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Block chain technology and its applications

  1. BLOCKCHAIN AND ITS APPLICATIONS By CA Abhishek Jain B. Com, FCA, DISA, FAFD, and CBE Email ID: | Mobile No. : +91 901680 8671 From The Chartered Accountants Perspective
  2. 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.
  3. Blockchains as Distributed Ledgers Storage of data in Blockchain Environment
  4. 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
  5. 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.
  6. 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
  7. A Chain of Blocks
  8. 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.
  9. 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
  10. 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
  11. 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
  12. 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
  13. Use Cases for Smart Contracts Smart Contract Use Cases Record Keeping Digital Identities IOT (Internet Of Things) Auctions Supply Chain Digital Agree- ments
  14. Blockchain – Applications in Industries
  15. Blockchain in Finance CURRENCY CURRENC Y
  16. 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
  17. Blockchain in Healthcare
  18. 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
  19. Blockchain in Government
  20. 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
  21. 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.
  22. Blockchain is the future. Let’s be ready to leverage this technology!
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