Fundamentals of Blockchain

Unit-5
Types of Consensus
Algorithm
Er. Harsh Raj
(Assistant Professor, CSE)
 Course Objectives
1. The students should be able to understand a broad overview of the essential concepts of blockchain
technology.

2. To familiarize students with Bitcoin protocol followed by the Ethereum protocol – to lay the
foundation necessary for developing applications and programming.

3. Students should be able to learn about different types of blockchain and consensus algorithms.

Expected Course Outcome

1. To explain the basic notion of distributed systems.

2. To use the working of an immutable distributed ledger and trust model that defines blockchain.

3. To illustrate the essential components of a blockchain platform.

Syllabus
 Text Books
1. Kirankalyan Kulkarni, Essentials of Bitcoin and Blockchain, Packt Publishing.

2. Anshul Kaushik, Block Chain & Crypto Currencies, Khanna Publishing House.

3. Tiana Laurence, Blockchain for Dummies, 2nd Edition 2019, John Wiley & Sons.

4. Mastering Blockchain: Deeper insights into decentralization, cryptography, Bitcoin, and

popular Blockchain frameworks by Imran Bashir, Packt Publishing (2017).

Reference Books
1. Blockchain: Blueprint for a New Economy by Melanie Swan, Shroff Publisher O’Reilly
Publisher Media; 1st edition (2015).

2. Mastering Bitcoin: Programming the Open Blockchain by Andreas Antonopoulos.

 Topics
Types of Consensus Algorithms:
• Proof of Stake
• Proof of Work
• Delegated Proof of Stake
• Proof Elapsed Time
• Deposite-Based Consensus
• Proof of Importance
• Federated Consensus
• Federated Byzantine Consensus
• Practical Byzantine Fault Tolerance

Blockchain Use Case:

• Supply Chain Management
 Types of Consensus Algorithms:

Consensus
Algorithm
 Consensus Algorithm
A consensus algorithm is a crucial component in distributed computing and blockchain technology that
ensures that all participants in a network agree on the current state of the system.

It helps maintain the integrity and consistency of data across multiple nodes in a decentralized network.

Here are a few key consensus algorithms:

1. Proof of Work (PoW): PoW is the consensus algorithm used in Bitcoin and many other
cryptocurrencies. Participants, called miners, compete to solve complex mathematical puzzles. The
first one to solve the puzzle gets the right to add a new block to the blockchain. PoW is energy-
intensive but highly secure.

2. Proof of Stake (PoS): In PoS, validators are chosen to create new blocks and validate transactions
based on the number of coins they hold and are willing to "stake" as collateral. This reduces energy
consumption compared to PoW and is used in cryptocurrencies like Ethereum 2.0.
3. Delegated Proof of Stake (DPoS): DPoS is a variation of PoS where coin holders vote for a smaller
number of delegates who are responsible for validating transactions and creating new blocks. It's
faster and more scalable but can be seen as less decentralized.

4. Proof of Authority (PoA): In PoA, network participants are known and have a reputation to
uphold. A set of authorities is responsible for validating transactions. PoA is often used in private
and consortium blockchains.

5. Practical Byzantine Fault Tolerance (PBFT): PBFT is a classic consensus algorithm used in
permissioned blockchain networks. It ensures consensus among a group of nodes, even if some of
them are malicious or faulty.

6. Raft: Raft is another consensus algorithm designed for use in distributed systems to achieve
consensus. It's often used in systems that need to be available and reliable but don't require the
decentralized and trustless nature of blockchain.

7. Tendermint: Tendermint is a BFT-based consensus algorithm designed for use in blockchain

systems. It combines elements of PoS and BFT to achieve both speed and security.
8. Honey Badger BFT: This is a more recent BFT-based consensus algorithm designed to be highly
resilient and scalable while being suitable for use in decentralized applications and networks.

The choice of consensus algorithm depends on the specific requirements of a network or

blockchain. Some prioritize decentralization and security, while others aim for scalability and
energy efficiency. Different use cases may require different consensus algorithms to strike the
right balance between these factors.
Blockchain
Consensus Algorithm
 Types of Consensus Algorithms:

Proof Of Stake
 Proof Of Stake
• Proof of Stake (PoS) is a consensus mechanism
used in blockchain networks to validate and secure
transactions and create new blocks in the blockchain.

• It is an alternative to Proof of Work (PoW), which is the consensus mechanism used in popular
cryptocurrencies like Bitcoin. PoS was designed to address some of the environmental and scalability
concerns associated with PoW.

Here's a brief explanation of how Proof of Stake works:

1. Validators and Stakers: In a PoS system, participants are referred to as validators or stakers. These
participants are responsible for validating transactions and adding them to the blockchain. Instead of
miners solving complex mathematical puzzles like in PoW, validators in PoS are chosen to create
new blocks and validate transactions based on the amount of cryptocurrency they hold and are
willing to "stake" as collateral.
2. Stake and Validation: To become a validator in a PoS network, a participant must lock up a
certain amount of the cryptocurrency native to that network as collateral. This collateral is
referred to as a "stake." The larger the stake, the higher the probability that the participant will be
chosen to validate transactions and create new blocks. This is in contrast to PoW, where miners
must invest in expensive hardware and consume electricity to compete for block rewards.

3. Block Validation: Validators take turns proposing and validating new blocks. The probability of
being selected to propose and validate a block is typically proportional to the size of their stake.
Validators are financially incentivized to act honestly, as they have a lot to lose (their staked
cryptocurrency) if they attempt to cheat the system.

4. Block Rewards: Validators are rewarded with transaction fees and, in some cases, newly created
cryptocurrency coins for successfully validating and adding a block to the blockchain. These
rewards are distributed in proportion to the size of their stake.

5. Slashing: PoS networks often have mechanisms in place to penalize validators who engage in
malicious behavior, such as double-spending or attempting to create fraudulent blocks. Validators
may lose a portion of their staked cryptocurrency as a penalty in a process called "slashing."
 Benefits Of Proof Of Stake (PoS)
1. Energy Efficiency: PoS is more energy-efficient than PoW because it doesn't require the massive
computational power that PoW mining does.

2. Scalability: PoS is generally considered more scalable because it doesn't involve the same resource-
intensive competition as PoW mining.

3. Security: PoS incentivizes validators to act honestly, as they have a significant financial stake at risk.

4. Environmental Impact: PoS reduces the environmental impact associated with energy-intensive
PoW mining.

Many blockchain projects have adopted PoS as their consensus mechanism, including
Ethereum 2.0, Cardano, and Tezos, among others. Each PoS system may have its unique rules
and variations on the basic principles of PoS, but they all rely on staking and financial
incentives to maintain the network's security and integrity.
 Types of Consensus Algorithms:

Proof Of Work
 Proof Of Work
• Proof of Work (PoW) is a consensus mechanism
used in blockchain networks to validate and secure
transactions, as well as to create new blocks in the blockchain.

• It is the original and most well-known consensus mechanism and is used in cryptocurrencies like
Bitcoin. PoW was introduced by Satoshi Nakamoto in the Bitcoin whitepaper in 2008.

Here's how Proof of Work works:

1. Miners: Participants in the PoW network are called miners. Miners are responsible for solving
complex mathematical puzzles, known as proof-of-work puzzles, to validate transactions and create
new blocks. These puzzles require significant computational power and are intentionally difficult to
solve.

2. Mining Process: Miners compete to solve the proof-of-work puzzle by using their computer's
processing power to find a solution. The first miner to solve the puzzle broadcasts the solution to the
network, and other nodes verify the solution.
3. Verification: Other nodes in the network verify that the proposed solution is correct by applying it
to the pending transactions. If the solution is valid, the miner's block is added to the blockchain, and
the transactions are considered confirmed.

4. Block Rewards: Miners are rewarded for their efforts with cryptocurrency coins, often in the form
of transaction fees and newly created coins (block rewards). This incentivizes miners to participate
in the network and secure it.

5. Difficulty Adjustment: The PoW network adjusts the difficulty of the proof-of-work puzzles
over time to ensure that blocks are created at a consistent rate. This adjustment helps maintain the
network's security and integrity.

Blockchain
Network
 Benefits Of Proof Of Work (PoW)
1. Security: PoW is considered highly secure because it requires significant computational power to
successfully mine new blocks. This makes it difficult and costly for malicious actors to attack the
network.

2. Decentralization: PoW encourages decentralization, as anyone with the necessary hardware can
participate in the network as a miner.

3. Reliability: PoW has proven to be a reliable and battle-tested consensus mechanism through the
success of cryptocurrencies like Bitcoin.

However, PoW also has some drawbacks, most notably its environmental impact. Mining in
PoW consumes vast amounts of electricity and requires specialized hardware, leading to
concerns about energy consumption and carbon emissions.
Difference
 Types of Consensus Algorithms:

Delegated Proof
Of Stake
 Delegated Proof Of Stake
• Delegated Proof of Stake (DPoS) is a consensus algorithm used in blockchain technology to validate
and confirm transactions and create new blocks in a blockchain.

• DPoS is an alternative to the more traditional Proof of Work (PoW) and Proof of Stake (PoS)
consensus mechanisms.

• It was designed to address some of the scalability and energy consumption issues associated with
PoW, while also providing faster transaction processing times.

• In a DPoS system, token holders of the blockchain's native cryptocurrency can vote for a select
number of delegates (often referred to as "witnesses" or "block producers") who are responsible for
validating transactions and creating new blocks.

• These delegates are typically the entities with the most votes and are tasked with running network
nodes.

• The number of delegates is limited, which helps maintain efficiency and scalability.
Here's how DPoS generally works:

1. Token Holders Vote: Token holders in the blockchain network vote for their preferred delegates by
staking their tokens. Delegates with the most votes become active participants in block production
and validation.

2. Block Production: Delegates take turns producing new blocks in a round-robin fashion. This rotation
ensures that multiple parties have the opportunity to participate and keeps the network decentralized.

3. Transaction Validation: Delegates validate transactions and add them to the blockchain. If a delegate
behaves dishonestly or fails to perform their duties, they can be voted out and replaced with more
trustworthy candidates.

4. Block Rewards: Delegates are rewarded for their services with cryptocurrency tokens. This
incentivizes them to perform their duties accurately and maintain the network's security and
integrity.

Some well-known blockchain platforms that use DPoS or a similar variant include EOS, TRON, and
BitShares.
DPoS has the advantage of being more energy-efficient than PoW because it doesn't require the
computational "mining" process that consumes significant amounts of electricity. However, it has also
faced criticism for potentially centralizing power in the hands of a few major delegates or stakeholders.
The governance structure and rules for DPoS can vary between different blockchain projects, and the
effectiveness of DPoS largely depends on the design and execution of the specific blockchain system.

Delegated
Proof of Stake
 Working
Delegated Proof of Stake
 Types of Consensus Algorithms:

Proof Elapsed Time

 Proof Of Elapsed Time
• Proof of Elapsed Time (PoET) is a consensus algorithm used in some blockchain systems to achieve
consensus and validate transactions.

• It was originally developed by Intel and introduced as part of the Hyperledger Sawtooth framework,
an open-source distributed ledger project hosted by the Linux Foundation.

• PoET is designed to address some of the energy efficiency concerns associated with traditional Proof
of Work (PoW) algorithms, such as those used in Bitcoin, while still maintaining a decentralized and
secure network. It does so by leveraging trusted execution environments (TEEs) provided by modern
hardware, such as Intel's Software Guard Extensions (SGX).

Here's how PoET generally works:

1. Wait Time Lottery: In PoET, participants in the network must wait for a random amount of time,
which is determined by a lottery process. Each participant requests a "wait time" from a trusted
function within a TEE.
2. Validation: The participant who finishes waiting for the shortest amount of time is allowed to
create the next block in the blockchain. This is similar to the lottery concept in PoW, where miners
compete to solve a difficult computational puzzle to create a new block.

3. Creating the Block: The participant who wins the lottery and creates the new block is rewarded
with cryptocurrency tokens and the right to include a set of transactions in the block.

• The idea behind PoET is that it doesn't rely on energy-intensive computations, as in PoW, but
rather on a trusted hardware-based randomization process to select the next block producer. This
reduces the energy consumption and environmental impact of the consensus mechanism.

• It's worth noting that PoET relies on trust in the hardware's security properties, specifically the
TEEs. If a TEE were compromised, it could undermine the security of the blockchain using PoET.
Therefore, the effectiveness of PoET depends on the robustness and security of the hardware
involved.

• While PoET is a novel approach to achieving consensus in a more energy-efficient way, it is not as
widely adopted as other consensus mechanisms like Proof of Work (PoW), Proof of Stake (PoS), or
Delegated Proof of Stake (DPoS). The choice of consensus mechanism depends on the specific goals
and requirements of a blockchain project.
Working
Proof of Elapsed Time
 Types of Consensus Algorithms:

Deposite-Based
Consensus
 Deposite-Based Consensus
• "Deposite-based consensus" refers to a consensus mechanism in which participants in a blockchain
network are required to make a deposit or stake a certain amount of cryptocurrency or other
valuable assets as collateral to participate in the consensus process. The deposits serve as a form of
commitment, and they can be forfeited in case a participant acts maliciously or violates the
network's rules. This type of consensus mechanism is often used to promote honest and secure
behaviour within the network.

• A well-known example of a deposit-based consensus mechanism is "Proof of Stake" (PoS). In PoS,

participants, also known as validators or stakes, are required to lock up a certain amount of
cryptocurrency as collateral in order to have the chance to create new blocks and validate
transactions. The more cryptocurrency a participant stakes, the higher the probability they have of
being selected as a validator for the next block. If a validator acts dishonestly or violates the
network's rules, they can lose their staked assets as a penalty, which incentivizes them to behave
honestly.
• Another related concept is "Delegated Proof of Stake" (DPoS), where token holders vote for a select
number of delegates who are responsible for block validation, and these delegates often have to make
a deposit or stake a certain amount of tokens to be eligible for the position. DPoS combines elements
of both deposit-based consensus and delegation.

• Deposit-based consensus mechanisms aim to enhance network security and reduce the risk of
malicious behaviour by requiring participants to have a vested interest in the network's success. The
specific rules and requirements for deposit-based consensus mechanisms can vary from one
blockchain project to another, and they are designed to align the interests of participants with the
overall integrity and security of the network.
 Types of Consensus Algorithms:

Proof Of Importance
 Proof Of Importance
"Proof of Importance" (PoI) is a consensus mechanism that was initially introduced by the NEM (New
Economy Movement) blockchain platform.

It is designed to determine the likelihood of a node being chosen to validate transactions and create new
blocks in a blockchain-based on factors beyond just the amount of cryptocurrency tokens held, as in
traditional Proof of Stake (PoS) systems.

PoI aims to encourage active and positive participation within the network.

Here are the key concepts of PoI:

1. XEM Holdings: NEM's native cryptocurrency is called "XEM." To participate in PoI, a user needs to
hold a certain minimum amount of XEM in their wallet. The more XEM held, the higher the
individual's chances of being chosen to participate in the consensus process.

2. Transactions: PoI takes into account the number of transactions in which a user has been involved. It
values users who both send and receive transactions, which encourages active participation on the
network.
3. Harvesting: Users can "harvest" on the NEM network, which is similar to the process of mining or
validating transactions in other blockchain systems. Harvesting involves actively processing and
confirming transactions.

4. Node Reputation: A user's reputation is also considered in PoI. Users can improve their reputation
by maintaining a higher balance of XEM in their wallet, actively participating in transactions, and
generally acting positively within the network.

5. Proof of Importance Score: Each user's PoI score is calculated based on these factors, and those
with higher scores have a better chance of being chosen as a harvester, responsible for validating
transactions and creating new blocks.

The idea behind PoI is to encourage network participation, rather than simply rewarding
those who hold large amounts of cryptocurrency. It is designed to promote active engagement
in the blockchain network and maintain its security and integrity.
Why Proof Of Importance (PoW) ?
 Working
Proof of Importance
 Types of Consensus Algorithms:

Federated Consensus
 Federated Consensus
Federated Consensus is a consensus mechanism used in certain blockchain systems to achieve agreement
on the state of the blockchain.

It involves a federation or group of trusted validators who collectively make decisions regarding
transaction validation and block creation.

Federated consensus is commonly used in private or permissioned blockchain networks, where the
participants are known and trusted entities, such as organizations, rather than anonymous participants
as in public blockchains like Bitcoin.

Here are some key features of Federated Consensus:

1. Trusted Federation: In a federated consensus system, the network relies on a federation of known
validators or nodes to reach consensus. These validators are typically pre-selected and trusted
participants who have the authority to validate transactions and create new blocks.

2. Efficiency: Federated consensus mechanisms are often more efficient and faster compared to Proof
of Work (PoW) or Proof of Stake (PoS) because the trust among participants is established
beforehand, eliminating the need for resource-intensive mining or staking.
3. Security and Control: Since the validators in a federated consensus system are known and trusted,
the network can maintain a higher degree of security and control. This is particularly important in
enterprise or consortium blockchain settings where compliance and governance are key concerns.

4. Scalability: Federated consensus mechanisms can be more scalable because they don't require the
computational work seen in PoW, and the limited number of validators allows for faster decision-
making.

5. Examples: Examples of blockchain platforms that use federated consensus mechanisms include
Hyperledger Fabric and Corda. These platforms are designed for specific use cases, such as supply
chain management or financial services, where a consortium of entities works together.

In summary, Federated Consensus is a consensus mechanism that leverages a predefined

group of trusted participants to reach agreement on transactions and block creation. It is a
suitable choice for private and permissioned blockchains where participants are known and
can work together efficiently, securely, and with a high degree of control.
Working Federated Consensus
 Types of Consensus Algorithms:

Federated Byzantine
Consensus
 Federated Byzantine Consensus
"Federated Byzantine Consensus" (FBC) is a consensus algorithm that combines the principles of the
Byzantine fault-tolerant (BFT) consensus protocol with a federation of trusted validators.

It is designed to provide a high degree of security and consensus in blockchain networks, particularly in
private or consortium blockchain settings where participants are known and trusted.

Here are the key features of the Federated Byzantine Consensus:

1. Byzantine Fault Tolerance: FBC is designed to address the Byzantine Generals’ Problem, which
refers to the challenge of achieving consensus in a distributed network when some nodes may be
faulty or malicious. FBC ensures that consensus can be reached even in the presence of Byzantine
faults.

2. Federation of Validators: In FBC, a limited and known set of validators, often referred to as a
federation, participate in the consensus process. These validators are selected and trusted by the
network’s participants.
3. Voting and Agreement: Validators in the federation communicate and reach a consensus through a
voting process. They agree on the state of the blockchain and validate transactions by signing and
confirming them.

4. Security and Finality: FBC offers a high level of security and finality. Once a sufficient quorum of
validators agrees on a set of transactions, they are considered confirmed and cannot be easily
reversed.

5. Efficiency: FBC is generally more efficient and scalable compared to Proof of Work (PoW) because
it doesn't rely on resource-intensive mining, and it can reach consensus more quickly.

6. Use Cases: FBC is often used in private or consortium blockchains where participants are known
and trust is established. It is suited for applications in which data privacy and control are important,
such as financial services, supply chain management, and government-related use cases.

It's important to note that while Federated Byzantine Consensus offers advantages in terms of security
and efficiency, it is typically not as decentralized as public blockchains like Bitcoin or Ethereum, where
anyone can participate in the consensus process. Instead, it is better suited for use cases where a limited
group of known entities collaborates in a more controlled environment
 Benefits

Federated Byzantine Consensus

 Working

Federated Byzantine Consensus

 Is Federated Consensus and Federated Byzantine
Consensus is same or different?
"Federated Consensus" and "Federated Byzantine Consensus" are related terms, but they refer to
different concepts in the context of consensus algorithms and blockchain technology.

Let's clarify the difference between the two:

1. Federated Consensus:
• Federated Consensus is a consensus mechanism that involves a group of trusted participants
(federated nodes or validators) who collectively make decisions to validate and confirm
transactions in a blockchain network.

• It is often used in private or permissioned blockchain networks, where the participants are
known and trusted entities, such as organizations or individuals.

• In a federated consensus model, decisions are made by a quorum of participants, and the
consensus process is typically more efficient and faster than some other consensus mechanisms,
like Proof of Work (PoW) or Proof of Stake (PoS).
• Stellar, for example, uses a Federated Byzantine Agreement (FBA) protocol to achieve consensus
among a predefined set of validators.

2. Federated Byzantine Consensus:

• Federated Byzantine Consensus, on the other hand, is a specific variant of federated consensus
that combines the principles of the Byzantine fault-tolerant consensus protocol with a federated
network of validators.

• It is designed to address the Byzantine Generals' Problem, a scenario in distributed computing

where some nodes in a network may be malicious or faulty and can send conflicting information.

• In Federated Byzantine Consensus, the network of validators works together to achieve

consensus even in the presence of Byzantine faults, ensuring that they agree on the state of the
blockchain.

• Stellar's FBA protocol is an example of a Federated Byzantine Consensus algorithm.

 Types of Consensus Algorithms:

Practical Byzantine
Fault Tolerance
 Practical Byzantine Fault Tolerance
Practical Byzantine Fault Tolerance (PBFT) is a consensus algorithm designed to address the Byzantine
Generals' Problem, a challenge in distributed computing where nodes in a network may be faulty or
malicious, and it's crucial to reach consensus in the presence of such faults.

PBFT is practical because it is known for its efficiency and is often used in permissioned and private
blockchain networks where participants are known and trusted.

Here's how PBFT works:

1. Node Roles: In PBFT, the network is composed of a set of nodes that take on specific roles. These
roles include the primary (leader), replicas, and clients.

2. Leader Selection: The primary is chosen among the nodes through a consensus algorithm or a rotating
leader selection process. The primary is responsible for proposing new blocks and ordering
transactions.

3. Request and Pre-Prepare Phase: When a client initiates a transaction, the primary broadcasts a request
to all replicas. Each replica verifies the request and replies with a "pre-prepare" message, indicating
their readiness to commit the transaction.
3. Prepare Phase: Once the primary collects enough pre-prepare messages from replicas, it broadcasts
a "prepare" message to the network. Replicas that receive the prepared message, validate it and
respond with their own prepare messages, indicating their commitment to the transaction.

4. Commit Phase: When a replica receives enough prepared messages, it broadcasts a "commit"
message, confirming its commitment to the transaction.

5. Finality: When a client sees enough commit messages from the replicas, it considers the
transaction as finalized and informs the client. Finality means that the transaction is confirmed and
cannot be reversed.
 Characteristics Of PBFT
• Byzantine Fault Tolerance: PBFT can tolerate up to one-third of the nodes in the network behaving
arbitrarily or maliciously while still reaching consensus.

• Efficiency: PBFT is known for its efficiency compared to Proof of Work (PoW) and can process
transactions quickly, making it suitable for use cases requiring low latency and high throughput.

• Finality: PBFT offers finality, meaning that once a consensus is reached on a transaction, it cannot be
reversed.

• Known Participants: It is typically used in networks where participants are known and trusted,
making it more centralized compared to public blockchains.

PBFT is widely used in enterprise and consortium blockchain settings and has been
implemented in various blockchain platforms, such as Hyperledger Fabric. It's a practical
choice when data privacy, control, and rapid transaction finality are essential requirements.
Working
Practical Byzantine Fault Tolerance
Practical Byzantine Fault Tolerance
 Blockchain Use Case:

Supply Chain
Management
 Supply Chain Management
• Supply Chain Management (SCM) is one of the prominent use cases for
blockchain technology.
• It involves tracking the production, shipment, and delivery of goods or
products throughout the entire supply chain, from raw materials to the end
consumer.
• Blockchain can address several challenges in supply chain management, providing
transparency, traceability, and efficiency.

Here's a detailed explanation of how blockchain is used in supply chain management:

1. Transparency: Blockchain provides a shared ledger that all participants in the supply chain can
access. Each transaction or event in the supply chain is recorded as a block on the blockchain. This
transparency ensures that all stakeholders have visibility into the movement and status of products.

2. Provenance and Traceability: Blockchain enables the tracking of products from their origin.
Every step of the supply chain, from the manufacturer to the distributor to the retailer, can be
recorded on the blockchain. This provenance and traceability help identify the source of quality
issues or recalls and can reduce fraud and counterfeiting.
3. Immutable Records: Once data is added to the blockchain, it becomes extremely difficult to alter
or delete. This immutability ensures that the historical records of the supply chain are secure and
trustworthy, preventing data tampering or fraud.

4. Smart Contracts: Smart contracts can be integrated into the blockchain to automate various supply
chain processes. For example, payment terms can be automatically triggered when products reach
certain milestones, reducing the need for manual oversight and reducing administrative costs.

5. Reducing Fraud: Counterfeiting and fraud are significant challenges in supply chain management.
Blockchain's transparency and immutability make it challenging for bad actors to introduce
counterfeit products into the supply chain.

6. Real-Time Updates: Blockchain allows real-time updates and alerts, ensuring that all stakeholders
are aware of the current status of products. This can be particularly important for perishable goods
or those with short shelf lives.

7. Cost Savings: By streamlining and automating many supply chain processes, blockchain can lead
to cost savings. Reduced paperwork, faster dispute resolution, and efficient tracking can cut down on
administrative and operational expenses.
8. Efficient Recall Management: In the event of product recalls or quality issues, blockchain enables
swift identification of affected products. This can minimize the impact of recalls on public safety and
brand reputation.

9. Compliance and Auditing: Blockchain records can be used for compliance purposes and auditing.
Companies can easily prove adherence to regulations and standards by providing an immutable record
of their supply chain activities.

10. Interoperability: Blockchain can facilitate interoperability among different participants in the supply
chain. Organizations with their own systems and databases can connect and share data securely on the
blockchain.

11. Environmental and Ethical Concerns: Blockchain can be used to track the environmental impact of
products and ensure ethical sourcing by providing data on the conditions in which products are
manufactured.

12. Cross-Border Trade: In international supply chains, blockchain can simplify customs procedures,
reduce fraud, and speed up the movement of goods across borders.
Some notable examples of companies and organizations implementing blockchain for supply
chain management include IBM's Food Trust, which tracks the origin and journey of food
products, and the TradeLens platform, co-developed by Maersk and IBM, which aims to
digitize global trade processes.

In conclusion, blockchain technology in supply chain management offers enhanced

transparency, traceability, and automation, which can lead to cost savings, reduce fraud, and
improve the overall efficiency and integrity of the supply chain. It's particularly valuable in
industries where the provenance and authenticity of products are critical, such as food,
pharmaceuticals, and luxury goods.
 Supply Chain
Management
Working

https://images.app.goo.gl/sxBn7hWN7QcmEDok9
Assignment
 Unit Assignment
1. Define Consensus in the context of Blockchain technology. Why is consensus
important in the distributed System?
2. Do the comparison between Proof of Work(PoW) and Proof of Stake(PoS) of the
Consensus Algorithm. What are the key differences between each?
3. Explain Proof of Elapsed Time and Proof of Importance.
4. Define Deposite-Based Consensus.
5. Describe Byzantine Fault Tolerance.
6. Write the major differences between the Federated Consensus and Federated
Byzantine Consensus.
7. Discuss some real-world use cases of Blockchain Technology.
 Any
Queries