BLOCKCHAIN

TECHNOLOGY
SCOPE OF THE VIDEO

• Blockchain technology and Features

• Distributed Ledger Technology and its Properties
• Transaction in Blockchain Technology
• Terminologies related to Blockchain
• Types of blockchain networks
• Advantages and Disadvantages of Blockchain
• Blockchain Uses
BLOCKCHAIN

Blockchain is a system of recording information

in a way that makes it difficult or impossible to
change, hack, or cheat the system.

Blockchain is a type of DLT in which

transactions are recorded with an immutable
cryptographic signature called a hash.
FEATURES

• Blockchain is a specific type of database.

• It differs from a typical database in the way it stores information;
blockchains store data in blocks that are then chained together.
• As new data comes in it is entered into a fresh block. Once the block is
filled with data it is chained onto the previous block, which makes the
data chained together in chronological order.
FEATURES

• Different types of information can be stored on a blockchain but

the most common use so far has been as a ledger for transactions.
• Blockchain is used in a decentralized way so that no single person
or group has control rather, all users collectively retain control.
• Decentralized blockchains are immutable, which means that the
data entered is irreversible. E.g. Bitcoin
• All the transaction are transparent
Distributed Ledger Technology (DLT).

A blockchain is essentially a digital ledger of transactions that

is duplicated and distributed across the entire network of
computer systems on the blockchain.

Each block in the chain contains a number of transactions, and

every time a new transaction occurs on the blockchain, a
record of that transaction is added to every participant’s
ledger. The decentralised database managed by multiple
participants is known as Distributed Ledger Technology (DLT).
Properties of distributed ledger Technology

Credit: Euromoney learning 2020

TRANSACTION INTO THE BLOCKCHAIN

Credit: Euromoney learning 2020

Terminologies related to Blockchain

• Database
• Authentication
• Authorisation
• Proof of work
• Proof of Stakes
DATABASE

A database is a collection of information that

is stored electronically on a computer
system. Information, or data, in databases is
typically structured in table format to allow
for easier searching and filtering for specific
information.
AUTHENTICATION

The original blockchain was designed to operate without a central authority,

but transactions still have to be authenticated.

This is done using cryptographic keys, a string of data (like a password) that
identifies a user and gives access to their “account” or “wallet” of value on
the system.

Each user has their own private key and a public key that everyone can see. It
creates a secure digital identity to authenticate the user via digital signatures
and to ‘unlock’ the transaction they want to perform.
AUTHORISATION

Once the transaction is agreed between the users, it needs to be approved,

or authorised, before it is added to a block in the chain.

For a public blockchain, the decision to add a transaction to the chain is

made by consensus. This means that the majority of “nodes” (or computers
in the network) must agree that the transaction is valid.

The people who own the computers in the network are incentivised to
verify transactions through rewards. This process is known as ‘proof of
work’.
PROOF OF WORK

The people who own the computers in the network to solve a complex
mathematical problem to be able to add a block to the chain. Solving the
problem is known as mining, and ‘miners’ are usually rewarded for their work
in cryptocurrency.

The mathematical problem can only be solved by trial and error and the
odds of solving the problem are about 1 in 5.9 trillion. It requires substantial
computing power which uses considerable amounts of energy.
PROOF OF STAKE

Cryptocurrency owned by participants validates the “Proof of

Stakes” in Blockchain network - to be in with a chance of
selecting, verifying & validating transactions.
This saves substantial computing power resources because no
mining is required.

In addition, blockchain technologies have evolved to include “Smart

Contracts” which automatically execute transactions when certain
conditions have been met.
Types of blockchain networks
Types of blockchain networks

Public blockchain networks

A public blockchain is one that anyone can join and
participate in. E.g. Bitcoin.
substantial computational power required, little or no
privacy for transactions, and weak security.
These are important considerations for enterprise
use cases of blockchain.
Types of blockchain networks

Private blockchain networks

One organization governs the network. That organization
controls who is allowed to participate in the network,
execute a consensus protocol and maintain the shared ledger.
Depending on the use case, this can significantly boost trust
and confidence between participants.
A private blockchain can be run behind a corporate firewall
and even be hosted on-premises.
Types of blockchain networks

Permissioned blockchain networks

Businesses who set up a private blockchain, will generally set
up a permissioned blockchain network.
public blockchain networks can also be a permissioned.
Places restrictions on who is allowed to participate in the
network, and only in certain transactions.
Participants need to obtain an invitation or permission to join.
Types of blockchain networks

Consortium blockchains
Multiple organizations can share the responsibilities of
maintaining a blockchain.
Pre-selected organizations determine who may submit
transactions or access the data.
A consortium blockchain is ideal for business when all
participants need to be permissioned and have a shared
responsibility for the blockchain.
Advantages and Disadvantages of Blockchain

• Pros
• Improved accuracy by removing human involvement in verification
• Cost reductions by eliminating third-party verification
• Decentralization makes it harder to tamper with
• Transactions are secure, private, and efficient
• Transparent technology
• Provides a banking alternative and way to secure personal information
for citizens of countries with unstable or underdeveloped governments
Advantages and Disadvantages of Blockchain

• Cons
• Significant technology cost associated with mining bitcoin
• Low transactions per second
• History of use in illicit activities
• Regulation
Blockchain Uses

• Currency
• Banking and Finance
• Healthcare
• Records of Property
• Smart Contracts
• Supply Chains
• Voting
Credit: pwc.com
 Banking and Finance
• By integrating blockchain into banks, consumers can see their
transactions processed in10 minutes.
• basically the time it takes to add a block to the blockchain,
regardless of holidays or the time of day or week.
• exchange funds between institutions more quickly and securely.
• E.g. In the stock trading business, the settlement and clearing
process can take up to three days, meaning that the money and
shares are frozen for that period of time.
 Currency
• By spreading its operations across a network of computers, blockchain
allows Bitcoin and other cryptocurrencies to operate without the need
for a central authority.
• Reduces risk
• NO processing and transaction fees.
• Provide a more stable currency with more applications and a wider
network of individuals and institutions they can do business with, both
domestically and internationally.
• Using cryptocurrency wallets for savings accounts or as a means of
payment is especially profound for those who have no state identification.
 Records of Property
• Potential to eliminate the need for scanning documents and tracking
down physical files in a local recording office.
• If property ownership is stored and verified on the blockchain,
owners can trust that their deed is accurate and permanently
recorded.
• If a group of people living in war-torn countries is able to leverage
blockchain, transparent and clear timelines of property ownership
could be established.
 Smart Contracts
• A smart contract is a computer code that can be
built into the blockchain to facilitate, verify, or
negotiate a contract agreement. Smart contracts
operate under a set of conditions that users agree
to. When those conditions are met, the terms of the
agreement are automatically carried out.
• E.g. a potential tenant would like to lease an
apartment using a smart contract.
 Supply Chains
• suppliers can use blockchain to record the origins of
materials that they have purchased. This would allow
companies to verify the authenticity of their products, along
with such common labels as “Organic,” “Local,” and “Fair
Trade.”
• the use of blockchain to track the path and safety of food
throughout the farm-to-user journey.