexdigest()

t1 = "George sends 9.1 GC to Joe"

t2 = "Joe sends 2.5 GC to Adam"
t3 = "Adam sends 1.2 GC to Bob"
t4 = "Bob sends 0.5 GC to Charlie"
t5 = "Charlie sends 0.2 GC to David"
t6 = "David sends 0.1 GC to Eric"
block1 = OlaCoinBlock('firstblock', [t1, t2])

print(f"Block 1 data: {block1.block_data}")

print(f"Block 1 hash: {block1.block_hash}")
block2 = OlaCoinBlock(block1.block_hash, [t3, t4])

print(f"Block 2 data: {block2.block_data}")

27
print(f"Block 2 hash: {block2.block_hash}")
block3 = OlaCoinBlock(block2.block_hash, [t5, t6])

print(f"Block 3 data: {block3.block_data}")

print(f"Block 3 hash: {block3.block_hash}")
Conclusion
Blockchain introduces a distributed ledger that can be shared across networked
devices. Individuals on the network can share files and values such as
cryptocurrencies securely, on a peer-to-peer basis without the need for middlemen.
This means reduced interruptions and there is no single point of failure, there is high
reliability in the network. Due to cryptography, all assets are secured with high
security.
The most important aspects of blockchain are its security, ensured by cryptography;
scalability where the network should accommodate millions of users without
compromising on security and reliability; and decentralization, which means control
and governance must be achieved by all individuals on the network and not a select
few.
The rules by which individuals agree on transactions and the creation of the chain is
called consensus algorithm or mechanisms. The basis of these mechanisms is Proof
of Work where individuals agree on what and when transactions go through or get
processed, based on the amount of computer processing power they contribute.
Blockchain technology has kept growing.
New consensus algorithms are more than 10 and keep on being innovated to ensure
networks are scalable, more secure, and more decentralized.

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