1)

a) What is a public ledger and how does it function in the context

of financial transactions?
Ans-
A public ledger is a digital record book that is open for everyone to see. It keeps track
of all the transactions that happen in a blockchain network, like buying or sending
digital money (cryptocurrency).

In traditional banks, your transaction history is stored in the bank’s private system. But
in blockchain, all the transactions are recorded in a public ledger, which is shared
across many computers worldwide. This makes it transparent and secure, because no
single person or company controls it.

How it works in financial transactions:

i. Transaction Made: When someone sends cryptocurrency to another person, a

transaction is created.

ii. Broadcast to Network: This transaction is sent to all the computers (called nodes)
in the blockchain network.

iii. Validation: These nodes check if the transaction is valid (for example, whether the
sender has enough money).

iv. Add to Ledger: Once confirmed, the transaction is grouped with others and added
to a block. This block is then added to the chain — the public ledger.

v. Permanent Record: The transaction becomes a permanent part of the blockchain

and can’t be changed or deleted.

Why it's useful:

 Transparent: Everyone can see the history of transactions.

 Secure: It's hard to cheat or change data.

 No middleman: Works without needing a bank or central authority.

b) Explain the concept of smart contracts and their potential
applications in various industries.
Ans-
A smart contract is a computer program that runs on a blockchain. It works like a
digital agreement between two or more people. The special thing about smart contracts
is that they run automatically — once the conditions in the contract are met, the
contract completes itself without needing anyone’s help.

For example, imagine a vending machine. You put in money, and it gives you a snack.
No shopkeeper is needed. Smart contracts work in a similar way but for digital deals.

Key features of smart contracts:

 They are automatic – no one has to manually approve them.

 They are secure – stored on the blockchain, so no one can change them secretly.

 They are trustless – you don’t have to trust the other person, only the code.

Applications in different industries:

i. Finance: Automate payments, loans, or insurance claims. For example, if flight

insurance is done through a smart contract, it can automatically pay you if your flight is
delayed.

ii. Real Estate: Buy or sell property without needing lawyers or agents. Once payment
is made, ownership is transferred automatically.

iii. Healthcare: Store and share medical records securely between hospitals and
doctors, without data leaks.

iv. Supply Chain: Track goods in real-time — for example, making sure that medicines
are kept at the right temperature during delivery.

v. Government and Voting: Make voting systems transparent and secure using
blockchain-based smart contracts.

Conclusion:

Smart contracts make deals faster, cheaper, and more reliable by removing middlemen
and reducing human error. They have the power to change how many industries work.
2)
a) What is the concept of a block within a block in blockchain
technology and how does it contribute to the overall structure?
Ans-
In blockchain, a block is like a digital container that holds data, usually a list of
transactions. Every block is connected to the one before it, forming a chain of blocks
— that’s why it's called a "blockchain."

Now, the idea of a block within a block means that a block doesn’t just store
transaction details — it also holds important information that helps organize and secure
the data. Each block has smaller parts inside it that work
together.

Parts (or "blocks within a block"):

i. Header: This is the top part of the block. It has information

like:

 Time and date of block creation

 Reference to the previous block (called the previous hash)

 A special code called the nonce

 The Merkle root, which is a summary of all transactions in the block

ii. Transactions list: This is the main content. It includes all the financial or data
transactions added to this block.

iii. Metadata (in some systems): Extra details like who created the block (miner info) or
how much reward they got.

How it helps the structure:

 The block header connects each block to the one before it, forming a strong chain.

 The Merkle root allows quick checking of whether a transaction exists in a block,
without searching the entire list.

 These “blocks within a block” make the system more organized, secure, and easy
to verify.

Conclusion:
The concept of a block containing smaller parts (like header and transactions) helps
maintain the security, structure, and reliability of the entire blockchain. Each part
has a special role in keeping the system running smoothly.

b) Explain the concept of Merkle tree and its role in ensuring

efficient data verification in blockchain technology.
Ans-
A Merkle tree (also called a hash tree) is a special way of organizing data in a
blockchain. It helps in checking whether a transaction is part of a block, without needing
to look through every single transaction.

What is a Merkle tree?

A Merkle tree takes all the transactions in a block and arranges them in pairs. Each pair
is converted into a hash (a short digital code). Then, these hashes are again paired
and hashed together, and this process continues until only one final hash is left — this is
called the Merkle root.

This Merkle root is stored in the block header and represents all the transactions in the
block.

How it works (simple steps):

i . Each transaction is turned into a hash.

ii. Two hashes are combined and turned into a new hash.

iii. This process goes on in layers until only one final hash remains — the Merkle root.
Role of Merkle tree in blockchain:

 Efficient verification: You can prove a transaction is part of a block by checking just
a few hashes, not the entire list. This saves time and memory.

 Data integrity: If even one transaction changes, the Merkle root changes. This
makes it easy to detect if any data was tampered with.

 Scalability: Makes it easier for lightweight devices (like mobile phones) to interact
with the blockchain without downloading everything.

Conclusion:

The Merkle tree helps the blockchain stay fast, secure, and trustworthy. It allows quick
verification of data and protects against fraud or tampering.
3)
a) What is the Bitcoin peer-to-peer (P2P) network and how does it
facilitate the transfer of bitcoins between users?
Ans-
The Bitcoin peer-to-peer (P2P) network is a group of computers connected together
around the world. These computers are called nodes. They work together to run the
Bitcoin system — there is no central server or single owner.

Instead of using a bank or company to handle Bitcoin, users connect directly to each
other through this network. That’s why it's called peer-to-peer.

How it helps transfer bitcoins:

i. Transaction creation: When a user wants to send bitcoins, their wallet creates a
transaction and signs it with their private key (like a digital signature).

ii. Broadcast to network: This transaction is sent to the P2P network. All the nearby
nodes receive it and share it with others.

iii. Verification: Nodes check if the transaction is valid (for example, does the user
really have enough bitcoins?).
iv. Mining and adding to blockchain: If valid, miners group the transaction with
others into a block. Once the block is confirmed and added to the blockchain, the bitcoin
transfer is complete.

v. Update to all nodes: The updated blockchain is shared across the network, so
everyone has the latest record.

Benefits of the P2P network:

 Decentralized: No bank or authority is in charge.

 Reliable: Even if some nodes go offline, others keep the system running.

 Transparent: Everyone can see the transaction history.

 Secure: Transactions are verified and recorded using strong rules.

Conclusion:

The Bitcoin P2P network lets users send and receive bitcoins without needing a
middleman. It keeps the system open, fast, and secure by allowing users to work
together directly.

b) What is HashCash Proof of work (PoW), and how does it

contribute to the security of digital currencies like bitcoin?
Ans-
HashCash Proof of Work (PoW) is a method used in Bitcoin and other digital
currencies to keep the system secure and prevent fraud. It was first created for email
spam protection but is now a key part of blockchain technology.

In Bitcoin, PoW is used by miners to add new blocks to the blockchain. It involves
solving a hard math problem (a cryptographic puzzle) using computer power. The
first one to solve it gets to add the block and earn a reward.

How HashCash PoW works in Bitcoin:

i. Miners compete to solve a puzzle by trying different numbers (called nonces) until
they find the correct one.

ii. The goal is to find a number that, when hashed (using SHA-256), gives a result with a
certain number of leading zeros.

iii. This process takes time and energy, which is why it’s called “proof of work.”

iv. Once a valid solution is found, the miner broadcasts the new block to the network.
 v. Other nodes verify the solution quickly. If it’s correct, the block is added to the
blockchain.

How it adds security:

 Prevents double spending: It makes it very hard to change past transactions

because re-doing the work would need huge computer power.

 Discourages cheating: Faking a block would need more power than the whole
network — which is nearly impossible.

 Keeps the network fair: No one can easily take over the blockchain, as mining
requires real effort.

Conclusion:

HashCash Proof of Work protects Bitcoin by making sure that only valid transactions are
added to the blockchain. It uses computer power to keep the system fair, secure, and
free from tampering.

4)
a) What are the daily challenges and routines in the life of a
Bitcoin miner, and how do they contribute to the functioning of
the Bitcoin network?
Ans-
A Bitcoin miner is someone who uses powerful computers to solve puzzles and add
new blocks to the Bitcoin blockchain. This process is called mining. Miners play a very
important role in keeping the Bitcoin network running smoothly and securely.

Daily routines of a Bitcoin miner:

i. Running mining hardware: Miners operate machines like ASICs (special computers
made for mining) 24/7 to solve complex math problems.

ii. Monitoring systems: They check if their machines are working properly, not
overheating, and are connected to the internet.

iii. Joining mining pools: Many miners join mining pools (groups of miners who work
together) to increase their chances of earning rewards.
iv. Checking electricity usage: Mining uses a lot of power. Miners must manage
energy costs and ensure power supply is stable.

v. Updating software: Miners keep their mining software and blockchain nodes up to
date with the latest versions.

Daily challenges miners face:

 High electricity costs: Mining uses a lot of energy, which can be expensive in some
places.

 Hardware failure: Mining machines can overheat or break down and need repairs.

 Network difficulty: As more miners join, solving puzzles becomes harder.

 Price changes: If Bitcoin’s price drops, mining may not be profitable.

 Regulations: Some countries have rules or bans on mining.

Contribution to the Bitcoin network:

 Securing the network: Miners confirm and add transactions to the blockchain,
making it hard to cheat or double-spend.

 Maintaining decentralization: By having many miners around the world, Bitcoin

stays open and not controlled by one group.

 Creating new bitcoins: Mining is the only way new bitcoins are made — it follows a
fixed system (like one block every 10 minutes).

Conclusion:

Bitcoin miners work hard every day to keep their machines running and solve puzzles.
Their efforts help secure the network, confirm transactions, and keep Bitcoin working as
a decentralized digital currency.

b) What are the design considerations for implementing a

permissioned blockchain?
Ans-
A permissioned blockchain is a type of blockchain where only selected people or
organizations can join the network and perform certain actions, like adding data or
validating transactions. It is mostly used in businesses, banks, or government systems
where privacy and control are important.
When creating a permissioned blockchain, several important design points must be
considered.

i. Access control

Decide who can:

 Join the network

 View the data

 Add or verify transactions

This helps protect private data and control how the system works.

ii. Identity management

Each participant must be clearly identified using digital IDs or certificates. This allows
trust and traceability — you know who is doing what.

iii. Consensus mechanism

Choose a consensus method that fits the network size and trust level. For example, use:

 PBFT (Practical Byzantine Fault Tolerance) for fast and trusted systems

 Not PoW, since permissioned blockchains don’t need mining

iv. Data privacy and security

Some data may need to stay private. You can:

 Limit who can see certain transactions

 Use encryption for sensitive info

v. Performance and scalability

Permissioned blockchains are usually faster than public ones, but they still need to:

 Handle many users or transactions

 Maintain good speed and performance

vi. Governance

Set rules about:

 Who maintains the network

 How decisions are made

  How updates are handled

Strong governance avoids conflicts and confusion.

vii. Integration with existing systems

Make sure the blockchain can work smoothly with other systems (like databases, apps,
or company software).

Conclusion:

Designing a permissioned blockchain requires careful planning of who can join, how
trust is managed, and how data is protected. When done right, it offers high speed,
strong privacy, and better control for business use.

5)
a) Explain the Paxos algorithm and its role in achieving distributed
consensus.
Ans-
The Paxos algorithm is a method used to achieve consensus (agreement) in a
distributed system — where many computers (or nodes) need to agree on a single
value, even if some of them fail or give wrong information.

It was designed by computer scientist Leslie Lamport to solve the problem of agreeing
on one decision in systems like databases, blockchains, or cloud services.

Why do we need Paxos?

In a distributed network, computers might crash or lose connection. But the system still
needs to agree on important decisions like:

 What transaction to process next

 What value to store in shared memory

Paxos makes sure that all honest nodes agree on the same result, even if some nodes
fail.

Key roles in Paxos:

i. Proposers: Suggest a value (like a transaction or decision) to the network.

ii. Acceptors: Vote on the value. If a majority (over 50%) agree, that value is accepted.

iii. Learners: Learn the final agreed value and act based on it.

How Paxos works (in simple terms):

i. A proposer sends a request with a proposal number to the acceptors.

ii. Acceptors promise not to accept any earlier-numbered proposals.
iii. If the proposer gets promises from a majority, it sends the actual value.
iv. Acceptors accept the value and inform the learners.
v. The value is now agreed (consensus is reached).

Role in achieving consensus:

 Handles failure: Even if some nodes go offline or send bad data, Paxos still works.

 No double decisions: Once a value is agreed on, it can't be changed.

 Safe and reliable: Ensures all good nodes agree, even in uncertain conditions.

Conclusion:

Paxos helps distributed systems agree on one value, even when some parts fail. It is a
strong and reliable way to reach consensus, used in databases, cloud systems, and
blockchain-like networks.

b) What is the Byzantine General Problem, and how does it relate

to distributed consensus?
Ans-
 The Byzantine General Problem is a thought experiment in computer science that
explains the difficulty of reaching agreement in a group, especially when some members
might lie or fail.

Imagine a group of generals trying to agree on whether to attack or retreat. They must
send messages to each other. But some generals might be traitors and send false
messages. The challenge is:
How can the loyal generals agree on a common plan, even if some are
dishonest?

This same problem appears in distributed systems like blockchain, where different
computers (called nodes) must agree on the same data — even if some nodes are faulty
or trying to cheat.

Key ideas from the Byzantine General Problem:

i. Communication is unreliable — messages might be delayed, lost, or changed.

ii. Some members might act dishonestly — and try to confuse others.

iii. All loyal members need to agree — even if they can’t trust everyone.

Relation to distributed consensus:

 In a blockchain or distributed system, many nodes must agree on a single version of

the truth (like the latest block or transaction).

 The Byzantine Fault Tolerance (BFT) is the ability of a system to keep working
correctly even if some nodes behave badly.

 Consensus algorithms like PBFT (Practical Byzantine Fault Tolerance) and PoW (used
in Bitcoin) are designed to solve this problem.

Why it matters:

 It makes sure that no one can fake transactions or corrupt the system.

 It keeps the network running smoothly, even if some nodes fail or cheat.

Conclusion:

The Byzantine General Problem shows how hard it is to get agreement in a system with
untrusted members. Solving it is key to building secure and reliable distributed systems
like blockchains.

6)
a) How does the Lamport-Shostak-Pease algorithm handle
Byzantine faults in a distributed system?
Ans-
The Lamport-Shostak-Pease algorithm is a method used to handle Byzantine
faults, which are failures caused by nodes (computers) that behave dishonestly or
unpredictably in a distributed system.

It helps a group of computers agree on a value (like a decision or a message), even if

some of them are faulty or sending false information.

Main goal:

To make sure that:

 All honest (non-faulty) nodes agree on the same value

 The agreed value is the one sent by the honest sender (if the sender is not faulty)

How the algorithm works (in simple terms):

Let’s say there are n nodes, and at most f of them can be faulty.
The algorithm works in (f + 1) rounds of message passing to deal with those faults.

i. Round 1 – The commander sends a value

One node (called the commander) sends a value (like “Attack” or “Retreat”) to all other
nodes (called lieutenants).

ii. Rounds 2 to f + 1 – Forwarding messages

Each lieutenant forwards the received message to the others. This happens multiple
times so that all nodes can compare what others received.

iii. Final decision

Each lieutenant collects the messages from others and applies a rule (usually a
majority rule) to decide on the final value.

How it handles Byzantine faults:

 Even if some nodes lie or send wrong values, the repeated forwarding and majority
voting help the honest nodes detect the lies.
 As long as the number of faulty nodes f is less than one-third of total nodes (n
> 3f), the honest nodes can still agree on the correct value.

Why it's important:

 It solves the Byzantine General Problem.

 It ensures reliable communication in distributed systems.

 It’s useful in blockchains, databases, and fault-tolerant systems.

Conclusion:

The Lamport-Shostak-Pease algorithm helps honest nodes agree on the same value,
even when some nodes are faulty or dishonest. It does this by using repeated message
passing and majority voting over several rounds.

b) What are the key components of the KYC process and why is it
important for financial institutions?
Ans-
KYC stands for Know Your Customer. It is a process used by banks and other financial
institutions to verify the identity of their customers and understand their financial
activities. This helps prevent fraud, money laundering, and illegal activities.

Key components of the KYC process:

i. Customer Identification
The first step is to collect and verify basic details like:
 Full name

 Address

 Date of birth

 Government-issued ID (like Aadhaar, passport, PAN card)

ii. Customer Due Diligence (CDD)

This means checking how risky the customer is. Banks may look at:

 The nature of the customer’s business

 Sources of funds

 Transaction patterns

iii. Enhanced Due Diligence (EDD)

If a customer is high-risk (for example, a politically exposed person), more checks are
done:

 More documents required

 Background checks

 Monitoring of transactions

iv. Ongoing Monitoring

Even after opening an account, banks keep an eye on:

 Unusual transactions

 Sudden changes in account activity

 Periodic updates of KYC documents

Why KYC is important for financial institutions:

 Prevents fraud and identity theft

KYC helps banks know who they are dealing with.

 Fights money laundering and terrorism financing

KYC ensures that financial systems are not used for illegal activities.

 Builds customer trust

It shows the bank is serious about safety and transparency.
  Follows government rules
KYC is mandatory under most national and international laws.

Conclusion:

KYC is a crucial process that helps financial institutions stay safe, follow the law, and
protect customers. It involves verifying identity, checking risks, and monitoring activity
regularly.

7)
a) What potential impact does blockchain technology have on
international trade and global supply chains?
Ans-
Blockchain is a digital system that records data securely and transparently. In
international trade and global supply chains, it can make a big difference by
improving trust, speed, and efficiency.

i. Improved transparency
Every transaction on the blockchain is recorded and can be seen by authorized parties.
This helps track the movement of goods and reduces cheating or fraud.

Example: Buyers can check if products are original or if they really came from a certified
source.

ii. Faster document processing

In global trade, many documents like invoices, bills of lading, and customs forms are
needed. Blockchain allows sharing them quickly and safely.

Result: Less paperwork, faster shipping, and fewer delays.

iii. Better tracking and traceability

With blockchain, each step in the supply chain is recorded — from raw materials to
delivery.

This is useful for industries like food, medicine, or luxury goods to trace the origin and
movement.

iv. Lower costs

It reduces the need for middlemen, manual checks, and repeated paperwork.

That means less money spent on administration and fraud handling.

v. Stronger security

Data on the blockchain can’t be easily changed or hacked. This keeps trade information
and transactions safe.

vi. Trust between international partners

Blockchain removes the need to "trust blindly." Since everyone sees the same verified
data, it builds trust between companies in different countries.

Conclusion:
Blockchain can transform international trade and supply chains by making them more
transparent, efficient, secure, and trustworthy. This can lead to faster trade,
fewer losses, and better global cooperation.

b) How does Hyperledger Fabric achieve modularity and scalability

in its architecture?
Ans-
Hyperledger Fabric is a permissioned blockchain platform mainly used by
businesses. It is designed to be modular and scalable, meaning it can be customized
and can handle large amounts of data or users.

i. Modular architecture
Fabric is made of separate, replaceable parts (modules). Each part can be customized as
per the need of the business.

Key modules include:

 Membership services (to control who can join the network)

 Consensus mechanisms (to decide how blocks are added)

 Smart contracts (called “chaincode” in Fabric)

ii. Pluggable consensus

Fabric allows businesses to choose or change the consensus algorithm based on their
needs — for example, Kafka, Raft, or BFT-style consensus.

This flexibility supports different performance and trust requirements.

iii. Channel support

Fabric supports channels, which are like private communication lines within the
blockchain.

Only selected members can see and access a specific channel’s data, allowing data
privacy and parallel processing.

iv. Chaincode execution outside the main blockchain

Smart contracts (chaincode) run in a separate container (like Docker), not directly inside
the blockchain.

This separation improves security and performance.

v. Efficient transaction flow

Fabric uses a "execute-order-validate" model instead of the traditional "order-

execute" used in many blockchains:

 Execute: Endorsing peers simulate transactions first

 Order: Valid transactions are ordered

 Validate: All peers check and commit

 This reduces errors and supports high scalability.

Conclusion:

Hyperledger Fabric is both modular and scalable because it allows components like
consensus, identity, and smart contracts to be customized. Its unique transaction flow,
channel system, and pluggable parts help large organizations use blockchain technology
efficiently and securely.

8)Write a short note on :-

a) Supply Chain Financing
b) Ripple and Corda
Ans-
a)
Supply Chain Financing is a set of financial solutions that helps businesses improve
cash flow by allowing them to extend payment terms to suppliers while still ensuring
that suppliers get paid early.
It is usually used in trade between buyers and suppliers. A third party (usually a bank or
financial institution) pays the supplier on behalf of the buyer.

Key Features:

 Early Payment to Suppliers: Suppliers receive their money early, which helps
them run their operations smoothly.

 Flexible Payment for Buyers: Buyers get more time to pay without hurting
supplier relationships.

 Use of Technology: Many SCF platforms use digital tools to track invoices and
payments in real time.

 Low-risk Financing: Since the buyer’s credit is used, the interest rate is usually
lower than traditional loans.

Benefits:

i. Improves cash flow for both buyers and suppliers

ii. Reduces risk of late payments
iii. Builds trust in the supply chain
iv. Increases efficiency with faster payment processing

Conclusion:

Supply Chain Financing is an important financial tool that helps strengthen the
relationship between buyers and suppliers while improving the overall health of the
supply chain.

b)
Ripple

Ripple is a blockchain-based payment protocol mainly used for fast and low-cost
international money transfers.

Key Points:

i. Created for banks and financial institutions to move money quickly across
borders.
ii. Uses a digital currency called XRP to provide liquidity and speed up transactions.

iii. Transaction speed is very high — it can process thousands of transactions per
second.

iv. Not fully decentralized — RippleNet is a permissioned network, and Ripple Labs
controls part of it.

v. Used by major banks to reduce the cost and time of cross-border payments.

Corda

Corda is a permissioned blockchain platform developed by R3, mainly for

businesses in sectors like finance, healthcare, and supply chain.

Key Points:

i. Designed for enterprise use with a focus on privacy and security.

ii. Unlike public blockchains, data is only shared between involved parties (not
broadcast to the whole network).

iii. Uses smart contracts to automate business processes.

iv. Does not use a cryptocurrency — it focuses on real-world business transactions.

v. Commonly used in banking, insurance, and legal industries to build trusted

applications.

Conclusion:

 Ripple is best for fast, global payments between banks.

 Corda is ideal for secure, private business transactions across industries.

Both are permissioned blockchain platforms, but they are built for different goals
and use cases.