BLOCK CHAIN TECHNOLOGY

(Open Elective)

Dr. K. VENKATA RAMANA

Associate Professor

Dept. of Computer Science Engineering

ANDHRA UNIVERSITY
Blockchain

“ Blockchain is Peer – to – Peer, distributed public

ledger that is cryptographically secure, append only,
immutable (extremely hard to change), and updatable only
via consensus or agreement among peers.”
Components of Blockchain
Blockchain Components
• Transaction:
 A transaction is fundamental unit of Block chain. It represent
transfer of value from one address to another.

 The network of computers in blockchain stores the transactional

data as copy with the storage typically referred to as a digital
ledger.

• Block:
 A Block is composed by multiple transactions and other
elements as metadata of block.

 In the field of cryptocurrency, blocks are like records that store

transactions like a record book, and those are encrypted into a
hash tree.

 Incase of bitcoin, block contains about 2000 transactions. The

size of each block is approximately 1MB.
Blockchain Components
• Miners:
 The process of adding transactions to a blockchain is called
mining.
 People (Nodes) involved in this mining process called miners.
 Blockchain mining is a process to validate each step in the
transactions while operating like crypto currencies.

• Nodes:
 Nodes are network participants and their devices permit them to
keep track of the distributed ledger and serve as communication
hubs in various network tasks.
 A block broadcasts all the network nodes when a miner looks to
add a new block in transactions to the blockchain.
Blockchain Components
 Nodes hold and distribute copies of the entire blockchain ledger
right from the genesis block (i.e., first block in the blockchain)
thereby helping in validating the history of the blockchain.

 A node can propose and validate transaction and perform mining

to facilitate consensus and secure the blockchain.

• Consensus Mechanisms: (also known as consensus protocols

or consensus algorithms)
 A consensus is a fault-tolerant mechanism that is used in
computer and blockchain systems to achieve the necessary
agreement on a single state of the network among distributed
processes or multi-agent systems, such as with
cryptocurrencies.
Blockchain Components
Smart Contract:
 A smart contract is a computer program or a transaction protocol that is
intended to automatically execute, control or document events and
actions according to the terms of a contract or an agreement.

 Smart contracts are simply programs stored on a blockchain that run

when predetermined conditions are met.
Generic Structure of Block

Block
Generic Structure of Block
Generic Structure of Block
Generic Structure of Block
Cont..
Working of Block Chain
Working of Block Chain
Step 1: Let’s suppose two users in a Blockchain network, Alex and
Brown, want to create a new transaction. Alex sends 50 BTC to
Brown. They will request for the transaction to be mined.
Step 2: The transaction can take place if all the other participants in the
network verify it as a genuine transaction. Thus, each user will
receive the request to verify the transaction between Alex and
Brown.
Step 3: The data of the transaction requires a hash value now to process
the transaction. The hash function takes any data of input and
converts it into a unique 64-bit string of output.
Working of Block Chain

Each client will check certain information about the transaction,

such as does Alex have sufficient funds to make the transaction.
Step 4: Then, the transaction is forwarded to the participating nodes of
the network. Once the verification is done, the transaction is
ready to take place. Now, the transaction is added into the
memory pool of Blockchain.
Step 5: Every block has a defined memory pool; hence several other
verified transactions combine together to create a new block of
the ledger. There can be a number of transactions in the block.
Working of Block Chain

Step 6: The created block is then added to the existing Blockchain.

Each new block will have a block header consisting of time-
stamp, hash, previous hash, and transaction data summary. Every
block has its unique hash value, which acts like its signature, or
you can say fingerprint.
Step 7: The block is mined with the help of the hash function.
The above process repeats itself, and new blocks continue to get
added into the Blockchain permanently after every time period.
Types of Block chain:

 Public Blockchain
 Private Blockchain
 Consortium Blockchain
 Hybrid blockchains
Types of Block chain:
Public Blockchain:
• A public blockchain is a concept where anyone is free to join and take
part in the core activities of the blockchain network.

• Anyone can read, write, and audit the ongoing activities on a public
blockchain network, which helps to achieve the self-determining,
decentralized nature often authorized when blockchain is discussed.

• Data on a public blockchain is secure as it is not possible to modify

once they are validated.

• The public blockchain is fully decentralized, it has access and control

over the ledger, and its data is not restricted to persons, is always
available and the central authority manages all the blocks in the chain.
Cont..
Public Blockchain:
• There is publicly running all operations. Due to no one handling it
singly then there is no need to get permission to access the public
blockchain.
• Anyone can run nodes and start mining.
• Anyone can review or audit the blockchain using a blockchain
explorer.
• Anyone can engage in transactions.
Cont..
Public Blockchain
Cont..
Examples: Bitcoin, Ethereum, and Litecoin blockchain systems

are public
Case Studies:
Private Blockchain:

• It is a permission – based Blockchain that is used in a closed

network. They are typically utilized within a company or
organization where only a few people are allowed to participate in the
network.

• Private blockchains are only partially decentralized because public

access to these blockchains is restricted.

• The level of security, authorizations, permissions, accessibility is in

the hands of the controlling organization.
Private Block chain:
Private Block chain:
Private Blockchain:
Example: Hyperledger projects (Fabric, Sawtooth), Corda

Use Cases:
Hybrid Blockchain:
 It uses the features of both types of blockchains that is one can have a
private permission-based system as well as a public permission-less
system.

 With such a hybrid network, users can control who gets access to which
data stored in the blockchain. Only a selected section of data or records
from the blockchain can be allowed to go public keeping the rest as
confidential in the private network.

 A transaction in a private network of a hybrid blockchain is usually

verified within that network. But users can also release it in the public
blockchain to get verified.
Hybrid Blockchain:
Hybrid Blockchain:
Example: Dragonchain.
Use cases:
Consortium Blockchain:
 A consortium blockchain is also known as federated
Blockchain.
 It is a semi-decentralized type where
more than one organization manages a
blockchain network.
 This is contrary to what we saw in a
private blockchain, which is managed
by only a single organization.
 More than one organization can act as a
node in this type of blockchain and
exchange information or do mining.

 Consortium blockchains are more decentralized than private blockchains,

due to being more decentralized it increases the privacy and security of
the blocks.
Consortium Blockchain:
Consortium Blockchain:
Example: Energy Web Foundation, R3
Use cases:
 Properties of Blockchain
Decentralization:
 The blockchain network is decentralized which means that there is no
central governing authority that will responsible for all the decisions.
 The blockchain network is less prone to failure due to the decentralized
nature of the network. Attacking the system is more expensive for the
hackers hence it is less likely to fail.
 The decentralized nature of blockchain facilitates creating a transparent
profile for every participant on the network. Thus, every change is traceable
and more concreate.
 Properties of Blockchain
• Immutability:
 Every node in the network has a copy of the digital ledger. To add a
transaction every node checks the validity of the transaction and if the
majority of the nodes think that it is a valid transaction then it is added
to the network. This means that without the approval of a majority of
nodes no one can add any transaction blocks to the ledger.
 Any validated records are irreversible and cannot be changed. This
means that any user on the network won’t be able to edit, change or
delete it.
• Highly Secure:
 Every information on the blockchain is hashed cryptographically which
means that every piece of data has a unique identity on the network. All
the blocks contain a unique hash of their own and the hash of the
previous block. Due to this property, the blocks are cryptographically
linked with each other.
 Properties of Blockchain
• Consensus:
 Every blockchain has a consensus to help the network to make
quick and unbiased decisions.
• High availability:
 As the system is based on thousands of nodes in a Peer – to –
peer network, and the data is replicated and updated every
node, the system becomes highly available.
 Anonymous:
 It is true that every transaction is transparent and open to the
public, but the actual persons are kept anonymous through the
addresses.
Properties of Blockchain
 Cost saving:
 As no trusted third party or clearing house is required in the
block chain model, this can massively eliminate overhead costs
in the form of the fees which are paid to such parties.
Tiers (Generations) of Blockchain Technology

• Blockchain 1.0:
 This tier was introduced with the invention of Bitcoin, and it is
primarily
used for cryptocurrencies.
 As you know Bitcoin was the first implementation of cryptocurrency, it
makes sense to categorize this first generation block chain technology.
 This generation started in 2009 and ended in early 2010.
• Blockchain 2. 0:
 The Second generation used by financial services and smart contracts.
 Applications that go beyond currency, finance and markets are
incorporated at this tier.
 Ethereum and Hyperledger platforms are considered as part of
Blockchain 2.0
Tiers (Generations) of Blockchain Technology

• Blockchain 3.0:
 This is used to implement applications beyond the financial services
such as government organizations, health, media, arts and justice.
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 a Google search engine.