SEMINAR REPORT

on
“BLOCKCHAIN TECHNOLOGY”
Submitted in Partial Fulfilment of the Requirements for
the degree
of
Bachelor of Technology
in
Computer Science & Engineering

SUBMITTED BY:
Harshit Kumar Srivastava
(180013135023)

Under the Guidance of

Er. Pankaj Kumar
(Assistant Professor)
Er. Anshu Singh
(Assistant Professor)

Department of Computer Science and Engineering

Faculty of Engineering & Technology, University of Lucknow
Lucknow
 CERTIFICATE

Certified that seminar work entitled “BLOCKCHAIN TECHNOLOGY” is a

bonafide work carried out in the sixth semester by “HARSHIT KUMAR
SRIVASTAVA” in partial fulfilment for the award of Bachelor of Technology in
Computer Science & Engineering from Faculty of Engineering & Technology,
University of Lucknow, Lucknow during the academic year 2020-2021

SIGNATURE SIGNATURE
Er. Anshu Singh Er. Pankaj Kumar
 ACKNOWLEDGEMENT

Firstly, I am thankful to my higher power, the divinity for providing me guidance and ultimate
power to pursue my work on this seminar.

I would also like to express my gratitude toward my supervisors Er. Anshu Singh and Er.
Pankaj Singh for providing their invaluable guidance, comments, suggestions throughout the
course of the seminar and providing me all the necessary resources to conduct my seminar. I
feel highly obliged that I got the opportunity to learn about such an incredible technology and
get to share my views on it with my friends and peers through this seminar.

I have no words to describe my feelings full of gratitude towards my beloved parents and
venerable teachers. My parents have done everything for me -every support, every care, every
sacrifice one can imagine. I wish every child could get the kind of support that I always get
from my parents.

How can I forget to mention the contribution of all my friends, peers and well-wishers, who
believed in my hard work and sincerity. I am grateful to have you all in my life.
Table of Contents
1. Abstract……………………………………………………………………………………..………..1
2. Introduction……………………………………………………………………………………...…..2
3. Short History On Bitcoin…………………………………………………………………………3
4. Blockchain technology: How does it work…………………………………………………..4-5
5. Applications of Technology ……………………………………………………………………..6
6. Risks for Adoption…………………………………………………………………….…...………7
7. Government of India & Blackchain…………………………………………………………….8
8. Corporate funding and interests…………………………………………………………………9
9. Conclusion…………………………………………………………………………………….……10
10. Bibliography….……………………………………………………………………………..….....11

Table of Figures
1. Figure:1: Working of Blockchain Technology ……………………………………..………..4
2. Figure 2: Companies Investment in Blockchain Technology……………………………...9

Table of Tables
1. Table:1: Indian States That Have Announced Blockchain Projects……………………….8
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ABSTRACT
A blockchain is essentially a distributed database of records or public ledger of all
transactions or digital events that have been executed and shared among participating
parties. Each transaction in the public ledger is verified by consensus of a majority 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 peer to peer 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.
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.
This report describes blockchain technology and some compelling specific applications in
both financial and nonfinancial sector. We then look at the challenges ahead and business
opportunities in this fundamental technology that is all set to revolutionize our digital world.
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INTRODUCTOIN
Blockchain is a technology that allows data to be stored and exchanged on a peer-to-peer1
(P2P) basis. Structurally, blockchain data can be consulted, shared and secured thanks to
consensus-based algorithms2. It is used in a decentralised manner and removes the need for
intermediaries, or "trusted third parties".
Blockchain emerged from the marriage of two concepts:
1. Asymmetrical cryptography, which allows the use of a paired public and private key
system.
2. Distributed IT architecture (especially P2P).
Asymmetrical cryptography enables users who do not know each other to exchange encrypted
information. The system is based on a public key that can be made available to all and allows
encrypted data to be sent to a third party. The third party accesses the encrypted data via a
paired private key. The public key is similar to a bank account number, which can be provided
to anyone. The private key, which remains secret, acts as the password to the same bank
account.
A distributed system is a series of independent computers (nodes) that connect to a network
and can communicate with each other. It is similar to the Internet, which also has no central
node. Downtime for one server does not affect the other users. The blockchain network is a
P2P distributed system. Information is shared among the different users.
The blockchain is open-ended and operates in a decentralised, ongoing manner thanks to the
activity of its users who can store information, and to consensus algorithms (notably "proof-
of-work" and "proof-of-stake"3) which certify the information per block (unit). Users running
these algorithms are known as miners. When a block has been validated, it is added to the
blockchain and shared with the network. Blocks are connected to each other in such a way that
if users wish to change one block, the entire blockchain must also be changed. On the Bitcoin
blockchain, network security is guaranteed by the availability of massive computer power.
These two pillars (asymmetrical cryptography and distributed IT architecture) make it possible
to create a secure environment that establishes a new basis for trust and allows for new ways
of exchanging data, new types of transactions and new forms of contracts.
Blockchain technology is finding applications in wide range of areas—both financial and non-
financial.
Financial institutions and banks no longer see blockchain technology as threat to traditional
business models. The world’s biggest banks are in fact looking for opportunities in this area by
doing research on innovative blockchain applications. In a recent interview Rain Lohmus of
Estonia’s LHV bank told that they found Blockchain to be the most tested and secure for some
banking and finance related applications.
Non-Financial applications opportunities are also endless. We can envision putting proof of
existence of all legal documents, health records, and loyalty payments in the music industry,
notary, private securities and marriage licenses in the blockchain. By storing the fingerprint of
the digital asset instead of storing the digital asset itself, the anonymity or privacy objective
can be achieved.
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SHORT HISTORY OF BITCOIN

In year 2008, an individual or group writing under the name of Satoshi Nakamoto published a
paper entitled “Bitcoin: A Peer-To-Peer Electronic Cash System”. This paper described a peer-
to-peer version of the electronic cash that would allow online payments to be sent directly from
one party to another without going through a financial institution. Bitcoin was the first
realization of this concept. Now word cryptocurrencies is the label that is used to describe all
networks and mediums of exchange that uses cryptography to secure transactions-as against
those systems where the transactions are channeled through a centralized trusted entity.
The author of the first paper wanted to remain anonymous and hence no one knows Satoshi
Nakamoto to this day. A few months later, an open source program implementing the new
protocol was released that began with the Genesis block of 50 coins. Anyone can install this
open source program and become part of the bitcoin peer-to-peer network. It has grown in
popularity since then.
– 2008
• August 18 Domain name "bitcoin.org" registered.
• October 31 Bitcoin design paper published November.
• 09 Bitcoin project registered at SourceForge.net.
– 2009
• January 3 Genesis block established at 18:15:05 GMT.
• January 9 Bitcoin v0.1 released and announced on the cryptography mailing list.
• January 12 First Bitcoin transaction, in block 170 from Satoshi to Hal Finney.
The popularity of the Bitcoin has never ceased to increase since then. The underlying
BlockChain technology is now finding new range of applications beyond finance.
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Blockchain Technology: How does it work?

We explain the concept of the blockchain by explaining how Bitcoin works since it is
intrinsically linked to the Bitcoin. However, the blockchain technology is applicable to any
digital asset transaction exchanged online.
Internet commerce is exclusively tied to the financial institutions serving as the trusted third
party who process and mediate any electronic transaction. The role of trusted third party is to
validate, safeguard and preserve transactions. A certain percentage of fraud is unavoidable in
online transactions and that needs mediation by financial transactions. This results in high
transaction costs.
Bitcoin uses cryptographic proof instead of the trust in the third party for two willing parties to
execute an online transaction over the Internet. Each transaction is protected through a digital
signature. Each transaction is sent to the “public key” of the receiver digitally signed using the
“private key” of the sender. To spend money, owner of the cryptocurrency needs to prove the
ownership of the “private key”. The entity receiving the digital currency verifies the digital
signature –thus ownership of corresponding “private key” --on the transaction using the “public
key” of the sender.

Figure 1: Working of Blockchain Technology

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Each transaction is broadcast to every node in the Bitcoin network and is then recorded in a
public ledger after verification. Every single transaction needs to be verified for validity
before it is recorded in the public ledger. Verifying node needs to ensure two things before
recording any transaction:
1. Spender owns the cryptocurrency—digital signature verification on the transaction.
2. Spender has sufficient cryptocurrency in his/her account: checking every transaction
against spender’s account (“public key”) in the ledger to make sure that he/she has
sufficient balance in his/her account.
However, there is question of maintaining the order of these transactions that are broadcast to
every other node in the Bitcoin peer-to-peer network. The transactions do not come in order in
which they are generated and hence there is need for a system to make sure that double-
spending of the cryptocurrency does not occur. Considering that the transactions are passed
node by node through the Bitcoin network, there is no guarantee that orders in which they are
received at a node are the same order in which these transactions were generated.
This means that there is need to develop a mechanism so that the entire Bitcoin network can
agree regarding the order of transactions, which is a daunting task in a distributed system.
The Bitcoin solved this problem by a mechanism that is now popularly known as Blockchain
technology. The Bitcoin system orders transactions by placing them in groups called blocks
and then linking these blocks through what is called Blockchain. The transactions in one block
are considered to have happened at the same time. These blocks are linked to each-other (like
a chain) in a proper linear, chronological order with every block containing the hash of the
previous block. There still remains one problem. Any node in the network can collect
unconfirmed transactions and create a block and then broadcasts it to rest of the network as a
suggestion as to which block should be the next one in the blockchain. How does the network
decide which block should be next in the blockchain? There can be multiple blocks created by
different nodes at the same time. One can’t rely on the order since blocks can arrive at different
orders at different points in the network. Bitcoin solves this problem by introducing a
mathematical puzzle: each block will be accepted in the blockchain provided it contains an
answer to a very special mathematical problem. This is also known as “proof of work”—node
generating a block needs to prove that it has put enough computing resources to solve a
mathematical puzzle. For instance, a node can be required to find a “nonce” which when hashed
with transactions and hash of previous block produces a hash with certain number of leading
zeros. The average effort required is exponential in the number of zero bits required but
verification process is very simple and can be done by executing a single hash.
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Applications of Technology
Compelling Uses cases in both Financial and Non-Financial Areas
1. Financial Applications:
1.1 Private Securities: It is very expensive to take a company public. A syndicate
of banks must work to underwrite the deal and attract investors. The stock
exchanges list company shares for secondary market to function securely with
trades settling and clearing in a timely manner. It is now theoretically possible
for companies to directly issue the shares via the blockchain. These shares can
then be purchased and sold in a secondary market that sits on top of the
blockchain. Here are some examples:
1.2 Insurance Assets which can be uniquely identified by one or more identifiers
which are difficult to destroy or replicate can be registered in blockchain. This
can be used to verify ownership of an asset and also trace the transaction
history. Any property (physical or digital such as real estate, automobiles,
physical assets, laptops, other valuables) can potentially be registered in
blockchain and the ownership, transaction history can be validated by anyone,
especially insurers

2. Non-Financial Applications:
2.1 Private Securities: It is very expensive to take a company public. A syndicate
of banks must work to underwrite the deal and attract investors. The stock
exchanges list company shares for secondary market to function securely with
trades settling and clearing in a timely manner. It is now theoretically possible
for companies to directly issue the shares via the blockchain. These shares can
then be purchased and sold in a secondary market that sits on top of the
blockchain. Here are some examples:
2.2 Applications of Blockchain in the Music Industry The music industry has gone
a big change in last decade due to the growth of Internet and availability of a
number of streaming services over the Internet. It is impacting everyone in the
music industry-artists, labels, publishers, songwriters and streaming service
providers. The process by which music royalties are determined has always
been convoluted one, but the rise of the Internet has made it even more complex
giving rise to the demand of transparency in the royalty payments by artists and
songwriters.
2.3 Decentralized proof of existence of documents Validating the existence or the
possession of signed documents is very important in any legal solution. The
traditional document validation models rely on central authorities for storing
and validating the documents, which present some obvious security challenges.
These models become even more difficult as the documents become older.
There are so many more non-financial applications in so many fields and it is practically
impossible to mention each of them is this report.
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Risks for Adoptions

Blockchain is a promising breakthrough technology. As we described before, there are vast
array of applications or problems that can be solved using Blockchain based technology. That
spans from Financial (remittance to investment banking ) to non-financial applications like
Notary services. Most of these are radical innovations. As it happens with adoption with radical
innovations, there are significant risks of adoption.
Behaviour change: Change is constant, but there is resistance to change. In the world of a non-
tangible trusted third party, that Blockchain presents, customers need to get used to the fact
that there electronic transactions are safe, secured and complete. The present day intermediaries
like Visa or Mastercard ( in case of a credit cards ) will also go through change roles and
responsibility. We envision that they will also invest and move their platforms to be
BlockChain-based. They will continue to provide the customer relationship kind of services.
Scaling: Scaling of the current nascent services based on Blockchain presents a challenge.
Imagine yourself executing a Blockchain transaction for the first time. You will have to go
through downloading the entire set of existing Blockchains and validate before executing your
first transaction. This may take hours or longer as the number of blocks increase exponentially.
Bootstrapping: Moving the existing contracts or business documents/frameworks to the new
Blockchain based methodology presents a significant set of migration tasks that need to be
executed. For example in case of Real Estate ownerships/liens, the existing documents lying in
County or Escrow companies need to be migrated to the equivalent Blockchain form. This may
involve time and cost.
Government Regulations: In the new world of Blockchain-based transactions, Government
agencies like FTC, SEC, etc may slow down the adoption by introducing new laws to monitor
and regulate the industry for compliance. In USA, this may in a way help adoption as these
agencies carry customer trust. In more controlled economies like in China, the adoption will
face significant headwind.
Fraudulent Activities: Given the pseudonymous nature of Blockchain transactions, coupled
with ease of moving valuables, the bad guys may misuse this for fraudulent activities like
money trafficking. That said, with enough regulations and technology support law enforcement
agencies will be able to monitor and prosecute them.
Quantum Computing: The basis of Blockchain technology relies on the very fact that 8 it is
mathematically impossible for a single party to game the system due to lack of needed compute
power. But with the advent of Quantum Computers ( in future ), the cryptographic keys may
be easy enough to crack through sheer brute force approach within a reasonable time. This will
bring the whole system to its knee. The counter-argument would be for keys to become even
stronger so that they may not be easy to crack.
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Government of India & Blockchain

Today the world believes in blockchain technology and see it as the future technology. Almost
all major developed countries are investing in this technology and Government of India is no
different. Our government is looking in all dimensions to use this technology.
Recently NITI AAYOG suggested few strategies that focus on recommendations to establish
India as a vibrant blockchain ecosystem. The suggested recommendations include:
1. Regulatory and policy considerations for evolving a vibrant blockchain ecosystem
2. IndiaChain: creation of a national infrastructure for deployment of blockchain solutions
with inbuilt fabric, identity platform and incentive platform.
3. India as blockchain hub: promotion of research and development in blockchain, in
addition to focus on skilling of workforce and students.
4. Procurement process for government agencies to adopt blockchain solutions.
5. Pegged stable coin for Indian Rupee for seamless exchange for blockchain solutions.
This may be in conjunction with the need for re-evaluating cryptocurrencies.
6. Crypto currencies for India: Does India need a cryptocurrency / ICO market? What
could be the possible contours for facilitation of ICO market in India that assuages all
the regulatory concerns?

Table 1: Indian States that have announced Blockchain Projects

STATE PROJECT
Land Registration
TELANGANA
Data Protection

Land Records
Educational Certificates
ANDHRA PRADESH
Road Transport Certificates
KYC for Hotel records

MAHARASHTRA Land Records

KARNATAKA IP Management

GOA Land Registry

UTTAR PRADESH Land and Revenue Records

GUJARAT E-Governance
 Page |9

Corporate Funding & Interest

In 2015, the bitcoin currency has reached yearly highs in both volume and price over the
course of September-October. The digital currency is gaining traction both in the consumer
marketplace, as a tradeable security, and with regulators. It isn't just digital-currency
enthusiasts that are bullish. Equity research firm Wedbush expects it to rise to $600 because
of the growing adoption.
This enthusiasm may be because of the large quantities of capital being injected into the
digital infrastructure. Excitement grows as Bitcoin and blockchain firms have received a
record US$1 Billion in investments as the year comes to an end. American Express, Bain
Capital, Deloitte, Goldman Sachs, MasterCard, the New York Life Insurance Company,
the New York Stock Exchange -- all of them have poured millions of dollars into Bitcoin
firms recently.
Corporate funding into Bitcoin & Blockchain infrastructure is growing and generating
interest in several segments. Nasdaq is tapping blockchain technology to create a more
secure, efficient system to trade stocks. DocuSign, a company that specializes in electronic
contracts, just unveiled a joint idea with Visa to use blockchain to track car rentals and
reduce paperwork. Microsoft will unveil details about its venture into "smart contracts" that
use blockchain technology. Meanwhile, this new obsession with blockchain technology has
reached a point that companies are even experimenting with creating smaller, "private
blockchains" inside their own offices. They hire companies like BlockCypher, a startup out
of Redwood City, California to develop blockchain technology within their business.

Figure 2: Companies Investment in Blockchain Technology

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Conclusion
To conclude, Blockchain is the technology backbone of Bitcoin. The distributed ledger
functionality coupled with security of BlockChain, makes it very attractive technology to solve
the current Financial as well as non-financial business problems. As far as the technology is
concerned, the cryptocurrency based tech is either in the downward slope of inflated
expectations or in trough of disillusionment.
There is enormous interest in BlockChain based business applications and hence numerous
Start-ups working on them. The adoption definitely faces strong headwind as described before.
The large Financial institutions like Visa, Mastercard, Banks, NASDAQ, etc., are investing in
exploring application of current business models on BlockChain. In fact, some of them are
searching for the new business models in the world of BlockChain. Some would like to stay
ahead of the curve in terms of transformed regulatory environments of BlockChain.
To conclude, we envision BlockChain to go through slow adoption due to the risks associated.
Most of the Startups will fail with few winners. We should be seeing significant adoption in a
decade or two.
Blockchain will fundamentally change financial systems in the next 10,15 years. A blockchain
technology will be applied in many areas because it is about trust, credit, security- the security
of data and the privacy of data. ~Jack Ma
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Bibliography
1. https://en.wikipedia.org/wiki/Blockchain
2. https://www.youtube.com/watch?v=SSo_EIwHSd4
3. https://www.youtube.com/watch?v=yubzJw0uiE4
4. https://www.moneycontrol.com/news/opinion/an-urgent-need-for-india-to-enable-
cryptocurrency-regulation-6929061.html
5. http://niti.gov.in/