BLOCKCHAIN TECHNOLOGY LECTURE NOES

UNIT-1

BLOCKCHAIN OR DISTRIBUTED TRUST:

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

transactions and tracking assets in a business network. An asset can be tangible (a house,
car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually
anything of value can be tracked and traded on a blockchain network, reducing risk and
cutting costs for all involved.

Why blockchain is important: Business runs on information. The faster it’s received and the
more accurate it is, the better. Blockchain is ideal for delivering that information because it
provides immediate, shared and completely transparent information stored on an
immutable ledger that can be accessed only by permissioned network members. 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, as well as new efficiencies and opportunities.
Key elements of a blockchain
Distributed ledger technology
All network participants have access to the distributed ledger and its immutable record of
transactions. With this shared ledger, transactions are recorded only once, eliminating the
duplication of effort that’s typical of traditional business networks.
Immutable records
No participant can change or tamper with a transaction after it’s been recorded to the
shared ledger. If a transaction record includes an error, a new transaction must be added to
reverse the error, and both transactions are then visible.
Smart contracts
To speed transactions, a set of rules — called a smart contract — is stored on the blockchain
and executed automatically. A smart contract can define conditions for corporate bond
transfers, include terms for travel insurance to be paid and much more.
How blockchain works
As each transaction occurs, it is recorded as a “block” of data
Those transactions show the movement of an asset that can be tangible (a product) or
intangible (intellectual). The data block can record the information of your choice: who,
what, when, where, how much and even the condition — such as the temperature of a food
shipment.
Each block is connected to the ones before and after it
These blocks form a chain of data as an asset moves from place to place or ownership
changes hands. The blocks confirm the exact time and sequence of transactions, and the
blocks link securely together to prevent any block from being altered or a block being
inserted between two existing blocks.
Transactions are blocked together in an irreversible chain: a blockchain
Each additional block strengthens the verification of the previous block and hence the entire
blockchain. This renders the blockchain tamper-evident, delivering the key strength of
immutability. This removes the possibility of tampering by a malicious actor — and builds a
ledger of transactions you and other network members can trust.
Benefits of blockchain
What needs to change: Operations often waste effort on duplicate record keeping and third-
party validations. Record-keeping systems can be vulnerable to fraud and cyberattacks.
Limited transparency can slow data verification. And with the arrival of IoT, transaction
volumes have exploded. All of this slows business, drains the bottom line — and means we
need a better way. Enter blockchain.
Greater trust
With blockchain, as a member of a members-only network, you can rest assured that you
are receiving accurate and timely data, and that your confidential blockchain records will be
shared only with network members to whom you have specifically granted access.
Greater security
Consensus on data accuracy is required from all network members, and all validated
transactions are immutable because they are recorded permanently. No one, not even a
system administrator, can delete a transaction.
More efficiencies
With a distributed ledger that is shared among members of a network, time-wasting record
reconciliations are eliminated. And to speed transactions, a set of rules — called a smart
contract — can be stored on the blockchain and executed automatically.

Types of blockchain networks

There are several ways to build a blockchain network. They can be public, private,
permissioned or built by a consortium.
Public blockchain networks
A public blockchain is one that anyone can join and participate in, such as Bitcoin.
Drawbacks might include substantial computational power required, little or no privacy for
transactions, and weak security. These are important considerations for enterprise use
cases of blockchain.
Private blockchain networks
A private blockchain network, similar to a public blockchain network, is a decentralized
peer-to-peer network. However, one organization governs the network, controlling who is
allowed to participate, execute a consensus protocol and maintain the shared ledger.
Depending on the use case, this can significantly boost trust and confidence between
participants. A private blockchain can be run behind a corporate firewall and even be hosted
on premises.
Permissioned blockchain networks
Businesses who set up a private blockchain will generally set up a permissioned blockchain
network. It is important to note that public blockchain networks can also be permissioned.
This places restrictions on who is allowed to participate in the network and in what
transactions. Participants need to obtain an invitation or permission to join.
Consortium blockchains
Multiple organizations can share the responsibilities of maintaining a blockchain. These pre-
selected organizations determine who may submit transactions or access the data. A
consortium blockchain is ideal for business when all participants need to be
permissioned and have a shared responsibility for the blockchain.
Blockchain security
Risk management systems for blockchain networks
When building an enterprise blockchain application, it’s important to have a comprehensive
security strategy that uses cybersecurity frameworks, assurance services and best practices
to reduce risks against attacks and fraud.

DISTRIBUTED TRUST:
Trust is an unstable equilibrium. When two people trust each other, it only takes one of
them to have doubts for the other to also start doubting. The result is that the parties
descend into a state of mutual mistrust, a sentiment that is much less precariously balanced.
It therefore takes energy to retain trust; yet it takes information to facilitate this energy. One
of our era’s most violent breaks with established models concerns the source of this energy.
France follows a model whereby energy is externalised: it is the nation’s judges, teachers,
managers, parents, and so on, who are responsible for driving this energy. In the Anglo-
Saxon model, the energy comes from both parties (or from the community, when there are
several people involved). When eBay was created, it was not the only online auction and
shopping website, but it invented the concept of buyers and sellers rating each other, a
scoring feature that can now be found on all community sites such as Airbnb, BlaBlaCar,
and so. What eBay understood is that trust could only be created by the community itself
and not by the presence of third parties, which in its case would have meant expert
auctioneers.
CURRENCY:

Currency serves as a means of exchanging commodities and services. Money in the form of
paper or coins, issued by a government and accepted at face value, is known as currency.

In bartering, goods and services were exchanged directly for other goods and services .
Currency has replaced bartering as the primary means of exchanging goods and services in
themodernworld.

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.
The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best
known today. Much of the interest in cryptocurrencies is to trade for profit, with speculators
at times driving prices skyward.
How does cryptocurrency work?

Cryptocurrencies run on a distributed public ledger called blockchain, a record of all

transactions updated and held by currency holders.

Units of cryptocurrency are created through a process called mining, which involves using
computer power to solve complicated mathematical problems that generate coins. Users can
also buy the currencies from brokers, then store and spend them using cryptographic wallets.

If you own cryptocurrency, you don’t own anything tangible. What you own is a key that
allows you to move a record or a unit of measure from one person to another without a
trusted third party.

Although Bitcoin has been around since 2009, cryptocurrencies and applications of
blockchain technology are still emerging in financial terms, and more uses are expected in the
future. Transactions including bonds, stocks, and other financial assets could eventually be
traded using the technology.

Cryptocurrency examples

There are thousands of cryptocurrencies. Some of the best known include:

Bitcoin:

Founded in 2009, Bitcoin was the first cryptocurrency and is still the most commonly traded.
The currency was developed by Satoshi Nakamoto – widely believed to be a pseudonym for
an individual or group of people whose precise identity remains unknown.

Ethereum:

Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called
Ether (ETH) or Ethereum. It is the most popular cryptocurrency after Bitcoin.

Litecoin:

This currency is most similar to bitcoin but has moved more quickly to develop new
innovations, including faster payments and processes to allow more transactions.

Ripple:

Ripple is a distributed ledger system that was founded in 2012. Ripple can be used to track
different kinds of transactions, not just cryptocurrency. The company behind it has worked
with various banks and financial institutions.

Non-Bitcoin cryptocurrencies are collectively known as “altcoins” to distinguish them from

the original.
 How to buy cryptocurrency

You may be wondering how to buy cryptocurrency safely. There are typically three steps
involved. These are:

Step 1: Choosing a platform

The first step is deciding which platform to use. Generally, you can choose between a
traditional broker or dedicated cryptocurrency exchange:

 Traditional brokers. These are online brokers who offer ways to buy and sell
cryptocurrency, as well as other financial assets like stocks, bonds, and ETFs. These
platforms tend to offer lower trading costs but fewer crypto features.
 Cryptocurrency exchanges. There are many cryptocurrency exchanges to choose from, each
offering different cryptocurrencies, wallet storage, interest-bearing account options, and
more. Many exchanges charge asset-based fees.

When comparing different platforms, consider which cryptocurrencies are on offer, what fees
they charge, their security features, storage and withdrawal options, and any educational
resources.

Step 2: Funding your account

Once you have chosen your platform, the next step is to fund your account so you can begin
trading. Most crypto exchanges allow users to purchase crypto using fiat (i.e., government-
issued) currencies such as the US Dollar, the British Pound, or the Euro using their debit or
credit cards – although this varies by platform.

Crypto purchases with credit cards are considered risky, and some exchanges don't support
them. Some credit card companies don't allow crypto transactions either. This is because
cryptocurrencies are highly volatile, and it is not advisable to risk going into debt — or
potentially paying high credit card transaction fees — for certain assets.

Some platforms will also accept ACH transfers and wire transfers. The accepted payment
methods and time taken for deposits or withdrawals differ per platform. Equally, the time
taken for deposits to clear varies by payment method.

An important factor to consider is fees. These include potential deposit and withdrawal
transaction fees plus trading fees. Fees will vary by payment method and platform, which is
something to research at the outset.

Step 3: Placing an order

You can place an order via your broker's or exchange's web or mobile platform. If you are
planning to buy cryptocurrencies, you can do so by selecting "buy," choosing the order type,
entering the amount of cryptocurrencies you want to purchase, and confirming the order. The
same process applies to "sell" orders.

There are also other ways to invest in crypto. These include payment services like PayPal,
Cash App, and Venmo, which allow users to buy, sell, or hold cryptocurrencies. In addition,
there are the following investment vehicles:
 Bitcoin trusts: You can buy shares of Bitcoin trusts with a regular brokerage account. These
vehicles give retail investors exposure to crypto through the stock market.
 Bitcoin mutual funds: There are Bitcoin ETFs and Bitcoin mutual funds to choose from.
 Blockchain stocks or ETFs: You can also indirectly invest in crypto through blockchain
companies that specialize in the technology behind crypto and crypto transactions.
Alternatively, you can buy stocks or ETFs of companies that use blockchain technology.

The best option for you will depend on your investment goals and risk appetite.

How to store cryptocurrency

Once you have purchased cryptocurrency, you need to store it safely to protect it from hacks
or theft. Usually, cryptocurrency is stored in crypto wallets, which are physical devices or
online software used to store the private keys to your cryptocurrencies securely. Some
exchanges provide wallet services, making it easy for you to store directly through the
platform. However, not all exchanges or brokers automatically provide wallet services for
you.

There are different wallet providers to choose from. The terms “hot wallet” and “cold wallet”
are used:

 Hot wallet storage: "hot wallets" refer to crypto storage that uses online software to protect
the private keys to your assets.
 Cold wallet storage: Unlike hot wallets, cold wallets (also known as hardware wallets) rely
on offline electronic devices to securely store your private keys.

Typically, cold wallets tend to charge fees, while hot wallets don't.

What can you buy with cryptocurrency?

When it was first launched, Bitcoin was intended to be a medium for daily transactions,
making it possible to buy everything from a cup of coffee to a computer or even big-ticket
items like real estate. That hasn’t quite materialized and, while the number of institutions
accepting cryptocurrencies is growing, large transactions involving it are rare. Even so, it is
possible to buy a wide variety of products from e-commerce websites using crypto. Here are
some examples:

Technology and e-commerce sites:

Several companies that sell tech products accept crypto on their websites, such as
newegg.com, AT&T, and Microsoft. Overstock, an e-commerce platform, was among the
first sites to accept Bitcoin. Shopify, Rakuten, and Home Depot also accept it.

Luxury goods:

Some luxury retailers accept crypto as a form of payment. For example, online luxury retailer
Bitdials offers Rolex, Patek Philippe, and other high-end watches in return for Bitcoin.

Cars:
Some car dealers – from mass-market brands to high-end luxury dealers – already accept
cryptocurrency as payment.

Insurance:
In April 2021, Swiss insurer AXA announced that it had begun accepting Bitcoin as a mode
of payment for all its lines of insurance except life insurance (due to regulatory issues).
Premier Shield Insurance, which sells home and auto insurance policies in the US, also
accepts Bitcoin for premium payments.

If you want to spend cryptocurrency at a retailer that doesn’t accept it directly, you can use a
cryptocurrency debit card, such as BitPay in the US.

Cryptocurrency fraud and cryptocurrency scams

Unfortunately, cryptocurrency crime is on the rise. Cryptocurrency scams include:

Fake websites: Bogus sites which feature fake testimonials and crypto jargon promising
massive, guaranteed returns, provided you keep investing.
Virtual Ponzi schemes: Cryptocurrency criminals promote non-existent opportunities to
invest in digital currencies and create the illusion of huge returns by paying off old investors
with new investors’ money. One scam operation, BitClub Network, raised more than $700
million before its perpetrators were indicted in December 2019.
"Celebrity" endorsements: Scammers pose online as billionaires or well-known names who
promise to multiply your investment in a virtual currency but instead steal what you send.
They may also use messaging apps or chat rooms to start rumours that a famous
businessperson is backing a specific cryptocurrency. Once they have encouraged investors to
buy and driven up the price, the scammers sell their stake, and the currency reduces in value.
Romance scams: The FBI warns of a trend in online dating scams, where tricksters persuade
people they meet on dating apps or social media to invest or trade in virtual currencies. The
FBI’s Internet Crime Complaint Centre fielded more than 1,800 reports of crypto-focused
romance scams in the first seven months of 2021, with losses reaching $133 million.

Otherwise, fraudsters may pose as legitimate virtual currency traders or set up bogus
exchanges to trick people into giving them money. Another crypto scam involves fraudulent
sales pitches for individual retirement accounts in cryptocurrencies. Then there is
straightforward cryptocurrency hacking, where criminals break into the digital wallets where
people store their virtual currency to steal it.

Is cryptocurrency safe?

Cryptocurrencies are usually built using blockchain technology. Blockchain describes the
way transactions are recorded into "blocks" and time stamped. It's a fairly complex, technical
process, but the result is a digital ledger of cryptocurrency transactions that's hard for hackers
to tamper with.

In addition, transactions require a two-factor authentication process. For instance, you might
be asked to enter a username and password to start a transaction. Then, you might have to
enter an authentication code sent via text to your personal cell phone.

While securities are in place, that does not mean cryptocurrencies are un-hackable. Several
high-dollar hacks have cost cryptocurrency start-ups heavily. Hackers hit Coincheck to the
tune of $534 million and BitGrail for $195 million, making them two of the biggest
cryptocurrency hacks of 2018.

Unlike government-backed money, the value of virtual currencies is driven entirely by supply
and demand. This can create wild swings that produce significant gains for investors or big
losses. And cryptocurrency investments are subject to far less regulatory protection than
traditional financial products like stocks, bonds, and mutual funds.

Four tips to invest in cryptocurrency safely

According to Consumer Reports, all investments carry risk, but some experts consider
cryptocurrency to be one of the riskier investment choices out there. If you are planning to
invest in cryptocurrencies, these tips can help you make educated choices.

Research exchanges:

Before you invest, learn about cryptocurrency exchanges. It’s estimated that there are over
500 exchanges to choose from. Do your research, read reviews, and talk with more
experienced investors before moving forward.

Know how to store your digital currency:

If you buy cryptocurrency, you have to store it. You can keep it on an exchange or in a digital
wallet. While there are different kinds of wallets, each has its benefits, technical
requirements, and security. As with exchanges, you should investigate your storage choices
before investing.

Diversify your investments:

Diversification is key to any good investment strategy, and this holds true when you are
investing in cryptocurrency. Don't put all your money in Bitcoin, for example, just because
that's the name you know. There are thousands of options, and it's better to spread your
investment across several currencies.

Prepare for volatility:

The cryptocurrency market is highly volatile, so be prepared for ups and downs. You will see
dramatic swings in prices. If your investment portfolio or mental wellbeing can't handle that,
cryptocurrency might not be a wise choice for you.

Cryptocurrency is all the rage right now, but remember, it is still in its relative infancy and is
considered highly speculative. Investing in something new comes with challenges, so be
prepared. If you plan to participate, do your research, and invest conservatively to start.

CROWDFUNDING:

The Crowdfunding platform in block-chain makes different possibilities for the startups by
raising the funds to create their own digital currency and it is peer-to-peer fund raising
model some of the famous crowdfunding cryptocurrencies are coinspace, swarm,
judobaby etc. Crowdfunding has offers for creators and other consumers. Anyone can
participate in this crowdfunding if they have invented any new cryptocurrency (e.g.,
Ethereum) and also can contribute as much as they want.
 How does BlockChain support Crowdfunding ?
There are several areas where block-chain supports and improves crowdfunding,
crowdfunding platforms powered by blockchain technology removes the need for
intermediate third party.
 Decentralization: Since block-chain is decentralized it doesn’t rely on any other
platforms to create funds. for starters, no longer to be obliged to any rules and any
project can get visibility and funded if the investors think to invest, eliminates fees
which makes crowdfunding less expensive for the creators.
 Access Equity: To provide investors equity or ownership block-chain relies on asset
tokenization. For example, a person who plans to create multiple new products with
the incoming funds and grant small ownerships stake in the company.This could
potentially open whole new world of opportunity.
 Universal Opportunity: Any project using a block-chain-based crowdfunding model
can get funded. Any person with an internet connection can contribute projects.
 Flexible Options: Using block-chain as asset tokenization grants creators and
entrepreneurs more liberties.usually asset tokens have their own currency to enable
organizations to hire professionals and advertisers.
 Peer-to-Peer: The cryptocurrencies are exchangeable on a peer to peer network.This
usually help the people for their investment which even generates more interest in the
entire process.

UNIT-II

Extensibility of Blockchain concepts:

Blockchain technology was introduced to disrupt the financial sector. Many financial
institutes and banks have leveraged blockchain to make transactions secure and remove
intermediaries.
But blockchain technology is not only restricted to the finance sector. From automobile to
retail, healthcare, manufacturing, and travel, every industry is investing in blockchain to
avail its benefits.
The technical concept behind the blockchain is similar to that of a database, but the
interaction with that database is entirely different.
For developers willing to learn blockchain development, it is essential to understand how
they will write software applications in the future and how different blockchain concepts
like consensus, trusted computing, smart contracts, and file storage systems interact with
one another in a decentralized environment.
To make you learn how to develop blockchain applications or to implement blockchain
development in businesses, we have covered the following ground:
Understanding the basics of Blockchain Development
If you are a beginner, you should be familiar with the following terms:
 Blockchain
 The blockchain is an incorruptible chain of blocks where each block contains data of value
which is validated by all nodes in the network, not by any central authority. Each block in
the chain includes its hash value and that of the previous block which acts as a unique
fingerprint so that no one can tamper with data stored in it.The information stored on the
blockchain can never be deleted or altered. Instead, a new block needs to be added to the
chain to update the information.
 Decentralized

A blockchain is said to be decentralized as it is not stored in one place and does not have a
center. Instead, the data saved in blockchain is distributed across many different computers,
called as nodes.Since no single entity has control over the data, users interact with each
other directly without the involvement of a third party.
 Decentralized Consensus

A blockchain is a decentralized peer-to-peer system which has no central authority to

control the exchange of information. Though no involvement of a central administrator
keeps the system devoid of corruption, it raises the following questions:
1. How is a decision made in the blockchain?
2. How is a transaction added to the chain of blocks?
In a normal centralized model, a central authority or a board of decision-makers take all the
required decisions. But it is not possible in the case of blockchain as it has no leader.
The members of a blockchain network need to come to a consensus via “consensus
mechanisms” to make decisions. We shall discuss some of the significant consensus
algorithms in detail.
 Smart Contracts

Smart contracts are the building blocks for blockchain-based applications. The concept
behind smart contracts is the contractual governance of transactions between two or more
participants. It can be verified programmatically with the blockchain, instead of a central
authority.Also, smart contracts allow users to control ownership by offering controlled data
disclosure.
 Mining

Mining is defined as the process of adding or validating transactions to the distributed

ledger. It mainly involves creating a hash of a block that cannot be forged. As a result, it
 protects the integrity of the entire system without needing a central system. Miners are the
users who utilize the computational power to mine for blocks.
Learning the basics of decentralized technology is not enough, there’s a lot to understand
before moving to blockchain development. Let’s discuss some of the concepts which are
common yet important for every blockchain enthusiast.
Following are some of the important concepts that are prerequisite for the blockchain
development
 Programming Language- C, C++, Java, JavaScript, Python and Solidity.
 Data Structures- Linked List, Hyperledger, Acyclic Graph, HashTable and Associative Array.
 Security and Encryption- Secure Hashing Algorithm, Private Key and Public Key Pair.
 Networking Concepts- Multi-Threading and Socket Programming.
Whether you are a learner, innovator or entrepreneur, you should also know about the
different blockchain consensus algorithms on the basis of which a blockchain platform can
be chosen to build a dApp (decentralized application).
Mentioned below are some of the blockchain consensus algorithms which can be used
for blockchain development
 Proof of Work

Proof of Work is the first consensus algorithm introduced in the blockchain network. It is
used by various blockchain technologies to validate the transactions and add relevant blocks
to the chain of a network. As a decentralized ledger contains all information related to the
blocks, it is essential to take care of all transactional blocks.
It is the responsibility of miners to manage the transactions blocks which can be done with
the process of mining. The concept behind this technique is to solve complicated
mathematical problems and provide a solution. Since it requires a lot of computational
power to solve a mathematical problem, proof of work has certain limitations. More a
network grows, more the power is required.
Firstly, miners have to solve the puzzles to create new blocks and confirm the transactions.
The complexity of a puzzle depends on the maximum number of users, overall load and the
minimum current power of the network.
Bitcoin is the most common platform where proof of work algorithm is implemented.
Ethereum also used the same consensus in 3-4 big projects, but now it has moved on to
Proof of Stake.
 Proof of Stake

Proof of stake is a blockchain consensus algorithm, designed to overcome the drawbacks of

the proof of work algorithm.
 In Proof of Stake algorithm, each block gets validated before another block is added to the
ledger. Miners can participate in the mining process with their coins to stake.
The algorithm has introduced a new type of concept where everyone can mine or validate
new blocks based on the coins they hold. So, the more coins an individual has, the more are
the chances to become a miner.
The miners of the network are chosen randomly. If an individual has a specific amount of
coins stored in the wallet, then he is qualified to act as a node on the network.
After becoming a node, an individual needs to deposit a specific amount of coins to be
qualified as a miner. Voting is done to choose the validators.
Then, the miners can stake the minimum amount needed for the special wallet staking.
New blocks get created which are proportional to the number of coins in the wallet. For
instance, if a person owns 10% of all the coins, he can only mine 10% of the new blocks.
 Proof of Elapsed Time (PoET)

PoET is one of the best consensus algorithms, designed for permissioned blockchain
network where you require permission to access the network.
The mining rights or voting principles are decided by the permissions networks.
Since the network requires identification of the miners, the consensus algorithm ensures a
secure login into the system.
Therefore, PoET gives a chance to choose the winners via a fair means only.
The algorithm relies on a special CPU requirement, called “Intel Software Guard Extension”.
The Software Guard Extension helps to execute unique codes within the network. Using this
system, it ensures that the winning is purely fair.
 Practical Byzantine Fault Tolerance (PBFT)

PBFT focuses on the state machine. It replicates the system but avoids the main Byzantine
general problem.
Now, the question is how PBFT consensus works?
The algorithm assumes from the start that the network could have possible failures and
independent nodes might not work properly at certain times.
So, PBFT is designed for asynchronous consensus systems and optimized in an efficient way
to deal with the above issues.
Moreover, all the nodes in the system are arranged in a particular order.
 Out of all the nodes, one node acts as the primary node while others work as the backup
plan. However, all the nodes in the system perform their functions in harmony and interact
with one another.
Once you understand the basics of blockchain development, it is the time to understand the
various tools that contribute to the blockchain development.
Following are some of the blockchain development tools which can help ease the
development process
1. Geth

Geth is a command line interface, used to run a full Ethereum node in Go. The tool is
designed to implement an Ethereum node in the Go programming language.By installing
and executing Geth, a user can perform the following tasks

 Mine Ether tokens.

 Create smart contracts and send transactions on the Ethereum Virtual Machine.
 Transfer funds between addresses.
 Track the block history.
Operating systems such as Linux, Mac, and Windows support the installation of Geth. Also,
this command line interface supports two types of installations, i.e., Binary and Scripted.
Using Geth, it can be possible to connect to the existing live blockchain and create its
blockchain on the basis of provided settings.
2. Mist

Before the development is started using Ethereum, it is essential to have a place where
Ether tokens can be stored and smart contracts can be executed. Mist is a program which is
connected to Geth in the background and acts as an interface for the wallet.

Though Mist is widely used for smart contract deployment, you must remember one thing.
It is a full node wallet, i.e., one has to download the entire Ethereum blockchain, which is
>1Tera Bytes (TB).Mist is supportable on Windows (both 32- and 64-bit), Linux (32- and 64-
bit) and Mac. After the node gets fully synced, you will have an option to operate on the
testnet or the mainnet.
3. Remix

Remix is a suite of tools which has been designed to communicate with the Ethereum
platform. It is used to debug transactions saved in the Git repository.
 A developer needs to connect with an Ethereum node to use tools hosted by Remix.
Remix is comprised of the following tools
 remix analyzer
 remix-lib
 remix-debug
 remix-tests
 remixd
 remix-solidity
Remix IDE is a browser based compiler that allows users to develop Ethereum smart
contracts with Solidity language. It also supports testing, deploying and debugging of smart
contracts.
4. Solc (Solidity Compiler)

Solidity is a loosely-typed language which has a syntax similar to that of ECMAScript used for
creating the smart contracts on Ethereum blockchain. The role of Solc is to convert the
solidity script into a format readable by the Ethereum Virtual Machine.

Solidity Compilers are of two types

 solc : Coded in C++
 solc-js : Uses Emscripten to cross-compile from solc C++ to JavaScript
Though both of the above compilers are built from the same source code, they come up
with the different results.
5. Blockchain Testnet

While writing any program for Ethereum Virtual Machine (EVM), it is important to consider
the following things:

First, a user has to pay for gas usage and the launch of an application. So, no one would like
to pay money for a project that has not been tested.
Secondly, an untested code can have some bugs which can create havoc to the Ethereum
blockchain. Also, the information stored on Ethereum blockchain is immutable which cannot
be undone.
 Therefore, it is good to test a dApp before deploying it on the mainnet. Testnet is quite
similar to the Ethereum blockchain which allows developers or users to test the application
before deployment.
Here are the top blockchain platforms that support blockchain development
 Ethereum

Ethereum is an open-source blockchain based distributed computing platform founded by

VitalkButerin in late 2013. Known for executing smart contracts on the custom-built
blockchain, Ethereum uses EVM (Ethereum Virtual Machine) to offer the run-time
environment.

No doubt that Ethereum a permissionless (public) blockchain platform, it is built for mass
consumption versus restricted access. It has a native cryptocurrency called Ether, which is
used to fuel the Ethereum ecosystem. A developer who builds the app on the top of the
Ethereum platform has to pay in Ethers to execute transactions and run nodes.
Since Ethereum uses PoW(Proof of Work) consensus algorithm, its speed is comparatively
slower as compared to other platforms.
 Hyperledger Sawtooth

Hyperledger Sawtooth is a modular and enterprise-grade blockchain development platform

which can be used to create, execute and deploy distributed ledgers to maintain digital
records in a decentralized way.

PoET (Proof of Elapsed Time) consensus algorithm allows Hyperledger Sawtooth platform to
integrate with hardware security solutions. Offering a solution to the Byzantine Generals
Problem, PoET utilizes the trusted execution environment which enhances the efficiency of
existing algorithms like Proof of Work.
Its modular architecture enables applications to select the transaction rules, consensus
algorithms, and permissions as per the business needs.
 Hyperledger Fabric

Intended to build blockchain based applications with a modular architecture, Hyperledger

Fabric is another project of Hyperledger designed for permissioned networks. It only
enables authorized identities to participate in a blockchain ecosystem.
 The architecture of Hyperledger Fabric allows the team of network designers to plug in the
preferred components such as consensus and membership services, separating it from other
blockchain platforms.
 EOS

Designed and developed by a private company, Block.one, EOS is a blockchain platform that
supports the development of decentralized applications (dApps).

EOS blockchain solution solves the issues of scalability with Ethereum and Bitcoin by offering
smart contract capability, decentralized storage of enterprise solutions and hosting services.
Transactions to be added to the EOS network accomplish consensus with a delegated proof-
of-stake algorithm and multi-threading.
 Hedera Hashgraph

Based on Directed Acyclic Graph, Hedera Hashgraph is a fast, secure and fair Distributed
Ledger Platform that does not require computing a heavy proof of work algorithm.

The transactions to be added to the network are validated via Gossip about Gossip and
Virtual Voting consensus algorithm.

DIGITAL IDENTITY VERIFICATION :

Blockchain identity systems enable users to monetize their own data, track how it’s used, and
easily share and secure it.

In the off-chain world, “Digital Identity” (D-ID) refers to the aggregated information that is
collected by various parties and platforms when a user spends time and conducts activities
online. Data such as a user’s search history, social media activity, transaction history,
usernames and passwords, call records, SSN, date of birth, credit history, medical history,
and other important information routinely finds its way and is stored online, ultimately
building a unique profile spread across multiple databases—each user’s Digital Identity.

Users have at their disposal a range of authentication and security tools to protect their data,
but even the most secure online platforms can be hacked, leading to exposure of sensitive
aspects of a user’s D-ID and putting them and the platforms at risk of identity theft and fraud.
In fact, multiple studies have shown that hacked or leaked personal information is among the
most frequently traded products on the dark web.

The way D-ID functions on a blockchain, by contrast, is at once more public and more
private. Blockchains are decentralized, immutable ledgers (or databases), allowing for
individuals to transact peer-to-peer while maintaining consensus concerning the ledger/data,
ultimately creating a source of shared truth. Blockchains are public in the sense that any
participant or even outsider can audit every transaction and address, and they’re private in the
sense that, unless they’re explicitly permissioned, blockchains require no KYC (Know Your
Customer) and users can participate anonymously with their blockchain addresses possessing
little or no link to their off-chain identities.

One especially promising use case for blockchain technology is to improve the D-ID
experience by applying the best features of blockchain technology to legacy D-ID systems.
Though the architectural details vary, a blockchain-based D-ID solution would ideally allow
users to selectively choose with whom and when they share their information, keep user
information off of databases vulnerable to attack, allow users to better monetize their data,
and better preserve user privacy. While this use case might seem trifling at first blush, it
offers more than convenience and data security—by some estimates, digital identity and
related industries could reach 3% of GDP by 2030.

This article will examine the risks and challenges associated with legacy D-ID
implementations, break down how blockchain D-ID might solve them, and analyze four
specific implementations relying on Chainlink oracles to connect personal information with
the blockchain.

Current Flaws in D-ID

Though they can often go unnoticed to users who have come to accept them, the flaws of
legacy D-ID systems are both systemic and pernicious. D-ID is a crucial element to making
many of the online systems people rely on for everyday life work, but at nearly every step—
from the collection, storage, and sale of data—D-ID is rife with security, privacy, and even
ethical concerns. Ultimately, these problems can roughly be grouped into three categories:
data monetization, data access, and data storage.

Data Monetization

An important part of D-ID is the data surreptitiously gathered by major internet platforms on
a user’s behavior, habits, and biographical information. A search engine, for instance, might
gather data about a user’s interests to tailor ads for them, or a social media site might sell
information natively created by users to interested parties such as political campaigns.
Because the details of these activities are often buried in terms-of-use agreements, users of
these platforms ubiquitously and unwittingly enrich platforms with time spent ostensibly in
leisure.

This process where users, by engaging in normal habits, unknowingly provide platforms with
information that is then subsequently monetized is frequently referred to “free labor.”
Proponents of free labor argue that this data monetization is a natural trade-off for access to
what are often free services/platforms, and that they eventually benefit the user by allowing
the platforms to grow faster and provide better user experiences.

However, free labor presents a host of ethical and privacy issues, often revolving around
users being unclear about what data is being gathered, to whom it’s being sold, or where it’s
being stored. Though some countries have attempted to place regulations on the data that can
be collected by major platforms, free labor remains a rampant issue, with users all across the
Internet unsure of what data is being gathered and what’s being done with it.

Data Access

Certain Internet platforms and services require a more complete D-ID profile to access than
others. Social media sites may require just an email address (though they’ll subsequently
build a profile on a user), while a lending service or a government agency might want a full
financial or personal history before providing access and services through their portal. As a
result, users are often forced to provide the same information about themselves over and over
across different platforms. While the separation of databases may prevent a more catastrophic
breach by isolating an attack, each database storing important user information ultimately
increases the attack surface of a user’s data.

This puts users in a difficult position, having to choose between time-consuming processes
and bureaucracy or storing their information for repeated use on databases that might
potentially be vulnerable to attack. Additionally, this system also creates headaches for the
platforms as well: government agencies might store redundant information across multiple
servers, which leads to cost inefficiency, and other platforms might become more vulnerable
to scams or theft as a result of user data leaks. In many instances, the platforms are ultimately
the responsible parties for any financial losses associated with identity theft.

Data Security

As mentioned above, users frequently propagate information about themselves online,

including financial information in order to make purchases or gain access to services. Access
and security rarely go hand-in-hand, and the same holds true for D-ID—each website that
stores information about a user presents a new attack vector through which their information
might be stolen.

Given the level of the threat, one would expect that platforms would invest in superior
security and privacy infrastructure. However, in spite of security efforts statistics indicate that
data protection problems are getting worse, not better: upwards of 10% of the population is
affected by identity theft every year, and that number is on the rise during the pandemic.

Blockchain-Based D-ID Solutions

Because of these flaws, D-ID is a space ripe for disruption from blockchain technology. By
using blockchains to architect superior D-ID systems, many of the most glaring problems
with D-ID can be solved and whole new use cases can be enabled.

The key features of a blockchain-based D-ID system would include: the ability for users to
monetize the information they natively create and track how their information is being used;
the ability to readily and easily share D-ID information; and the ability to keep that data
secure. There are a range of unique approaches towards achieving these goals—including the
potential of doing away with off-chain identities entirely—and each leverage blockchain in
different ways.

DECO

One blockchain-based D-ID system is Chainlink’s privacy preserving oracle

technology DECO—developed by Chainlink Labs Chief Scientist Ari Juels, researcher Fan
Zhang, and others. While new D-ID storage solutions may alter how data is stored, the reality
is that a lot of data is still stored in trusted databases. Many users/institutions may prefer the
security of entrusting a high-security custodian to protect that data, especially governments
and large enterprises.

DECO allows oracles to attest to the validity of information in trusted databases/systems

without exposing it to the public or even the oracle itself using a cryptographic technique
known as Zero Knowledge Proofs. Essentially, the oracle can join a user-initiated web
session to attest to some requested information— possibly to verify someone’s identity,
approve their financial information, or check key government records. Importantly, that data
never leaves the secure, user-selected database, allowing a user to store their D-ID
information in certain locations they trust and set up selective access, as opposed to
propagating it to a variety of systems with weak guarantees on access control. This allows for
a privacy-preserving plug-and-play option that combines the usability of legacy systems with
the security of blockchain.

One of DECO’s main techniques involves a three-party handshake – a method in which the
Prover (user) and Verifier (oracle) can combine their public TLS keys and form a combined
request for data, without the Verifier ever receiving said data.
DECO’s privacy-preserving technology also allows for use cases that would otherwise have
been impossible, such as big data medical studies. For years researchers have been excited
about the potential of applying machine learning and computational analysis to large medical
datasets, hoping to use these tools to make discoveries and breakthroughs that human analysis
wouldn’t be able to find. However, the privacy and security concerns of patient data have
long been a roadblock. DECO would allow researchers selective access to the data they need
while complying with HIPA regulations and without putting that data at risk, potentially
enabling a new era of medical research.

Bloom

Another example of a project using blockchain technology to enhance D-ID is Bloom, a

decentralized identity protocol that allows users to claim, control, and selectively share their
financial data while retaining full ownership via a decentralized architecture.

Bloom works by taking user-provided data and verifying each user’s identity, and then
subsequently writing that data to the blockchain as an encrypted hash. This allows user
information to be stored on a public ledger/source of truth while simultaneously maintaining
privacy of it. It’s especially useful for financial information, which is one of Bloom’s core
areas of focus—a recent blog post from Bloom laid out how Chainlink oracles help connect
credit scores to DeFi protocols.

How Chainlink decentralized oracles connect credit scores to DeFi protocols.

“Bloom started as a protocol using smart contracts and Ethereum addresses to uniquely
identify individuals and enable them to claim, store, and share verified identity attributes,
with the goal of decentralizing the credit bureau model,” says Isaac Patka, CTO of Bloom.
“As the technology evolved we joined forces with the larger decentralized/self-sovereign
identity community to develop open and interoperable standards for identifying users, issuing
credentials, and exchanging information. The identity standards have now matured to the
point that we can take this technology to market and drive global impact. We are excited to
realize our original vision of extending financial inclusion, and using platforms like
Chainlink to bridge the gap between the traditional and decentralized worlds.”

Unstoppable Domains

Unstoppable Domains is decentralized blockchain-based protocol for registering and hosting

Internet domain names as non-fungible ERC721 tokens on the Ethereum blockchain.
Unstoppable Domains recently announced a new feature that uses Chainlink oracles to link
Twitter users to specific domains, making it easy to identify and confirm a user’s public
address based on their social media account. Additionally, users can send payments directly
to the domains, bypassing often confusing Ethereum addresses for a superior UI/UX
experience.

What makes this solution unique is that it can potentially bypass real-world information
entirely. Twitter users can remain anonymous, but still have a named Internet domain linked
to them that can send and receive blockchain-based payments. This allows for secure, highly
intuitive transfer of value between parties whose identities are potentially entirely digital and
don’t have to be stored in any centralized database.

Decentr

Decentr is a project that aims to provide a Web3 version of credit scores—what they call a
“Personal Data Value” (PDV). Each user’s PDV would be sourced from a potential
combination of social media activity, on-chain activity such as their total owned assets and
history of repaying loans, and real-world data such as KYC/AML information. As discussed
Decentr’s blog post, Chainlink oracles can supply this data to DeFi protocols across any
blockchain, and users with high PDV values could potentially receive less collateralized or
even collateral-free loans.

Decentr integrates with Chainlink to provide user-centric social reputation scores to DeFi.
Like Unstoppable Domains, this approach not only finds a way to securely connect off-chain
data to D-ID using blockchain, but also bolsters the blockchain identity experience by taking
valuable on-chain data and using it to create a D-ID profile of users. Privacy-focused users
could potentially bypass using real-world information all together, and instead build their
PDV value solely from their on-chain metrics.

BLOCKCHAIN NEUTRALITY:

Blockchain technology is transforming how markets work.Blockchains eliminate the need for
trusted gatekeepers likebanks to execute, verify, and record transactions. In the
financial markets, their disruptive potential threatens bothWall Street banks and Silicon
Valley venture capitalists. Howblockchain technology is regulated will determine whether it
encourages or inhibits competition. Some blockchainapplications present serious fraud and
systemic risks,complicating regulation. This Article explores the antitrust andcompetition
policy challenges blockchain presents and proposesa regulatory strategy, modeled on Internet
regulation and netneutrality principles, to unlock blockchain’s competitivepotential. It
contends that financial regulators should promoteblockchain competition—and the resulting
marketdecentralization—except in cases where specific applicationsare shown to harm
consumers or threaten systemic safety.Regulators also should ensure open access and non-
discrimination on dominant blockchain networks. Thisapproach will not only serve
traditional antitrust goals oflowering prices and promoting innovation, but it also might
achieve broader economic and social reform by reducing thepower and influence of the
biggest financial institutions.

DIGITAL ART:

Crypto art is a blanket term coined to represent the fusion of art and blockchain technology.
As a sub ecosystem within the world of cryptocurrencies, crypto art intends to preserve
immutable versions of digital art such as music albums, paintings, awards and a wide range
of memorabilia.

Crypto art is preserved on the blockchain in the form of nonfungible tokens, or NFTs, and are
usually tied up with a monetary value. Just like traditional art forms, the value of crypto art or
NFTs is heavily influenced by the credibility of the creator, the rarity of the art and its
demand in the collector’s market.

As a collectible, NFTs and similar forms of digital art are capable of being publicly verified
for authenticity and change of ownership. This allows every piece of art to be verifiably
unique and hold a corresponding monetary value. Let’s dive deeper into the world of crypto
art.

Who are the crypto artists?

The biggest drivers of the crypto art landscape are the artists that create/recreate pieces to be
stored over the blockchain. Although NFTs can represent numerous aspects of the digital
world, the first step begins with the creation of digital artwork. Digital art can be created by
using readily-available software and a personal computer in the form of GIF, JPEG, videos,
3D images and similar art forms.

While the aforementioned digital art can be easily replicated and distributed over the internet,
crypto artists need to certify and mint a nonfungible token that is linked to the authenticity of
the art created. Once certified, the art can then be uploaded to various marketplaces and
marketed to potential buyers.

It is important to note that crypto art is also subject to copyright laws and artists are expected
to create, mint and sell unique NFTs while respecting the ownership of other artworks.

Metaverse

The term metaverse was coined in 1992 by Neal Stephenson, the author of the science fiction
novel Snow Crash. This was the first time someone envisioned a full-interactable virtual
world consisting of human avatars and 3D digital objects.

Metaverse is the most popular implementation of crypto art or NFTs, which makes use of
digital art to represent objects in a fully-functional virtual world. The Metaverse allows users
to create, own, create, purchase and sell virtual versions of shoes, clothes, property and other
belongings.

A metaverse can also represent social communities where people from all over the world can
participate in online meetups for conferences, meetings and parties. In a typical metaverse
setting, users can interact with each other and co-participate in virtual reality (VR) events
such as dancing to music or attending yoga classes in groups.

Metaverses has also found use cases in the gaming industry as developers create open-world
games around the rising digital ecosystem. By infusing gamification, metaverses can be
modified to depict interactive virtual worlds explorable through user-created avatars.
Given the untapped potential of possibilities within metaverses, major social media and tech
corporations continue to explore various use cases primarily aimed at improving customer
engagement. For example, social media giant Facebook renamed itself “Meta” to be more
aligned with the development of a metaverse. Following suit, numerous tech giants are also
exploring metaverse capabilities to identify the various revenue streams and customer
engagement services.

Nonfungible tokens (NFT)

Nonfungible tokens are what make crypto art possible. While comparable to any other form
of digital images including JPEG, GIF and 3D images, NFTs contain metadata that can help
prove its value and ownership over a public blockchain.

Given the endless possibilities offered by digitalization, NFTs have evolved into representing
real-world objects in metaverses and other virtual worlds. Online virtual stores facilitate retail
purchases of digital clothes, shoes, property and other assets and merchandise.

Moreover, the true market value of NFTs is dictated by the rarity and the public demand for a
particular collection or entity. Some of the mainstream examples of NFT adoption include the
launch of music albums and the issuance of awards and fan tokens in various sport events.

In addition to representing aspects of the real world, artists make the most of this budding
landscape to create art and market it to potential buyers across the globe. This also brings the
opportunity for enthusiasts to recreate popular paintings and offer collectors a piece of
priceless history.

How much does it cost to hang the crypto art on your wall?

While crypto art can be replicated and copied by simply downloading the image or taking a
screenshot, the process leaves out the most important feature of the art, i.e., the metadata or
the proof of its uniqueness.

Every digital art needs to be assigned a unique ID before it can be called NFT and possess a
monetary value. As a result, the unique ID of the NFTs is what makes the arts one-of-a-kind,
confirming the legitimacy of the art’s value and ownership. The typical prices of minting an
NFT can range from as low as $1.00 to an average of $900, depending on the service
provider and the blockchain host. However, unrealistic gas prices can drive up the NFT
minting costs even higher.

The unique ID of an NFT artwork can be cross-checked across a network of public

blockchains. When crypto art gets sold or transferred to a different user, the metadata gets
timestamped over the blockchain network. Depending on the rarity and collector’s demand of
the piece, an NFT can range anywhere from a few dollars to millions.

NFT marketplaces help the creator mint digital art into a nonfunglible token. The process
typically involves the use of a native blockchain cryptocurrency wallet and cryptocurrency
payment. Minting requires the creator to pay transaction fees or gas fees for updating the
blockchain with the metadata about the crypto art in question, determined by the blockchain
network and the stress or the current transactional capacity of the blockchain.

Weighing in the risks and rewards

The NFT marketplace, while rewarding, has opened new potential avenues for scammers and
bad actors that target unsuspecting investors and collectors. Just like any other ecosystem that
involves cryptocurrency and blockchain technology, investors and enthusiasts are advised to
research heavily on the NFTs before making any commitments or purchases.

It is equally important for investors to confirm the metadata of the NFTs on their
corresponding blockchains. Metadata is a term used to describe additional information about
a particular object or an instance which, in the case of NFTs, involves information about
minting, blockchain host, ownership and the creator details. The information available on the
blockchain can be regarded as the only way to confirm the legitimacy of a crypto art
offering.

As discussed, the credibility and the value of NFTs are directly linked to their creators and
the demand in the resale market. That being said, even though the NFTs may check out in
terms of authenticity, it does not guarantee high (or any) resale value. The resale value of
NFTs is purely determined by the investor sentiment attached to the art.

Can crypto art be copied?

Contrasting to the popular belief that replicating crypto art is as simple as saving a copy of
the image or video locally on a computing device, copying crypto art is technically
impossible. For example, when a user attempts to “save” a crypto art, the person ends up
saving an identical copy of the image but misses out on capturing the information that makes
the NFT component of any digital art.

In many cases, the artist may choose to retain the copyright ownership of an NFT, which
allows the artist to create and sell multiple copies of the same art. However, the metadata
helps differentiate the ownership of similar-looking NFTs and ensures the credibility of the
creator.

As discussed earlier, crypto art (just like any other form of art) is subject to copyright and
wrongly claiming to be the creator can have negative consequences depending on the law of
the land.

A peek into the future of NFTs, metaverse and crypto art

The future of crypto art will be determined by the people that believe in the ecosystem and its
extent of mainstream adoption. Given the involvement of popular artists, musicians, sports
persons and celebrities, crypto art has fortunately attracted a large number of people willing
to buy, sell and collect art in the form of NFTs.
The existing use cases of the crypto art ecosystem involve art and interactive virtual worlds.
With increased adoption, NFTs are slowly bleeding into the world of virtual asset purchases
such as purchasing online versions of limited edition clothes, property and so on.

While the world of cryptocurrencies, especially crypto art, is yet to be tested for its full
potential, the budding technology has already altered the way we look at precious collectibles
and art in a virtual setup. As for its future, crypto art is well-positioned to be treated as an
instrument of a virtual representation of every aspect of our day-to-day lives.

BLOCKCHAIN ENVIRONMENT:

Blockchain, a digital ledger technology, is widely known for its application to

cryptocurrencies. Introduced in 2008 to serve as a public transaction ledger for Bitcoin, the
technology has given rise to hundreds of cryptocurrencies (e.g. Ethereum, Ripple, NEO,
Litecoin), as well as having other emerging applications in diverse fields, including supply
chains, digital content, patents, smart contracts, governance and e-voting (EPRS, 2017).

Understanding the basics of blockchain technology is essential to assess its implications,

which are potentially huge and transformative for society, the economy and the
environment. The European Union Agency for Network and Information Security (ENISA)
defines blockchain as:

… a public ledger consisting of all transactions taking place across a peer-to-peer network. It
is a data structure consisting of linked blocks of data … This decentralised technology
enables the participants of a peer-to-peer network to make transactions without the need of a
trusted central authority and at the same time relying on cryptography to ensure the integrity
of transactions.

(ENISA, 2019)

In contrast to the traditional ledgers used by banks and governments for centuries, which are
centralised and inaccessible, blockchain ledgers are decentralised and transparent (EPRS,
2017). There is no central authority acting as the exclusive manager of the ledger, with sole
responsibility for storage, updates and verification of transactions. On the contrary, all
participants of the blockchain network hold a copy of the ledger, and transactions — although
encrypted — are visible to all.

Although participants may not know each other, such a decentralised ledger system is viable
because it is made trustworthy and secure by design. Blockchain stores, shares and
synchronises data as ‘chains of blocks’ using cryptographic techniques. Blocks represent
recorded transactions, and each new block of transactions is linked to the previous ones, thus
creating an ever growing chain (Nakamoto, 2008). The creation of each new block must be
approved by all network participants. This is achieved thanks to a predefined ‘consensus
mechanism’ that sets the rules for the verification, validation and addition of transactions to
the ledger (JRC, 2018). The most common approach is ‘mining’, which relies on the ‘proof-
of-work’ mechanism. To add a block of transactions to a blockchain, participants compete
to find a solution to a difficult mathematical problem based on a cryptographic algorithm
(EPRS,2017). When a ‘miner’ finds the solution, and after verification from other
participants, the block is added to the blockchain. All copies of the ledger are updated,
making the new changes permanent.

Furthermore, each block has a timestamp as well as a unique hash value referring to previous
blocks. The authenticity and integrity of transactions themselves are ensured by standard
public-private key cryptography. With constant updates and validation made to the
blockchain, as well as inspection of the complete history of transactions open (at least
potentially) to everyone, unauthorised changes or tampering are almost impossible (JRC,
2018). All these features make the ledger unique and immutable, ensuring trust among
participants to operate their transactions. In addition, these transactions can be executed
automatically, without the need for human intervention, thanks to self-executing computer
codes — named ‘smart contracts’ — that contain the terms of contracts and are stored in the
blockchain.

‘Permissionless’ blockchains, of the sort just described, allow anyone to access, verify and
add transitions. But it is also possible to set up a ‘permissioned’ blockchain where access to
and the validation or addition of transactions are restricted to a more limited group of people
(Kouhizadeh and Sarkis, 2018).

UNIT-III

1.what is the main purpose of Blockchain?

The main purpose of blockchain is to create a decentralized and transparent system for
recording and verifying transactions. Unlike traditional systems, which rely on central
authorities such as banks or governments to validate transactions and maintain records,
blockchain technology allows for peer-to-peer transactions and eliminates the need for
intermediaries.
Blockchain achieves this through the use of a distributed ledger, which is a decentralized
database that is maintained by a network of nodes. Each node on the network has a copy of
the ledger, and transactions are validated through a consensus mechanism that ensures that all
nodes agree on the state of the ledger.
The key benefits of this decentralized and transparent system are increased security, privacy,
and efficiency. Transactions on the blockchain are secure and tamper-proof, as they are
validated and recorded using cryptographic techniques. Additionally, the decentralized nature
of the system makes it more resistant to fraud or hacking attempts, as there is no single point
of failure.
Blockchain technology has many potential applications, from financial services and supply
chain management to voting systems and digital identity verification. Its ability to create trust
and transparency in a decentralized environment makes it a promising solution for many
industries and use cases.

2.what is Blockchain in Science?

Blockchain technology has many potential applications in science, particularly in the areas of
data management and collaboration. Some of the ways that blockchain is being explored in
science include:

1. Data management: Blockchain can be used to create secure and tamper-proof records
of scientific data, such as experimental results, genomic data, or climate data. This can help
to ensure the integrity and accuracy of the data, as well as make it easier to share and
collaborate with other researchers.
2. Intellectual property: Blockchain can be used to create a decentralized and transparent
system for managing intellectual property, such as patents or copyrights. This could help to
reduce disputes over ownership and attribution, and make it easier for researchers to license
and commercialize their work.
3. Collaboration: Blockchain can facilitate collaboration among scientists by creating a
secure and transparent platform for sharing data and resources. For example, researchers
could use blockchain-based systems to share research tools or datasets, or to collaborate on
projects in real-time.
4. Funding: Blockchain can be used to create new models for funding scientific research,
such as crowdfunding or tokenized investment. This could help to democratize access to
funding and reduce reliance on traditional funding models.

Overall, blockchain technology has the potential to transform many aspects of

scientific research, from data management and collaboration to funding and intellectual
property. While there are still many challenges to be addressed, such as scalability and
interoperability, the growing interest in blockchain among scientists and researchers suggests
that it could play an increasingly important role in the future of science.

3.what is Gridcoin in Blockchain? Explain its role in Blockchain Science projects? How
much is Grid coin worth today?

Gridcoin is a cryptocurrency that is designed to incentivize scientific research by rewarding

users who contribute computing power to scientific projects. Unlike traditional
cryptocurrencies, which rely on proof-of-work algorithms that require significant
computational power, Gridcoin uses a proof-of-stake algorithm that rewards users for holding
and staking coins, as well as for contributing computing power to scientific research projects.
The role of Gridcoin in blockchain science projects is to provide a financial incentive for
users to contribute their computing power to scientific research. By contributing computing
power to scientific projects, users can earn Gridcoin rewards, which can then be exchanged
for other cryptocurrencies or used to support further scientific research.
Gridcoin's value is determined by market demand and supply, and is subject to fluctuations
like any other cryptocurrency. As of May 5, 2023, the value of Gridcoin is approximately
$0.020 USD per coin, according to CoinGecko. However, it is important to note that
cryptocurrency prices can be highly volatile and subject to rapid fluctuations.

4.what is folding coin ? what are the Applications of folding coin?

FoldingCoin is a cryptocurrency that is designed to incentivize the folding of proteins for

medical research. The Folding@home project is a distributed computing project that aims to
simulate the folding of proteins in order to better understand diseases such as Alzheimer's,
Parkinson's, and cancer. FoldingCoin rewards users for contributing their computer's
processing power to the Folding@home project.
Some of the applications of FoldingCoin include:

1. Medical research: FoldingCoin supports the Folding@home project, which is focused

on researching and understanding diseases that are caused by protein misfolding. By
contributing computing power to the project, users can help accelerate medical research and
potentially lead to new treatments for diseases.
2. Cryptocurrency mining: FoldingCoin can be mined using a computer's processing
power, similar to other cryptocurrencies. However, instead of solving complex mathematical
problems, FoldingCoin mining involves running protein folding simulations for the
Folding@home project.
3. Charitable donations: FoldingCoin can be donated to charitable organizations that are
focused on medical research or other causes. By donating FoldingCoin, users can support
important causes while also earning rewards for their contributions to the Folding@home
project.
Overall, FoldingCoin is an innovative cryptocurrency that combines the
benefits of cryptocurrency mining with the potential to contribute to important scientific
research. By providing an incentive for users to contribute their computing power to the
Folding@home project, FoldingCoin has the potential to accelerate medical research and
potentially lead to new treatments for diseases.

5. Explain aboca blockchain Genomics? What is The use of Blockchain in genomics?

Blockchain Genomics refers to the use of blockchain technology in genomics, which is the
study of an organism's DNA sequence and structure. The use of blockchain technology in
genomics has the potential to revolutionize the way genetic data is collected, stored, and
shared.
The main use of blockchain in genomics is to create a decentralized and secure system for
storing and sharing genetic data. With blockchain technology, genetic data can be stored in a
distributed ledger that is encrypted and tamper-proof, which ensures that the data is secure
and cannot be altered without authorization. This allows researchers to securely share and
collaborate on genetic data, which can lead to new discoveries and treatments for genetic
diseases.
Another use of blockchain in genomics is to create a system of incentives for individuals to
contribute their genetic data to research projects. By providing individuals with ownership
and control over their genetic data, and by incentivizing the sharing of that data through
cryptocurrency rewards, blockchain technology can help overcome some of the privacy
concerns that have historically limited the sharing of genetic data.
Overall, the use of blockchain in genomics has the potential to revolutionize the field of
genetics and lead to new discoveries and treatments for genetic diseases. By providing a
secure and decentralized system for storing and sharing genetic data, and by creating
incentives for individuals to contribute their data to research projects, blockchain technology
can help accelerate medical research and improve human health.

6.Explain about Blockchain MOOCS?

Blockchain MOOCs (Massive Open Online Courses) are online courses that teach blockchain
technology and related topics to a large audience. These courses are designed to be accessible
to anyone with an internet connection, and they typically use a combination of video lectures,
interactive exercises, and discussion forums to help students learn about blockchain.
Blockchain MOOCs cover a wide range of topics, including the basics of blockchain
technology, smart contracts, decentralized applications (DApps), and cryptocurrencies. Some
MOOCs also cover more advanced topics, such as blockchain governance, consensus
algorithms, and scalability.
The benefits of blockchain MOOCs are that they are often free or low-cost, flexible, and
accessible. They can be accessed from anywhere in the world and at any time, allowing
students to learn at their own pace. Additionally, many blockchain MOOCs offer a certificate
upon completion, which can be useful for demonstrating knowledge and skills to employers.
There are several platforms that offer blockchain MOOCs, including Coursera, edX, Udacity,
and Blockchain at Berkeley. These platforms offer courses from top universities and industry
experts, and they are a great way for individuals to learn about blockchain technology and
related topics.

UNIT-IV

What Is Currency?
Currency is a medium of exchange for goods and services. In short, it's money, in the form
of paper and coins, usually issued by a government and generally accepted at its face value
as a method of payment.

Currency is the primary medium of exchange in the modern world, having long ago replaced
bartering as a means of trading goods and services.

In the 21st century, a new form of currency has entered the vocabulary and realm of
exchange: the virtual currency, also known as cryptocurrency. Virtual currencies, such as
Bitcoin and Ethereum, have no physical form or government backing in the United States.
They are traded and stored electronically.

Understanding Currency
Currency in some form has been in use for at least 3,000 years. At one time only in the form
of coins, currency proved to be crucial to facilitating trade across continents.1

A key characteristic of modern currency is that it is worthless in itself. That is, bills are
pieces of paper rather than coins made of gold, silver, or bronze.

The concept of using paper as a currency may have been developed in China as early as
1000 BC, but the acceptance of a piece of paper in return for something of real value took a
long time to catch on.2 Modern currencies are issued on paper in various denominations,
with fractional issues in the form of coins.

Money vs. Currency

The terms money and currency are often thought to mean the same thing. However, while
related, they have different meanings.

Money is a broader term that refers to an intangible system of value that makes the exchange
of goods and services possible, now and in the future. Currency is simply one, tangible form
of money.

Money is used in a variety of ways, all related to its future use in some kind of transaction.
For example, money is a store of value. This means that it has and maintains a certain value
that supports ongoing exchanges. People know that the money they received today
essentially will have the same value next week when they need to make a purchase or pay a
bill.

Money is also referred to as a unit of account. That means it can be used to account for
changes in the value of items over time. Businesses use money as a unit of account when
they prepare a budget or give assets a value. Profits and losses are established and relied
upon using money as a unit of account.

Money also has certain properties that allow for the smooth exchange of goods:

 It is fungible, or, exchangeable, so that it doesn't need to be re-valued for every

transaction.
 It is durable so that it lasts for many exchanges over time.
 It is convenient to carry and divide.
 It is recognizable so that people can trust it and confidently complete their exchanges
of goods and services.
 The supply of money should be stable so that its value is reliable.

Understanding what money is clarifies the meaning of currency. It's a form of money used
every day by people all over the world. Checks are another form of money (known as money
substitutes). Cigarettes have even been a form of money, as they were for soldiers during the
Second World War.3

The Bureau of Engraving and Printing is responsible for printing America's paper currency.
Its parent agency is the U.S. Dept. of the Treasury.4 The U.S. Mint, founded in 1792, is "the
nation’s sole manufacturer of legal tender coinage and is responsible for producing
circulating coinage for the nation to conduct its trade and commerce."5

Types of Currency

The United States Mint defines currency as money in the form of paper and coins that's used
as a medium of exchange.6 Currencies are created and distributed by individual countries
around the world.

U.S. currency in paper form is issued by the Bureau of Engraving and Printing as $1, $2, $5,
$10, $20, $50, and $100 bills. The $500, $1,000, $5,000, and $10,000 bills are no longer
issued but those still in circulation are redeemable at full face value. Currency issued in 1861
or earlier is no longer valid and would not be redeemable at full face value.7
U.S. currency in the form of coins is issued by the Mint in denominations of 1¢, 5¢, 10¢,
25¢, 50¢, and $1.7

There are over 200 national currencies currently in circulation.8 Including the U.S., 42
countries either use the U.S. dollar or peg their currencies directly to the dollar.9

OANDA. "US Dollar Currency."

According to the International Monetary Fund (IMF) the dollar makes up 58.8% of the
foreign exchange reserves.10
Most countries issue their own currencies. For example, Switzerland's official currency is
the Swiss franc, and Japan's is the yen.1112 An exception is the euro, which has been
adopted by most countries that are members of the European Union.13

Some countries accept the U.S. dollar as legal tender in addition to their own currencies, like
the Bahamas, Zimbabwe, and Panama.8 For some time after the founding of the U.S. Mint
in 1792, Americans continued to use Spanish coins because they were heavier and
presumably felt more valuable.9

There are also branded currencies, like airline and credit card points and Disney Dollars.
These are issued by companies and are used only to pay for the products and services to
which they are tied.

Currency Trading

The exchange rate is the current value of any currency relative to another currency. As a
result, rates are quoted for currency pairs, such as the EUR/USD (euro to U.S. dollar).
Exchange rates fluctuate constantly in response to economic and political events.14

These fluctuations create the market for currency trading. The foreign exchange
market where these trades are conducted is one of the world's largest markets, based on
sheer volume. All trades are in large volumes, with a standard minimum lot of
100,000.15 Most currency traders are professionals investing for themselves or for
institutional clients that include banks and large corporations.

The foreign exchange market has no physical address. Trading is entirely electronic and
goes on 24 hours a day to accommodate traders in every time zone.16

For the rest of us, currency exchange typically is done at an airport kiosk or a bank before
we go on a trip or while traveling.

Consumer advocates say that travelers get the best value by exchanging cash at a bank or at
an in-network ATM. Other options may have higher fees and unattractive exchange rates.

What Does Currency Mean?

The term currency refers to the tangible form of money that is paper bills and coins. It's used
as a medium of exchange that's accepted at face value for products and services as well as
for savings and the payment of debt.
What's an Example of Currency?

One example of currency is any of the U.S. paper bills you may have on hand. It is any of
the coins the U.S. issues, such as the penny, nickel, and quarter. Currency can also be the
paper bills and coins issued by the governments of other countries across the globe.

What's the Difference Between Money and Currency?

Money is an intangible system of value that provides the means for the ongoing exchange of
goods and services in a society. Money has taken many forms since it overtook the system
of bartering. Currency is a tangible form of it. So, instead of, say, bartering agricultural
produce for the clothing you may need, you can use currency (paper notes and coins) to
obtain it.

What is a blockchain token?

A token represents a set of rules encoded in a smart contract. Each token belongs to a
blockchain address. It’s essentially a digital asset that is stored securely on the blockchain.
Tokens are most often known to be cryptocurrencies such as Bitcoin or Ether tokens.
However, they can be anything from votes to licenses to ownership of a song.

Source: Blockchainhub Berlin

Tokens, as in the image above, are merely assets or access rights (or both). They grant
permission and/or ownership to a user. They are a key part of how blockchain technology
works.
Another distinction is that tokens are always created on existing blockchains.
So, tokens aren’t cryptocurrencies?
Tokens can be forms of cryptocurrency, such as Bitcoin or Ethereum. There are also
stablecoin tokens, which are ‘cryptocurrencies’ that are backed by a real-world asset.
However, tokens often have nothing to do with crypto. A cryptocurrency unit is a token that
is secured by cryptography – a token is not a cryptocurrency. A token merely means an asset
that can be utilised by the user.
This means that the word ‘blockchain token’ doesn’t need to fill you with fear. It probably
has nothing to do with crypto at all. Blockchain has spent many years trying to shed its
Bitcoin reputation, yet it is a very valuable asset even outside of crypto.
A cryptocurrency coin is merely a coin and a form of currency. A token has much wider
functionality.
To put it simply: look at Bitcoin. Bitcoin tokens can only be used as coins. They are a form of
monetary value. Bitcoins have no value outside of finance.
Ether, on the other hand, can be used as a coin but also has other uses. Many blockchain
companies use Ethereum for other uses outside of cryptocurrency. ERC-20 tokens can serve
different purposes.
So, next time you hear the word ‘token’, don’t immediately shoot it down because you don’t
want to be involved with crypto – it might have nothing to do with cryptocurrency at all.
Blockhead Technologies is creating blockchain-enabled tracking solutions, especially suited
to the mining sector.
What is Tokenization?
Tokenization is the process of transforming ownerships and rights of particular assets into a
digital form. By tokenization, you can transform indivisible assets into token forms.
For example, if you want to sell the famous painting Mona Lisa. You would need to find a
seller who wants to shell out millions of dollars for it. Clearly, this reduces the number of
people who have enough liquid cash worthy of buying it. But if we tokenize the painting.
Then we can have multiple people with whom the ownership of that painting be shared.
Specifically, fractional ownership is possible. Say someone can be 1/25 owner of a painting
or asset. It is only possible with tokenization, which provides an adequate solution over
traditional solutions. Therefore, most cryptocurrency experts will bet on its usage and future
prospects. That is why most experts suggest upskilling with a cryptocurrency course.
Tokenization in blockchain opens up multiple new possibilities for businesses and
individuals. IDC, the global market intelligence firm, puts the tokenized asset market on the
blockchain to be around $500 billion. The number is mind-blowing, but the concept of
tokenization is not new and has been around for some decades.
Before the introduction of blockchain technology, we have used tokenization, especially in
financial institutions from the 1960s, to safeguard our credit card details and transaction
statements. Even hospitals use them to keep sensitive patient information, and governments
use them to keep track of voter registration.
Traditional tokens save the information as alphanumeric tokens and later pass through a
cryptographic function. This process makes sure that each token is unique. Blockchain
tokenization is like this process.
 But blockchain tokenization provides some additional benefits.
 Flexible tokenization of assets
 It comes with security similar to that of a cryptocurrency security
 Potential for broad application of tokens
The technology behind blockchain tokens
We implement tokens using smart contracts in the blockchain, also known as token
contracts. These contracts are computer programs that help verify the business rules and help
transfer values from one user’s wallet to the next.
There are two basic ways to transfer values using a smart contract.
 First is the UTXO model. They introduced it by implementing the bitcoin technology, and
many cryptocurrencies use this model. UTXO works by determining the amount of digital
currency left in a user’s account after a successful cryptocurrency transaction.
 Then we have the Account-based model, which is used by Ethereum and Hyperledger
fabric. When an order takes place, the nodes that are the network’s validators debit the
amount from the sender’s account and credit it to the receiver’s account.
Types of Tokens
 Security tokens
They are tokens that help validate the ownership of a particular asset or rights. They are the
digital representation of an underlying asset. Along with that, they have all the benefits of
traditional securities. Moreover, in security tokens, we can program it with the help of
a cryptocurrency developer to have unique characteristics and features that suit our needs.

For example, you can trade real estate tokens and pay using the cryptocurrency of that chain.
Then there are some tokens whose value is determined by the underlying asset, such as those
with off-chain assets like real estate, invoices—the more valuable the asset, the costlier the
token.
 Platform tokens
Platform tokens are used in the blockchain to help deliver decentralized applications. For
example, you can interact with the Daaps built on the Ethereum network with token Dai.
Along with that, as a platform token as we widely use it in the Ethereum network.

 Utility tokens
Utility tokens are the most basic token on a blockchain network. They are used to access the
services, power the consensus program, pay transaction fees, and even vote for
new blockchain developments. Yes, they also work as governance tokens and are utilized in
the decision-making process of DAOs.

Suppose, you want to learn more about DAO and ways to set up a DAO to take the pain out
of managing your business. Then check out our cryptocurrency course, where we explain
cryptocurrency in an easy and fun way.
While security tokens are used to establish ownership rights, utility tokens have more
practical usage. This makes utility tokens much more valuable in terms of providing liquidity
to a platform.
Note: Crypto tokens developed for a specific purpose can also be used for other purposes. For
example, many people buy utility tokens hoping that the blockchain services and product
range will grow. The token will see an increase in value.
 Along with the above classification, we also have different types of assets that we can convert
into tokens.
Fungible Tokens
Fungible tokens mean they can be replicated or replaced. They are not unique.
Converting fungible assets into tokens is easier as you can divide them into fractional units.
The most common type of fungible token is gold. Fungible token converters have an inbuilt
abstraction layer that helps to facilitate interoperability and provide platform independence.
Non-Fungible Tokens
Non-fungible assets like a diamond, a baseball, or the painting of the Mona Lisa, which we
mentioned above, cannot be broken into fractions. But when we convert them into non-
fungible tokens, we can have full or partial ownership of them.
Non-fungible tokens are unique, and we can track the history of ownership on the blockchain.
This makes sure that no one can replicate the token. Moreover, when a non-fungible asset is
converted into a token. They start the process by providing an immutable digital signature. It
will help to determine the uniqueness of the underlying asset.
If you have been watching blockchain and crypto-related news, you might have heard how
NFT’s are the latest trend, with some of them selling for millions of dollars. The prospect of
NFT opens a lot of real-life usage for tokenization. Even fortune 500 companies are racing to
have NFT of their products.
Advantages of Tokenization
We have seen what tokenization is and the underlying technology. But it is crucial to
understand its advantages as it will help us realize the reasons for its growth. So, here are its
advantages in simple terms.
 Assets Divisibility and More Liquidity
One of the significant benefits of tokenization in the blockchain is that it opens up the
underlying assets to a broad audience. The divisibility of assets helps to achieve it. We can
now take part in investments that have a high investment threshold. Thus, removing the liquid
premium of hard-to-sell assets like prime real estate and artworks.

Tokenization also provides a broader geographic reach as blockchain is inherently global in

nature. Anyone with a computer web browser can interact and keep track of the asset from
any part of the world.
Asset divisibility also comes with the benefit of shared ownership. You can have a vacation
home with 15 other people and agree on who will use the house during a specific time. This
is just one example. There can be many more use cases.
 Faster and Cheaper transactions
We can bypass all the intermediaries involved in a transaction with cryptocurrency tokens.
Let us understand it with an example if we tokenize the deed of a house and put it on the
blockchain. Then interested parties can directly buy the deed with cryptocurrency, and the
smart contract will transfer the deed to the new owner after a successful transaction.

The process eliminates the need for a lawyer, banks, an escrow account, and even brokerage
commissions. The process is simply cheap and efficient. Moreover, crypto tokens are on the
blockchain network that means we can trade them 24/7 all around the globe.
 Transparency
In a blockchain, all of the transactions are transparent and available to any computer
interacting with the chain. That means you can dig up the previous owner history of an asset,
thus increasing trust among potential buyers. Moreover, blockchain tokens also benefit from
being immutable as all of the transactions are verified by the nodes.

All of this provides a level of trust that most traditional solutions cannot match.
How blockchain tokenization can help in enterprise systems
For a long time, we have propagated blockchain technology for enterprises. Blockchain
provides businesses the flexibility, security, and transparency that most business solutions
cannot offer.
On top of that, let us see in detail the benefits of implementing blockchain-based tokenization
in businesses.
 Considerable reduction in transaction time between payment and settlement.
 Intangible assets like copyright and patents can be tokenized to increase shareholding.
Tokenization will also help to understand the actual value of the assets.
 Asset-backed tokens like stable coins can be used for transactions. This reduces the
dependency of enterprises on banks and other intermediaries.
 Loyalty-based tokens can be used to incentivize users to use a company’s products.
Additionally, loyalty tokens bring transparency and efficiency as users interact and use
loyalty rewards across different platforms.
 Renewable energy projects are costly. So, tokens issued against them will expand the
investor pool while building trust.
Challenges to tokenization
As the world slowly adapts to blockchain technology, projects involved with blockchains like
tokenization will require increased regulations. However, the tokenization of assets functions
similarly to financial securities. But tokenized assets may not be subjected to such rules.
While most countries are implementing laws to encourage the growth of blockchain-based
projects. However, some countries are taking strict actions against them, for example. The
Securities and Exchange Commission (SEC) can classify certain tokens as securities in the
USA. Without a doubt, it will invite a large amount of external scrutiny.
Another major concern is how security tokens-backed assets will be managed. For example,
maybe thousands of foreign investors collectively own a tokenized hotel. There remains a big
question on who will manage the hotel.
Again, if the underlying assets behind a token go missing. Like tokens backed by gold.
Then there is the issue of lack of undefined rules when the real world and blockchain
environment overlaps. So, to summarize it, blockchain, a decentralized system, will still need
some kind of third party or a centralized system.
Coin Drop as a strategy for public adoption :
The world has moved to a higher sphere due to current technological innovations and
advancements in computer science by introducing virtual currency, also known as
Cryptocurrency. The Cryptocurrency that has captivated the world of computer science and
economics is a digital currency first mentioned by Wei Dai in 1998. Wei Dai expressed the
creation of a digital currency using cryptography as a control . In the white paper titled
“Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008, an anonymous person or group of
programmers known as Satoshi Nakamoto introduced bitcoin, which operates on a digital
ledger technology known as Blockchain . Blockchain is a record of digital transactions within
a distributed database in which participants share data subject to verification by most network
participants, eliminating the need for a central authority Aside from bitcoin, numerous
cryptocurrencies exist, including Auroracoin, Dogecoin, Litecoin, Peercoin, and Ripplecoin [.
Reference identified Bitcoin as the most popular, with a capital market value of one billion
US dollars in 2016. Cryptocurrency is a peer-to-peer (P2P) digital currency system that
allows electronic payments from one individual or entity to another while avoiding all forms
of financial institutions. Unlike fiat currency, it is highly divisible, virtual, and independent of
any higher authority.

The advent of this digital currency has affected several countries in different ways. For
example, Nigeria, which is regarded as the most populous country in Africa, is estimated to
have over 200 million people and is characterized by a high unemployment rate and a limited
enabling environment for entrepreneurship and business ventures. The Nigerian Bureau of
Statistics (NBS) published an unemployment rate of 33.3% in the fourth quarter of 2020, of
which 42.5% are youths. As a sequel to this, many had to resort to blockchain and
cryptocurrency to improve their economic status. Thus, within a short time, Nigeria generated
the second-largest volume of traded bitcoin worldwide . According to , Nigeria took the
world by surprise when it published a P2P bitcoin trading volume worth $1.5 billion in the
first quarter of 2021. Similarly, a leading financial information media in Nigeria known as
Nairametrics disclosed that in the third quarter, Nigeria published an all-time high trading
volume worth $1.5 billion on Paxful (an online marketplace for bitcoin trading). Abiodun
further reiterated that Nigeria is in the same ranking as China, the US, and India in Paxful’s
P2P ranking.

The number of exchanges in operation and the volume of transactions in Nigeria show that
the younger generations are fascinated and enthralled by this digital financial innovation.
According to ,there are approximately twenty cryptocurrency exchanges in Nigeria run by
young Nigerians. He also claimed that between 2018 and 2019, an Austin-based job search
site saw a 90% increase in job postings for bitcoin, other cryptocurrencies, and blockchain in
Nigeria. Despite the economic boost, the government continues to outlaw the use of
cryptocurrency, citing illegality and criminality. Regardless of the ban, Nigeria remains the
African P2P bitcoin trading leader. Given the sizeable financial yield in bitcoin trading in
Nigeria and the ardent benefits of virtual currency, can this financial technology be embraced
and continuously maintained?

This research aims at strengthening the investigation into how digital currency is disrupting
the financial sector, the relationship between the advantages of cryptocurrency and factors
critical for its adoption and sustainability. This study contributes in the following ways:

 i.

Highlights on the factors that are considered advantages of cryptocurrency and the factors
that are more critical for the adoption of cryptocurrency.

 ii.

Empirically substantiating the critical industry areas operators engage in and how it has
changed the funding and employment narratives.
Demurrage Currency:

Demur-rage currencies in Blockchain

The way we do financial transactions has been completely transformed by blockchain

technology. It has produced an unchangeable, decentralized system that guarantees security
and transparency. However, the use of demurrage currencies in blockchain technology has
been underutilized. Alternatives to conventional currencies, demurrage currencies offer
distinctive qualities that draw people in. In this post, we'll look into blockchain-based
demurrage currencies and their possible advantages.

What are Demurrage Currencies?

Demurrage currencies are those whose value depreciates over time. Demurrage currencies
aim to increase consumption by discouraging hoarding. Demurrage currencies are not a novel
idea; they have been applied in the past, notably during periods of economic unrest. The
Wörgl money, which was used in Austria during the Great Depression, is the most well-
known illustration of a demurrage currency. The local government utilized the Wörgl money
to pay for public works projects, although it depreciated at a rate of 1% each month.

Currency issued under a demurrage has an expiration date, which sets it apart from
conventional currencies. To accommodate the demands of the currency's users, this
expiration date can be changed. A currency may, for instance, lose value at a rate of 1% per
week or 1% per day. To promote spending and discourage hoarding, the expiration date was
created.

How do Demurrage Currencies Work in Blockchain?

Demurrage currencies may now be created that are safe and transparent thanks to blockchain
technology. These currencies are based on blockchain networks and use smart contracts to
function. Smart contracts are preprogrammed to automatically carry out the conditions of the
parties' agreement. Smart contracts are employed in the case of demurrage currencies to
control the currency's expiration date.

The smart contract includes a provision for the currency's expiry date. The smart contract
subtracts a specific percentage from the value of the currency at predetermined intervals
when a user gets demurrage cash. Depending on the demands of the currency's users, this
deduction can be programmed to happen daily, weekly, or monthly. It is impossible to halt or
change the automatic deduction.
Benefits of Demurrage Currencies in Blockchain

There are several benefits to using demurrage currencies in blockchain, including:

Encouraging Spending: Demurrage currencies discourage hoarding and promote spending.

This is because the currency loses value over time, so users are incentivized to spend it before
it expires.

Stability: Demurrage currencies can provide stability in times of economic uncertainty. They
can help prevent inflation and stabilize the value of a currency.

Sustainability: Demurrage currencies can promote sustainable practices by encouraging users

to spend their currency on environmentally-friendly products and services.

Decentralization: Demurrage currencies are decentralized, meaning they are not controlled by
a central authority. This makes them more resistant to manipulation and corruption.

Community Building: Demurrage currencies can be used to build communities around a

shared set of values. For example, a demurrage currency could be used to fund local public
works projects or support local businesses.

Specific Examples of Demurrage Currencies in Blockchain

There are several demurrage currencies that are currently being developed or are already in
use in blockchain. Some examples include:

Freicoin: Freicoin is a cryptocurrency that was launched in 2013. It is a demurrage currency

that loses value at a rate of 5% per year. The purpose of Freicoin is to encourage spending
and prevent hoarding. Freicoin operates on the Bitcoin blockchain.

Circles: Circles is a blockchain-based social currency that was launched in 2020. It is a

demurrage currency that loses value at a rate of 5% per month. The purpose of Circles is to
promote community building and social interactions. Circles operates on the xDai
blockchain.

Earth Dollar: Earth Dollar is a blockchain-based currency that was launched in 2018. It is a
demurrage currency that loses value at a rate of 3.5% per year. The purpose of Earth Dollar is
to promote sustainable practices and fund environmental projects. Earth Dollar operates on
the Ethereum blockchain.

Mutual Credit: Mutual Credit is a blockchain-based currency that was launched in 2016. It is
a demurrage currency that loses value at a rate of 5% per month. The purpose of Mutual
Credit is to promote community building and local economic development. Mutual Credit
operates on the Open Credit Network blockchain.

Challenges of Demurrage Currencies in Blockchain

Although demurrage currencies provide a number of advantages, they are not without
drawbacks. The biggest obstacle is user acceptability. Users could be cautious to use
demurrage currencies since they differ from conventional currencies. The difficulty of
deploying demurrage currency on a big scale presents another difficulty. Governments and
corporations must provide major technical infrastructure in order for this to be possible.

UNIT-V

1.what are The Technical challenges of blockchain

The technical challenges of blockchain include:

1. Scalability: As blockchain networks grow in size, they can become slower and less
efficient. This can make it difficult for blockchain networks to handle large numbers of
transactions or support applications with high computational requirements.
2. Security: While blockchain technology is inherently secure, there are still
vulnerabilities that can be exploited by attackers. These include attacks on consensus
mechanisms, smart contract vulnerabilities, and attacks on individual nodes.
3. Interoperability: There are many different blockchain platforms and protocols, and
they are not always compatible with each other. This can make it difficult for applications
and networks to communicate with each other, which can limit the usefulness of blockchain
technology.
4. Governance: Blockchain networks require a governance framework to make decisions
about changes to the network. This can be difficult to achieve, as there may be competing
interests and no central authority to make decisions.
5. Energy consumption: Some blockchain networks, such as Bitcoin, require significant
amounts of energy to validate transactions and maintain the network. This can have negative
environmental impacts and make blockchain less sustainable in the long term.
6. User adoption: Blockchain technology can be complex and difficult for the average
user to understand. This can limit adoption and make it difficult for blockchain networks to
achieve widespread use.

Overall, these technical challenges must be addressed in order for blockchain technology to
reach its full potential and become a widely adopted technology.

2.What are the business model challenge in Blockchain

Blockchain technology presents several challenges to traditional business models. Here are
some of the main challenges:

1. Disintermediation: Blockchain technology enables direct peer-to-peer transactions,

which reduces the need for intermediaries such as banks, brokers, and other financial
institutions. This can disrupt existing business models that rely on intermediaries for
revenue.
2. Tokenization: Tokens are digital assets that can represent ownership or value in a
particular asset or network. Tokenization can create new revenue streams, but it also requires
new business models to be developed.
3. Governance: Blockchain networks are typically decentralized and have no central
authority. This can make it difficult to govern and make decisions about changes to the
network, which can impact the sustainability of the business model.
4. Regulatory compliance: Blockchain technology presents challenges to traditional
regulatory frameworks, particularly in areas such as data privacy, consumer protection, and
financial regulation. Companies must navigate these challenges in order to comply with
existing regulations and ensure legal compliance.
5. Talent acquisition: As blockchain technology is still relatively new, there is a shortage
of skilled professionals who understand the technology and can implement it effectively.
This can make it difficult for companies to build and maintain blockchain-based systems.

Overall, businesses must navigate these challenges in order to successfully adopt blockchain
technology and create sustainable business models that leverage the benefits of the
technology.

3.Explain about Scandals and public perception in Blockchain technology anc crypto
currency?

Blockchain technology and cryptocurrencies have been surrounded by scandals and

controversies that have affected public perception of the technology. Here are some
examples:

1. Cryptocurrency scams: There have been numerous instances of cryptocurrency scams,

where people have lost significant amounts of money due to fraudulent ICOs (initial coin
offerings), Ponzi schemes, and other scams. These incidents have led to skepticism and
distrust among the public.
2. Cybersecurity breaches: Cryptocurrency exchanges and wallets have been targets of
cyber-attacks, resulting in the theft of millions of dollars worth of digital assets. These
incidents have raised concerns about the security of blockchain technology and the
vulnerability of digital assets.
3. Illegal activities: Cryptocurrencies have been associated with illegal activities such as
money laundering, drug trafficking, and other illegal transactions. This has led to negative
public perception of cryptocurrencies as being associated with criminal activities.
4. Lack of regulation: The lack of clear regulation and oversight in the cryptocurrency
industry has contributed to negative public perception, as it is perceived as a risky and
unregulated industry.

Overall , these scandals and controversies have contributed to a negative public

perception of
blockchain technology and cryptocurrencies. However, as the technology matures and more
regulation is introduced, it is expected that the public perception will improve over time.

4.Explain about Government Regulations of Blockchain?

A blockchain technology and cryptocurrencies become more mainstream, governments
around
the world are starting to take notice and regulate the industry. Here are some examples of
government regulations of blockchain:

1. Anti-Money Laundering (AML) and Know-Your-Customer (KYC) regulations:

Governments require companies dealing with cryptocurrencies to comply with AML and
KYC regulations to prevent money laundering and terrorist financing.
2. Tax regulations: Governments require individuals and companies to report their
cryptocurrency transactions and pay taxes on any profits earned from those transactions.
3. Securities regulations: Some countries consider cryptocurrencies to be securities and
require them to be registered and regulated as such.
4. ICO regulations: Governments are starting to regulate ICOs to protect investors from
fraud and ensure that they comply with securities regulations.
5. Data protection regulations: Governments are introducing regulations to protect user
data on blockchain networks, particularly with regard to personal information and privacy.

Overall, government regulations of blockchain aim to protect consumers, prevent criminal

activities, and ensure that the technology is used in a safe and responsible manner. As
blockchain technology continues to evolve, it is expected that governments will introduce
more regulations to keep up with the changing landscape.