BLOCKCHAIN AND ITS
APPLICATIONS
By CA Abhishek Jain
B. Com, FCA, DISA, FAFD, and CBE
Email ID: abhishek@proex.co.in | Mobile No. : +91 901680 8671
From The Chartered Accountants Perspective

Blockchain Technology
Blockchain is a cryptography based software technology which
functions as a distributed ledger that is heavily secured due to its
attributes of peer to peer verification and authentication.
Leveraging this technology to apply it in real world situations where
a secured record is required for transactions, documents or any
other sensitive information will lead to higher productivity and
security.

Blockchains as Distributed Ledgers
Storage of data in Blockchain Environment

How Blockchains Work: Basics
oChronological Ledger
• Transactions are “pseudo-
anonymous”
• Transactions are grouped
together in “blocks”
• Transactions are logged and
stamped with information
about the time, amount, and
participants as if a notary is
present at every transaction
oBlockchain is not centralized
(does not have one owner),
therefore there are strict
rules about how it must be
maintained

How Blockchains Work:
Maintenance
o The individuals who maintain and update the Blockchain are “miners,”
and they are paid a reward
o The Miners process transactions by:
• Solving a complex mathematical problem
• Sending transactions to other nodes to be verified.

How Blockchains Work: Hashing
o The unbroken Hash
(seal) confirms that the
block, and therefore
every block before it, is
legitimate
o Miners incentivized to
add “valid” transactions
via a reward; invalid
transactions are
rejected, and thus, no
reward is given
o When all miners agree the problem has been solved correctly, the
block is added to the chain and is visible to the entire network

A Chain of Blocks

Markle Tree
o Merkle tree is a tree structure, where the leaf nodes will
contain the hash of the document and every individual node
and intermediate node will contain the hash of the combination
of the Childs.

How the Digital Distributed Ledger
Works
A Verified Transaction
can involve Crypto-
currency, Contracts,
Records or any other
Information
Validation
The Network Nodes
Validates the Transactions
and the User Status using
known Algorithms
Some one request
the Transaction
The requested
transaction is
broadcasted to a
P2P network nodes
Once verified, the
transaction is combined
with other transactions,
to create a new block of
data in the ledger.
The new block is then added to
the existing blockchain, in a way
that is permanent and unalterable
The Transaction is
Complete

Permission less vs. Permissioned
Blockchains
 Permission less/Public
 Decentralized Trustless Blockchains – Anyone can
process blocks
 Consensus typically reached via Proof of Work
 Miners compensated for validation
 E.g. Ethereum, Bitcoin
 Permissioned/Federated
 Trusted: - All processors of blocks are known
 Less processing required for consensus hence faster
 E.g. Hyperledger

What are Blockchains Good For?
• Cryptocurrencies/Store of
value - What is my account
balance?
• Digital Identity - Who are
you and how have you
changed over time?
• Digital representation of a
property/Tokenization –
Who owned this car over
time?
• Tracking provenance of
food or drugs – What
country & postal code did
this chicken come from?
o Immutably storing the digital representation of entities as their state
changes via transactions
Use
Cases

Smart Contracts (an application of
Blockchain)
oA smart contract allows
individuals to exchange data in
a trusted, conflict-free manner
without relying on a third party
like a bank, lawyer or notary.
oIt is a self-automated computer
program that can carry out the
terms of any contract.
oMostly based on objective
conditions precedent
• “If, then” criteria

Use Cases for Smart Contracts
Smart
Contract
Use
Cases
Record
Keeping
Digital
Identities
IOT
(Internet
Of
Things)
Auctions
Supply
Chain
Digital
Agree-
ments

Blockchain – Applications in
Industries

Blockchain in Finance
CURRENCY
CURRENC
Y

Blockchain in Finance
o Payments and Remittance
• Transactions can occur directly between two parties on a
frictionless P2P basis. The technology’s application for overseas
transactions has the potential to reduce risk, transaction costs and
to improve speed, efficiency and transparency.
o Issuance, Ownership and Transfer of Financial Instruments
• A blockchain-based securities market allows traders to buy or sell
stocks directly on exchanges or directly to other market participants
in a P2P manner without the intermediation services provide by a
broker or clearing house.
o Clearing and Settlement Latency
• On the blockchain, the entire lifecycle of a trade, including its
execution, clearing and settlement can occur at trade level,
lowering post-trade latency and reducing counterparty exposures

Blockchain in Healthcare

Blockchain in Healthcare
oCost Containment
• The block chain can be filtered to identify and alert about specific
activity on the chain, monitoring, using patterns, can include data that
represents a doctor, consumer, drugs, procedures, all can to tokenized
and added to the chain.
• Building a rule base using best practices, ICD codes, medical procedures
and other costs can be monitored and audited using blockchain.
oSmart Contracts
• Smart contracts would automatically pay providers when conditions of
service are established such as:
• Validation that a service was received by a registered Medicaid patient
• Service was provided by a properly registered doctor & provider
• Neither party is on a known list of past participants in any fraud

Blockchain in Government

Blockchain in Government
o Asset registration
• A blockchain framework enables government agencies to increase
the accuracy and efficiency of publicly held records by linking
ownership of an asset to a single, shared ledger without disrupting
existing registry data.
o Identity services
• Blockchain enables government agencies to create a single,
trustworthy collection of digital identity documents. These
documents make it easier for government officials to reconcile data
conflicts and provide citizens with control over their own identity

Blockchain in Government (contd.)
o Fraud prevention and compliance
• Blockchain creates a shared and trusted ledger that sequentially
appends cryptographically secure data. The ledger is only accessible
to trusted parties, giving government administrators the assurance
that they’re working with data that’s up-to-date, accurate and
nearly impossible to manipulate.
oSupply Chain
• Blockchain makes the precise location of an object — and its
accompanying digitized documentation — part of a traceable
permanent record giving government full visibility of the supply
chain.

Blockchain is the future.
Let’s be ready to leverage this technology!

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