BLOCKCHAIN TECHNOLOGIES

UNIT I:
• Introduction: Scenarios, Challenges Articulated,
• Block chain,
• Block chain Characteristics,
• Opportunities Using Block chain,
• History of Block chain.
• Evolution of Block chain :
• Evolution of Computer Applications,
• Centralized Applications,
• Decentralized Applications,
• Stages in Block chain Evolution,
• Consortia, Forks,
• Public Block chain Environments,
• Type of Players in Block chain Ecosystem,
• Players in Market
 Text books
• Text Books:
• 1) “Block chain for Enterprise Application
Developers” by Ambadas, Arshad Sarfarz Ariff,
Sham, Wiley
• 2) “Mastering Bitcoin: Programming the Open
Block chain” Andreas M. Antonpoulos,,
O’Reilly
 What is a block chain
• Blockchain is a type of technology that involves
the distribution of a ledger.
• This ledger contains transactions known
as blocks.
• These blocks are linked in the form of
a chain (hence “blockchain”) in such a way that
it is updated in every transaction.
• Additionally, because of the cryptography used,
it is impossible to alter or modify any records.
 Demo on block chain technology
• https://blockchaindemo.io/
Block chain Characteristics
 Decentralized Network:
• The network for Blockchain Technology is a
decentralized Peer to Peer Network.
• What is a peer to peer network
• A peer-to-peer network is a simple network of
computers.
• Each computer acts as a node for file sharing
within the formed network.
• Here each node acts as a server and thus there
is no central server in the network.
• This allows the sharing of a huge amount of data.
• The tasks are equally divided amongst the nodes.
• Each node connected in the network shares an
equal workload
• All the nodes are considered as Peer.
• The nodes have assigned
permission and
role as decided by the application.
Decentralization eliminates the necessity of a
Central Authority (Server) for authentication.
A decentralized network eliminates the Single
Point Failure of the Centralized System.
 Distributed Shared Ledger:
• A Ledger is a record of all relevant transactions.
• A Distributed shared Ledger is a replicated
ledger, maintained by the participating nodes as
a record of transactions.
• In this case, Block chain is the data structure of
the ledger.
• A shared ledger allows the authorized
participants to access monitor and analyze the
state of a transaction in its lifecycle.
 Consensus
• "Consensus" is a kind of validation.
• It is the mechanism by which members agree
upon the transaction being done.
• Consensus obtained blocks alone get added to
the main chain; if consensus is not achieved,
then that transaction stays away from the
main chain.
 The Consensus Protocol
• Protocol are
• Proof-of-Stake (PoS),
• Proof-of-Work (PoW),
• Delegated PoS,
• Proof-of-Authority (PoA), etc.,
are few of the popular Consensus algorithms.
 Immutable
• Once a data is encrypted into the block and
added to the Block chain, it cannot be altered
or tampered with.
• This is the immutable property.
 Security -
• SHA – 256 cryptography algorithm is used for
hashing.
• Further fixed-length has output value is generated
irrespective of the input data length. This makes it
difficult to hack.
• Also, the components that go into block generation
increases the difficulty level for hacking.
• Immutability is another factor adding to securing
information. Thus the systemic aspect of BCT
inherently provides security.
 opportunities of blockchain technology in
the upcoming years:
• Blockchain Developer
• Blockchain Project Manager
• Blockchain UX Designer
• Blockchain Quality Engineer
• Blockchain Legal Consultant
• Blockchain Solutions Architect
• accountants,
• public relations,
• crypto brokers,
• analysts, and
• crypto marketers
Opportunities Using Block chain
History of Block chain.
Evolution of Blockchain Technology
 Evolution of Blockchain Technology
• Bitcoin
• Litecoin
• Ethereum
• Ripple
• NEO
• IOTA
 Bitcoin
• The peer-to-peer network used by Bitcoin, the
first decentralized cryptocurrency, eliminates
the need for middlemen.
• Satoshi Nakamoto created the Bitcoin
cryptocurrency in 2008
• Transactions for Bitcoin are kept on the public
ledger known as the blockchain.
• Right now, there are more than 18 compared to
the current ceiling of 21 million Bitcoin tokens in
circulation.
 Lit coin:
• Charlie Lee, a former Google employee,
invented Litecoin in 2011.
• Reduces transaction speeds,
• cheaper fees, and
• a concentration of miners
• were some of the improvements he made to
Bitcoin technology.
 Ethereum
• Vitalik Buterin introduced Ethereum in July
2015.
• The second-largest cryptocurrency by market
cap right now is Ethereum, behind only
Bitcoin.
• The blockchain platform Ethereum has its own
programming language, Solidity, as well as its
own digital currency, Ether (ETH).
 Ripple:
• It is like a cryptocurrency that runs on an
• open-source peer-to-peer
• decentralized platform that enables easy
money transfers in any format.
• A blockchain-based digital payment network
and protocol called Ripple has its own money
called XRP.
 NEO
• NEO, is developed in China, is actively aiming
to overtake other key cryptocurrency players
on the international stage.
• It focuses on smart contracts, or digital
contracts, which let users draft and carry out
contracts without the aid of a middleman.
 IOTA
• IOTA, a 2016 invention, is an Internet of Things (IoT)
application .
• By 2020, there would be billions of gadgets online.
• Smart devices can communicate data and payment
information with numerous other devices in
transactions carried out throughout the day inside
this Internet of Things environment.
• IOTA wants to replace other methods of performing
transactions on smart devices as the norm.
 1. Phase 1 (Transactions)
• 2008-2013: Blockchain 1.0 ( Bitcoin Emergence):
• Blockchain 1.0 is the first blockchain type that supports
• Digital currency,
• Distributed Ledger,
• Merkle tree,
• Blockchain data, and
• PoW.
• This is the first blockchain type to support Bitcoin as a form of
currency.
• Satoshi Nakamoto first presented it in 2008.
Version 1.0 is the initial release.
• Cryptocurrencies or the Internet of Money
enable financial transactions over the
internet.
• It uses a 16-bit architecture and is the most
basic type.
 2. Phase 2 (Contracts)

• 2013-2015: Blockchain 2.0 (Ethereum Development):

• Blockchain 2.0 supports
• Smart contracts,
• Virtual machines, and
• Decentralized,
• Distributed Applications.
• Introduce a peer-to-peer network.
• A significant turning point in the history of the blockchain came
when Ethereum was introduced as a brand-new public blockchain
in 2013 with more features than bitcoin.
• By allowing users to record other assets like trademarks and
contracts in addition to bit coin transactions.
• The most recent addition expanded Ethereum’s
capabilities beyond those of a coin to include a platform
for creating decentralized apps.
• Given its capacity to support smart contracts used to
carry out diverse operations,
• The Ethereum blockchain become most popular in 2015.
• The Ethereum blockchain technology enabled it to create
a true ecosystem.
• Due to its capacity to handle smart contracts and
decentralized apps, Ethereum blockchain innovations
have the most daily transactions.
• In the cryptocurrency industry, its market cap has also
significantly increased.
 2015: Hyperledger:
• A blockchain project called Umbrella was
made public by the Linux Foundation in 2015.
• They are referred to as Hyperledger, which up
until now has served as a joint effort for
distributed ledger development.
• Hyperledger aims to encourage cross-industry
cooperation for the creation of blockchain
technology and distributed ledgers.
• Hyperledger is focused on enhancing the
performance and dependability of
contemporary systems to support cross-
border corporate transactions.
 A Transaction Processing System or TPS is software that
Transaction Processing System keeps track of transactions by processing the data in an
online recording system.
 Phase 3 (Applications)

• 2016-2018: Blockchain 3.0 (DApps):

• Blockchain 3.0 supports
• scalable,
• good user interface,
• user experience, and
• interoperable applications
 Block chain
• Blockchain is a technology that stores data and
information in a chain of blocks.
• Every block links to each other by using hash
algorithms.
• This technology uses cryptographic protocols to
enhance security.
• This technology makes it impossible to change,
edit or delete the information in blocks.
 Types of blockchain technology:
• Public blockchains
• Private blockchains
• Hybrid blockchains or consortium blockchain
 Public blockchains
• Public blockchains are open networks that
allow anyone to participate in the network i.e.
public blockchain is permissionless.
• In this type of blockchain anyone can
• join the network and
• read,
• write, or
• participate within the blockchain.
• A public blockchain is decentralized and does
not have a single entity which controls the
network..

• Data on a public blockchain are secure as it is

not possible
• to modify or alter data once they have been
validated on the blockchain.
Features of public blockchain are :
• High Security –
It is secure Due to Mining (51% rule).

• Open Environment –
The public blockchain is open for all.

• Anonymous Nature –
In public blockchain every one is anonymous. There is
no need to use your real name, or real identity,
therefore everything would stay hidden, and no one can
track you based on that.
• No Regulations –
Public blockchain doesn’t have any regulations
that the nodes have to follow.
• So, there is no limit to how one can use this
platform for their betterment
 Full Transparency –
• Public blockchain allow you to see the ledger
anytime you want.
• There is no scope for any corruption and
everyone has to maintain the ledger and
participate in consensus.
 True Decentralization –
•
In this type of blockchain, there isno a
centralized entity.
• Thus, the responsibility of maintaining the
network is on the nodes.
• They are updating the ledger, and it promotes
fairness with help from a consensus
algorithm .
 Full User Empowerment –
In any network user has to follow a lot of rules
and regulations.
In many cases, the rules might not even be a
fair one.
But not in public blockchain networks.
Here, all of the users are empowered as there is
no central authority to look over their every
move.
 Immutable –
• When something is written to the blockchain,
it can not be changed.

• Distributed –
The database is not centralized like in a client-
server approach, and all nodes in the
blockchain participate in the transaction
validation.
 What is Private Blockchain ?
• A private blockchain is managed by a network
administrator and
• participants need permission to join the network i.e., a
private blockchain is a permissioned blockchain.
• There are one or more entities which control the
network and this leads to depend on third-parties to
transact.
• In this type of blockchain only entity participating in the
transaction have knowledge about the transaction
performed whereas others will not able to access it i.e.
transactions are private.
 features of private blockchain are :
• Full Privacy –
It focus on privacy concerns.

• Private Blockchain are more centralized.

• High Efficiency and Faster Transactions –

When you distribute the nodes locally, but also
have much less nodes to participate in the
ledger, the performance is faster.
 Better Scalability –
• Being able to add nodes and services on
demand can provide a great advantage to the
enterprise.
 Public BlockChain
S.no Basis of Comparison Private BlockChain

In this type of blockchain anyone can In this type of

read, blockchain read and
write and write is done upon
1. Access
participate in a blockchain. invitation, hence it is a
it is permissionless blockchain. permissioned
It is public to everyone. blockchain.

2. Network Actors Don’t know each other Know each other

Decentralized Vs A private blockchain is
3. A public blockchain is decentralized.
Centralized more centralized.

4. Speed Slow Fast

Transaction per second

Transactions per second are lesser in a
5. Transactions pre second is more as compared
public blockchain.
to public blockchain.
6. Security It is more secure Less secure.

It consumes more electrical energy Private blockchains

7. Energy Consumption consume a lot less
than a private blockchain.
energy and power.

Proof of Elapsed Time

Some are
(PoET),
proof of work,
Raft, and
8. Consensus algorithms proof of stake,
Istanbul BFT can be used
proof of burn,
only in case of private
proof of space etc.
blockchains.

Bitcoin, Ethereum, Monero, Zcash, Dash, R3 (Banks), EWF (Energy),

9 Examples –
Litecoin, Stellar, Steemit etc. B3i (Insurance), Corda.
 HYBRID BLOCKCHAIN
OR

CONSORTIUM
• It is a privately owned but not by a single
entity or individual.
• It is a group of individuals from different
sectors or a group of companies owns such a
chain.
• It also differs in functions since a HYBRID
blockchain is used to collaborate data from
multiple sources.
• It helps keep the flow of data secured and
efficient between entities.
 Advantages and Disadvantages of Consortium
Blockchain
Advantages of Consortium Blockchain Disadvantages of Consortium Blockchain

Since there are multiple owners from different

organizations, there is no centralization or A consortium blockchain can get corrupted if one
monopoly. or more owners are corrupt.

Rule breakers are detected easily. Validation is Launching such a blockchain is difficult since you
carried out by trusted nodes only, must get more than one enterprise to agree to a
communication protocol.

There is a sharing of data amongst the Upgrading the blockchain is a long and tedious
consortium only, which helps build companies’ task requiring every member’s permission.
trust in one another.

There is no transaction fee involved. There are chances of frequent disputes between
the member organizations.
Characteristics of a Hybrid Blockchain
 1. Partially Decentralized
• In decentralization, it falls in the middle as
there are nodes from different organizations.
These nodes have an equal say in the
blockchain, and a consensus is required for
every transaction to pass through.
• With a limited number of nodes, the
transactions often take less time.
• Also, there is no monopoly inside the
blockchain regarding any decisions.
 2. More Controllable
• A public blockchain lacks the flexibility to
change the data entered in a block once it’s
done.
• Such an issue does not occur with the
consortium blockchain.
• It can be done very easily if the consensus
agrees to change certain data.
 3. Privacy of Data
• Since a consortium blockchain allows only a few
nodes on the blockchain, few people get the
data shared on the blockchain.
• Such an arrangement helps ensure that the data
stored is untampered and completely secure.
• Only a few users have the right to access the
data, and
• there cannot be any modification without the
whole network of nodes agreeing.
 4. Faster Transactional Speed
• Since there are lesser nodes on a consortium
blockchain, there is not much competition to
verify a transaction.
• This helps in keeping the transactional speed
very high.
• It is easier and faster to reach a consensus
than a public blockchain.
 Applications of Consortium Blockchain

• 1. Finance and Banking

• 2. Logistics
• 3. Healthcare and Insurance