HASHING :-

Blockchain technology
Blockchain technology is an intricate web of several technological innovations working
together. Among the most important pieces of the blockchain puzzle is hashing.

Hashing is a cryptographic function that converts a string of characters of any length into a
unique output, or hash, of fixed length. This means that no matter what combination of
symbols are used as the input, they will always produce a one-of-a-kind string of digits and
characters.

A Bitcoin hash looks like this:

00000000000000000025e2ba026a8ad462b9a693d80fd0887def167f5f888a11

(hash of block 540807)

HASHING ESSENTIALS

 Hashing is a method for cryptographically encoding data.

 It produces a fixed-length output from any input.
 The same input always produces the same hash.
 The input cannot be reconstructed from the hash.
 Modern hash functions make it virtually impossible to produce the same output from
two different inputs.

Hashing in cryptocurrencies

Hashing is an integral part of all blockchain-based transactions, including the trading of

cryptocurrency. Hash functions are necessary in everything from mining blocks to signing
transactions to generating private keys.

Bitcoin Bitcoin Cash Ethereum Litecoin Ripple

SHA-256 SHA-256 keccak256 scrypt SHA-512

A hash function is a mathematical algorithm used to calculate the hash. Different

cryptocurrencies use different hash functions but all of them follow the same basic principles
of hashing.

Main properties of hashing

Hashing produces outputs of fixed length

Hashing will always produce a unique, fixed-length output from any input. Let us take a look
at what that means with a couple of examples.

Input Output
hello 2CF24DBA5FB0A30E26E83B2AC5B9E29E1B161E5C1FA7425E73043362938B9
It’s a good day to
6B89D5D4AD6A3364410DD9BAB95FD250EF4A663D9D3C47CBD7388535A591
HODL.
The entire novel Bleak
House by Charles 4F144CC612CA27E2DD6DFD6663F68BABC3B758D602B5102BF14E717E823EB
Dickens

In the table above, the SHA-256 hash function is used to generate the hashes of three
different inputs. In all three cases, the hash is completely unique, but its length remains the
same. SHA-256 generates hashes that are 256 bits long, usually represented as 64 symbols
comprised of numbers 0–9 and letters A–F. No matter how short or how long the input is – be
it a single word (hello) or even a whole novel (Bleak House by Charles Dickens) – the hash is
fixed at 64 characters.

Hashing is deterministic

The same input will always produce the same output. If you use SHA-256 to generate a hash
from “fun”, you will always get the output seen in the table below. Even changing one letter,
however, will produce a completely different hash.

Input Output
fun 00C4285274FCC5D6FBA2EE58DAF0D8C2B9B825B68D35D65D0E90A9BB333A51B5
sun 27756F050E14A1CB1C1EE867F0EACE9EA4D9FCB81B8BEE089469F1EBD5FD7B17

Hashing is a one-way function

It is infeasible to determine what the input was from any given output. That is to say, it is
virtually impossible to reverse the hash function with contemporary technology. The only
way to determine what the input was is trying out random strings until you find the right one.
This method is known as brute force.

Using brute force to reverse the hash back to the original string is easier said than done. No
computer in existence is powerful enough to find the solution in any reasonable amount of
time, nor are we ever likely to build one that will. Even IBM Summit, currently the fastest
computer in the world, capable of making several trillion calculations per second, would need
many years and an astounding amount of electricity to find the answer for a single hash.

Hashing is resistant to collisions

A collision occurs when a hashing mechanism produces the same output for two different
inputs. This is possible in theory for hashing, as the number of unique hashes is limited but
the number of inputs is not. However, the probability of collisions is extremely small.
Hashing is thus said to be resistant, but not immune, to collisions.

SHA-256, the algorithm used by Bitcoin, outputs hashes that are 256 bits long (a 256 digit-
long string of 1s and 0s). This means there are a total of 2256 unique hashes that it can
produce. As soon as the number of inputs is larger than the number of all possible outputs, let
us say 2256+1, at least two of the inputs will have the same output – that’s a collision.
So does that mean hashing is exploitable? No, not at all. 2256 is an enormous number. In fact,
enormous does not even begin to do it justice. Think about it this way: 2256 is very roughly
equal to the number of atoms in the entire observable universe. The sheer size of this number
means the likelihood of a collision occurring is utterly miniscule.

Hashing is fundamental for blockchain

Blockchain technology combines a range of important solutions from various fields of

science. The cryptographic hash function serves as the basis for building a blockchain and
harnessing those solutions. It is difficult to imagine a decentralized network that forgoes
hashing entirely.

PUBLIC KEY CRYPTO SYSTEM: -

Blockchain technology is one of the greatest inno vations of the 21st

century. In this article, we will focus on the concept of cryptography i.e. public-key
cryptography or Asymmetric key cryptography.

Introduction To Public-Key Cryptography

Most of the time blockchain uses public-key cryptography, also known as asymmetric-key
cryptography. Public key cryptography uses both public key and private key in order to
encrypt and decrypt data. The public key can be distributed commonly but the private key
can not be shared with anyone. It is commonly used for two users or two servers in a secure
way.

Public Key: Public keys are designed to be public. They can be freely given to everyone or
posted on the internet. By using the public key, one can encrypt the plain text message into
the cipher text. It is also used to verify the sender authentication. In simple words, one can
say that a public key is used for closing the lock.
Private Key: The private key is totally opposite of the public key. The private key is
always kept secret and never shared. Using this key we decrypt cipher text messages into
plain text. In simple words, one can say that the private key is used for opening the lock.

Why Do We Need Public-Key Cryptography?

 In symmetric-key cryptography, a single key is used to encrypt and decrypt the

message. Here, the possibility of data loss or unauthorized access to data is high.
 To overcome the unauthorized access of data and data sent securely without any
loss, we use public-key cryptography.
 Public-key cryptography is more secure than symmetric-key cryptography
because the public key uses two keys to encrypt and decrypt the data
 Public-key cryptography allows users to hide the data that they want to send.
The sender encrypts the data and the receiver decrypts the data. The encrypted
message is not understood by unauthorized users.

Working On Public-Key Cryptography

Suppose, the sender wants to send some important message to the receiver.
 The sender first creates a message in the form of plain text which is in a readable
format.
 The sender knows the public key of the receiver but doesn’t know the private
key of the receiver because the receiver keeps secret his private key. With the
help of the public key of the receiver and the private key of the sender, the
sender generates the encrypted message i.e. called cipher text. Cipher text is in
an unreadable format. In this step, plain text converts into cipher text.
 Now, cipher text reaches the receiver end. The receiver knows its own private
key, and with the help of the private key receiver converts the cipher text into
readable format i.e. plain text.
The below example shows the working of public-key cryptography.

Let us try to under the working of public-key cryptography with an example. Suppose
Sachin is the sender who wants to send a message to Anurag. Here Anurag is the receiver.
 Sachin uses Anurag’s public key to encrypt the message and Anurag uses his
own private key to decrypt the message.
 First Sachin creates plain text. Sachin has access to Anurag’s private key and
cipher text. Using Anurag’s public key and his own public key,
 Sachin will generate an encrypted message i.e. cipher text which is in an
unreadable format. After applying the encryption process plain text converts into
cipher text.
 Now, Anurag receives a cipher text. First Anurag will decrypt the cipher text
message into a readable format. For decrypting Anurag will use the private key.
Now cipher text converts into plain text and is readable by the receiver. Because
Sachin keeps his private key, Anurag knows that this message couldn’t have
come from anyone else. This is also called a digital signature.

Benefits of Public-key Cryptography

  Authentication: It ensures to the receiver that the data received has been sent by
the only verified sender.
 Data integrity: It ensures that the information and program are changed only in
a specific and authorized manner.
 Data confidentiality: It ensures that private message is not made available to an
unauthorized user. It is referred to as privacy or secrecy.
 Non-repudiation: It is an assurance that the original creator of the data cannot
deny the transmission of the said data to a third party.
 Key management: Public-key cryptography allows for secure key management,
as the private keys are never transmitted or shared. This eliminates the need for a
secure channel to transmit the private key, as is required in symmetric key
cryptography.
 Digital signatures: Public-key cryptography allows for the creation of digital
signatures, which provide non-repudiation and can be used to verify the
authenticity and integrity of data.
 Key exchange: Public-key cryptography enables secure key exchange between
two parties, without the need for a pre-shared secret key. This allows for secure
communication even if the parties have never communicated before.
 Secure communication: Public-key cryptography enables secure
communication over an insecure channel, such as the internet, by encrypting the
data with the public key of the recipient, which can only be decrypted by the
recipient’s private key.
 Versatility: Public-key cryptography can be used for a variety of purposes, such
as secure communication, digital signatures, and authentication, making it a
versatile tool for securing data and communications.

Limitation of Public-Key Cryptography

 One can encrypt and decrypt the fixed size of messages or data. If there is an
attempt to encrypt or decrypt a large size of the message then the algorithm
demands high computational power.
 The main disadvantage of this algorithm is that if the receiver losses its private
key then data/message will be lost forever.
 If someone has access private key then all data will be in the wrong hand.
 There are many secret-key which is faster than public-key cryptography.
 Key distribution: The process of securely distributing public keys to all
authorized parties can be difficult and time-consuming, especially in large
networks.
 Performance: Public-key cryptography is generally slower than symmetric-key
cryptography due to its more complex algorithms, making it less suitable for
applications that require fast processing speeds.
 Security assumptions: Public-key cryptography relies on mathematical
assumptions about the difficulty of certain problems, such as factoring large
numbers, which may not hold true in the future. As a result, public-key
cryptography is vulnerable to future advancements in computing power and
algorithmic breakthroughs.
 Susceptibility to man-in-the-middle attacks: Public-key cryptography is
vulnerable to man-in-the-middle attacks where an attacker intercepts and alters
 the public key before it reaches the intended recipient. This can result in the
attacker being able to decrypt the message or impersonate the sender.
 Complexity: Public-key cryptography can be more complex to understand and
implement than symmetric-key cryptography, requiring specialized knowledge
and expertise.

 Difference between Public and Private blockchain :

Basis of Public BlockChain
S.no Comparison Private BlockChain
In this type of blockchain anyone In this type of blockchain
can read, write and participate in a read and write is done
blockchain. Hence, it is upon invitation, hence it
permissionless blockchain. It is is a permissioned
1. Access – public to everyone. blockchain.
Network
2. Actors – Don’t know each other Know each other
Decentralized
Vs Centralized A public blockchain is A private blockchain is
3. – decentralized. more centralized.
The order of magnitude of a public
blockchain is lesser than that of a
private blockchain as it is lighter The order of magnitude
Order Of and provides transactional is more as compared to
4. Magnitude – throughput. the public blockchain.
Native Token
5. – Yes Not necessary
6. Speed – Slow Fast
Transaction per second is
Transactions Transactions per second are lesser more as compared to
7. pre second – in a public blockchain. public blockchain.
A private blockchain is
A public network is more secure more prone to hacks,
due to decentralization and active risks, and data breaches/
participation. Due to the higher manipulation. It is easy
number of nodes in the network, it for bad actors to
is nearly impossible for ‘bad actors’ endanger the entire
to attack the system and gain network. Hence, it is less
8. Security – control over the consensus network. secure.
9. Energy A public blockchain consumes more Private blockchains
Consumption energy than a private blockchain as consume a lot less energy
– it requires a significant amount of and power.
electrical resources to function and
 achieve network consensus.
Proof of Elapsed Time
(PoET), Raft, and
Some are proof of work, proof of Istanbul BFT can be used
Consensus stake, proof of burn, proof of space only in case of private
10. algorithms – etc. blockchains.
In a public blockchain, no one In a private blockchain,
knows who each validator is and there is no chance of
this increases the risk of potential minor collision. Each
collision or a 51% attack (a group validator is known and
of miners which control more than they have the suitable
50% of the network’s computing credentials to be a part of
11. Attacks – power.). the network.
Potential to disrupt current Reduces transaction cost
business models through and data redundancies
disintermediation. There is lower and replace legacy
infrastructure cost. No need to systems, simplifying
maintain servers or system admins documents handling and
radically. Hence reducing the cost getting rid of semi
of creating and running manual compliance
12. Effects – decentralized application (dApps). mechanisms.
R3 (Banks), EWF
Bitcoin, Ethereum, Monero, Zcash, (Energy), B3i
13. Examples – Dash, Litecoin, Stellar, Steemit etc. (Insurance), Corda.

HASH PUZZLES:-
An algorithm that transforms a given amount of data (the "message") into a fixed number of
digits, known as the "hash," "digest" or "digital fingerprint." Hash functions are a
fundamental component in digital signatures, password security, random number generation,
message authentication and blockchains. A hash can also be used to avoid the risk of storing
passwords on servers that could be compromised (see zero proof example). See RSA and
hashing.

One-Way Processing
Also called a "one-way hash function" because it is nearly impossible to turn the digest back
into the original data. It is also exceedingly rare that two different inputs can result in the
same output.

Blockchain Integrity
This one-way processing guarantees that existing blockchain crypto balances and smart
contract program code cannot be altered. All transactions in a block are hashed into the
subsequent block creating a chained linkage, and any alteration to an existing block breaks
the chain (for details, see blockchain). See Merkle tree, HMAC, digital
signature, MD5 and hash.

Solve the Bitcoin Puzzle by Hashing

As transactions are combined in a block by Bitcoin miners, they must solve a mathematical
puzzle to prove they did work (see illustration below). The first to do so earns the right to add
the new block to the blockchain and collect the fees and new coins. This proof-of-work
(PoW) system is also used by Ethereum (see Ethash); however, that is changing
(see Ethereum 2.0).

With specialized hardware executing trillions of hash computations per second, it can take a
single machine years to come up with the required hash, which is why mining pools use
hundreds of machines (see miner hardware). So much hash processing takes place mining
Bitcoin worldwide that the electricity used could power a small country (see proof-of-work
algorithm and hash rate). See crypto mining.

Hashes Are Fixed in Size

The hash value guarantees only that it is mathematically equal to the data it has hashed. If the
data are changed in any way, that same hash cannot be generated. No matter how large or
small the input, the hash output is fixed; for example, Bitcoin hashes are 256 bits long.
See SHA.
Solving the Bitcoin Puzzle
The puzzle is finding the random number that, when added to the block's header, generates a
hash with some number of leading zeros. Trying a new number trillions of times per second,
the miner algorithm attempts to find the one that generates the desired results.

AntPool Wins Block 753673

The Bitaps website shows new Bitcoin blocks in real time. Notice the 19 leading zeros, which
was the difficulty level at 17:38 UTC on 9-11-2022. The number of zeros is adjusted every
2,016 blocks to keep transactions flowing at one new block approximately every 10 minutes.

EXTENSIBILITY OF BLOCK CHAIN CONCEPTS:-

Extensibility refers to the ability of a system to adapt and evolve over time.
The extensibility of blockchain technology allows for the development of new use cases

beyond its original intent. Extensibility is a critical factor in the ongoing success of blockchain

technology.

Blockchain technology has a vast range of potential use cases, from supply chain management

to identity verification to voting systems. The extensibility of blockchain technology allows

for the creation of new use cases that were previously impossible. The potential use cases for

blockchain technology continue to expand as the technology evolves.

It is necessary to understand the new ideas separately and together.

Blockchain Technology concepts include public-key and private-key cryptography, peer-to

peer file sharing, distributed computing, network models, pseudonymity, blockchain ledgers,

cryptocurrency protocols, and cryptocurrency.

It is a required to understand these concepts in order to operate in the blockchain technology

environment. When you understand the concepts involved, it is not only possible to innovate

blockchain-related solutions, but further, the concepts are portable to other contexts.

This extensibility of blockchain-related concepts may be the source of the greatest impact of

blockchain technology as human agents understand these concepts and deploy them in every

venue they can imagine.

One broad way of thinking about the use of blockchain concepts is applying them beyond the

original context. The extensibility of blockchain technology allows for the creation of new use

cases and the evolution of existing ones.

However, there are significant challenges to be addressed, including scalability, privacy,

governance, and sustainability.

As blockchain technology continues to evolve, its potential use cases will continue to expand.

Some of the challenges to be addressed are

1. Smart Contracts

2. Interoperability

3. Scalability

4. Privacy

5. Governance

6. Sustainability

Smart Contracts:

Smart contracts are self-executing contracts with the terms of the agreement between buyer

and seller being directly written into lines of code.

Smart contracts are a key innovation in blockchain technology, enabling the automation of

complex processes.

Smart contracts have the potential to transform many industries, including financial services,

real estate, and supply chain management.

Scalability

Scalability refers to the ability of a system to handle increasing amounts of work without

impacting performance.

Scalability is a significant challenge for blockchain technology, which currently struggles with

slow transaction processing and high fees.

Several solutions are being developed to address scalability, including sharding, layer 2

solutions, and blockchain interoperability.

Interoperability

Interoperability refers to the ability of different blockchain networks to communicate and

work together seamlessly.

Interoperability is critical for the widespread adoption of blockchain technology.

Several projects are underway to develop interoperability solutions, including Polkadot,

Cosmos, and Ark.

Privacy

Privacy is a critical concern for many blockchain use cases, particularly those involving

sensitive data.

Several privacy-focused blockchain projects, such as Monero and Zcash, have emerged to

address this issue.

Privacy-enhancing technologies, such as zero-knowledge proofs, are also being developed to

improve privacy on public blockchains.

Governance

Governance refers to the systems and processes in place to manage and regulate a blockchain

network.
Effective governance is essential for the ongoing success of blockchain projects.

Several governance models exist, including on-chain governance, off-chain governance, and

hybrid models.

Sustainability:

Sustainability refers to the ability of a blockchain network to operate over the long term.

Blockchain networks require significant computing power and energy consumption, which can

be a barrier to sustainability.

Several projects are exploring alternative consensus mechanisms, such as proof of stake, to

improve sustainability.

Some of the use cases are

1. Financial Services

2. Supply chain Management

 3. Health Care

4. Identity Management

5. Voting Systems

Financial Services

Blockchain technology has the potential to transform the financial services industry by

enabling faster, more secure, and more efficient transactions.

Use cases for blockchain in financial services include cross-border payments, trade finance,

and digital identity.

Several blockchain projects are focused on financial services, including Ripple, Stellar, and

Corda.

Supply Chain Management

Blockchain technology can improve supply chain management by increasing transparency and

traceability, reducing fraud and counterfeiting, and improving efficiency.

Use cases for blockchain in supply chain management include tracking the origin and

movement of goods, verifying product authenticity, and reducing waste.

Several blockchain projects are focused on supply chain management, including VeChain,

Waltonchain, and Ambrosus.

DIGTIAL IDENTITY VERIFICATION:-

At Dock, we built our own digital identity blockchain because it was:

 Faster: Other blockchain options were congested and took a long time to finalize
transactions
 Most cost-effective: There weren’t many good solutions at the time for making
transactions
 Customization: Our public, permissionless blockchain is built specifically for
decentralized identity use cases to better accommodate customers
 Precedence: We're a first class application on our own chain in contrast to other
chains where we would run the risk of being preempted by other work

The Dock blockchain serves as a foundation of trust by keeping an authentic record of all
verifiable DIDs, public cryptography keys, and invalidation registries.

Verifiable Credentials that are issued are stored outside of the chain, usually in a holder's
digital wallet app, along with its corresponding cryptographic key pairs. To ensure data
privacy, the only data entered on the Dock chain are the issuer's and holder's DIDs,
Credential Schema (its "template"), and Revocation Registries.

Digital Identity Blockchain Examples

These are just a few of many examples of how Dock’s digital identity blockchain can be
leveraged in various industries:

 Secure identity verification: Digital identity systems leveraging blockchain can

instantly and securely verify the identity and credentials of individuals for various
purposes, such as opening bank accounts, or accessing government services.
Blockchain-based identity verification provides enhanced security as it eliminates the
need for centralized third-party verification services and prevents identity fraud and
theft.
 Healthcare Records: Patients can create and manage their own digital identity while
healthcare providers can securely verify patient records and medical histories. This
can result in providing better care while also ensuring data privacy and security.
 Supply Chain Management: Blockchain-based digital identities can be used to track
and manage supply chain information, providing greater transparency and security.
By creating digital identities for products, supply chain managers can track the
movement of goods across the supply chain, ensuring product authenticity and
preventing counterfeiting and fraud.

Digital Identity Blockchain Projects

These are just a few of a growing number of organizations using Dock’s technology for
digital identity blockchain projects:

 Gravity eliminates Health & Safety certificate fraud with Dock (South Africa)
 SEVENmile issues fraud-proof verifiable certificates using Dock (Australia)
 BurstIQ Makes Health Data Verifiable, Secure, and Portable With Dock (USA)
BLOCK CHAIN NEUTRALITY :-
Blockchain technology is transforming how markets work.
Blockchains eliminate the need for trusted gatekeepers like
banks to execute, verify, and record transactions. In the
financial markets, their disruptive potential threatens both
Wall Street banks and Silicon Valley venture capitalists. How
blockchain technology is regulated will determine whether it
encourages or inhibits competition. Some blockchain
applications present serious fraud and systemic risks,
complicating regulation. This Article explores the antitrust and
competition policy challenges blockchain presents and proposes
a regulatory strategy, modeled on Internet regulation and net
neutrality principles, to unlock blockchain’s competitive
potential. It contends that financial regulators should promote
blockchain competition—and the resulting market
decentralization—except in cases where specific applications
are shown to harm consumers or threaten systemic safety.
Regulators also should ensure open access and non-
discrimination on dominant blockchain networks. This
approach will not only serve traditional antitrust goals of
lowering prices and promoting innovation, but it also might
achieve broader economic and social reform by reducing the
power and influence of the biggest financial institutions.
DIGITAL ART :-
When talking about digital environments and art, the issue of authenticity and uniqueness
of each work can arise. Creators and buyers of art and collectors of all kinds of digital
assets have the same concerns: is this work authentic, is it unique, are there copies of a
given digital work.

Digital art and millionaire collecting

And the sum of money that this new artistic current moves is not small. In 2021 the news
broke: Beeple, a digital artist, became world famous when his work ‘Everydays – The First
5000 Days’ sold for 57 million euros. At the time, it became the third most expensive work
of art ever auctioned by Christie’s by a living artist.
Not all digital works have such an impact, but this milestone put this field on the map. The
buyers of these pieces are consumers who are very familiar with cryptocurrencies and can
start to get their hands on a collection of interesting pieces for much less than what
Beeple’s work cost. From around €600 it is possible to find interesting works, without the
need to join more conventional and perhaps more elitist art and collecting circuits.
Precisely following this alliance of crypto-art and blockchain, in 2022, Telefónica
launched a collection of 114 NFTs associated with a series of 114 unique drawings in
digital format made by the chef Ferran Adrià, depicting the history of culinary evolution.

BLOCK CHAIN ENVIRONMENT :-

Blockchain technology has scaled rapidly in the last several years and is projected to
expand to an even larger market across industries and countries. It is shaking up the global
financial system, but environmental concerns risk stifling innovation. Potential regulatory
action by governments concerned with the energy impact of blockchain activity is another
reason to focus on sustainability.
In response, blockchain participants are considering environmental, social and governance
(ESG) issues in their efforts to innovate. For example, Ethereum, the blockchain platform and
the second largest cryptocurrency by market capitalization, Ether (ETH), is transitioning its
consensus mechanism from proof-of-work to proof-of-stake in an effort known as "The
Merge". One of the main drivers behind The Merge is the ability to measurably reduce
energy consumption, indicating the urgency with which developers are factoring in their
environmental impact.

To help navigate this complex landscape, PwC has developed a first-of-its-kind assessment
framework that allows organizations to evaluate their environmental footprint as they look to
take advantage of this emerging technology.

Breaking down blockchain technology

Blockchain is a distributed ledger technology that maintains

data through a peer-to-peer network of computers. Although it was originally
developed to facilitate cryptocurrency transactions, blockchain has expanded to other
capabilities. From verifying ownership of digital assets like NFTs to tracking items in a
supply chain, its versatility can drive innovation and support business transformation.
Blockchain provides an opportunity for organizations to build trust through its decentralized,
secure and transparent features, but its reputation as a threat to climate goals remains an
obstacle.

The E in ESG: blockchain’s environmental impact

A closer look reveals that not all blockchain protocols are the same and may have different
purposes and varying levels of environmental impact.
A key component of these protocols is the consensus mechanism, which is the defined
approach to validate transactions and prevent malicious activity. Each consensus mechanism
has advantages and disadvantages regarding decentralization, security and scalability, and
adjustments to these trade-offs can unlock opportunities to make the respective blockchain
more sustainable.

A thorough analysis of blockchain protocols can inform the decisions of regulators, users and
the market as this technology continues to grow. Blockchain has significant potential
to support sustainability, and it may prove to be a valuable tool to help companies advance
environmental aspects of their ESG goals.