INTRODUCTION TO BLOCKCHAIN

What I have learnt from this course:

1. Problems existing with banking system
2. Blockchain
3. Benefits of blockchain
4. Applications of blockchain
5. Cryptocurrency
 BANKING SYSTEM
Blockchain technology is a core, underlying
technology with promising application prospects in
the banking industry. Problems with the present
banking system are:

 HIGH TRANSACTION COST

 o The ineffectiveness of bank credit information
systems is mainly due to the following: first, the
scarcity and poor quality of data makes it
difficult to judge the situation of personal credit;
second are difficulties in inter-institutional data
sharing; third is the unclear ownership of user
data, leading to difficulties in circulation due to
concerns for privacy and security. Blockchain
technology can provide some assistance in
addressing these issues.

 DATA THEFT
o Identity theft is one of the most common
outcomes from data breaches. 31.7% of breach
victims in 2016 later experienced identity fraud,
compared to just 2.8% of individuals not notified
of a data breach in 2016.
 o
 FINANCIAL MELTDOWN
o In the blockchain movement’s ideology, the
2008 financial crisis holds a special spot. A
critical juncture in the history of global
capitalism, it readily provides a bedrock
narrative that justifies the very purpose of a
decentralized digital currency.

o
 DOUBLE SPENDING
o Double-spending is the result of successfully
spending some money more than once. Bitcoin
users protect themselves from double spending
fraud by waiting for confirmations when
 receiving payments on the blockchain, the
transactions become more irreversible as the
number of confirmations rises.

 WHAT IS MEANT BY BLOCKCHAIN

Blockchain is currently a concept that has received

significant attention in financial technology
(FinTech). It combines several computer
technologies, including distributed data storage,
point-to-point transmission, consensus mechanisms,
and encryption algorithms. It has also been
 identified as a disruptive innovation of the Internet
era.

However, as blockchain is a major breakthrough in

data storage and information transmission, it might
fundamentally transform the existing operating
models of finance and economy, which might lead to
a new round of technological innovations and
industrial transformation within the FinTech
industry.

 BENEFITS OF BLOCKCHAIN:
 DECENTRALIZATION
o The decentralized nature of blockchain
technology means that it doesn’t rely on a
central point of control. A lack of a single
authority makes the system fairer and
considerably more secure.

o
 FASTER TRANSACTIONS
o A blockchain-based digital asset exchange
network has launched a “lightning fast” protocol
which is capable of processing more than 60,000
transactions per second. MetaHash says its
 protocol, known as Trace Chain, takes no longer
than three seconds to approve each transaction.

o
 IMPROVED SECURITY
o Blockchain is innately secure. It utilises powerful
cryptography to give individuals ownership of an
address and the cryptoassets associated with it,
through a combination of public and private
keys, made up of combinations of random
numbers and letter. This solves the issue of
stolen identity as addresses are not directly
associated with users’ identity, whilst also being
far harder to compromise. Private keys are even
more secure as they are considerably longer. It
is in this way that blockchain offers a greater
level of security to the individual user as it
removes the need for weak and easily
compromised passwords and online identities.
 
 Example:

o
 COST REDUCTION
o Blockchain as an impartial and peer-to-peer
technology that can reduce costs in many
aspects of diverse industries that deal with large
databases. Payments. The backbone of the
blockchain technology is the elimination of the
third parties, and as a result, it significantly
reduces transaction fees and time.
 o

 APPLICATIONS OF BLOCKCHAIN

The major applications of blockchain are in the field

of:
1. Cryptocurrency
A cryptocurrency is a digital asset designed to work
as a medium of exchange that uses strong
cryptography to secure financial transactions,
control the creation of additional units, and verify
the transfer of assets.

2. Medical

Blockchain is a distributed system recording and

storing transaction records. More specifically,
blockchain is a shared, immutable record of peer-to-
peer transactions built from linked transaction
blocks and stored in a digital ledger.

3. Smart contracts
These are an electronic agreement between two
parties which automatically executes when the pre-
defined conditions are met. In the case of banking
and financial institutions, they can use it to file a deal
or agreement between the parties. Thus it reduces
the need to gauge the entire process every time.
Once the set conditions are met the payment will be
released directly to the parties.

4. Intellectual property

Blockchain technology has become famous as the

technology behind cryptocurrencies such as Bitcoin
and Ethereum. In its basic form it is an open ledger
of information that can be used to record and track
transactions, and which is exchanged and verified on
a peer-to-peer network.

5. Real estate

Blockchain technology has recently been adopted

and adapted for use by the commercial real estate
(CRE) industry. CRE executives are finding that
blockchain-based smart contracts can play a much
larger role in their industry. Blockchain technology
can potentially transform core CRE operations such
as property transactions like purchase, sale,
financing, leasing, and management transactions.

6. Internet of things
 IoT allows devices to send data to private blockchain
ledgers for inclusion in shared transactions with
tamper-resistant records. IBM Blockchain enables
your business partners to access and supply IoT data
without the need for central control and
management. Each transaction can be verified to
prevent disputes and ensure each partner is held
accountable for their individual roles.

 CRYPTOCURRENCY:
A cryptocurrency is a tradable digital asset or digital
form of money, built on blockchain technology that
only exists online. Cryptocurrencies use
cryptography to verify and secure transactions,
hence their name. There are currently well over one
thousand different cryptocurrencies in the world and
many people see them as the lynchpin of a fairer,
future economy.

Example: