Module 1

Syllabus: Distributed systems, CAP theorem, Byzantine Generals problem,

Consensus. The history of blockchain, Introduction to blockchain, Various
technical definitions of blockchains, Generic elements of a blockchain,
Features of a blockchain, Applications of blockchain technology, Tiers of
blockchain technology, Consensus in blockchain, CAP theorem and
blockchain, Benefits and limitations of blockchain.

Introduction
Blockchain is a buzzword in today’s technology and this technology is described as the most
disruptive technology of the decade. Thus, Blockchain is used for the secure transference of
items like money, contracts, property rights, stocks, and even networks without any requirement
of Third Party Intermediaries like Governments, banks, etc. Once the data is stored in the
Blockchain it becomes very difficult to manipulate the stored data. A Blockchain is a Network
Protocol like SMTP. However, Blockchain cannot be run without the Internet. BlockChain is
useful in many areas like Banking, Finance, Healthcare, Insurance, etc. A blockchain is an open,
distributed ledger that can record transactions between two parties efficiently and in a verifiable
and permanent way without the need for a central authority.

Key Characteristics:
Open: Anyone can access blockchain.
Distributed or Decentralised: Not under the control of any single authority.
Efficient: Fast and Scalable.
Verifiable: Everyone can check the validity of information because each node maintains a copy
of the transactions.
Permanent: Once a transaction is done, it is persistent and can’t be altered.

Blockchain can be defined as the Chain of Blocks that contain some specific Information. Thus,
a Blockchain is a ledger i.e file that constantly grows and keeps the record of all transactions
permanently. This process takes place in a secure, chronological (Chronological means every
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transaction happens after the previous one) and immutable way. Each time when a block is
completed in storing information, a new block is generated

1.1 Distributed Systems:

Understanding distributed systems is essential to our understanding of blockchain, as blockchain
was a distributed system at its core. It is a distributed ledger that can be centralized or
decentralized. A blockchain is originally intended to be and is usually used as a decentralized
platform. It can be thought of as a system that has properties of both decentralized and
distributed paradigms. It is a decentralized-distributed system.

Distributed systems are a computing paradigm whereby two or more nodes work with each other
in a coordinated fashion to achieve a common outcome. It is modeled in such a way that end
users see it as a single logical platform. For example, Google's search engine is based on a large
distributed system; however, to a user, it looks like a single, coherent platform.
A node can be defined as an individual player in a distributed system. All nodes are capable of
sending and receiving messages to and from each other. There is no Central Server or System
which keeps the data of Blockchain. The data is distributed over Millions of Computers around
the world which are connected with the Blockchain. This system allows Notarization of Data as
it is present on every Node and is publicly verifiable.A node can be defined as an individual
player in a distributed system. All nodes are capable of sending and receiving messages to and
from each other.

Nodes can be honest, faulty, or malicious and have their own memory and processor. A node that
can exhibit arbitrary behavior is also known as a Byzantine node. This arbitrary behavior can be
intentionally malicious, which is detrimental to the operation of the network. Generally, any
unexpected behavior of a node on the network can be categorized as Byzantine. This term
arbitrarily encompasses any behavior that is unexpected or malicious. The main challenge in
distributed system design is coordination between nodes and fault tolerance. Even if some
if the nodes become faulty or network links break, the distributed system should tolerate this and
should continue to work flawlessly in order to achieve the desired result. This has been an area of

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active research for many years and several algorithms and mechanisms has been proposed to
overcome these issues.

A network of nodes: A node is a computer connected to the Blockchain Network. Node gets
connected with Blockchain using the client. Client helps in validating and propagates transaction
on to the Blockchain. When a computer connects to the Blockchain, a copy of the Blockchain
data gets downloaded into the system and the node comes in sync with the latest block of data on
the Blockchain. The Node connected to the Blockchain which helps in the execution of a
Transaction in return for an incentive is called Miners.

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Disadvantages of current transaction system:

●​ Cash can only be used in low amount transaction locally.
●​ Huge waiting time in the processing of transactions.
●​ Need to third party for verification and execution of Transaction make the process
complex.
●​ If the Central Server like Banks is compromised, whole System is affected including the
participants.
●​ Organization doing validation charge high process thus making the process expensive.
Building trust with Blockchain:
Blockchain enhances trust across a business network. It’s not that you can’t trust those who you
conduct business with, it's that you don’t need to when operating on a Blockchain network.
Blockchain builds trust through the following five attributes:
Distributed: The distributed ledger is shared and updated with every incoming transaction
among the nodes connected to the Blockchain. All this is done in real-time as there is no central
server controlling the data.
Secure: There is no unauthorized access to Blockchain made possible through Permissions and
Cryptography
Transparent: Because every node or participant in Blockchain has a copy of the Blockchain
data, they have access to all transaction data. They themselves can verify the identities without
the need for mediators.
Consensus-based: All relevant network participants must agree that a transaction is valid. This
is achieved through the use of consensus algorithms.

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Flexible: Smart Contracts which are executed based on certain conditions can be written into the
platform. Blockchain Network can evolve in pace with business processes
1.2 CAP theorem
The CAP theorem, also known as Brewer's theorem, was introduced by Eric Brewer in 1998 as a
conjecture. In 2002, it was proven as a theorem by Seth Gilbert and Nancy Lynch. The theorem
states that any distributed
system cannot have consistency, availability, and partition tolerance simultaneously:
●​ Consistency is a property that ensures that all nodes in a distributed system have a single,
current, and identical copy of the data. Consistency is achieved using consensus
algorithms in order to ensure that all nodes have the same copy of the data. This is also
called state machine replication. The blockchain is a means for achieving state machine
replication.
●​ Availability means that the nodes in the system are up, accessible for use, and are
accepting incoming requests and responding with data without any failures as and when
required. In other words, data is available at each node and the nodes are responding
The CAP theorem states that a distributed database system has to make a tradeoff between
Consistency and Availability when a Partition occurs. A distributed database system is bound to
have partitions in a real-world system due to network failure or some other reason.

The CAP Theorem is comprised of three components (hence its name) as they relate to
distributed data stores:

Consistency. All reads receive the most recent write or an error.

Availability. All reads contain data, but it might not be the most recent. Partition tolerance.

The CAP Theorem is comprised of three components (hence its name) as they relate to
distributed data stores:

●​ Consistency. All reads receive the most recent write or an error.

●​ Availability. All reads contain data, but it might not be the most recent.

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●​ Partition tolerance. The system continues to operate despite network failures (ie; dropped
partitions, slow network connections, or unavailable network connections between
nodes.)
In normal operations, your data store provides all three functions. But the CAP theorem
maintains that when a distributed database experiences a network failure, you can provide either
consistency or availability.

It’s a tradeoff. All other times, all three can be provided. But, in the event of a network failure, a
choice must be made.In the theorem, partition tolerance is a must. The assumption is that the
system operates on a distributed
data store so the system, by nature, operates with network partitions. Network failures will
happen, so to offer any kind of reliable service, partition tolerance is necessary—the P of CAP.
That leaves a decision between the other two, C and A. When a network failure happens, one can
choose to guarantee consistency or availability:
●​ High consistency comes at the cost of lower availability.
●​ High availability comes at the cost of lower consistency.

1.3 Byzantine Generals problems

In 1982, a thought experiment was proposed by Lamport et al. in their research paper, The
Byzantine Generals Problem
In this problem, a group of army generals who lead different parts of the Byzantine army is
planning to attack or retreat from a city. The only way of communicating with them is via a
messenger. They need to agree to strike at the same time to win. The issue is that one or more
generals might be traitors who could send a misleading message. Moreover, the messenger could
be captured by the city, resulting in no message delivery. Therefore, there is a need for a viable
mechanism that allows agreement among the generals, even in the presence of the treacherous
ones, and message loss, so that the attack can still take place at the same time. As an analogy for
distributed systems, the generals can be considered as honest nodes, the traitors as Byzantine
nodes (that is, nodes with arbitrary behavior), the messenger can be thought of as a channel of

communication with the generals, and a captured messenger as a delayed or lost message.

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Several solutions were presented to this problem in the paper by Lamport et al. in 1982.
This type of inconsistent behavior of Byzantine nodes can be intentionally malicious, which is
detrimental to the operation of the network. Any unexpected behavior by a node on the network,
whether malicious or not, can be categorized as Byzantine.
A small-scale example of a distributed system is shown in the following diagram. This
distributed system has six nodes, of which one (N4) is a Byzantine node, leading to possible data
inconsistency. L2 is a link that is broken or slow, and this can lead to a partition in the network:

Figure 1.1: Design of a distributed system: N4 is a Byzantine node and L2 is broken or a slow
network link
Two key challenges of a distributed system design are the coordination between nodes and fault
tolerance. Even if some (a certain threshold dictated by the consensus protocol) of the nodes
become faulty or network links break, the distributed system should be able to tolerate this and

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continue to work to achieve the desired result. This problem has been an active area of
distributed system design research for many years, and several algorithms and mechanisms have
been proposed to overcome these issues.

1.4 History of Blockchain:

●​ In 1991, researcher scientists named Stuart Haber and W. Scott Stornetta introduced
Blockchain Technology. These scientists wanted some Computational Practical Solution
for time-stamping the digital documents so that they couldn’t be tempered or misdated.
So both scientists together developed a system with the help of Cryptography. In this
System, the time-stamped documents are stored in a Chain of Blocks.
●​ After that in 1992, Merkle Trees formed a legal corporation by using a system developed
by Stuart Haber and W. Scott Stornetta with some more features. Hence, Blockchain
Technology became efficient to store several documents to be collected into one block.
Merkle used a Secured Chain of Block which stores multiple data records in a sequence.
However, this Technology became unused when Patent came into existence in 2004
●​ However, in the same year 2004, Cryptographic activist Hal Finney introduced a system
for digital cash known as “Reusable Proof of Work”. This step was the game-changer in
the history of Blockchain and Cryptography. This System helps others to solve the
Double Spending Problem by keeping the ownership of tokens registered on a trusted
server.
Now we will look at the early history of computing and computer networks and will discuss how
these technologies evolved and contributed to the development of Bitcoin in 2008:
●​ 1976 – Diffie–Hellman worked on securely exchanging cryptographic keys.
●​ 1978 – Invention of public key cryptography.
●​ 1979 – Invention of Merkle trees (hashes in a tree structure) by Ralph C. Merkle.
●​ 1980s – Development of TCP/IP.
●​ 1980 – Protocols for public key cryptosystems, Ralph C. Merkle.
●​ 1982 – Blind signatures proposed by David Chaum.
●​ 1982 – The Byzantine Generals problem.
●​ 1985 – Work on elliptic curve cryptography by Neal Koblitz and Victor Miller.

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●​ 1991 – Haber and Stornetta work on tamper-proofing document timestamps. This can be
considered the earliest idea of a chain of blocks or hash chains.
●​ 1992 – Cynthia Dwork and Moni Naor publish Pricing via Processing or Combatting
Junk Mail. This is considered the first use of PoW.
●​ 1993 – Haber, Bayer, and Stornetta upgraded the tamper-proofing of document
timestamps system with Merkle trees.used in some banks.
●​ 1998 – Bit Gold, a mechanism for decentralized digital currency, invented by Nick
Szabo. It used hash chaining and Byzantine Quorums.
●​ 1999 – Emergence of a file-sharing application mainly used for music sharing, Napster,
which is a P2P network, but was centralized with the use of indexing servers.
●​ 1999 – Development of a secure timestamping service for the Belgian project TIMESEC.
●​ 2000 – Gnutella file-sharing network, which introduced decentralization.
●​ 2001 – Emergence of BitTorrent and Distributed Hash Tables (DHTs).
●​ 2002 – Hashcash by Adam Back.
●​ 2004 – Development of B-Money by Wei Dei using Hashcash.
●​ 2004 – Hal Finney, the invention of the reusable PoW system.
●​ 2005 – Prevention of Sybil attacks by using computation
●​ 2009 – Bitcoin (first blockchain).

1.5 Various Technical Definition of blockchains

There are some different ways that blockchain may be defined; the following are two of the most
widely accepted definitions:
Layman’s definition: Blockchain is an ever-growing, secure, shared recordkeeping system in
which each user of the data holds a copy of the records, which can only be updated if a majority
of parties involved in a transaction agree to update.
Technical definition: Blockchain is a peer-to-peer, distributed ledger that is cryptographically
secure, append-only, immutable (extremely hard to change), and updateable only via consensus
among peers.

1.6 Generic elements of a blockchain

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The structure of a generic blockchain can be visualized with the help of the following diagram:

1.​ Addresses
Addresses are unique identifiers that are used in a transaction on the blockchain to denote
senders and recipients. An address is usually a public key or derived from a public key.
2.​ Transaction
A transaction is the fundamental unit of a blockchain. A transaction represents a transfer
of value from one address to another.
3.​ Block
A block is composed of multiple transactions and some other elements such as the
previous block hash (hash pointer), timestamp, and nonce.
4.​ Peer-to-peer network
This is a network topology whereby all peers can communicate with each other and send
and receive messages.
5.​ Scripting or programming language
This element performs various operations on a transaction. Transaction scripts are
predefined sets of commands for nodes to transfer tokens from one address to another and
perform various other functions.
6.​ Virtual machine
This is an extension of a transaction script. A virtual machine allows Turing complete
code to be run on a blockchain (as smart contracts) whereas a transaction script can be
limited in its operation.
7.​ Nodes

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Nodes are storage units that store massive amounts of blockchain data. Nodes can be
computers, servers and laptops. All nodes are connected to the blockchain network.
When changes are made to blockchain data, nodes can quickly detect them.
8.​ Smart contracts
These programs run on top of the blockchain and encapsulate the business logic to be
executed when certain conditions are met.
9.​ Peer-to-peer network
A peer-to-peer network is a network topology wherein all peers can communicate with
each other directly and send and receive messages.
10.​Ledger
The ledger is composed of blocks, each containing a set of transactions, a timestamp, and
a reference (hash) to the previous block, forming a chronological chain.
Public Ledger: It is open and transparent to all. Anyone in the blockchain network can
read or write something.
Distributed Ledger: In this ledger, all nodes have a local copy of the database. Here, a
group of nodes collectively execute the job i.e verify transactions, add blocks in the
blockchain.
Decentralized Ledger: In this ledger, no one node or group of nodes has a central
control. Every node participates in the execution of the job.
The following structure is a simple block diagram that depicts a generic block:

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Figure 1.6: The generic structure of a block

Generally, there are just a few attributes that are essential to the functionality of a block:
●​ The block header: which is composed of the hash of the previous block’s header
●​ The timestamp, nonce, Merkle root, and the block body that contains the
transactions.
A high-level diagram of blockchain architecture highlighting the key elements mentioned
previously is shown as follows:

Figure 1.7: Generic structure of a blockchain network

The preceding diagram shows a four-node blockchain network (at the top), each maintaining a
chain of blocks, virtual machine, state machine, and address. The blockchain is then further
magnified (middle) to show the structure of the chain of blocks, which is again magnified
(bottom) to show the structure of a transaction. Note that this is a generic structure of a
blockchain.
1.7 Features of blockchain
1.​ Decentralization: Unlike traditional databases controlled by a single entity, a blockchain
is maintained by multiple nodes (computers) that participate in the network. This
decentralization reduces the risk of single points of failure.

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2.​ Transparency: Every transaction on the blockchain is visible to all participants in the
network. This transparency helps in building trust, as anyone can verify the authenticity
of the data.
3.​ Immutability: Once a transaction is recorded in a block and added to the blockchain, it
cannot be altered or deleted without consensus from the majority of the network. This
feature protects against fraud and ensures data integrity.
4.​ Security: Blockchain uses cryptographic techniques to secure transactions and control
the creation of new blocks. Each block contains a unique hash of the previous block,
creating a chain that is difficult to tamper with.
5.​ Consensus Mechanisms: Blockchain employs various algorithms (such as Proof of
Work, Proof of Stake, etc.) to achieve agreement among nodes on the validity of
transactions. This ensures that all participants in the network have a consistent view of
the ledger.
1.8 Tiers of blockchain
1.​ Blockchain 1.0: This tier was introduced with the invention of Bitcoin, and it is primarily
used for cryptocurrencies. Bitcoin was the first implementation of cryptocurrencies, it
makes sense to categorize this first generation of blockchain technology to include only
cryptographic currencies. Applications such as payments and applications. This
generation started in 2009 when Bitcoin was released and ended in early 2010.
2.​ Blockchain 2.0: This second blockchain generation is used by financial services and
smart contracts. This tier includes various financial assets, such as derivatives, options,
swaps, and bonds. Applications that go beyond currency, finance, and markets are
incorporated at this tier. Ethereum, Hyperledger, and other newer blockchain platforms
are considered part of Blockchain 2.0. This generation started to emerge in 2010.
3.​ Blockchain 3.0: This third blockchain generation is used to implement applications
beyond the financial services industry and is used in government, health, media, the arts,
and justice. This generation of blockchain emerged around 2012 when multiple
applications of blockchain technology in different industries were researched.
4.​ Blockchain X.0: This generation represents a vision of blockchain singularity where one
day there will be a public blockchain service available that anyone can use just like the

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Google search engine. It will provide services for all realms of society. It will be a public
and open distributed ledger with general-purpose rational agents (Machina economicus)
running on a blockchain, making decisions, and interacting with other intelligent
autonomous agents on behalf of people, and regulated by code instead of law or paper
contracts.
1.9 Consensus
Consensus is a process of agreement between distrusting nodes on the final state of data. To
achieve consensus, different algorithms are used. It is easy to reach an agreement between two
nodes (in client-server systems, for example), but when multiple nodes are participating in a
distributed system and they need to agree on a single value, it becomes quite a challenge to
achieve consensus. This process of attaining agreement common state or value among multiple
nodes despite the failure of some nodes is known as distributed consensus.
There are various requirements for a consensus mechanism. The following describes these
requirements:
• Agreement: All honest nodes decide on the same value.
• Integrity: This is a requirement that no node can make the decision more than once in a
single consensus cycle.
• Validity: The value agreed upon by all honest nodes must be the same as the initial
value proposed by at least one honest node.
• Fault tolerant: The consensus algorithm should be able to run correctly in the presence
of faulty or malicious nodes (Byzantine nodes).
• Termination: All honest nodes terminate the execution of the consensus process and
eventually reach a decision.

1.10 Consensus in blockchain

Consensus is a distributed computing concept that has been used in blockchain in order to
provide a means of agreeing to a single version of the truth by all peers on the blockchain
network
1.​ Proof of Work (PoW): This consensus algorithm is used to select a miner for the next
block generation. Bitcoin uses this PoW consensus algorithm. The central idea behind
this algorithm is to solve a complex mathematical puzzle and easily give out a solution.

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This mathematical puzzle requires a lot of computational power and thus, the node who
solves the puzzle as soon as possible gets to mine the next block.
2.​ Proof of Stake (PoS): This is the most common alternative to PoW. Ethereum has shifted
from PoW to PoS consensus. In this type of consensus algorithm, instead of investing in
expensive hardware to solve a complex puzzle, validators invest in the coins of the
system by locking up some of their coins as stakes. After that, all the validators will start
validating the blocks. Validators will validate blocks by placing a bet on them if they
discover a block that they think can be added to the chain. Based on the actual blocks
added in the Blockchain, all the validators get a reward proportional to their bets, and
their stake increases accordingly. In the end, a validator is chosen to generate a new block
based on its economic stake in the network. Thus, PoS encourages validators through an
incentive mechanism to reach an agreement.
3.​ Delegated Proof Of Stake (DPoS): This is another type of Proof of Stake consensus
algorithm. This type of consensus mechanism depends on the basis of the delegation of
votes. The users delegate their votes to other users. Whichever user then mines the block
will distribute the rewards to the users who delegated to that particular vote.
4.​ Proof of Burn (PoB): With PoB, instead of investing in expensive hardware equipment,
validators ‘burn’ coins by sending them to an address from where they are irretrievable.
By committing the coins to an unreachable address, validators earn the privilege to mine
on the system based on a random selection process. Thus, burning coins here means that
validators have a long-term commitment in exchange for their short-term loss. Depending
on how the PoB is implemented, miners may burn the native currency of the Blockchain
application or the currency of an alternative chain, such as bitcoin. The more coins they
burn, the better their chances of being selected to mine the next block. While PoB is an
interesting alternative to PoW, the protocol still wastes resources needlessly. And it is
also questioned that mining power simply goes to those who are willing to burn more
money.
5.​ Proof of Capacity: In the Proof of Capacity consensus, validators are supposed to invest
their hard drive space instead of investing in expensive hardware or burning coins. The

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more hard drive space validators have, the better their chances of getting selected for
mining the next block and earning the block reward.
6.​ Proof of Elapsed Time: PoET is one of the fairest consensus algorithms which chooses
the next block using fair means only. It is widely used in permissioned Blockchain
networks. In this algorithm, every validator on the network gets a fair chance to create
their own block. All the nodes do so by waiting for a random amount of time, adding
proof of their wait in the block. The created blocks are broadcasted to the network for
others’ consideration. The winner is the validator which has the least timer value in the
proof part. The block from the winning validator node gets appended to the Blockchain.
There are additional checks in the algorithm to stop nodes from always winning the
election, and stop nodes from generating the lowest timer value.
7.​ Proof of Elapsed Time (PoET): Introduced by Intel in 2016, PoET uses a Trusted
8.​ Execution Environment (TEE) to provide randomness and safety in the leader- election
process via a guaranteed wait time. It requires the Intel SGX (Software Guard
Extensions) processor to provide the security guarantee for it to be secure.
9.​ Proof of Deposit (PoD): In this case, nodes that wish to participate in the network have
to make a security deposit before they can mine and propose blocks. This mechanism is
used in the Tendermint blockchain.
10.​Proof of Importance (PoI): This idea is significant and different from PoS. PoI not only
relies on how large a stake a user has in the system, but it also monitors the usage and
movement of tokens by the user in order to establish a level of trust and importance. It is
used in the NEM coin blockchain.
11.​ Federated consensus or federated Byzantine consensus: This mechanism is used in
the stellar consensus protocol. Nodes in this protocol retain a group of publicly-trusted
peers and propagate only those transactions that have been validated by the majority of
trusted nodes.
12.​ Reputation-based mechanisms: As the name suggests, a leader is elected by the
reputation it has built over time on the network. It is based on the votes of other
members.
13.​ Practical Byzantine Fault Tolerance (PBFT): This mechanism achieves SMR, which
provides tolerance against Byzantine nodes. Various other protocols, including

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PBFT,PAXOS, RAFT, and Federated Byzantine Agreement (FBA), are also being used or
have been proposed for use in many different implementations of distributed systems and
blockchains.
14.​Proof of Activity (PoA): This scheme is a combination of PoS and PoW, which ensures
that a stakeholder is selected in a pseudorandom but uniform fashion. This is a
comparatively more energy-efficient mechanism as compared to PoW. It utilizes a new
concept called "Follow the Satoshi." In this scheme, PoW and PoS are combined together
to achieve consensus and a good level of security. This scheme is more energy efficient as
PoW is used only in the first stage of the mechanism; after the first stage, it switches to
PoS, which consumes negligible energy.
1.11 Application of Blockchain
1.​ Asset Management is one of the biggest applications of Blockchain. Blockchain plays a
big part in the financial world and it is no different in asset management.
2.​ Healthcare using smart contracts These smart contracts mean that a contract is made
between 2 parties without needing any intermediary.
3.​ Cryptocurrency
4.​ Online Identity Verification
5.​ Copyright and Royalties: this can be rectified using Blockchain which has a detailed
ledger of artist rights.

1.12 Benefits and limitations of blockchain:

Numerous benefits of blockchain technology are being discussed in the industry and proposed by
thought leaders around the world in blockchain space. The top 10 benefits are listed and
discussed as follows.
1.​ Decentralization :This is a core concept and benefit of blockchain. There is no need for
a trusted third party intermediary to validate transactions; instead a consensus mechanism
is used to agree on the validity of transactions.
2.​ Transparency and trust :As blockchains are shared and everyone can see what is on the
blockchain, this allows the system to be transparent and as a result trust is established.

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This is more relevant in scenarios such as the disbursement of funds or benefits where
personal discretion should be restricted.
3.​ Immutability: Once the data has been written to the blockchain, it is extremely difficult
to change it back. It is not truly immutable but, due to the fact that changing data is
extremely difficult and almost impossible, this is seen as a benefit to maintaining an
immutable ledger of transactions.
4.​ High availability:As the system is based on thousands of nodes in a peer-to-peer
network, and the data is replicated and updated on each and every node, the system
becomes highly available. Even if nodes leave the network or become inaccessible, the
network as a whole continues to work, thus making it highly available.
5.​ Highly secure:All Transactions on a blockchain are cryptographically secured and
provide integrity.
6.​ Simplification of current paradigms:The current model in many industries such as
finance or health is rather disorganized, wherein multiple entities maintain their own
databases and data sharing can become very difficult due to the disparate nature of the
systems. But as a blockchain can serve as a single shared ledger among interested parties,
this can result in simplifying this model by reducing the complexity of managing the
separate systems maintained by each entity.
7.​ Faster dealings:In the financial industry, especially in post-trade settlement functions,
blockchain can play a vital role by allowing the quicker settlement of trades as it does not
require a lengthy process of verification, reconciliation, and clearance because a single
version of agreed upon data is already available on a shared ledger between financial
organizations.
8.​ Cost saving:As no third party or clearing houses are required in the blockchain model,
this can massively eliminate overhead costs in the form of fees that are paid to clearing
houses or trusted third parties.

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Blockchain Technology (BCS613A)​ ​ ​ ​ ​ ​ Module 1

Prof.Preethi S, Dept. CSE, Dr.TTIT,KGF​ ​ ​ ​ ​ ​ ​ 19