A

Seminar Report
On

Blockchain

For
partial fulfillment of award of the
B. Tech Degree in Computer Science & Engineering

Submitted by:
Harishiv Singh (1519210103)

G. L. Bajaj Institute of Technology and Management,

Greater Noida
 TABLE OF CONTENTS

1. Introduction
2. Relevant Work\Existing System
3. Proposed work
4. Methodology
5. Conclusion and Future Scope
References/Bibliography
Introduction
Blockchain (BC), the technology behind the Bitcoin crypto-currency system, is both alluring and
critical for ensuring enhanced security and (in some implementations, non-traceable) privacy for
diverse applications in many other domains - including in the Internet of Things (IoT) eco-
system. A blockchain is a distributed public ledger of all transactions or digital events that have
been completed and shared among participating parties. Each transaction in the public ledger is
verified by consensus of most of the participants in the system. And, once entered, information
can never be erased. The blockchain contains a certain and verifiable record of every single
transaction ever made. Bitcoin, the decentralized digital currency, is the most popular example
that uses blockchain technology. The digital currency bitcoin itself is highly controversial but
the underlying blockchain technology has worked flawlessly and found wide range of
applications in both financial and nonfinancial world.

Fig. Success Rates

The main hypothesis is that the blockchain establishes a system of creating a distributed
consensus in the digital online world. This allows participating entities to know for certain that
a digital event happened by creating an irrefutable record in a public ledger. It opens the door
for developing a democratic open and scalable digital economy from a centralized one. There
are tremendous opportunities in this disruptive technology and revolution in this space has just
begun.

Current digital economy is based on the reliance on a certain trusted authority. Our all online
transactions rely on trusting someone to tell us the truth—it can be an email service provider
telling us that our email has been delivered; it can be a certification authority telling us that a
certain digital certificate is trustworthy; or it can be a social network such as Facebook telling us
that our posts regarding our life events have been shared only with our friends or it can be a
bank telling us that our money has been delivered reliably to our dear ones in a remote country.
The fact is that we live our life precariously in the digital world by relying on a third entity for
the security and privacy of our digital assets. The fact remains that these third-party sources can
be hacked, manipulated or compromised.

This is where the blockchain technology comes handy. It has the potential to revolutionize the
digital world by enabling a distributed consensus where each online transaction, past and
present, involving digital assets can be verified at any time in the future. It does this without
compromising the privacy of the digital assets and parties involved. The distributed consensus
and anonymity are two important characteristics of blockchain technology.

The advantages of Blockchain technology outweigh the regulatory issues and technical
challenges. One key emerging use case of blockchain technology involves “smart contracts”.
Smart contracts are basically computer programs that can automatically execute the terms of a
contract. When a pre-configured condition in a smart contract among participating entities is met
then the parties involved in a contractual agreement can be automatically made payments as per
the contract in a transparent manner.

Smart Property is another related concept which is regarding controlling the ownership of a
property or asset via blockchain using Smart Contracts. The property can be physical such as
car, house, smartphone etc. or it can be non-physical such as shares of a company. It should be
noted here that even Bitcoin is not really a currency--Bitcoin is all about controlling the
ownership of money. Blockchain technology is finding applications in wide range of areas both
financial and non-financial.

Fig. Technologies of Blockchain – Historical Timeline

Relevant Work\Existing System

A Blockchain comprises of two different components, as follows:

1. Transaction: A transaction, in a Blockchain, represents the action triggered by the participant.

2. Block: A block, in a Blockchain, is a collection of data recording the transaction and other
associated details such as the correct sequence, timestamp of creation, etc.

The Blockchain can either be public or private, depending on the scope of its use. A public
Blockchain enables all the users with read and write permissions such as in Bitcoin, access to it.
However, there are some public Blockchains that limit the access to only either to read or to
write. On the contrary, a private Blockchain limits the access to selected trusted participants
only, with the aim to keep the users’ details concealed. This is particularly pertinent amongst
governmental institutions and allied sister concerns or their subsidies thereof. One of the major
benefits of the Blockchain is that it and its implementation technology is public. Each
participating entity possesses an updated complete record of the transactions and the associated
blocks. Thus, the data remains unaltered, as any changes will be publicly verifiable. However,
the data in the blocks are encrypted by a private key and hence cannot be interpreted by
everyone.

Another major advantage of the Blockchain technology is that it is decentralized. It is

decentralized in the sense that:

• There is no single device that stores the data (transactions and associated blocks), rather
they are distributed among the participants throughout the network supporting the
Blockchain.
• The transactions are not subject to approval of any single authority or must abide by a set
of specific rules, thus involving substantial trust as to reach a consensus.
• The overall security of a Blockchain eco-system is another advantage. The system only
allows new blocks to be appended. Since the previous blocks are public and distributed,
they cannot be altered or revised.

Fig. Blockchain
For a new transaction to be added to the existing chain, it must be validated by all the
participants of the relevant Blockchain eco-system. For such a validation and verification
process, the participants must apply a specific algorithm. The relevant Blockchain eco-system
defines what is perceived as “valid”, which may vary from one eco-system to another. Several
transactions, thus approved by the validation and verification process, are bundled together in a
block. The newly prepared block is then communicated to all other participating nodes to be
appended to the existing chain of blocks. Each succeeding block comprises a hash, a unique
digital fingerprint, of the preceding one. Once the monetary transaction is initiated and hence
triggered by Bob, it is represented as a “transaction” and broadcast to all the involved parties in
the networks. The transaction now must get “approval” as being indeed “valid” by the
Blockchain eco-system. Transaction(s) once approved as valid along with the hash of the
succeeding block are then fed into a new “block” and communicated to all the participating
nodes to be subsequently appended to the existing chain of blocks in the Blockchain digital
ledger.

Fig. Applications of Blockchain

Proposed Work

The blockchain in its basic form be the distributed, decentralized,

transparent and chronological database of transactions, sometimes also called
the ledger. The data in the blockchain (e.g. transactions) is divided into blocks.
Each block is dependent on the previous one. The system in which a blockchain
serves as the database comprises of nodes or workers. These workers are responsible for
appending new blocks to the blockchain. A new block can only
be appended after all nodes in the system reach a consensus, i.e all agree that
this block is legit and contains only valid transactions.

Represents the currency itself, e.g. Bitcoin, Litecoin, Peercoin etc. In order to
use these currencies (which are just hashes in the system), the protocol must
be followed and blockchain architecture is used as an underlying database where
every transaction between two parties is stored. So, every change of ownership
is marked in the blockchain and it can be traced back until its creation (Coin
creation, i.e introduction of new coins is also determined by the protocol). This
implies: To check whether a person possesses a specific coin, one must check
the blockchain and see if a specific person got a specific coin from somebody or
not. Also, the blockchain technology makes it impossible to double-spend the
coin, because every change is written in the block. Much like regular currency
Bitcoins are decomposable into smaller units. The smallest unit in Bitcoin is 1
Satoshi which is 10-8 Bitcoins (or abbreviated BTC).

Although the Internet is a great tool to aid every sphere of the modern digital life, it is still
highly flawed in terms of the lack of security and privacy, especially when it comes to FinTech
and E-commerce. Blockchain, the technology behind crypto-currency, brought forth a new
revolution by providing a mechanism for Peer-to-Peer (P2P) transactions without the need for
any intermediary body such as the existing commercial banks [1]. BC validates all the
transactions and preserves a permanent record of them while making sure that any identification
related information of the users is kept incognito. Thus, all the personal information of the users
is sequestered while substantiating all the transactions. This is achieved by reconciling mass
collaboration by cumulating all the transactions in a computer code based digital ledger. Thus,
by applying Blockchain or similar crypto-currency techniques, the users neither need to trust
each other nor do they need an intermediator; rather the trust is manifested within the
decentralized network system itself.

Blockchain thus appears to be the ideal “Trust Machine” paradigm. In fact, Bitcoin is just an
exemplary use of the Blockchain. Blockchain is a novel revolution in the domain of computing
enabling limitless applications such as storing and verifying legal documents including deeds
and various certificates, healthcare data, IoT, Cloud and so forth. Tapscott [3] rightly indicated
Blockchain to be the “Worldwide Ledger”, enabling many new applications beyond verifying
transactions such as in smart deeds, decentralized and/or autonomous organizations/ government
services etc.

In the cloud environment, the history of creation of any cloud data object and its subsequent
operations performed thereupon are recorded by the data structure mechanism of ‘Data
Provenance’, which is a type of cloud metadata. Thus, this is very important to provide the
utmost security to the data provenance for ensuring its data privacy, forensics and
accountability. Liang et al. puts forward a Blockchain based trusted cloud data provenance
architecture, ‘Prochain’, which is fully decentralized. Such adoption of the Blockchain in a
cloud environment can provide strong protection against records being altered thus enabling an
enhanced transparency as well as additional data accountability. This also increases the
availability, trustworthiness, privacy and ultimately the value of the provenance data itself. In an
IoT ecosystem, most of the communication is in the form of Machine-to-Machine (M2M)
interactions.

Thus, establishing trust among the participating machines is a big challenge that IoT technology
still has not been met extensively. However, Blockchain may act as a catalyst in this regard by
enabling enhanced scalability, security, reliability and privacy. This can be achieved by
deploying Blockchain technology to track billions of devices connected to the IoT eco-systems
and used to enable and/or coordinate transaction processing. Applying Blockchain in the IoT
ecosystem will also increase reliability by axing the Single Point of Failure (SPF). The
cryptographic algorithms used for encryption of the block data as well as the hashing techniques
may provide better security. However, this shall demand more processing power which IoT
devices currently suffer from.

Thus, further research is required to overcome this current limitation. Underwood considers the
application of Blockchain technology to completely overhaul the digital economy. Ensuring and
maintaining trust is both the primary and initial concern of the application of the Blockchain. BC
can also be used to gather chronological and sequence information of transactions, as it may be
seen as an enormous networked time-stamping system. For example, NASDAQ is using its
‘Linq Blockchain’ to record its private securities transactions. Meanwhile the Depository Trust
& Clearing Corporation (DTCC, USA) is working with Axoni in implementing financial
settlement services such as post-trade matters and swaps. Regulators are also interested in BC’s
ability to offer secure, private, traceable real-time monitoring of transactions.
Methodology

Blockchain is a fast-moving phenomenon. Due to its decentralized methodology, many leaders

in the finance and technology industries are taking blockchain seriously. A blockchain consists
of a distributed database of all transactions on a network. Each constituent of this database
represents a “block”. As the state of a transaction changes, a block gets appended to the
blockchain with a reference to the previous block in a linear and chronological order. The new
block is then replicated across the network so that each node has the same blockchain.

Every participant of this transaction has a copy of the blockchain. Thus, any participant can
validate a given transaction. This methodology has removed the need for having a centralized,
trusted third-party transaction validation. Blockchain technology has a broad applicability range
and has great transformative potential. Thus, business leaders must use this technology to
explore the range of possibilities available to their business and their sector.

Fig. Working of bitcoin

Using blockchain’s ledger methodology and cryptographic techniques, data can be sent across a
network securely. A blockchain technique will ensure that the data is from the correct sources
and that nothing is intercepted in the interim. If this technology is more widely implemented, the
probability of hacking can go down. Blockchain is more robust than the legacy systems in your
organization. Thus, blockchain technology minimizes cyber security risk by simply removing
the need for human intervention.

Blockchain’s verifiable and networked data structure is suitable for application across many
other industries. Companies undertaking digital initiatives to gain a competitive advantage
should not overlook blockchain. According to me, we will begin to see significant commercial
applications of blockchain technology taking hold within a year, and several industries will feel
its impact.
Conclusion and future scope

Blockchain has shown its potential for transforming traditional industry with its key
characteristics: decentralization, persistency, anonymity and auditability. In this paper, we
present a comprehensive overview on blockchain. We first give an overview of blockchain
technologies including blockchain architecture and key characteristics of blockchain. We then
discuss the typical consensus algorithms used in blockchain. We analyzed and compared these
protocols in different respects. Furthermore, we listed some challenges and problems that
would hinder blockchain development and summarized some existing approaches for solving
these problems. Some possible future directions are also proposed. Nowadays blockchain-
based applications are springing up and we plan to conduct in-depth investigations on
blockchain-based applications in the future.

Moving forward, we need to keep in mind the initial motivation for each of these technologies,
their strengths, their limitations, and determine how to create different architectures based on
business needs. A good example of this is to relax the requirements of anonymity, strengthen
safety, incorporate recourse, improve security, and incorporate the enormous complexity of
regulatory compliance in securities transactions. Making such trade-offs doesn’t detract from the
need for public, decentralized blockchains. On the contrary, this strengthens the use of the
blockchain technology ‘horizontally’ across many industries and use cases.

According to the Gartner Hype Cycle for Emerging Technologies 2017, shown in Figure below,
Blockchain still remains in the region of “Peak of Inflated Expectation” with forecast to reach
plateau in “five to ten years”. However, this technology is shown going downhill into the region
of the “Trough of Disillusionment”. Because of the wide adoption of the Blockchain in a wide
range of applications beyond cryptocurrency, the authors of this paper are forecasting a shift in
classification from “five to ten years” to “two to five years” to reach maturation. Blockchain
possesses a great potential in empowering the citizens of the developing countries if widely
adopted by e-governance applications for identity management, asset ownership transfer of
precious commodities such as gold, silver and diamond, healthcare and other commercial uses
as well as in financial inclusion. However, this will strongly depend on national political
decisions.
Soon, we expect to see some innovation in blockchains to improve performance and scalability,
which is a special challenge for public blockchains. Along the same lines, there will be new
consensus mechanisms going mainstream (such as proof-of-stake). For consensus and
validation, blockchain researchers are investigating efficient implementation of zero-knowledge
proofs and specific variants such as zkSNARKs.
References/Bibliography
E. Y. P. Gavin Wood, \Ethereum: A secure decentralised generalised transaction ledger."

Nir Kshetri, "Can Blockchain Strengthen the Internet of Things?," IT Professional, vol. 19, no.
4, pp. 68 - 72, May 2017, Available: http://ieeexplore.ieee.org/document/8012302/

Don Tapscott and Alex Tapscott, Blockchain Revolution: How the Technology Behind Bitcoin
Is Changing Money, Business, and the World, 1st ed. New York, USA: Penguin Publishing
Group, 2016.

Maaruf Ali and Mahdi H Miraz, "Cloud Computing Applications," in Proceedings of the
International Conference on Cloud Computing and eGovernance - ICCCEG 2013, Internet City,
Dubai, United Arab Emirates, 2013, pp. 1-8, Available:
http://www.edlib.asdf.res.in/2013/iccceg/paper001.pdf

Mahdi H. Miraz, "Blockchain: Technology Fundamentals of the Trust Machine," Machine

Lawyering, Chinese University of Hong Kong, 23rd December 2017, Available:
http://dx.doi.org//10.13140/RG.2.2.22541.64480/2

G. W. Peters, E. Panayi, and A. Chapelle, “Trends in crypto-currencies and blockchain

technologies: A monetary theory and regulation perspective,” 2015. [Online]. Available:
http://dx.doi.org/10.2139/ssrn. 2646618