Blockchain Technology: A Conceptual Study

International Journal of Research in Economics and Social Sciences(IJRESS)
Available online at: http://euroasiapub.org
Vol. 11 Issue 04, April- 2021
ISSN: 2249-7382 | Impact Factor: 8.018|
(An open access scholarly, peer-reviewed, interdisciplinary, monthly, and fully refereed journal.)
International Journal of Research in Economics & Social Sciences
Email:- editorijrim@gmail.com, http://www.euroasiapub.org
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Blockchain Technology: A Conceptual Study
Dr. Pinki Insan
Assistant Professor of Commerce
Indira Gandhi University, Meerpur, Rewari, Haryana
Email-Id: pinkiinsan@yahoo.com
Jyoti Yadav
Research Scholar, Indira Gandhi University
Meerpur, Rewari, Haryana
Email-Id: shagunrao825@gmail.com
“We have elected to put our money and faith in a mathematical framework that is free of
politics and human error.”
Tyler Winkelvoss, Rower & Entrepreneur, Read more on cnbc.com
Abstract
Blockchain, the technology behind the digital currency is an innovative technology with
potential to disrupt the banking system as well as other business models. It is an invisible
technology which is changing the world, a world in which contracts are embedded in digital
code and stored in transparent, shared databases, where they are protected from deletion,
tampering, and revision and has the potential to change the way the organizations work. The
main aim of this paper is to make reader familiar with the concept of blockchain which has
become a buzz word today. Everyone is talking about the benefits and potential uses of
blockchain in different sectors of economy, health care and e – governance. This paper will
mainly discuss about the basic concepts of block chain technology.
Keywords: Blockchain, Hash, Cryptography, Distributed Ledger, Nodes.
1. Introduction
The global financial crisis of 2008 raised many questions all around the world about the
working of banking system. As the main reason behind the crisis was sub- prime lending
given by banks. This crisis created distrust among people (Alterkawi & Bittar, 2019)about
banks. Then a person named Satoshi Nakamoto proposed a white paper and brought the
concept of Bitcon. In his study “Bitcoin: a peer to peer electronic cash system” he discussed
about electronic way of transferring money without any third party. As banks work as a

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mediator in transferring money. The main idea behind the Bitcoin was to remove banks as a
mediator and transfer money directly from sender to receiver.
The technology behind the Bitcoin was the Blockchain. But before 2017 no one was as
familiar to this word as today. Because in 2017 (Alterkawi & Bittar, 2017) discussed
blockchain technology as a fundamental technology in their research paper named “the truth
about blockchain”. This paper took attention to the potential of blockchain. Now it has
become a hot topic among researchers of different fields.
Blockchain is a distributed ledger where data is stored digitally, cryptographically and
chronologically. The main features of blockchain are: immutability and transparency.
(Madakam & Kollu, 2020) has defined blockchain in the simplest words as:
Blockchain = Public Distributed Ledger
As it is a distributed ledger that means there is no central authority to control it. Once the data
is stored at blockchain it is shared among all the nodes. This feature creates transparency in a
blockchain network everyone has symmetric information.
Fig 1: Working of Blockchain Technology
Source: https://blockgeeks.com

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Before going deep into the concept we should know about some basic terminologies used in
blockchain technology:
1.1 Nodes: The participant of the blockchain is called a node (small servers). Nodes can
be any kind of device (mostly computer, laptops or even bigger servers). All nodes are
connected to each other and share information related to latest transactions. Nodes
contain a full copy of the transaction history of blockchain.
1.2 Transaction: It represents the transfer of information broadcasted to the network that
needs to be validated by other participants on the network.
1.3 Ledger: Ledger is a book of records. In a ledger transactions are recorded
systematically.
1.4 Block: As the name of blockchain suggests it is a chain of blocks where each block
contains three kinds of information Data, Hash value and Previous Hash value. Here
data is any transaction made between two persons. Thus, block is like a page of a
ledger or record book (https://investopedia.com).
1.5 Cryptography: Cryptography is the process of converting simple text into
unintelligible text. It prevents a third party from accessing the knowledge of data.
There are three types of cryptography. In blockchain we mainly use hash function of
cryptography.
1.6 Hash: in hashing, data is processed from a block through a mathematical function,
and will result in an output of fixed length. It works like a fingerprint as fingerprints
give a person unique identity in the same way hash value gives a block unique
identity. But this is a one way function; this means that hash values don’t tell you
anything about the input data. It is important for encryption in blockchain so that no
one a=can guess what is inside the block.
Fig 2: Hashing
Source: www.freecodecamp.org

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In fig 2 we can see that the number of digits in hash value is same for fox and the red
fox runs across the ice. Thus the output is created in same length and we can’t guess
about the word only with the help of output.
2. Types of blockchain:
After understanding the basic terms of blockchain now we will discuss about the types of
blockchain. There are three types of blockchain on the basis of accessibility.
2.1 Public Blockchain: as the name suggests public blockchain can be accessed easily by
anyone all around the world. Any node which access the network can engage in
transactions, can take part in consensus and validation process. Public blockchains are
fully decentralized and unpermissioned as you don’t need anyone’s permission. These
are fully transparent. Bitcoin network is the most known example of public
blockchain.
2.2 Private Blockchain: Private blockchains are permissioned, one need permission
from a central authority to use the network. A central authority working as a
gatekeeper enacts control over who is allowed to engage in transactions and who are
not? Here we see that the main aim of Bitcoin blockchain network was to remove the
middleman but private blockchains are abolishing the original aim. But on a private
blockchain network we can process transactions more efficiently and quickly.
Because here we don’t need verification by thousands of nodes, but only by a few
participants. As Buterin (2015) pointed out that the central authority can make quick
changes to the blockchain parameters and it is crucial for certain fields of application
such as national land registries.
2.3 Consortium/federated blockchain: A consortium blockchain is not fully
unpermissioned like a public blockchain. Because here an organization or group of
persons decides the accessibility of network participants. But it is not totally private
blockchain because in a private blockchain there is only a single organization
controlling over the network but in consortium there is a group of organizations.
Every organization keep an eye on all the activities of other organizations also. It
offers collaboration among organizations to come together and work more efficiently.
Hyperledger is the most prominent consortium in the market right now.
3. Uses of blockchain
As blockchain is a new technology it is not fully discovered till now. So, it is not possible
to know all the uses, benefits and limitations of the technology. More research work on
this technology will provide more information about potential uses. Here are some of the
uses
3.1 Cryptocurrency: Cryptocurrency is a digital currency with no physical appearance.
It only stays on a network you can’t touch it. Previously it was neither issued
by any central bank nor backed by any fiat currency. But now many central banks
have issued their own crypto currency. Most commonly known cryptocurrency is

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Bitcoin. But the blockchain is the heart of Bitcoin. It is the technology on which
Bitcoin works. So the first and mostly use case of blockchain is for issuing
cryptocurrency.
3.2 E-governance: The most attractive feature of blockchain is immutability. By using
this land registries or for any other asset where legal claim is necessary towards the
asset. Because of the immutability feature we can assure about the ownership
protection.
Government can use it to distribute subsidy directly to the eligible persons or in case
of any natural disaster can send money directly to the needy. Thus we can remove
corruption from the society by directly helping the needy and it will also save time by
removing the middlemen.
3.3 Education: After qualifying any exam or passing a college education a degree is
provided to the individual. That degree verifies the credentials of the individual across
domains. But many times we read about fake universities blacklisted by UGC. UGC
keeps an eye on such kind of universities but this kind of organizations keep
mushrooming up. The solution for this problem lies in digitization the certificates. By
doing this we can also avoid document tempering.
3.4 Health care: In health sector the major problem which has also become a global
concern is counterfeit drugs. As per National Drug survey 2014-16, conducted by
National Institute of Biologics in India 3% of drugs being substandard or counterfeit.
The solution of the problem lies in traceability of drugs from production to supply
chain. It can be done through using blockchain. As the drug will move through the
supply chain, each transaction will be done in an automated manner and will be
registered as well as time-stamped using the ledger to ensure safety and security of the
drug.((NITI Aayog, 2020)
3.5 Banking Sector: Though, researchers from every field are excited about the potential
of this technology. But the financial players are first movers to capitalize this
technology. Most of the banks are using this for cross-border payments. At present, a
transaction between two customers of different banks includes of a variety of parties
other than two commercial banks. It increases cost and time due to large number of
middlemen. The solution is provided by blockchain in the form of Ripple. It is a
settlement infrastructure technology which offers interbank cross border payments
facility.
Banks can use it for KYC of customers. Due to decentralized data any bank can
access the data of customers from different banks. It will save cost and time.
Conclusion:
As we know that blockchain is an innovative new technology and it has potential to
change the traditional way of thinking and doing things. Here we have discussed only
about a few known uses of blockchain technology. As today we are not aware about

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all the uses of it. More researches need to be conducted to understand this technology
completely. Most of the use cases are being used by financial sectors. By using the
features like immutability and transparency we can remove corruption from our
society by using supply chain we can assure the good quality of edible products and
by digitalization of degrees we can stop document tempering. This study can be
extended to Indian banks or a case study can be conducted on pilot projects started by
Indian government. In this research paper we have not discussed about the limitations
and implementation barrier of blockchain technology it can be further studied.
Bibliography:
1.Alterkawi, M. A., & Bittar, T. (2019). The Impact of FinTech Companies on Financial
Institutions in Sweden A qualitative study on impacts and remedies.
2.Madakam, S., & Kollu, S. (2020). Blockchain Technologies Fundamentals – Perceptions ,
Principles , Procedures and Practices. Prajnan, 48(4), 345–368.
3.NITI Aayog. (2020). BLOCKCHAIN: THE INDIAN STRATEGY.
4.Blakstad, S., Allen, R., Blakstad, S., & Allen, R. (2018). Leapfrogging Banks in Emerging
Markets. FinTech Revolution, 121–132. https://doi.org/10.1007/978-3-319-76014-8_7
5.Nakamoto, S. (n.d.). Bitcoin: A Peer-to-Peer Electronic Cash System. www.bitcoin.org
6.Swan, M. (2015). Blockchain: Blueprint for a new economy (NOTE! Poor quality). In
O’Reilly Media, Inc. https://doi.org/10.1017/CBO9781107415324.004
7.Albeshr, S. (n.d.). Blockchain Application in Banking Industry : A Mini-Review.
8.Marco Iansiti, & R., K. L. (2017). The Truth About Blockchain - It will take years to
transform business, but the journey begins now. Harvard Business Review,
9. www.investopedia.com
10. https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/
11. www.freecodecamp.org
12. https://blockgeeks.com
13. https://blockchain101.com
14. https://blockchainhub.net

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