T.Y.B.SC.

COMPUTER SCIENCE
CS-3511 :
Blockchain
Technology
Mrs. Rakhshanda Jamadar
(Asst. Professor)
Reference Books:
Textbook: 1. Beginning Blockchain : A Beginner’s Guide to Building Blockchain Solutions By
Bikramaditya Singhal, Gautam Dhameja, Priyansu Sekhar Panda, Apress Media

Reference Books:
2. Mastering Blockchain by Imran Bashir, Third Edition, Packt Publication
3. Waterhole, The Science of the Blockchain
4. Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System
5. Mastering Ethereum: Building Smart Contracts and DAPPS, by Andreas Antonopoulos, Dr.
Gavid Wood, Oreilly Publication
Unit 1: Introduction to Blockchain
▪ Foundational Computing Concepts (Client-Server systems vs Peer to Peer Systems)
▪ Evolution of Blockchain
▪ Blockchain Vs Database
▪ Essentials of Blockchain (Blockchain generations, types of blockchain, benefits and
challenges of blockchain usage)
▪ Types of Networks
▪ Layered Architecture of Blockchain Ecosystem
▪ Components of blockchain
▪ Cryptography (private and public keys, Hashing & Digital Signature)
▪ Consensus Mechanisms
▪ Cryptocurrency, Digital Currency Bitcoin and Ethereum
▪ Smart Contracts
▪ Blockchain use cases
 Foundational Computing Concepts
(Client-Server systems vs Peer to Peer Systems)
► Client-Server Network:
This model are broadly used network model. In Client-Server Network, Clients and
server are differentiated, Specific server and clients are present. In Client-Server
Network, Centralized server is used to store the data because its management is
centralized. In this, Server respond the services which is request by Client.
 Foundational Computing Concepts
(Client-Server systems vs Peer to Peer Systems)
► Peer-to-Peer Network: This model does not differentiate the clients and the servers,
In this each and every node is itself client and server. In this, Each and every node
can do both request and respond for the services.
► Peer-to-peer networks are often created by collections of 12 or fewer machines. All of
these computers use unique security to keep their data, but they also share data with
every other node.
► In peer-to-peer networks, the nodes both consume and produce resources.
Therefore, as the number of nodes grows, so does the peer-to-peer network’s
capability for resource sharing. This is distinct from client-server networks where an
increase in nodes causes the server to become overloaded.
 Foundational Computing Concepts
(Client-Server systems vs Peer to Peer Systems)
► It is challenging to give nodes in peer-to-peer networks proper security because they
function as both clients and servers. A denial of service attack may result from this.
► The majority of contemporary operating systems, including Windows and Mac OS,
come with software to implement peer.
Blockchain???
 What is Blockchain???

• A Blockchain is a series of blocks that each contain a specific piece of information.

Consequently, a Blockchain is a ledger, or file, that continuously expands and
permanently records every transaction.
• Every transaction occurs after the one before it in a secure, sequential, and
unchangeable manner during this procedure.
• A new block is generated each time an information storage block is finished.

• A blockchain is a particular sort of distributed ledger technology (DLT) that

consists of a growing list of records, known as blocks, that are safely connected to
one another using cryptography.

• Blockchain is a shared, immutable ledger that facilitates the process of recording

transactions and tracking assets in a business network.
 What is Blockchain???

• Business runs on information. The faster information is received and the more
accurate it is, the better.

• Blockchain is ideal for delivering that information because it provides immediate,

shared, and observable information that is stored on an immutable ledger that only
permissioned network members can access.

• A blockchain network can track orders, payments, accounts, production and much
more. And because members share a single view of the truth, you can see all
details of a transaction end to end, giving you greater confidence, and new
efficiencies and opportunities.
 Evolution of Blockchain Technology

1. Bitcoin:
The peer-to-peer network used by Bitcoin, the first decentralized cryptocurrency,
eliminates the need for middlemen. A person or group of persons going by the
moniker Satoshi Nakamoto created the Bitcoin cryptocurrency in 2008. Transactions
for Bitcoin are kept on the public ledger known as the blockchain. Right now, there
are more than 18. compared to the current ceiling of 21 million Bitcoin tokens in
circulation.
 Evolution of Blockchain Technology

2. Litecoin:
Charlie Lee, a former Google employee, invented Litecoin in 2011. Shorter
transaction speeds, cheaper fees, and a concentration of miners were some of the
improvements he made to Bitcoin technology.

3. Ethereum:
Vitalik Buterin introduced Ethereum in July 2015. The second-largest cryptocurrency
by market cap right now is Ethereum, behind only Bitcoin. The blockchain platform
Ethereum has its own programming language, Solidity, as well as its own digital
currency, Ether (ETH).
 Evolution of Blockchain Technology

4. Ripple:

Like Litecoin or Bitcoin, Ripple is a sort of cryptocurrency that runs on an open-source,

peer-to-peer, decentralized platform that enables easy money transfers in any format. A
blockchain-based digital payment network and protocol called Ripple has its own
money called XRP.

5. NEO:

NEO, formerly known as Antshares and developed in China, is actively aiming to

overtake other key cryptocurrency players on the international stage. It focuses on
smart contracts, or digital contracts, which let users draft and carry out contracts
without the aid of a middleman.
 Evolution of Blockchain Technology

6. IOTA:

IOTA, a 2016 invention, is an Internet of Things (IoT) application. By 2020, there would
be billions of gadgets online. Smart devices can communicate data and payment
information with numerous other devices in transactions carried out throughout the day
inside this Internet of Things environment. IOTA wants to replace other methods of
performing transactions on smart devices as the norm.
 Blockchain v/s Database

Database Blockchain

Database uses centralized storage of data. Blockchain uses decentralized storage of data.

Database needs a Database admin or Database administrator to

There is no administrator in Blockchain.
manage the stored data.

Modifying data does not require permission. Users have a copy of

Modifying data requires permission from database admin. data and by modifying the copies does not affect the master copy of
the data as Blockchain is irresistible to modification of data.

Centralized databases keep information that is up-to-date at a Blockchain keeps the present information as well as the past
particular moment information that has been stored before.

Centralized databases are used as databases for a really long time

Blockchain is ideal for transaction platform but it slows down when
and have a good performance record, but are slow for ertain
used as databases, specially with large collection of data.
functionalities.
 Blockchain v/s Database

Blockchain is best suited for scenarios where decentralization, immutability, and

trustless interactions are critical. It's particularly useful in applications like
cryptocurrencies, decentralized finance, and supply chain management.

Traditional Databases excel in scenarios requiring high-speed transactions, complex

queries, and centralized control. They are commonly used in business applications,
data warehousing, and web services.
 Blockchain Generations

1. First Generation: Bitcoin

Characteristics:
● Purpose: Created primarily as a digital currency.
● Key Feature: Peer-to-peer transactions without the need for intermediaries like
banks.
● Consensus Mechanism: Proof of Work (PoW), which involves solving complex
cryptographic puzzles to validate transactions.
● Limitations: Limited scripting capabilities, primarily designed for transferring value.
Scalability issues due to block size and time constraints.
Examples: Bitcoin, the original blockchain, introduced by Satoshi Nakamoto.
 Blockchain Generations

2. Second Generation: Smart Contracts and Platforms

Characteristics:

● Purpose: Extends blockchain capabilities beyond simple currency transactions.

● Key Feature: Introduction of smart contracts—self-executing contracts with the terms
directly written into code.
● Consensus Mechanism: Still using PoW in many cases, but starting to see other mechanisms
like Proof of Stake (PoS).
● Limitations: Scalability and performance issues, complexity of smart contract development,
and security vulnerabilities in smart contracts.

Examples: Ethereum, which introduced smart contracts and a more flexible programming
environment. Other examples include NEO and Cardano.
 Blockchain Generations

3. Third Generation: Scalability and Interoperability

Characteristics:

● Purpose: Addresses scalability, interoperability, and governance issues found in earlier generations.
● Key Feature: Innovations to improve transaction speed, reduce costs, and enable different blockchains to
communicate with each other.
● Consensus Mechanism: Adoption of various new mechanisms, including PoS, Delegated Proof of Stake
(DPoS), and hybrid models.
● Limitations: Complexity in achieving true interoperability, and ongoing challenges with network security and
decentralization.

Examples:

● Polkadot: Focuses on interoperability between different blockchains.

● Tezos: Known for its on-chain governance model and self-amending features.
● EOS: Aims for high performance and scalability with a delegated proof-of-stake system.
 Blockchain Generations

4. Fourth Generation: Advanced Features and Integration

Characteristics:

● Purpose: Further improvements in scalability, privacy, and integration with real-world applications.
● Key Feature: Enhanced privacy features, integration with existing systems, and the ability to handle
complex decentralized applications (DApps) and enterprise solutions.
● Consensus Mechanism: Continued evolution, including advanced PoS models, zero-knowledge proofs,
and hybrid approaches.
● Limitations: Balancing scalability, decentralization, and security, and navigating regulatory challenges.

Examples:

● Algorand: Focuses on high-speed transactions and scalability with a unique consensus mechanism.
● Cosmos: Designed for interoperability and scaling with a focus on connecting various blockchains.
● Avalanche: Aims for high performance and low latency with a consensus protocol that supports multiple
blockchains.
 Blockchain Generations

5. Fifth Generation: Web3 and Beyond

Characteristics:

● Purpose: Envisions a decentralized internet (Web3) where users have more control over their data and
interactions.
● Key Feature: Integration of blockchain with AI, IoT (Internet of Things), and other emerging technologies.
Emphasis on user-centric decentralized applications (DApps) and improved governance.
● Consensus Mechanism: Incorporates advancements in consensus protocols, often focusing on sustainability
and reducing environmental impact.
● Limitations: Emerging field with ongoing development challenges, including user adoption and regulatory
concerns.

Examples:

● Filecoin: Focuses on decentralized storage solutions.

● Chainlink: Provides decentralized oracle services to bridge blockchain with external data sources.
● Ocean Protocol: Designed for data sharing and privacy in a decentralized manner.
Blockchain in detail…..
 Vocabulary of Blockchain:

Consensus mechanism: It is a system that validates a transaction and marks it as authentic.

This mechanism lists all valid transactions of a coin in a blockchain to build trust in the coin
among traders.
PoW : Proof of work (PoW) is a form of cryptographic proof in which one party (the prover) proves
to others (the verifiers) that a certain amount of a specific computational effort has been expended.
PoS: Proof of Stake protocols are a class of consensus mechanisms for blockchains that work
by selecting validators in proportion to their quantity of holdings in the associated
cryptocurrency.
Proof of Stake uses randomly selected validators to confirm transactions and create new
blocks.
Proof of work uses a competitive validation method to confirm transactions and add new blocks
to blockchain.
DPoS: Delegated Proof of Stake is a consensus mechanism in blockchain where network users
 Vocabulary of Blockchain:

Smart Contracts: A smart contract is defined as a digital agreement that is

signed and stored on a blockchain network, which executes automatically when
the contract's terms and conditions (T&C) are met. The T&C is written in
blockchain-specific programming languages such as Solidity.
 Types of Blockchain

1. Public Blockchains
2. Private Blockchains
3. Consortium Blockchains
4. Hybrid Blockchains
5. Sidechains
6. Layer 2 Solutions
 Types of Blockchain

1. Public Blockchains:

These blockchains are completely open to following the idea of decentralization. They don’t have any
restrictions, anyone having a computer and internet can participate in the network.
● As the name is public this blockchain is open to the public, which means it is not owned by anyone.
● Anyone having internet and a computer with good hardware can participate in this public
blockchain.
● All the computer in the network hold the copy of other nodes or block present in the network.
● In this public blockchain, we can also perform verification of transactions or records.

● Examples of public blockchain are Bitcoin, Ethereum.

 Types of Blockchain

2. Private Blockchains

These blockchains are not as decentralized as the public blockchain only selected nodes can
participate in the process, making it more secure than the others.
● These are not as open as a public blockchain.
● They are open to some authorized users only.
● These blockchains are operated in a closed network.
● In this few people are allowed to participate in a network within a
company/organization.
● An example of private blockchains is Hyperledger, Corda.
 Types of Blockchain

3. Consortium Blockchains

It is a creative approach that solves the needs of the organization. This blockchain validates
the transaction and also initiates or receives transactions.
● Also known as Federated Blockchain.
● This is an innovative method to solve the organization’s needs.
● Some part is public and some part is private.
● In this type, more than one organization manages the blockchain.
● Examples of consortium Blockchain are Tendermint and Multichain.
 Types of Blockchain

4. Hybrid Blockchains

It is the mixed content of the private and public blockchain, where some part is controlled by
some organization and other makes are made visible as a public blockchain.
● It is a combination of both public and private blockchain.
● Permission-based and permissionless systems are used.
● User access information via smart contracts
● Even a primary entity owns a hybrid blockchain it cannot alter the transaction
● Examples of Hybrid Blockchain are Ripple network and XRP token.
 Types of Blockchain

5. Sidechains

● A sidechain is a separate blockchain network that connects to another blockchain – called a parent

blockchain or mainnet – via a two-way peg.

● These secondary blockchains have their own consensus protocols allowing a blockchain network to

improve its privacy and security, and minimize the additional trust required to maintain a network.

● A key component of sidechains is their ability to facilitate a smoother asset exchange between the

mainnet and the secondary blockchain. This means that digital assets such as tokens can be securely

transferred between blockchains – allowing projects to expand their ecosystem in a decentralized

manner.
 Types of Blockchain

6. Layer 2 Solutions
● A Layer-2 solution refers to infrastructure built on top of an existing blockchain
that can execute transactions off-chain. While they process transactions
separately, Layer-2 blockchains are still secured by the underlying Layer-1
blockchain.
● Protocols built on top of existing blockchains to enhance scalability and
efficiency. They work by processing transactions off the main blockchain and then
settling them back on the main chain.
● Features include improved transaction speed and reduced costs while still
leveraging the security of the underlying blockchain.
● Examples: Lightning Network (for Bitcoin), Optimistic Rollups (for Ethereum).
 Benefits of Blockchain Technology

► Open: One of the major advantages of blockchain technology is that it is accessible to all means anyone can
become a participant in the contribution to blockchain technology, one does not require any permission from
anybody to join the distributed network.
► Verifiable: Blockchain technology is used to store information in a decentralized manner so everyone can verify
the correctness of the information by using zero-knowledge proof through which one party proves the correctness
of data to another party without revealing anything about data.
► Permanent: Records or information which is stored using blockchain technology is permanent means one needs
not worry about losing the data because duplicate copies are stored at each local node as it is a decentralized
network that has a number of trustworthy nodes.
► Free from Censorship: Blockchain technology is considered free from censorship as it does not have control of
any single party rather it has the concept of trustworthy nodes for validation and consensus protocols that
approve transactions by using smart contracts.
 Benefits of Blockchain Technology

► Tighter Security: Blockchain uses hashing techniques to store each transaction on a block that is connected
to each other so it has tighter security. It uses SHA 256 hashing technique for storing transactions.
► Immutability: Data cannot be tampered with in blockchain technology due to its decentralized structure so
any change will be reflected in all the nodes so one cannot do fraud here, hence it can be claimed that
transactions are tamper-proof.
► Transparency: It makes histories of transactions transparent everywhere all the nodes in the network have a
copy of the transaction in the network. If any changes occur in the transaction it is visible to the other nodes.
► Efficiency: Blockchain removes any third-party intervention between transactions and removes the mistake
making the system efficient and faster. Settlement is made easier and smooth.
► Cost Reduction: As blockchain needs no third man it reduces the cost for the businesses and gives trust to
the other partner.
 Challenges in blockchain Technology
1. Scalability
● Many blockchain networks struggle with high transaction volumes, leading to slower processing times compared to
traditional systems.

2. Energy Consumption
● Blockchains using PoW, like Bitcoin, require significant computational power, leading to high energy consumption and
environmental concerns.

3. Security Risks
● Bugs or flaws in smart contracts can lead to significant financial losses.
● If a single entity controls more than 50% of the network’s mining power, they could potentially manipulate the
blockchain.

4. Regulatory and Legal Uncertainty

● The regulatory environment for blockchain and cryptocurrencies is still evolving, with varying laws and guidelines
across different jurisdictions.
● The legality of blockchain-based transactions and smart contracts can be ambiguous.
 Challenges in blockchain Technology
5. Interoperability
● Many blockchains operate in isolation, making it challenging to exchange information or assets across different networks
seamlessly.

6. Complexity and Usability

● The technical complexity of blockchain technology can be a barrier for average users and businesses.
● Incorporating blockchain into existing systems can be complicated and resource-intensive.

7. Cost
● Setting up and maintaining a blockchain network, especially one requiring substantial computational resources, can be
expensive.
● Fees can vary widely depending on network congestion and can be a deterrent for smaller transactions.

8. Data Privacy
● Transparency vs. Privacy: While blockchains are often praised for their transparency, this can conflict with the need for data
privacy, especially in sensitive applications.
Types of Networks

1. Personal Area Network (PAN)

2. Local Area Network (LAN)

3. Campus Area Network (CAN)

4. Metropolitan Area Network (MAN)

5. Wide Area Network (WAN)

 Types of Networks

1. Wireless local area network (WLAN) - A home or office Wi-Fi network

2. Storage area network (SAN) - Fibre Channel (FC), Ethernet, and InfiniBand

3. Passive optical local area network (POLAN)- campus buildings where departments share a

common network, hospitals that have a shared network with on-site pharmacy and patient needs

4. Enterprise private network (EPN)- A Large-scale Retail Company (Walmart)

5. Virtual private network (VPN) - employees at a branch office could use a VPN to connect to the main

office's internal network

6. System-area network (SAN) - linked by a high-speed, high-performance connection

Layered Architecture of Blockchain Ecosystem
Layered Architecture of Blockchain Ecosystem

Some blockchain experts believe that blockchain has 7 layers:

1. Hardware/Infrastructure layer.
2. Data layer.
3. Network layer.
4. Consensus layer.
5. Incentive layer.
6. Contract layer.
7. Application and Presentation layer.
 Hardware/Infrastructure layer

● Blockchains are predicated on peer-to-peer sharing of data.

● This layer consists of the physical components that support the blockchain
network, such as computers and servers.
● A node is a computer or network of computers that decrypts transactions, and a
blockchain is the sum of all nodes.
● The Blockchain network’s nodes are responsible for verifying transactions,
grouping them into blocks, broadcasting them to the network, and so forth.
 Data layer

● Following the hardware layer is the data layer, where transaction details are stored.

● The transaction information recorded on a block (the basic unit of a blockchain) includes

information about the sent crypto, the public key of the recipient, and the private key of the
sender.

● Each data-containing block is connected to the block that came before it and the block that

will be generated next.

● Only the first block of the network, the genesis block, is connected forwards and not

backwards.
 Network layer

● The network layer is also known as the peer-to-peer (P2P) layer. In addition to being
known as the propagation layer, it is in charge of inter-node communication.
● This layer handles the communication between blockchain nodes.
● It connects nodes, propagates transactions, and distributes data throughout the
network.
● Since blockchain is an open system, each node must be aware of the transactions
being validated by other nodes.
● The network layer facilitates this communication.
 Consensus Layer

● This layer guarantees that all nodes in the network concur on the validity of each
transaction.
● It uses a consensus mechanism, such as Proof of Work (PoW) or Proof of Stake
(PoS), to validate and add transactions to the blockchain.
● Blockchain platforms cannot function without the consensus layer. Whether using
Ethereum, Hyperledger, or another blockchain, the consensus layer is the most
important and fundamental layer.
● The consensus layer is in charge of validating the blocks, putting them in the proper
sequence, and making sure everyone is in agreement.
● The distributed peer-to-peer network’s consensus layer establishes a certain set of
agreements between nodes.
● Power remains distributed and decentralized due to the consensus layer.
 Incentive Layer

● This stack’s optional incentive layer is the fourth tier.

● This layer handles how network nodes are compensated for the effort they put
forth to establish consensus in terms of rewards.
● Depending on the consensus process being used, this layer may or may not be
implemented.
○ This layer defines the minimum amount of transaction fees needed to perform
actions on the blockchain.
○ This determines the variant types of incentives available on the network.
 Contract Layer
► The information in the contracts layer, which is right next to the application layer and specifies how a
service will operate and what kind of information will be made accessible, is similar to that in a
real-world contract.
► In essence, there are four types of contracts, which are given below:
1. Service Contract
2. Data Contract
3. Message Contract
4.Policy & Binding
► However, the transaction is validated and carried out at the semantic layer before moving from the
application layer to the execution layer.
► Applications transmit instructions to the execution layer, which carries out transaction processing and
maintains the Blockchain’s deterministic nature.
 Application Layer

● The Application layer in the blockchain is the one on which apps are built.
● This layer includes smart contracts, decentralized applications (dApps),
and other software that run on top of the blockchain network.
● It allows developers to create new applications and services that leverage
the security and transparency of the blockchain.
● These implementations may consist of anything, like wallets, social media
Apps, browsers, Defi Apps, and NFT platforms, to name a few.
● While the UI/UX of the app is identical to that of any other standard
application, the backend data storage of these applications is
decentralized.
 Components of Blockchain

Following are the components of a Blockchain network –

1. Node
2. Ledger
3. Wallet
4. Nonce
5. Hash
 1. Node

It is of two types – Full Node and Partial Node.

● Full Node –
It maintains a full copy of all the transactions. It has the capacity to validate, accept and
reject the transactions.
● Partial Node –
It is also called a Lightweight Node because it doesn’t maintain the whole copy of the
blockchain ledger. It maintains only the hash value of the transaction. The whole transaction
is accessed using this hash value only. These nodes have low storage and low
computational power.
 2.Ledger

It is a digital database of information. Here, we have used the term ‘digital’ because the currency
exchanged between different nodes is digital i.e cryptocurrency. There are three types of ledger. They are –
1. Public Ledger –
It is open and transparent to all. Anyone in the blockchain network can read or write something.
2. Distributed Ledger –
In this ledger, all nodes have a local copy of the database. Here, a group of nodes collectively
execute the job i.e verify transactions, add blocks in the blockchain.
3. Decentralized Ledger –
In this ledger, no one node or group of nodes has a central control. Every node participates in the
execution of the job.
 3. Wallet

It is a digital wallet that allows user to store their cryptocurrency. Every node in the
blockchain network has a Wallet. Privacy of a wallet in a blockchain network is
maintained using public and private key pairs. In a wallet, there is no need for
currency conversion as the currency in the wallet is universally acceptable.
Cryptocurrency wallets are mainly of two types –
1. Hot Wallet
2. Cold Wallet
 Hot Wallet

These wallets are used for online day-to-day transactions connected to the internet. Hackers
can attack this wallet as it is connected to the internet. Hot wallets are further classified into
two types –
a. Online/ Web wallets –
These wallets run on the cloud platform. Examples – MyEther Wallet, MetaMask Wallet.
b. Software wallets –
It consists of desktop wallets and mobile wallets. Desktop wallets can be downloaded on a
desktop and the user has full control of the wallet. An example of a desktop wallet is
Electrum.
c. Mobile wallets –
They are designed to operate on smartphone devices. Example – mycelium.
 Cold Wallet

These wallets are not connected to the internet. It is very safe and hackers cannot attack it.
These wallets are purchased by the user. Example – Paper wallet, hardware wallet.
a. Paper wallet –
They are offline wallets in which a piece of paper is used that contains the crypto address. The
private key is printed in QR code format. QR code is scanned for cryptocurrency transactions.
b. Hardware wallet –
It is a physical electronic device that uses a random number generator that is associated with
the wallet.
 Nonce

A nonce is an abbreviation for “number only used once,” which is a number added to a
hashed or encrypted block in a blockchain. It is the 32-bit number generated randomly
only one time that assists to create a new block or validate a transaction. It is used to
make the transaction more secure.
It is hard to select the number which can be used as the nonce. It requires a vital
amount of trial-and-error. First, a miner guesses a nonce. Then, it appends the guessed
nonce to the hash of the current header. After that, it rehashes the value and compares
this to the target hash. Now it checks that whether the resulting hash value meets the
requirements or not. If all the conditions are met, it means that the miner has created
an answer and is granted the block.
Hash

The data is mapped to a fixed size using hashing. It plays a very important role
in cryptography. In a blockchain network hash value of one transaction is the
input of another transaction. Properties of the hash function are as follows –
● Collision resistant
● Hiding
● Puzzle friendliness
 Cryptography

● Cryptography is a technique of securing information and communications through the use

of codes so that only those persons for whom the information is intended can understand
and process it. Thus preventing unauthorized access to information.
● The prefix “crypt” means “hidden” and the suffix “graphy” means “writing”. In
Cryptography, the techniques that are used to protect information are obtained from
mathematical concepts and a set of rule-based calculations known as algorithms to
convert messages in ways that make it hard to decode them.
● These algorithms are used for cryptographic key generation, digital signing, and
verification to protect data privacy, web browsing on the internet and to protect
confidential transactions such as credit card and debit card transactions.
 Features of Cryptography

● Confidentiality: Information can only be accessed by the person for whom it is intended and no other person
except him can access it.
● Integrity: Information cannot be modified in storage or transition between sender and intended receiver
without any addition to information being detected.
● Non-repudiation: The creator/sender of information cannot deny his intention to send information at a later
stage.
● Authentication: The identities of the sender and receiver are confirmed. As well destination/origin of the
information is confirmed.
● Interoperability: Cryptography allows for secure communication between different systems and platforms.
● Adaptability: Cryptography continuously evolves to stay ahead of security threats and technological
advancements.
 Types of Cryptography

1. Symmetric Key Cryptography

It is an encryption system where the sender and receiver of a message use a single common
key to encrypt and decrypt messages. Symmetric Key cryptography is faster and simpler but
the problem is that the sender and receiver have to somehow exchange keys securely. The
most popular symmetric key cryptography systems are Data Encryption Systems (DES) and
Advanced Encryption Systems (AES).
 Types of Cryptography

2. Asymmetric Key Cryptography

In Asymmetric Key Cryptography, a pair of keys is used to encrypt and decrypt information. A
receiver’s public key is used for encryption and a receiver’s private key is used for decryption. Public
keys and Private keys are different. Even if the public key is known by everyone the intended receiver
can only decode it because he alone knows his private key. The most popular asymmetric key
cryptography algorithm is the RSA algorithm.
 Types of Cryptography

Hash Function
This algorithm makes no use of any keys. A hash value with a fixed length is calculated based on
the plain text, making it impossible to recover the plain text’s contents. Many operating systems
encrypt passwords using hash functions.
 Digital Signature

A digital signature is a mathematical technique used to validate the authenticity and

integrity of a message, software, or digital document.

It's the digital equivalent of a handwritten signature or stamped seal, but it offers far
more inherent security. A digital signature is intended to solve the problem of tampering
and impersonation in digital communications.

Digital signatures can provide evidence of origin, identity and status of electronic
documents, transactions and digital messages. Signers can also use them to
acknowledge informed consent.
 Digital Signature

A digital signature consists of three algorithms:

1. Key generation algorithm

The key generation algorithm selects private key randomly from a set of possible private keys. This
algorithm provides the private key and its corresponding public key.

2. Signing algorithm

A signing algorithm produces a signature for the document.

3. Signature verifying algorithm

A signature verifying algorithm either accepts or rejects the document's authenticity.

 Digital Signature

How do digital signatures work?

Digital signatures are based on public key cryptography, also known as asymmetric
cryptography. Using a public key algorithm, such as Rivest-Shamir-Adleman, or RSA, two keys are
generated, creating a mathematically linked pair of keys: one private and one public.

Digital signatures work through public key cryptography's two mutually authenticating
cryptographic keys. For encryption and decryption, the person who creates the digital signature
uses a private key to encrypt signature-related data. The only way to decrypt that data is with the
signer's public key.

If the recipient can't open the document with the signer's public key, that indicates there's a
problem with the document or the signature. This is how digital signatures are authenticated.
 Cryptocurrency

● Cryptocurrency is a digital payment system that doesn't rely on banks to verify

transactions. It’s a peer-to-peer system that can enable anyone anywhere to send
and receive payments.
● Instead of being physical money carried around and exchanged in the real world,
cryptocurrency payments exist purely as digital entries to an online database
describing specific transactions.
● When you transfer cryptocurrency funds, the transactions are recorded in a public
ledger. Cryptocurrency is stored in digital wallets.
● Cryptocurrency received its name because it uses encryption to verify
transactions.
● This means advanced coding is involved in storing and transmitting cryptocurrency
data between wallets and to public ledgers. The aim of encryption is to provide
security and safety.
 Cryptocurrency - BITCOIN

● Bitcoin (BTC) is a cryptocurrency (a virtual currency) designed to act as money and a

form of payment outside the control of any one person, group, or entity. This removes
the need for trusted third-party involvement (e.g., a mint or bank) in financial
transactions.
● It is rewarded to blockchain miners who verify transactions and can be purchased on
several exchanges.
● Bitcoin was introduced to the public in 2009 by an anonymous developer or group of
developers using the name Satoshi Nakamoto. It has since become the most
well-known and largest cryptocurrency in the world.
● Its popularity has inspired the development of many other cryptocurrencies.
● Bitcoin is the public blockchain used to create and manage the cryptocurrency of the
same name.
 Cryptocurrency - Ethereum

● Ethereum is a decentralized global software platform powered by blockchain technology.

It is most commonly known by investors for its native cryptocurrency, ether (ETH), and by
developers for its use in blockchain and decentralized finance application development.
● Anyone can use Ethereum—it's designed to be scalable, programmable, secure, and
decentralized—to create any secured digital technology. Its token is designed to pay for
work done supporting the blockchain, but participants can also use it to pay for tangible
goods and services if accepted.
● Bitcoin and Ethereum have many similarities but different long-term visions and
limitations.
● Ethereum uses a proof-of-stake transaction validation mechanism.
● Ethereum is the foundation for many emerging technological advances based on
blockchain.
 Smart Contracts

● A smart contract is a digital agreement signed and stored on a blockchain network

that executes automatically when the contract's terms and conditions (T&C) are
met; the T&C is written in blockchain-specific programming languages like Solidity.
● A Smart Contract (or cryptocontract) is a computer program that directly and
automatically controls the transfer of digital assets between the parties under
certain conditions.
● A smart contract works in the same way as a traditional contract while also
automatically enforcing the contract.
● Smart contracts are programs that execute exactly as they are set up(coded,
programmed) by their creators. Just like a traditional contract is enforceable by
law, smart contracts are enforceable by code.
 Use Cases of Blockchain

Cryptocurrency
The blockchain concept was originally developed to manage cryptocurrencies such as
bitcoin. Given the anonymity of crypto coins, blockchain is an effective way to
document transactions accurately and provide privacy for the parties involved.

Healthcare
The possibilities for blockchain use in healthcare seem endless. There are a number
of potential use cases: managing electronic medical record data, protecting
healthcare data, safeguarding genomics information, and tracking disease and
outbreaks,etc.
 Use Cases of Blockchain

Government
There are many blockchain use cases in government agencies, including voting applications and
personal identification security.

Because blockchains can't usually be forged or their data manipulated, they can hold digital IDs,
certificates of any kind and even passports, Rafferty said. "This data can be accessed and
viewed at any time in a completely transparent manner, which will bolster international travel
industries."

Supply chain management

Supply chains were already the hottest blockchain application before the COVID-19 pandemic
disrupted supply chains worldwide. Blockchain is a good fit because complex global supply chains
have no central authority and lack visibility.
Thank You….