MODULE-I

Blockchain Technology
 Topic Hours

MODULE-1: Foundations of Blockchain: Blockchain 15 Hours

Architecture – Challenges – Applications – Blockchain
Design Principles -The Blockchain Ecosystem - The
consensus problem - Asynchronous Byzantine 4 Hours/ Week
Agreement - AAP protocol and its analysis - peer-to-peer
network – Abstract Models - GARAY model - RLA
Model - Proof of Work (PoW) - Proof of Stake (PoS)
based Chains - Hybrid models
 Foundations of Blockchain
A blockchain is a digital ledger that stores information securely across a
network of computers.
It records transactions in blocks, which are linked together in a chain.
Once recorded, the data cannot be changed, making blockchain secure,
transparent, and tamper-proof.
A ledger is a record-keeping system that stores financial or transactional
data.
It keeps track of all transactions, such as payments, purchases, and sales, in
an organized and secure way.
In blockchain, a digital ledger is used to record transactions in a
decentralized and tamper-proof manner, ensuring transparency and security.
 Bitcoin
A real-life example of blockchain is Bitcoin.
Bitcoin is a digital currency that operates on a blockchain network.
When someone sends Bitcoin to another person, the transaction is
recorded on a public ledger (the blockchain).
This ensures that the transaction is secure, cannot be altered, and is verified
by multiple computers (nodes) in the network.
Other real-life blockchain examples
Supply Chain Tracking: Companies like Walmart use blockchain to track food
products from farm to store, ensuring quality and reducing fraud.
 Mango Supply Chain on
Blockchain
Real-Life Process:
Imagine a supermarket (Walmart) wants to ensure that the mangoes it sells
are fresh and come from trusted farms. Using blockchain, the entire journey
of a mango—from farm to shelf—is securely recorded and verified.
Step-by-Step Blockchain Process & Real-Life Comparison
1. Transaction is Created (Mango is Harvested & Scanned)
•A farmer harvests mangoes and scans a QR code linked to a blockchain
system.
•This entry includes details like farm location, date of harvest, and farming
methods.
•This information is recorded as a transaction in the blockchain.
 Mango Supply Chain on
Blockchain
2. Transaction is Verified (Supply Chain Partners Confirm)
• The mango is transported to a processing center, where it is cleaned and packed.
• Each step (e.g., washing, packaging) is recorded on the blockchain by supply chain
partners (transport companies, warehouse managers).
• All network nodes verify that the recorded data is correct, using a consensus mechanism.
3. Block is Created (Data is Stored Securely)
• Once verified, the transaction is added to a block.
The block includes:
• Mango farm details
• Transportation logs
• Quality checks
• Warehouse storage details
 Mango Supply Chain on
Blockchain
4. Block is Added to the Blockchain (Immutable Record)
•The new block is linked to the previous blocks, forming a chain of records
that cannot be changed.
•This ensures data security and prevents fraud (e.g., fake organic labels).
5. Consumers Can Verify Mango’s Origin (Transparency)
•When the mango reaches Walmart, it is placed on store shelves.
•A customer can scan a QR code on the mango package and instantly see:
• Where the mango was grown
• When it was harvested
• How it was transported and stored
 Benefits
Benefits of Using Blockchain in This Process
✅ Trust & Transparency – Customers trust the product because they can
verify its source.
✅ No Fraud – Retailers can ensure they are getting real organic mangoes, not
fake-labeled ones.
✅ Fast Tracking – If there’s a contamination issue, Walmart can quickly trace
which batch of mangoes is affected and recall them.
✅ Security – The data cannot be altered, preventing any tampering in the
supply chain.
This blockchain-based supply chain is already used by companies like
Walmart, IBM, and Nestlé. It ensures food safety, prevents fraud, and builds
trust with customers.
Figure shows the online
transaction flow in a Blockchain
network
 Blockchain Architecture
Blockchain architecture is the structure that defines how blockchain functions.
It consists of multiple layers and components that work together to ensure
decentralization, security, transparency, and immutability.
1. Key Components of Blockchain Architecture
a) Blocks
Each block in the blockchain contains:
• Data (Transaction details, contracts, or records)
• Hash (Unique identifier of the block)
• Previous Block’s Hash (Links blocks together, forming a secure chain)
Once added to the chain, blocks cannot be changed (immutability).
 Blockchain Architecture
b) Distributed Ledger (Decentralization)
•A ledger is a record-keeping system that stores transaction data.
•Blockchain distributes this ledger across multiple nodes (computers), ensuring
there is no single point of control or failure.
•Every node has a copy of the entire blockchain, making it tamper-proof.
c) Nodes (Participants in the Network)
•Nodes are computers that store, validate, and maintain the blockchain.
•Types of Nodes:
• Full Nodes – Store the entire blockchain history.
• Light Nodes – Store only important parts for faster processing.
• Miner Nodes – Solve complex problems to validate and add new blocks.
 Blockchain Architecture
d) Consensus Mechanisms (Validation & Agreement Process)
To maintain trust, blockchain networks use consensus mechanisms to
validate transactions before adding them to the ledger.
•Proof of Work (PoW) – Miners solve cryptographic puzzles (e.g., Bitcoin).
•Proof of Stake (PoS) – Validators are chosen based on their cryptocurrency
holdings (e.g., Ethereum 2.0).
•Delegated Proof of Stake (DPoS) – Users vote for a few delegates to validate
transactions.
•Practical Byzantine Fault Tolerance (PBFT) – Used in permissioned
blockchains (e.g., Hyperledger).
Consensus ensures that only valid transactions are recorded.
 Blockchain Architecture
e) Cryptography (Security)
•Public & Private Keys – Used to encrypt and sign transactions securely.
•Hash Functions (SHA-256) – Converts transaction data into a fixed-length string,
ensuring data integrity.
•Digital Signatures – Verify the authenticity of a transaction.
This ensures privacy, security, and fraud prevention.
f) Smart Contracts (Automation)
•Smart contracts are self-executing contracts with rules written in code.
•Once the predefined conditions are met, the contract automatically executes.
•Used for financial transactions, supply chain tracking, and legal agreements
(e.g., Ethereum-based contracts).
 Blockchain Architecture
2. Layers of Blockchain Architecture
1 Data Layer
1️⃣
• Stores transaction data in blocks.
• Each block is linked using hashes.
2️⃣Network Layer (P2P Network)
• Nodes communicate and share data.
• Ensures decentralization by maintaining copies of the blockchain.
3️⃣Consensus Layer
• Enforces agreement between nodes.
• Uses PoW, PoS, or other mechanisms to validate transactions.
4️⃣Execution Layer
• Processes smart contracts and runs blockchain applications.
5️⃣Application Layer
• User interfaces, wallets, and applications that interact with blockchain.
 Blockchain Architecture
3. Types of Blockchain Architectures
Type Description Examples
Open to anyone,
Public Blockchain Bitcoin, Ethereum
decentralized
Restricted access,
Private
controlled by an Hyperledger, Corda
Blockchain
organization
Shared by multiple
Consortium
organizations for Banking networks
Blockchain
collaboration
Hybrid Combines public &
IBM Food Trust
Blockchain private features

4. How Blockchain Works (Step-by-Step Process)

1
1️⃣ Transaction Created – A user initiates a transaction (e.g., sending cryptocurrency).
2️⃣ Transaction Broadcasted – The transaction is sent to the blockchain network.
3️⃣ Transaction Verified – Nodes use a consensus mechanism to validate the
transaction.
4️⃣ Block Created – Verified transactions are grouped into a block.
5️⃣ Block Added to Blockchain – The block is linked to the previous one, creating an
immutable record. ensures secure, transparent, and tamper-proof transactions. It is widely used in
Blockchain architecture
cryptocurrencies, supply chains,
6️⃣ Ledger healthcare,
Updatedand finance.
– Every node in the network updates its copy of the blockchain.
 Blockchain Challenges
1. Scalability Issues
•Problem: Blockchains like Bitcoin and Ethereum process limited transactions per second
(e.g., Bitcoin = ~7 TPS, Ethereum = ~30 TPS, while Visa handles ~65,000 TPS).
•Reason: Every node must store and validate each transaction, causing delays.
2. High Energy Consumption ⚡
•Problem: Proof of Work (PoW) blockchains require massive computational power,
leading to high electricity usage.
•Example: Bitcoin mining consumes more energy
3. Security Risks & 51% Attacks 🔓
•Problem: If a group controls 51% of a blockchain’s computing power, they can
manipulate transactions (e.g., double-spending).
•Example: Bitcoin Gold suffered a 51% attack in 2018, causing huge losses.
 Blockchain Challenges
4. Privacy Concerns
• Problem: Public blockchains (e.g., Bitcoin, Ethereum) store all transactions permanently
and transparently, reducing privacy.
• Example: A company may not want its financial transactions visible to competitors.

5. Cost of Implementation
• Problem: Building and maintaining a blockchain system is expensive due to high
development, infrastructure, and security costs.
• Example: Companies like banks need to rebuild their financial systems to adopt blockchain.

6. Slow Adoption & Resistance to Change

• Problem: Many companies and industries hesitate to adopt blockchain due to a lack of
knowledge and technical expertise.
• Example: Banks still rely on traditional centralized databases instead of blockchain.
 Blockchain Applications
Blockchain technology has a wide range of applications across various industries. Some key applications
include:
1. Finance & Banking
• Cryptocurrencies: Used for digital currencies like Bitcoin and Ethereum.
• Cross-border Payments: Enables fast and secure international transactions (e.g., Ripple).
• Smart Contracts: Automates financial agreements without intermediaries (e.g., Ethereum, Hyperledger).
• Decentralized Finance (DeFi): Provides financial services without traditional banks (e.g., Uniswap, Aave).

2. Supply Chain Management

• Product Tracking: Ensures transparency and authenticity in supply chains (e.g., IBM Food Trust).
• Anti-Counterfeiting: Verifies product origin to prevent fraud (e.g., VeChain).
• Smart Logistics: Automates and optimizes shipping and logistics.

3. Healthcare
• Electronic Health Records (EHRs): Securely stores and shares patient data.
• Drug Traceability: Prevents counterfeit medicines in pharmaceutical supply chains.
• Clinical Trials: Ensures data integrity and transparency in research

4. Real Estate
• Property Transactions: Reduces paperwork and fraud in property sales.
• Land Registry: Provides secure, tamper-proof records of ownership.
 Blockchain Applications
5. Voting Systems
• E-Voting: Enables transparent and tamper-proof digital voting systems.
• Fraud Prevention: Ensures voter identity and election integrity.
6. Identity Management
• Self-Sovereign Identity (SSI): Gives individuals control over their personal data.
• Digital IDs: Helps in identity verification for banking and government services.
7. Internet of Things (IoT)
• Secure IoT Networks: Protects connected devices from hacking.
• Automated Machine-to-Machine Transactions: Enables smart contracts between IoT devices.
8. Intellectual Property & Copyright Protection
• Digital Rights Management (DRM): Protects artists, writers, and musicians from piracy.
9. Gaming & Entertainment
• In-Game Assets: Blockchain-based assets can be traded across games (e.g., Axie Infinity).
• Decentralized Gaming Platforms: Allows fair and transparent gaming economies.
10. Government & Public Services
• Transparent Taxation: Reduces fraud in tax collection.
• Public Records Management: Securely stores documents like birth certificates and licenses
 Blockchain Design Principles
The design rules of blockchain generally include key aspects that ensure its security, transparency, and
decentralization. Here are the core principles:
1. Decentralization
• No single entity controls the network.
• Uses a distributed ledger across multiple nodes.
2. Transparency
• Transactions are recorded on a public or permissioned ledger.
• All network participants can verify transactions.
3. Immutability
• Once recorded, transactions cannot be altered or deleted.
• Uses cryptographic hashing to ensure data integrity.
4. Security
• Uses encryption and cryptographic techniques (e.g., SHA-256).
• Consensus mechanisms (PoW, PoS, etc.) prevent fraud and attacks.
5. Consensus Mechanism
• Transactions must be validated by network participants.
• Examples: Proof of Work (PoW), Proof of Stake (PoS), Byzantine Fault Tolerance (BFT).
6. Smart Contracts
• Self-executing contracts with predefined rules.
• Automates and enforces agreements without intermediaries.
7. Scalability
• Designed to handle an increasing number of transactions efficiently.
 Blockchain Ecosystem
• The blockchain ecosystem refers to the network of technologies, participants, and protocols that work together to
create, maintain, and expand blockchain networks.
• The blockchain ecosystem is the network of all the participants in the blockchain network that share the business
process and business objectives.
Types of Blockchain Ecosystem:
1. Single-party led blockchain ecosystem:
• This ecosystem is led by a single organization where all the stakeholders have a mutual benefit for
participating in the network.
• Bumble Bee Foods has created a single-party-led blockchain ecosystem to improve the traceability of
the yellowfin tuna fish. This helped to improve the buyer’s confidence in the fish’s freshness.

2. Joint venture blockchain ecosystem:

• This is also known as the Consortium blockchain ecosystem. Two or more organizations in the
ecosystem.
• The participating organizations have a common goal.
• BunkerTrace a marine fuel tracking solution is a joint venture blockchain ecosystem between
Forecast technology Ltd. and Blockchain Labs for Open Collaboration (BLOC).

3. Regulatory blockchain ecosystem:

• This ecosystem comprises various government agencies that share a project and have to self-report
for compliance.
• For example, a shared project between Marine Transport International and Recycling Association.
 Blockchain Ecosystem
Participants in Blockchain Ecosystem
1. Leaders:
• Leaders take control of everything happening on the blockchain network.
• These are the creators of the project and are the main beneficiaries of the work in the
ecosystem.
2. Core group:
• The core group refers to the group of active or leading organizations in the network that gives
shape to operational activities in the network.
• They are responsible for the blockchain ecosystem actively. controlling, streamlining, and
managing
• Active participants: These are the group of primary network participants that take on the
responsibility of contributing to workflow, governance, and data management.
3. Users:
◦ They don’t get any responsibility for the active management of the network.
◦ Their only responsibility in the ecosystem is to obtain desired benefits from the network
alongside accessing their own data.
4. Third-party service providers:
• They are important participants in the network and offer different types of services on the
network.
• They could offer desired services like IT support services or infrastructure and applications
services in exchange for specific fees.
 Components of Blockchain Ecosystem

1. Node application:
• It is a particular internet application that every internet-connected computer must download for
participating in a blockchain ecosystem.
• Once one has a node application installed, it can participate in the ecosystem.

2. Distributed ledger:
• logical component and the data structure that is managed inside the node application.
• Once the node application is installed, one can view the respective ledger contents from that ecosystem.

3. Consensus algorithms:
• Consensus algorithm is implemented as a part of the node application in the blockchain ecosystem.
• They provide the rules of the game for how the ecosystem will arrive at the single view of the ledger.

4. Virtual machine:
• It is the representation of the computer environment created by a computer program and
operated with instructions programmed in a language.
 Blockchain : Consensus Problem
• There is no central authority present to validate and verify the transactions, yet every transaction
in the Blockchain is considered to be completely secured and verified.

Consensus Problem in Blockchain

The consensus problem in blockchain refers to the challenge of ensuring that all participants
in a decentralized network agree on a single, consistent version of the ledger, despite
potential failures, malicious actors, and network delays.

Challenges in Blockchain Consensus

1.Decentralization: No central authority controls the ledger.
2.Byzantine Fault Tolerance (BFT): Some nodes may act maliciously or fail unpredictably.
3.Scalability: High transaction throughput and low latency are needed.
4.Security: The system must prevent attacks such as double-spending.
5.Finality: Ensuring that once a transaction is confirmed, it cannot be reversed.
Consensus Problem:Asynchronous Byzantine Agreemen
• Asynchronous Network: There are no bounds on message delays, meaning that messages can
arrive arbitrarily late or out of order.
• Asynchronous Byzantine Agreement (ABA) is a mechanism that allows a group of nodes to
agree on a value even if some nodes are malicious.
• It's a key concept in blockchain technology, which uses it to build a fault-tolerant, ordered log
of records.
• Ensuring that all honest nodes in a decentralized network reach consensus, even in the presence
of malicious actors and unpredictable network delays.
• This is especially important for ensuring security and consistency in blockchain protocols.
• Byzantine faults: Nodes acting maliciously or unpredictably
• Since blockchain operates in a distributed environment with Byzantine faults , achieving
agreement without relying on synchronized clocks or bounded network delays is a major
challenge.
Consensus Problem:Asynchronous Byzantine Agreemen
 Consensus Problem:AAP Protocol
• AAP protocol" refers to the "Asynchronous Byzantine Agreement" protocol .
• A crucial cryptographic mechanism used to ensure consensus among nodes in a decentralized network,
even when some nodes might be faulty or malicious, allowing for secure transaction validation despite
potential network disruptions or unreliable communication.

Key aspects of AAP protocol in blockchain:

1. Consensus Mechanism:
• AAP protocol helps nodes on a blockchain network reach agreement on the state of the ledger, even if
some nodes are malicious or unreliable, by requiring a majority of nodes to validate a transaction
before it is added to the blockchain.
2. Asynchronous Communication:
• Unlike some other consensus protocols, AAP is designed to function in an asynchronous network,
meaning nodes don't need to be synchronized in terms of time, allowing for more robust network
operation.
3. Byzantine Fault Tolerance:

• The "Byzantine" aspect refers to the scenario where nodes might send conflicting information, and
AAP protocol is specifically designed to handle such situations by employing cryptographic
techniques to identify and disregard unreliable data.
 Consensus Problem: AAP Protocol
ABA-Based Consensus Protocols in Blockchain
✅ Tendermint (BFT Consensus)
• Uses a round-based voting mechanism with leader rotation.
• Ensures fast finality in asynchronous settings.
✅ Algorand (BA)*
• Uses a verifiable random function (VRF) to select a leader for each round.
• Probabilistic finality ensures efficient agreement.
✅ HoneyBadgerBFT
• Fully asynchronous BFT protocol.
• Uses threshold cryptography and randomized agreement to prevent delays.
Consensus Problem: Analysis of AAP protocol
Analysis of AAP protocol
Advantages:
• Highly Secure: Due to its Byzantine Fault Tolerance, AAP can withstand malicious actors
attempting to disrupt the network.
• Scalability: Its asynchronous nature allows for efficient operation even with network delays or
varying node response times.
• Decentralized Consensus: AAP facilitates consensus building without relying on a central
authority.

Challenges:

• Complexity: Implementing AAP can be computationally expensive due to the complex

cryptographic operations involved.
• Performance Overhead: The need for multiple rounds of communication between nodes can
impact transaction speed in certain scenarios.
 Peer-to-Peer (P2P) Network
A peer-to-peer (P2P) network in blockchain is a decentralized network where multiple
computers (nodes) interact directly with each other to maintain and validate a shared ledger.
Unlike traditional client-server models, where a central authority manages transactions, P2P
networks allow all nodes to participate equally in verifying, recording, and broadcasting
transactions.
Key Features of a P2P Network in Blockchain
1.Decentralization – No single authority controls the network.
2.Transparency – All nodes have access to the blockchain ledger.
3.Security – Uses cryptographic techniques to ensure data integrity.
4.Fault Tolerance – Even if some nodes fail, the network continues to function.
5.Consensus Mechanisms – Nodes agree on transaction validity using protocols like Proof of
Work (PoW) or Proof of Stake (PoS).
 Abstract Models in Blockchain
• Abstract models refer to high-level, conceptual frameworks used to design and implement blockchain architectures.

• These models help standardize functionality, improve modularity, and enable reusability in smart contract development,
consensus mechanisms, and decentralized applications (dApps).

1. Abstract Smart Contract Models

• Abstract smart contracts serve as blueprints that define functions but do not provide full implementations.

• These contracts are meant to be inherited and implemented by other contracts.

2. Abstract Consensus Models

• These models define the general structure of consensus mechanisms without tying them to a specific blockchain.

• Examples include abstract models for:

• Proof of Work (PoW), Proof of Stake (PoS), Delegated Proof of Stake (DPoS), Practical Byzantine Fault
Tolerance (PBFT)

3. Abstract Data Models

• Blockchains require standardized data structures for transactions, blocks, and states.

• Abstract models define how data is organized, stored, and processed across different blockchain implementations.

4. Abstract Identity Models

• Used in decentralized identity (DID) systems, defining roles like issuers, verifiers, and holders while leaving specific
implementation details flexible.
 GARAY MODEL
•The Garay Model refers to a formal security model proposed by Juan
A. Garay
•Analysing and proving the security of blockchain consensus
protocols.
•Model focuses on the security and efficiency of blockchain system.
Key Features of the Garay Model in Blockchain:
1.Formal Security Analysis of Blockchain
1.It provides a mathematical framework to analyze blockchain
protocols, particularly Bitcoin’s proof-of-work (PoW) consensus.
2.Abstract Modeling of Nakamoto Consensus
1.It abstracts Bitcoin’s PoW mechanism and defines properties like
chain growth, chain quality, and chain soundness.
 GARAY MODEL
3.Adversarial Conditions & Assumptions
1.The model assumes an adversary who can control a certain
percentage of the mining power and examines how this impacts
security and fairness.
4.Liveness and Persistence
2.The model ensures that valid transactions get confirmed within
a reasonable timeframe (liveness), and once a transaction is
confirmed, it remains in the chain permanently (persistence).
Why is it Important?
•It rigorously proves that Bitcoin’s blockchain is secure under certain
conditions.
•It helps design and analyze new blockchain consensus mechanisms.
•It is useful for academic research on blockchain security.
 RLA MODEL
• "RLA model" typically stands for "Reverse Logistics Automation model
• System that utilizes blockchain technology to streamline and track the process of returning
products, particularly in the context of supply chain management and sustainability initiatives.
• RLA Model explored the application of blockchain technology to improve efficiency and
transparency in reverse logistics.
Key points about RLA models in blockchain
• Tracking product lifecycle:
Blockchain's immutability allows for detailed tracking of a product's journey from initial
purchase to its eventual return and recycling, ensuring transparency and accountability.
• Improved efficiency:
By automating data recording and verification on the blockchain, RLA models can
significantly reduce administrative overhead and streamline reverse logistics processes.
• Sustainability focus:

• RLA models can be used to incentivize responsible recycling and reuse by tracking the
movement of returned items and potentially rewarding participants for sustainable
practices.
 PoW
Proof of Work (PoW) is a decentralized system that verifies transactions on a
blockchain network. It is a competitive process that uses complex mathematical
puzzles to secure the network.
How it works
•Miners compete to solve a complex mathematical puzzle to create a new block
•The winner receives a reward in the form of the blockchain's native coin
•The process requires a lot of energy and computing power
Why it's used
•PoW is considered more secure than other consensus mechanisms
•It's resistant to double-spending attacks and unauthorized alterations
Drawbacks
•It's very energy intensive and has a large carbon footprint
•It requires expensive hardware
•It's vulnerable to 51% attacks, where an entity controls over half of the
network's mining power
•A large carbon footprint is related to Proof of Work (PoW) in blockchain
technology because PoW requires high energy consumption, which leads
to large-scale carbon emissions.
 PoW
•Miners are individuals or entities that use computational power to validate
transactions and secure a blockchain network, typically in Proof of Work (PoW)
blockchains like Bitcoin. Miners compete to solve complex mathematical puzzles,
and the first to solve it gets to add a new block to the blockchain and receive a
reward.

•How Mining Works (in PoW Blockchains)

• 1. Transaction Verification – Miners collect and verify new
transactions from the network.
• 2. Solving Cryptographic Puzzles – Using specialized hardware,
miners compete to solve a complex mathematical problem (hash function).
• 3. Block Creation – The first miner to solve the puzzle adds a new
block of transactions to the blockchain.
• 4. Mining Reward – The winning miner receives:
• • Block reward (e.g., Bitcoin miners earn BTC for each block mined).
• • Transaction fees from users in that block.
 PoS
Proof of Stake (PoS)-based blockchains are designed to be energy-efficient
alternatives to Proof of Work (PoW) blockchains. Unlike PoW, which requires
miners to solve complex mathematical puzzles using high-powered computers,
PoS selects validators based on the amount of cryptocurrency they “stake” in the
network.
Examples of cryptocurrencies that use PoS:Avalanche (AVAX) , Cardano
(ADA) ,Cosmos (ATOM) ,EOS (EOS) ,Ethereum (ETH) ,Peercoin (PPC) ,Solana
(SOL)

Key Advantages of PoS Chains

1. Energy Efficiency – PoS eliminates mining, reducing energy
consumption by 99% or more compared to PoW.

2. Lower Carbon Footprint – Since PoS doesn’t require massive

computational power, its environmental impact is minimal.

3. Faster Transactions – PoS blockchains often have higher

scalability and lower transaction fees.
 POS: STAKE
In blockchain and cryptocurrency, stake refers to the amount of cryptocurrency that
a person locks up or commits to a network to participate in its operations, such as
validating transactions and securing the blockchain. This concept is central to
Proof of Stake (PoS) and its variants.

How Staking Works

1. Users “stake” their coins by locking them in the network.
2. Validators are chosen based on the amount of crypto they have staked
(instead of solving puzzles like in Proof of Work).
3. Validators confirm transactions and create new blocks.
4. Rewards are earned for honest participation (typically paid in the
staked cryptocurrency).
5. Slashing penalties apply if validators act maliciously or fail to follow the
rules.
Why People Stake?
• Earn passive income (staking rewards).
• Support network security and decentralization.
• Lower energy consumption compared to mining.
 Hybrid Proof of Work (PoW) and Proof of
Stake (PoS) Blockchain
A hybrid PoW-PoS blockchain combines mining (PoW) and staking
(PoS) to secure and validate transactions. This system is designed to
improve security, decentralization, and energy efficiency compared to
pure PoW or PoS blockchains.

Step-by-Step Process of Hybrid PoW-PoS

1. Miners Create Blocks Using Proof of Work (PoW)

• Just like Bitcoin, miners compete to solve cryptographic puzzles
using computational power.
• The first miner to solve the puzzle proposes a new block of
transactions.
• This process ensures security and prevents spam or fraudulent
tran
 2. Stakers (Validators) Approve Blocks Using Proof of Stake
(PoS)
• Unlike pure PoW, PoS validators (stakers) verify
the miner’s block before it is added to the blockchain.
• Validators are chosen based on how many coins
they have staked.
• If a block is valid, the validators approve it. If it’s
fraudulent, it gets rejected.

3. Rewards Are Distributed

• Miners receive block rewards (like Bitcoin mining rewards).
• Stakers (PoS participants) earn staking rewards for
approving blocks.
4. Network Governance (Voting Mechanism)
• In some hybrid blockchains, stakers can vote on network
upgrades, policies, or changes.
• This prevents miners from having full control over the
blockchain’s future.
Questions

How does the peer-to-peer (P2P) network architecture support the decentralization of blockchain systems?

What are the key differences between public and private blockchains in terms of accessibility, control, and use cases?

What are the key architectural components of a blockchain, and how do they contribute to its security and
decentralization?

What are the major challenges in implementing blockchain technology in large-scale systems?

List and briefly explain three real-world applications of blockchain technology across different industries.

What are the core design principles of blockchain that ensure immutability and trust?

Describe the major components of the blockchain ecosystem and their roles.

What is the consensus problem in distributed systems, and why is it critical for blockchain networks?

How does the Asynchronous Byzantine Agreement differ from the synchronous version, and what are its advantages?

What is the AAP protocol in the context of blockchain consensus, and how does it function under Byzantine fault
conditions?

Discuss the strengths and weaknesses of the AAP protocol based on its analytical evaluation.

Compare and contrast Proof of Work (PoW), Proof of Stake (PoS), and hybrid consensus models in terms of energy
efficiency, security, and scalability.

What is the purpose of abstract models in blockchain research, and how do they simplify protocol design?

Explain the GARAY model and RLA model and their significance in analyzing blockchain consensus mechanisms.