Blockchain technology.docx
- 1. 1 Blockchain is a shared, immutable Ledger that facilitates the process of recording transactions and tracking assents 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.
- 2. 2 1. : 1. What Is Blockchain Technology 2. How Does a Blockchain created 3. How Are Blockchains work 2. : 1. Public Blockchains 2. Private Blockchains 3. Consortium Blockchains 4. Hybrid blockchains 3. : 1. Who is behind Blockchain technology 2. When did Blockchain first appear 3. How is a Blockchain created 4. : 1. Books/articles/websites….
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- 4. 4 1. What Is Blockchain Technology: 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. Blockchain technology has been a topic of research since the early 90s and was used as a database structure to store documents and hashes. Today, blockchain technology provides a foundation for the new form of ‘digital trust’, where users across the network can transfer value and information without relying on a central intermediary. This new form of digital trust will bring disruption across various industries that rely on ‘gatekeepers. 2. How Does a Blockchain created: 1.1. Step 1: Identifying a suitable Use-case
- 5. 5 There are three use-cases where blockchains do very well: Data Authentication and Verification: It focuses on encryption, inflexible storage and digital signatures, creation of private and public keys, and verifying digital signatures. Smart Asset Management: This focuses on disbursement, revenue, trade, bond, and retirement. In crypto, real-world properties are represented in the form of a token, for example, land, infrastructure, gold, silver, oil. Smart Contracts: This focuses on trade between dealer and buyer with smart contracts. 1.2. Step 2: Selection of Suitable Consensus Protocol Depending on your requirements, you need to choose the right consensus protocol among: Deposit based consensus Proof of stake Delegated Proof of Stake. Derived PBFT Byzantine fault-tolerant Federated Byzantine Agreement
- 6. 6 Redundant Byzantine Fault Tolerance Federated consensus Proof of Elapsed Time Simplified Byzantine Fault Tolerance Round Robin 1.3. Step 3: Selection of a Blockchain Platform This depends on your choice of consensus protocol. Many of them are cost-free and open source. Here are some examples: Ethereum, Hyperledger Fabric, Quorum, Hydra Chain, Stellar, Hyperledger Iroha, Open chain, Hyperledger Sawtooth Lake, and many more. 1.4. Step 4: Node designing Blockchain systems can be designed as private/public, permission-less as well as with permission, or even hybrid. Another important factor to be considered at this step is whether the nodes are running on-premise or in the cloud. Also, the selection of operating systems and tasks related to hardware configuration such as processors, and memory and disk size is to be done in this step. 1.5. Step 5: Designing the Blockchain Parameter Configuration
- 7. 7 Usually, blockchain platforms require a thoroughly plotted configuration for elements like permissions, atomic trades, key management, asset issuance, multiple signatures, address formats, hand-shaking, etc. 1.6. Step 6: APIs Most platforms offer pre-built APIs, while others don’t. The issues that you’ll need APIs for are: For developing keys and addresses. Conducting auditable processes. Performing data verification by using hash and digital signatures. For holding data and its recovery. Managing smart-asset, I.e., distribution, bond, donations, business, etc. Creating smart contracts. 1.7. Step 7: Building admin and user Interfaces At this step, you’ll select the programming languages. You’ll also have to pick external databases and servers. 1.8. Step 8: Adding smart technology Boost the potential of your Blockchain solution with the addition of Artificial Intelligence (AI), cloud, data analytics, biometrics, machine learning, and bots. 3.How Are Blockchains work:
- 8. 8 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.
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- 10. 10 1. Public Blockchain: These blockchains are completely open to following the idea of decentralization. They don't have any restrictions, anyone having a computer and internet can participate in the network. As the name is public this blockchain is open to the public, which means it is not owned by anyone. Anyone having internet and a computer with good hardware can participate in this public blockchain. All the computer in the network holds the copy of other nodes or block present in the network In this public blockchain, we can also perform verification of transactions or records 1.1. Advantages: Trustable: There are algorithms to detect no fraud. Participants need not worry about the other nodes in the network Secure: This blockchain is large in size as it is open to the public. In a large size, there is greater distribution of records
- 11. 11 Anonymous Nature: It is a secure platform to make your transaction properly at the same time, you are not required to reveal your name and identity in order to participate. Decentralized: There is no single platform that maintains the network, instead every user has a copy of the ledger. 1.2. Disadvantages: Processing: The rate of the transaction process is very slow, due to its large size. Verification of each node is a very time- consuming process. Energy Consumption: Proof of work is high energy-consuming. It requires good computer hardware to participate in the network Acceptance: No central authority is there so governments are facing the issue to implement the technology faster. Use Cases: Public Blockchain is secured with proof of work or proof of stake they can be used to displace traditional financial systems. The more advanced side of this blockchain is the smart contract that enabled this blockchain to support decentralization. Examples of public blockchain are Bitcoin, Ethereum. 2. Private Blockchain: These blockchains are not as decentralized as the public blockchain only selected nodes can participate in the process, making it more secure than the others. These are not as open as a public blockchain. They are open to some authorized users only. These blockchains are operated in a closed network. In this few people are allowed to participate in a network within a company/organization. 2.1. Advantages:
- 12. 12 Speed: The rate of the transaction is high, due to its small size. Verification of each node is less time-consuming. Scalability: We can modify the scalability. The size of the network can be decided manually. Privacy: It has increased the level of privacy for confidentiality reasons as the businesses required. Balanced: It is more balanced as only some user has the access to the transaction which improves the performance of the network. 2.2. Disadvantages: Security- The number of nodes in this type is limited so chances of manipulation are there. These blockchains are more vulnerable. Centralized- Trust building is one of the main disadvantages due to its central nature. Organizations can use this for malpractices. Count- Since there are few nodes if nodes go offline the entire system of blockchain can be endangered. Use Cases: With proper security and maintenance, this blockchain is a great asset to secure information without exposing it to the public eye. Therefore, companies use them for internal auditing, voting, and asset management. An example of private blockchains is Hyperledger, Corda. 3. Hybrid Blockchain: It is the mixed content of the private and public blockchain, where some part is controlled by some organization and other makes are made visible as a public blockchain. It is a combination of both public and private blockchain. Permission-based and permissionless systems are used. User access information via smart contracts Even a primary entity owns a hybrid blockchain it cannot alter the transaction
- 13. 13 3.1. Advantages: Ecosystem: Most advantageous thing about this blockchain is its hybrid nature. It cannot be hacked as 51% of users don't have access to the network Cost: Transactions are cheap as only a few nodes verify the transaction. All the nodes don't carry the verification hence less computational cost. Architecture: It is highly customizable and still maintains integrity, security, and transparency. Operations: It can choose the participants in the blockchain and decide which transaction can be made public. 3.2. Disadvantages: Efficiency: Not everyone is in the position to implement a hybrid Blockchain. The organization also faces some difficulty in terms of efficiency in maintenance. Transparency: There is a possibility that someone can hide information from the user. If someone wants to get access through a hybrid blockchain it depends on the organization whether they will give or not. Ecosystem: Due to its closed ecosystem this blockchain lacks the incentives for network participation. Use Case: It provides a greater solution to the health care industry, government, real estate, and financial companies. It provides a remedy where data is to be accessed publicly but needs to be shielded privately. Examples of Hybrid Blockchain are Ripple network and XRP token. 4. Consortium Blockchain: It is a creative approach that solves the needs of the organization. This blockchain validates the transaction and also initiates or receives transactions. Also known as Federated Blockchain.
- 14. 14 This is an innovative method to solve the organization's needs. Some part is public and some part is private. In this type, more than one organization manages the blockchain. 4.1. Advantages: Speed: A limited number of users make verification fast. The high speed makes this more usable for organizations. Authority: Multiple organizations can take part and make it decentralized at every level. Decentralized authority, makes it more secure. Privacy: The information of the checked blocks is unknown to the public view. but any member belonging to the blockchain can access it. Flexible: There is much divergence in the flexibility of the blockchain. Since it is not a very large decision can be taken faster. 4.2. Disadvantages: Approval: All the members approve the protocol making it less flexible. Since one or more organizations are involved, there can be differences in the vision of interest. Transparency: It can be hacked if the organization becomes corrupt. Organizations may hide information from the users. Vulnerability: If few nodes are getting compromised there is a greater chance of vulnerability in this blockchain
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- 17. 17 1. Who is behind Blockchain technology: It is essential to learn about the historical background of Blockchain for Blockchain supporters and Blockchain prospects. Thus, to help readers to comprehend the Blockchain advancement, let us learn the history of this technology: 1991-2008: Creation Period of Blockchain Technology Blockchain emerged in 1991 when “W. Scott Stornetta” and “Stuart Haber” deliberated what the world has come to know as a “Blockchain.” Their early work included shaping a cryptographically secured blockchain where nobody could alter timestamps of records. In 1992, they updated their technique to consolidate Merkle trees that improved proficiency hence providing the assortment of more reports on a solitary block. Nonetheless, in 2008, the term “Blockchain” began to acquire importance when Satoshi Nakamoto ingrained his idea of Blockchain in the blockchain space. Satoshi Nakamoto is credited as the master of blockchain innovation. There is not much knowledge about Nakamoto as individuals speculate, he could be a single person or a group that molded Bitcoin, the primary application of digital roster technology. 2.When did Blockchain first appear: The very first appearance of Blockchain was seen in 2008. It was introduced by an individual named ‘Satoshi Nakamoto.’ Nakamoto improved the blockchain structure effectively, utilizing a Hash cash-like strategy to keep records of time and date of added blocks without expecting them to be endorsed by a central party and embedding boundaries to balance out the rate at which blocks were to be added to the chain. Next year, this blockchain structure was recognized as a central part of the cryptocurrency bitcoin, where it acts as the public record for all exchanges carried on the network. In August of 2014, the size of stored records of all exchanges that have happened on the bitcoin blockchain network filled up to 20 GB. In January 2015, the size had reached nearly 30 GB. This size expanded from 50 GB to 100 GB between January 2016 to 2017. While reaching halfway to 2020, this record size exceeded 200 GiB.
- 18. 18 Bibliography: Article: Introduction to Blockchain technology | Set 1 - GeeksforGeeks Website: A detailed history of blockchain: From the Establishment to Broad Adoption - (blockchain-council.org) What is Blockchain Technology? - IBM Blockchain | IBM Blockchain Facts: What Is It, How It Works, and How It Can Be Used (investopedia.com) Blockchain Concepts You Should Know About - 101 Blockchains Books: Blochian revolution.