Volume 10, Issue 3, March – 2025 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/25mar637

Digital Money Transaction using

Blockchain in Python
Mohanapriya M.1; Eswarapasadh S.2; Dinu Karthik P.3; Franklin Jack R.4
1,2,3,4
Department of Computer Science and Engineering, SRM Valliammai Engineering College

Publication Date: 2025/03/27

Abstract: The evolution of digital transactions has revolutionized financial systems, leading to more secure and efficient payment
methods. Blockchain technology ensures decentralized, immutable, and transparent transactions, eliminating the need for
intermediaries. This study explores a Python-based implementation of digital money transactions using blockchain,
demonstrating the efficiency, security, and reliability of the system. The proposed model is implemented using Flask, Hashlib,
and JSON for transaction validation and block verification. The experimental results highlight the effectiveness of blockchain
in preventing double-spending and fraud.

The project "Digital Money Transaction Using Blockchain" aims to develop a secure, transparent, and decentralized
system for digital financial transactions using blockchain technology. The solution leverages Python's versatility to implement
a blockchain that ensures immutability, transparency, and real-time verification of transactions.

This project highlights the potential of blockchain to revolutionize digital finance by providing a secure and reliable
infrastructure for transactions, minimizing intermediary costs, and fostering trust in financial systems.

Keywords: Blockchain, Digital Transactions, Cryptocurrency, Decentralized Ledger, Python.

How to Cite: Mohanapriya M.; Eswarapasadh S.; Dinu Karthik P.; Franklin Jack R. (2025). Digital Money Transaction using
Blockchain in Python. International Journal of Innovative Science and Research Technology,
10(3), 1120-1124. https://doi.org/10.38124/ijisrt/25mar637.

I. INTRODUCTION validation.
 Slow Processing – Transactions, especially crossborder
The digital economy has significantly shifted towards ones, can take days to settle.
cashless transactions, demanding high security, transparency,  Lack of Transparency – Users lack visibility into transaction
and trust. Traditional banking systems rely on centralized processing.
authorities, making them susceptible to fraud, manipulation,  Fraud Risks – Centralized systems are frequent targets of
and failures. Blockchain technology provides a decentralized financial fraud and data breaches.
approach to digital transactions, ensuring trust through
cryptographic mechanisms. This paper presents a blockchain- B. Proposed System
based digital transaction system implemented in Python, The proposed system implements a decentralized
demonstrating its benefits in securing financial transactions. blockchain-based digital transaction platform using Python.
This model overcomes the limitations of traditional systems by
A. Existing System ensuring:
In traditional digital transaction systems, financial
institutions serve as intermediaries, leading to inefficiencies,  Decentralization – Eliminates intermediaries, allowing
high transaction costs, fraud risks, and lack of transparency. direct peer-to-peer transactions.
These centralized systems suffer from:  Security – Uses cryptographic hashing (SHA- 256) and
digital signatures for authentication.
 Single Point of Failure – Banks and payment gateways are  Transparency – All transactions are recorded in a public
vulnerable to cyber-attacks and service disruptions. ledger, making tampering nearly impossible.
 High Costs – Intermediaries impose fees for processing and  Efficiency – Transactions are validated in

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Volume 10, Issue 3, March – 2025 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/25mar637

 realtime, reducing processing time and costs. for small-scale financial applications and decentralized
 Scalability – The system can accommodate increasing payment systems.
transaction volumes using consensus mechanisms like
Proof-of-Work (PoW) or Proofof-Stake (PoS). III. PROPOSED MODEL

II. RELATED WORK The proposed blockchain model ensures secure,

transparent, and tamper-proof transactions using Python. By
Numerous studies have explored blockchain applications leveraging blockchain technology, this system offers an
in finance and digital transactions, highlighting its potential to efficient and decentralized approach to financial transactions,
transform the financial ecosystem. eliminating the need for intermediaries while ensuring high
security. Unlike traditional financial systems that depend on
 Satoshi Nakamoto (2008): Nakamoto introduced Bitcoin as centralized control, blockchain operates as a distributed ledger,
the first decentralized cryptocurrency, demonstrating how where every transaction is verified and permanently recorded in
blockchain could enable peer-to-peer electronic cash an immutable manner.
transactions without the need for a central authority.
Bitcoin's blockchain-based system ensures transparency, A. Components of the Blockchain System
security, and immutability, making it an innovative solution
for financial transactions. This foundational work laid the  Block Structure:
groundwork for future advancements in blockchain
technology.  Each block contains transaction details, a timestamp, a hash,
 Vitalik Buterin (2013): Buterin developed Ethereum, which and the hash of the previous block. This ensures that all
expanded the capabilities of blockchain by introducing  blocks are cryptographically linked, preventing tampering.
smart contracts. Unlike Bitcoin, which primarily serves as a  The structure of the block also includes a nonce, a variable
digital currency, Ethereum enables programmable contracts that plays a crucial role in mining new blocks.
that execute automatically when predefined conditions are  Once a block is added to the blockchain, it is immutable,
met. This innovation has enabled the development of ensuring security and trust among participants.
decentralized applications (DApps) in various industries,  A merkle tree is often used within blocks to efficiently
including finance, healthcare, and supply chain manage and verify transactions.
management.
 Recent Studies: In recent years, researchers have focused on  Proof of Work (PoW):
enhancing blockchain's scalability, transaction speeds, and
privacy features. Many studies explore how to improve  A consensus mechanism that ensures security by solving
consensus mechanisms, such as transitioning from cryptographic puzzles, making it computationally expensive
energyintensive Proof-of-Work (PoW) to more sustainable for malicious actors to alter the blockchain.
alternatives like Proof-of-Stake (PoS) and Delegated Proof-  Miners must solve complex mathematical problems to find a
of-Stake (DPoS). valid hash for the block, ensuring that only legitimate
transactions are added.
Additionally, innovations like sharding, layer- two scaling  This process creates an incentive mechanism where miners
solutions, and privacy-preserving techniques such as Zero- are rewarded with cryptocurrency for successfully adding
Knowledge Proofs (ZKP) aim to address blockchain's existing new blocks.
limitations.  While PoW is secure, it is also energy intensive; alternative
consensus mechanisms such as Proof of Stake (PoS) are
While these studies demonstrate blockchain's being explored for efficiency improvements.
transformative potential, they primarily focus on largescale
applications and theoretical advancements. This study,  Transaction Verification:
however, emphasizes a Python-based implementation
specifically designed for secure digital transactions. By
 A distributed ledger ensures the legitimacy of transactions
developing a lightweight, accessible, and efficient blockchain
by requiring multiple nodes in the network to validate them
model in Python, this research aims to bridge the gap between
before they are permanently recorded.
theoretical blockchain frameworks and practical real-world
 Transactions undergo cryptographic validation using digital
applications. The implementation showcases how Python
signatures and public-private key encryption.
libraries such as Flask, Hashlib, and JSON can be utilized to
create a functional blockchain system that ensures security,  Once a transaction is verified, it is grouped with other
transparency, and efficiency. Furthermore, the study evaluates transactions in a block, ensuring security and order.
the performance of this Python-based blockchain model in  Verification prevents double-spending, where users attempt
handling digital transactions, offering insights into its feasibility to spend the same digital asset multiple times.

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Volume 10, Issue 3, March – 2025 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/25mar637

 Every block’s hash is based on the content of the block and

 Mining and Block Addition: the hash of the previous block, making tampering nearly
impossible.
 A node in the network validates transactions, groups them  Cryptographic hashing ensures that even a minor change in
into a block, and attempts to mine the block by solving the transaction data will result in a completely different hash,
cryptographic puzzle. alerting the system to any potential manipulation attempts.
 Once the mining process is completed, the new block is  Hashing also plays a role in validating transactions, ensuring
appended to the blockchain, linking it to the previous block. that they are securely stored and transferred within the
 The mining process ensures network security by preventing blockchain.
unauthorized modifications to the transaction history.
 Each new block undergoes verification by multiple network  Mining and Consensus Mechanism:
participants to maintain decentralization and prevent
fraudulent activity.  Transactions are added to a block, and miners compete to
solve the cryptographic puzzle required for block validation.
B. Implementation Steps  Once a miner finds a valid solution, the block is added to the
blockchain and other nodes verify its authenticity.
 Blockchain Creation:  Consensus mechanisms such as PoW ensure that the longest
valid chain is considered the true record of transactions.
 The blockchain is created using Python’s Flask framework,  Future iterations may explore PoS as an alternative to reduce
providing a lightweight and efficient web-based blockchain the environmental impact of mining while maintaining
solution. security and efficiency.
 Flask allows for easy API development, enabling interaction
with the blockchain via HTTP requests.  Transaction Broadcasting:
 The blockchain class defines the core functions, including
creating blocks, managing transactions, and ensuring block  Peer-to-peer (P2P) validation enables transactions to be
integrity. broadcast across multiple nodes for verification.
 Each block is structured to store transaction data, a  Once verified, transactions are stored in a block and linked
timestamp, a hash of the previous block, and a proof-of- to the blockchain, ensuring transparency and security.
work solution.  P2P communication eliminates reliance on a central
authority, allowing for a more decentralized and resilient
 Cryptographic Hashing: financial system.
 Broadcasting also ensures redundancy, making it difficult
 SHA-256 hashing is used to ensure data integrity by for malicious actors to alter transaction history without
generating unique digital fingerprints for each transaction. detection.

Fig 1: How Block Chain Works

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Volume 10, Issue 3, March – 2025 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/25mar637

By following these implementation steps, the proposed regulate digital transactions on blockchain networks. Issues
blockchain system ensures secure and efficient digital such as taxation, compliance, anti-money laundering
transactions. The decentralized nature of blockchain enhances (AML) policies, and fraud detection require further
transparency, reduces fraud risks, and minimizes transaction refinement to align blockchain with existing financial
costs, making it a viable alternative to traditional financial regulations.
systems. This study aims to provide a scalable and practical  Moreover, user adoption and technological barriers must be
implementation of blockchain using Python, contributing to the considered. Many individuals and businesses are unfamiliar
growing adoption of decentralized financial solutions with blockchain technology, and its complexity can deter
widespread adoption. Education, awareness, and user-
IV. DISCUSSION friendly interfaces are essential for ensuring that
blockchain-based financial systems are accessible to a
 The implementation of blockchain technology for digital broader audience.
money transactions offers several benefits and challenges.  In conclusion, while blockchain technology offers
One of the primary advantages of blockchain is its significant benefits in securing and streamlining digital
decentralized nature, which eliminates the need for transactions, challenges related to scalability, energy
intermediaries, thereby reducing transaction costs and efficiency, regulatory compliance, and adoption must be
improving efficiency. Unlike traditional banking systems, addressed. This study demonstrates that a Python-based
which often require multiple verification steps, blockchain blockchain implementation can provide a robust foundation
transactions can be validated and recorded within seconds or for secure digital money transactions, but further
minutes, enhancing the overall user experience. advancements are necessary to enhance efficiency and
Furthermore, the transparency provided by the blockchain practicality. Future research should focus on optimizing
ledger ensures that all transactions are publicly verifiable, transaction speeds, reducing energy consumption, and
reducing fraud risks and enhancing trust in financial integrating privacy-enhancing technologies to ensure
exchanges. blockchain remains a viable and sustainable solution for
 Another critical benefit is the security of blockchain digital financial transactions.
transactions. The use of cryptographic hashing and
decentralized validation mechanisms ensures that once a  Transaction time: ~0.5s per transaction.
transaction is recorded, it cannot be altered or deleted. This  Block generation time: ~10s per block.
immutability protects against data tampering, unauthorized  Security: No double-spending detected.
access, and cyber-attacks. Additionally, blockchain
enhances financial inclusion by allowing individuals who do  Challenges and Limitations
not have access to traditional banking services to participate
in digital transactions through decentralized networks. This  Computational Costs – High energy consumption in Proof-
is particularly beneficial for developing countries, where of-Work.
banking infrastructure is limited.  Storage Constraints – Large block sizes require significant
 Despite these advantages, blockchain technology faces storage.
several challenges that must be addressed for widespread  Network Latency – Synchronization delays in distributed
adoption. One of the most significant challenges is environments.
scalability. As the number of transactions increases, the size
of the blockchain grows, leading to slower processing times V. CONCLUSION
and higher storage requirements. Solutions such as layer-
two protocols, sharding, and improved consensus The project on Digital Money Transactions Using
mechanisms are being developed to address these issues, but Blockchain in Python demonstrates the transformative potential
further research is needed to make blockchain more scalable of blockchain technology in revolutionizing digital financial
and efficient. systems. Blockchain, as a decentralized ledger technology,
 Another major concern is energy consumption. Blockchain ensures secure, transparent, and tamper-proof transactions
networks that rely on Proof of Work (PoW) require without relying on a centralized authority. This project serves as
substantial computational power to validate transactions, a practical implementation of these principles, providing
leading to high electricity usage. While alternative insights into the core functionalities and advantages of
consensus mechanisms like Proof of Stake (PoS) and blockchain for digital money transactions. One of the primary
Delegated Proof of Stake (DPoS) offer more energy- achievements of this project is the successful creation of a
efficient solutions, they must be thoroughly tested and blockchain structure in Python. Each block in the chain contains
optimized before replacing existing systems. a set of transactions, a timestamp, and a cryptographic hash that
 Regulatory and legal challenges also present hurdles to links it to the previous block, ensuring data integrity. The
blockchain adoption. Governments and financial inclusion of proof-of-work consensus further enhances security
institutions are still developing policies and frameworks to by making it computationally expensive to alter transaction
data.

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ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/25mar637

Additionally, cryptographic techniques such as hashing [8]. IBM Blockchain Platform: o IBM Blockchain Resources
and digital signatures safeguard user identities and prevent Guides and tools for deploying block chain based
fraudulent activities. The project also emphasizes transparency solutions.
and trust, as all transactions recorded on the blockchain are [9]. Blockchain APIs: o Blockchain.com API Offers APIs for
accessible to authorized participants. This feature is especially integrating blockchain functionality into 67
relevant in financial systems, where accountability and applications.
traceability are critical. By eliminating the need for
intermediaries, the blockchain reduces transaction costs and  Online Courses
processing times, offering a more efficient alternative to
traditional banking systems. 64 Despite its success, the project [10]. Coursera: Blockchain Specialization by the University of
reveals certain challenges and limitations. Scalability remains a Buffalo o A series of courses focusing on blockchain
concern as the blockchain grows in size, which could affect technology, cryptocurrencies, and smart contracts.
processing speeds and storage requirements. Additionally, [11]. Udemy: Blockchain and Cryptocurrency Explained in
while Python is an excellent language for prototyping, Python o A practical course on building blockchain and
optimizing the block chain for real world applications may cryptocurrency projects with Python.
require more advanced tools and frameworks. In conclusion, [12]. edX: Blockchain for Business by The Linux Foundation
this project highlights blockchain’s immense potential in digital o Covers blockchain applications and frameworks like
money transactions and provides a stepping stone for further Hyperledger.8
exploration. Future enhancements could include implementing
smart contracts, exploring more efficient consensus  Frameworks and Libraries
mechanisms like Proof-of-Stake, and integrating the blockchain
with real-world applications. By building on this foundation, [13]. Python Libraries for Blockchain: o Flask: To build APIs
blockchain technology can pave the way for secure, for blockchain transactions. o Hashlib: For hashing
decentralized, and userfriendly financial systems, algorithms. o Cryptography: For digital signatures and
fundamentally transforming the way we handle digital encryption. o JSON: To manage and store blockchain
transactions. data.
[14]. Tools for Testing and Deployment: o Ganache: For local
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[3]. "Blockchain Basics" by Daniel Drescher o An excellent
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Blockchain in Python Step-by-step tutorials on creating
a basic blockchain using Python.
[7]. Blockchain for Developers: o Ethereum Developer
Documentation Official documentation for building
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