sspu computer engineering ppt

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BT unit 3 notes
Blockchain Technology (Savitribai Phule Pune University)
Studocu is not sponsored or endorsed by any college or university
BT unit 3 notes
Blockchain Technology (Savitribai Phule Pune University)
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2. Types of Blockchain Platforms
Public:
It is a permissionless distributed ledger on which anybody can join
and conduct transactions.
-
It is a non-restrictive form of the ledger in which each peer has a
copy. This means that anyone with an internet connection can
access the public blockchain.
-
The user has access to historical and contemporary records and the
ability to perform mining operations.
-
These complex computations must be performed to verify
transactions and add them to the ledger.
-
On the blockchain network, no valid record or transaction may be
altered.
-
Because the source code is usually open, anybody can check the
transactions, uncover problems and suggest fixes.
-
These blockchains are completely open to following the idea of
decentralization.
-
It is not owned by anyone.
-
All the computer in the network hold the copy of other nodes or
block present in the network.
-
Advantages:
Trustable: There are algorithms to detect fraud so participants
need not worry about the other nodes in the network.
1.
Secure: This blockchain is large in size as it is open to the
public. In a large size, there is a greater distribution of records.
2.
Anonymous nature: It is a secure platform that allows you to
make proper transactions without having to reveal your name
and identity in order to participate.
3.
Decentralized: There is no single platform that maintains the
network, instead every user has a copy of the ledger.
4.
Open and Transparent: The data on a public blockchain is
transparent to all member nodes. Every authorized node has a
copy of the blockchain records or digital ledger.
5.
-
Disadvantages:
Processing: The rate of the transaction process is very slow,
due to its large size. Verification of each node is a very time-
consuming process.
1.
Energy consumption: Proof of work is high energy-
consuming. It requires good computer hardware to participate
in the network.
2.
Acceptance: No central authority is there so governments are
facing the issue to implement the technology faster.
3.
Lower TPS (Transactions per second): The TPS in a public
blockchain is extremely low. This is because it is a large
network with many nodes which take time to verify a
transaction and do proof-of-work.
4.
Scalability issues: The transactions are processed and
completed slowly. This harms scalability. The more we try to
expand the network's size, the slower it will become.
5.
-
Use cases of public blockchain:
Voting: Governments can use a public blockchain to vote,
ensuring openness and trust.
1.
Fundraising: Businesses or initiatives can use the public
blockchain to improve transparency and trust.
2.
-
Examples: Bitcoin, Ethereum.
-
•
Private:
These blockchains are not as decentralized as the public
blockchain.
-
Only selected nodes can participate in the process, making it more
secure than the others.
-
•
Blockchain Platforms and Consensus in Blockchain
08 December 2022 19:57
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3. This blockchain network operates in a private context, such as
a restricted network, or is controlled by a single identity.
-
While it has a similar peer-to-peer connection and
decentralization to a public blockchain network, this
blockchain is far smaller.
-
They are often run on a small network within a firm or
organization rather than open to anybody who wants to
contribute processing power.
-
They are open to some authorized users only.
-
Advantages:
Speed: The rate of the transaction is high, due to its small
size. Verification of each node is less time-consuming.
1.
Scalability: We can modify the scalability. The size of the
network can be decided manually.
2.
Privacy: It has increased the level of privacy for
confidentiality reasons as the businesses required.
3.
Balanced: It is more balanced as only some users have the
access to the transaction which improves the performance
of the network.
4.
-
Disadvantages:
Security: The number of nodes in this type is limited so
chances of manipulation exist. These blockchains are more
vulnerable.
1.
Centralized: Trust building is one of the main
disadvantages due to its central nature. Organizations can
use this for malpractices.
2.
Count: Since there are few nodes, if nodes go offline the
entire system of blockchain can be endangered.
3.
-
Use cases of private blockchain:
Supply Chain Management: A private blockchain can be
used to manage a company's supply chain.
1.
Asset Ownership: A private blockchain can be used to
track and verify assets.
2.
Internal Voting: Internal voting is also possible with a
private blockchain.
3.
-
Examples: Hyperledger, Corda.
-
Hybrid:
It is the mixed content of the private and public blockchain, where
some part is controlled by some organization and other parts are
made visible as a public blockchain.
-
Allows enterprises to choose who has access to certain blockchain
data and what data is made public.
-
Transactions and records are typically not made public, but they
can be validated if necessary by granting access via a smart
contract.
-
Advantages:
Ecosystem: It cannot be hacked as 51% of users don't have
access to the network.
1.
Cost: Transactions are cheap as only a few nodes verify the
transaction. All nodes don’t carry the verification hence less
computational cost.
2.
Architecture: It is highly customizable and still maintains
integrity, security and transparency.
3.
Operations: It can choose the participants in the blockchain
and decide which transaction can be made public.
4.
-
Disadvantages:
Efficiency: Issues in terms of efficiency in maintenance.
1.
Transparency: Because information can be hidden, this type of
blockchain isn't completely transparent. If someone wants to
get access it depends on the organization whether they will
give or not.
2.
Less incentive: Upgrading can be difficult and users have no
incentive to participate in or contribute to the network.
3.
-
Use cases of hybrid blockchain:
Real estate: Real estate companies can use hybrid networks to
run their systems and offer information to the public.
1.
Retail: The hybrid network can also help retailers streamline
their processes.
2.
Highly regulated markets: Hybrid blockchains are also well-
suited to highly regulated areas like the banking sector.
3.
-
Examples: Ripple network, XRP token.
-
•
Consortium:
It is a creative approach that solves the needs of the organization.
-
This blockchain validates the transaction and also initiates or
receives transactions.
-
Also known as Federated Blockchain.
-
Some part is public and some part is private.
-
In the same way that a hybrid blockchain has both private and
public blockchain features, a consortium blockchain also does.
-
However, it differs because it involves various organizational
members working together on a decentralized network.
-
Predetermined nodes control the consensus methods in a
consortium blockchain.
-
It has a validator node responsible for initiating, receiving, and
validating transactions.
-
Transactions can be initiated or received by member nodes.
-
•
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4. Advantages:
Speed: A limited number of users make verification fast. The
high speed makes this more usable for organizations.
1.
Authority: Multiple organizations can take part and make it
decentralized at every level. Decentralized authority makes it
more secure.
2.
Privacy: The information of the checked blocks is unknown to
the public view, but any member belonging to the blockchain
can access it.
3.
Flexible: There is much divergence in the flexibility of the
blockchain. Since it is not a very large decision it can be taken
faster.
4.
Secure: A consortium blockchain is more secure, scalable, and
efficient than a public blockchain network.
5.
-
Disadvantages:
Approval: All the members approve the protocol making it
less flexible. Since one or more organizations are involved
there can be differences in the vision of interest.
1.
Transparency: Has a lower degree of transparency. It can be
hacked if the organization becomes corrupt. Organizations
may hide information from the users.
2.
Vulnerability: If few nodes are getting compromised there is a
greater chance of vulnerability in this blockchain.
3.
-
Use cases of consortium blockchain:
Banking and payments: A consortium can be formed by a
group of banks working together. They have control over
which nodes will validate transactions.
1.
Research: A consortium blockchain can be employed to share
research data and outcomes.
2.
Food Tracking: It is also apt for food tracking.
3.
-
Examples: Tendermint, Multichain.
-
Bitcoin:
Bitcoin is a cryptocurrency, which is a form of digital, private money
that works independently of a bank or government.
•
It is a digital token, or virtual currency, as well as the network on which
such tokens can be stored and moved.
•
Satoshi Nakamoto discovered bitcoin in 2009.
•
Bitcoin is electronically stored currency. It can be stored in your
mobiles, computers, or any storage media as a virtual currency.
•
It is a virtual currency designed to act as money and outside the control
of any person or group thus eliminating the need for third-party in
financial transactions.
•
Bitcoin started as a peer-to-peer network to generate a system for
electronic transactions.
•
Since then, there has been a rapid growth in the usage as well as the
value of bitcoin which is a popular system of digital currency.
•
Features:
Distributed: All bitcoin transactions are recorded in a public ledger
known as the blockchain. There are nodes in the network that
maintain copies of the ledger and contribute to the correct
propagation of the transactions following the rules of the protocols
making it impossible for the network to suffer downtime.
-
Decentralized: There is no third party who controls the bitcoin
network. The network consists of willing participants who agree to
the rules of a protocol and changes to the protocol are done by the
consensus of its users. This makes bitcoin a quasi-political system.
-
Transparent: The addition of new transactions to the blockchain
ledger and the state of the bitcoin network is arrived upon by
consensus in a transparent manner according to the rules of the
protocol.
-
Peer-to-peer: In bitcoin transactions, the payments go straight from
one party to another party so there is no need for any third party to
act as an intermediary.
-
Censorship resistant: As bitcoin transactions are pseudo-
anonymous and users possess the keys to their bitcoin holdings, so
it is difficult for the authorities to ban users from using their assets.
This provides economic freedom to the users.
-
Public: All bitcoin transactions are available publicly for everyone
to see. All the transactions are recorded, which eliminates the
possibility of fraudulent transactions.
-
Pseudo-anonymous: Bitcoin transactions are tied to addresses that
take the form of randomly generated alphanumeric strings.
-
•
Bitcoin transactions are digitally signed for security.
•
Anyone can create a bitcoin wallet by downloading the bitcoin program.
Each bitcoin wallet has two things:
Public key: It is like an address or an account number via which
any user or account can receive bitcoins.
-
Private key: It is like a digital signature via which anyone can send
bitcoins.
-
•
The public key can be shared with anyone but the private key must be
held by the owner. If the private key gets hacked or stolen then bitcoin
is lost.
•
A bitcoin transaction contains three pieces of information:
Private key: The first part contains the bitcoin wallet address of the
sender i.e., the private key.
-
Amount of bitcoin to be transferred: The second part contains the
amount that has been sent.
-
Public key: The third part contains the bitcoin wallet address of the
recipient i.e., the public key.
-
•
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5. Bitcoin transactions are verified by the nodes on the network. Once
the transaction is verified and executed successfully, the transaction is
recorded in a distributed public ledger called a blockchain.
•
Bitcoins are a decentralized currency, they aren't printed, like rupees,
they're produced by people, and big companies, running computers all
around the world, using software that solves mathematical problems.
•
Bitcoins are mined using the computing power of the distributed
network. This network also processes transactions made using bitcoin.
•
Bitcoins are mined on the basis of computing power, so they take time
to be generated.
•
How does bitcoin mining work?
The user initiates the bitcoin transaction by listing the details like
the number of bitcoins to be sent, and the public address, and
affixing the private key to generate a digital signature. The
encrypted information to the miners present on the network.
-
The miners will verify the transaction to check whether there is
sufficient balance to carry out the transaction.
-
The faster the CPU of a miner, the greater the chances of the
miner to get rewarded for verifying the transaction. The miner's
job is only to provide the CPU, there is no manual intervention
from the miner. The bitcoin program will run automatically on the
system.
-
Once the transaction is verified, the number of transactions is
broadcasted to the network of miners who can copy or download
the block.
-
These blocks through timestamps are stored in sequential order to
form a blockchain.
-
Each miner in the network must have an updated copy of the
blockchain ledger in order to earn bitcoins.
-
•
Benefits:
User anonymity: Bitcoin users can have multiple public keys and
are identifies by numerical codes. This ensures that the
transactions cannot be traced back to the user. Even if the wallet
address becomes public, the user can generate a new wallet
address to keep information safe.
-
Transparency: Bitcoin transactions are recorded on the public
ledger blockchain. The transactions are permanently viewable,
which gives transparency to the system but they are secure and
fraud-resistant at the same time due to blockchain technology.
-
Accessibility: Bitcoin is a very versatile and accessible currency.
It takes a few minutes to transfer bitcoins to another user, so it can
be used to buy goods and services from a variety of places
accepting bitcoins. This makes spending bitcoin easy in another
country with little or no fees applied.
-
Independence from central authority: Bitcoin is decentralized
currency, which means there is no dependence on any single
governing authority for verifying transactions. This means that the
authorities are not likely to freeze or demand back the bitcoins.
-
Low transaction fees: Standard wire transfers involve transaction
fees and exchange costs. Since bitcoin transactions do not involve
any government authority so the transaction fees are very low
compared to bank transfers.
-
•
Drawbacks:
Volatility: Various factors like uncertainty about its future value,
security breaches, scarcity of bitcoins contribute to the bitcoin's
volatility.
-
No government regulations: Unlike the investments that are done
through central banks, bitcoins transactions are not regulated by
any central authority due to a decentralized framework. This
means that bitcoin transactions don’t come with legal protection
and are irreversible which makes them susceptible to crimes.
-
No buyer protection: If the goods are bought using bitcoins and
the seller does not send the promised goods then nothing can be
done to reverse the transactions and since there is no central
authority so no legal protection can be provided in this case.
-
Not widely accepted: Bitcoins are still only accepted by a small
group of online merchants. This makes it unfeasible to rely
completely on bitcoin as a currency and replace it with traditional
bank transactions.
-
Irreversible: There is a lack of security in bitcoin transactions due
to the anonymous and non-regulated nature of the bitcoin
transactions. If the wrong amount is sent or the amount is sent to
the wrong recipient then nothing can be done to reverse the
transactions.
-
•
Ethereum
Initially released in 2015.
•
Ethereum is a blockchain network that introduced a built-in Turing-
complete programming language that can be used for creating various
decentralized applications.
•
The Ethereum network is fuelled by its own cryptocurrency called 'ether'.
•
The Ethereum network is currently famous for allowing the
implementation of smart contracts.
•
Smart contracts can be thought of as 'cryptographic bank lockers' which
contain certain values.
•
These cryptographic lockers can only be unlocked when certain
conditions are met.
•
Unlike bitcoin, Ethereum is a network that can be applied to various
other sectors.
•
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6. The consensus mechanism used in Ethereum is Proof of Stakes (PoS),
which is more energy efficient when compared to that used in the
bitcoin network, that is Proof of Work (PoW). PoS depends on the
amount of stake a node holds.
•
History of Ethereum:
2013: Ethereum was first described in Vitalik Buterin's white paper
in 2013 with the goal of developing decentralized applications.
-
2014: EVM was specified in a paper by Gavin Wood, and the
formal development of the software also began.
-
2015: Ethereum created its genesis block marking the official
launch of the platform.
-
2018: Ethereum took second place in bitcoin in terms of market
capitalization.
-
2021: A major network upgrade named London included Ethereum
improvement proposal 1559 and introduced a mechanism for
reducing transaction fee volatility.
-
2022: There will be a shift from Ethereum to Ethereum 2.0 and a
shift from PoW to PoS consensus model.
-
•
Features of Ethereum:
Smart contracts: Ethereum allows the creation and deployment of
smart contracts. Smart contracts are created mainly using a
programming language called solidity. Solidity is an Object
Oriented Programming language that is comparatively easy to
learn.
-
Ethereum Virtual Machine (EVM): It is designed to operate as a
runtime environment for compiling and deploying Ethereum-based
smart contracts.
-
Ether: Ether is the cryptocurrency of the Ethereum network. It is
the only acceptable form of payment for transaction fees on the
Ethereum network.
-
Decentralized applications (Dapps): Dapp has its backend code
running on a decentralized peer-to-peer network. It can have a
frontend and user interface written in any language to make calls
and query data from its backend. They operate on Ethereum and
perform the same function irrespective of the environment in which
they get executed.
-
Decentralized autonomous organizations (DAOs): It is a
decentralized organization that works in a democratic and
decentralized fashion. DAO relies on smart contracts for decision-
making or decentralized voting systems withing the organization.
-
•
Types of Ethereum accounts: Ethereum has two types of accounts -
Externally owned account (EOA): Externally owned accounts are
controlled by private keys. Each EOA has a public-private key pair.
The users can send messages by creating and signing transactions.
-
Contract account: Contract accounts are controlled by contract
codes. These codes are stored with the account. Each contract
account has an ether balance associated with it. The contract code
of these accounts gets activated every time a transaction from an
EOA or a message from another contract is received by it. When
the contract code activates, it allows to read/write the message to
the local storage, send messages and create contracts.
-
•
How does Ethereum work?
Ethereum implements an execution environment called Ethereum
Virtual Machine (EVM).
-
When a transaction triggers a smart contract all the modes of the
network will execute every instruction.
-
All the nodes will run the EVM as part of the block verification,
where the nodes will go through the transactions listed in the block
and run the code as triggered by the transaction in the EVM.
-
All the nodes on the network must perform the same calculations
for keeping their ledgers in sync.
-
Every transaction must include -
Gas limit
▪
Transaction fee that the sender is willing to pay for the
transaction.
▪
-
If the total amount of gas needed to process the transaction is less
than or equal to the gas limit then the transaction will be processed
and if the total amount of the gas needed is more than the gas limit
then the transaction will not be processed the fees are still lost.
-
Thus it is safe to send transactions with the gas limit above the
estimate to increase the chances of getting it processed.
-
•
Real world applications:
Voting: Voting systems are adopting Ethereum. The results of polls
are available publicly, ensuring a transparent fair system thus
eliminating voting malpractices.
-
Agreements: With Ethereum smart contracts, agreements and
contracts can be maintained and executed without any alteration.
Ethereum can be used for creating smart contracts and for digitally
recording transactions based on them.
-
Banking systems: Due to the decentralized nature of the Ethereum
blockchain it becomes challenging for hackers to gain unauthorized
access to the network. It also makes payments on the Ethereum
network secure, so banks are using Ethereum as a channel for
making payments.
-
Shipping: Ethereum provides a tracking framework that helps with
the tracking of cargo and prevents goods from being misplaced.
-
Crowdfunding: Applying Ethereum smart contracts to blockchain
based crowdfunding platforms helps to increase trust and
information symmetry. It creates many possibilities for start-ups by
raising funds to create their own digital cryptocurrency.
-
Domain names: Ethereum name service allows crypto users to buy
-
•
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7. and manage their own domain names on Ethereum, thus
simplifying decentralized transactions without putting users to
remember long, machine-readable addresses.
Benefits of Ethereum:
Availability: As the Ethereum network is decentralized so
there is no downtime. Even if one node goes down other
computing nodes are available.
-
Privacy: Users don't need to enter their personal credentials
while using the network for exchanges, thus allowing them to
remain anonymous.
-
Security: Ethereum is designed to be unhackable, as the
hackers have to get control of the majority of the network
nodes to exploit the network.
-
Less ambiguity: The smart contracts that are used as a basis
for trade and agreement on Ethereum ensure stronger contracts
that differ from the normal traditional contracts which require
follow-through and interpretation.
-
Rapid deployment: On Ethereum decentralized networks,
enterprises can easily deploy and manage private blockchain
networks instead of coding blockchain implementation from
scratch.
-
Network size: Ethereum network can work with hundreds of
nodes and millions of users.
-
Data coordination: Ethereum decentralized architecture better
allocated information so that the network participants don't
have to rely on a central entity to manage the system and
mediate transactions.
-
•
Drawbacks of Ethereum:
Complicated programming language: Learning solidity from
programming smart contracts on Ethereum can be challenging
and one of the main concerns is the scarcity of beginner-
friendly classes.
-
Volatile cryptocurrency: Ethereum investing can be risky as
the price of Ether is very volatile, resulting in significant gains
as well as a significant loss.
-
Low transaction rate: Bitcoin has an average transaction rate
of 7TPS and Ethereum has an average speed of 15TPS which
is almost double that of bitcoin but it is still not enough.
-
•
Ethereum is designed to be scalable, decentralized, and
programmable.
•
Provides a flexible platform to build applications using the solidity
scripting language.
•
Transactions are sent and received in user created Ethereum
accounts.
•
It is a blockchain based platform with the cryptocurrency Ether
(ETH).
•
Difference between Bitcoin and Ethereum
Criteria Bitcoin Ethereum
Definition Decentralized digital
currency that can be
transferred on the peer-to-
peer bitcoin network.
Decentralized global
software platform powered
by blockchain technology.
Purpose Purpose was to replace
national currencies during the
financial crisis of 2008.
Purpose was to utilize
blockchain technology for
maintaining a decentralized
payment network and
storing computer code.
Smart contracts Has smart contract but not as
flexible or complete as
Ethereum smart contracts.
Allows us to create smart
contracts.
Smart contract
programming
language
Written in programming
languages like script, clarity.
Written in programming
languages like Solidity,
Vyper, etc.
Transactions Generally bitcoin transactions
are only for keeping notes.
Ethereum transactions may
contain some executable
code.
Hash algorithm Runs on the SHA-256 hash
algorithm.
Runs on the Keccak-256
hash algorithm.
Consensus
mechanism
The Proof-of-Work (PoW) is
the consensus mechanism
used by bitcoin network.
The Proof-of-Stake (PoS) is
the consensus mechanism
used by Ethereum.
Block time Block time of bitcoin is 10
minutes.
The block time of Ethereum
is 14 to 15 seconds.
Block limit Block limit of 1 MB. Does not have a block limit.
Popularity Most popular digital currency
in the market to date.
Second-largest
cryptocurrency after bitcoin
to date.
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8. Hyperledger
Hyperledger is an open-source project under the Linux foundation
where people can come and work on the platform to develop blockchain
related use cases.
•
Provides the platform to create personalized blockchain services
according to the need of business work.
•
Unlike other platforms for developing blockchain-based software,
Hyperledger has the advantage of creating a secured and personalized
blockchain network.
•
It is created to support the development of blockchain based distributed
ledgers
•
It includes a variety of enterprise-ready permissioned blockchain
platforms.
•
It is a global collaboration for developing high-performance and reliable
blockchain and distributed ledger-based technology frameworks.
•
Why do we need Hyperledger?
To enhance the efficiency, performance, and transactions of various
business processes.
-
It provides the necessary infrastructure and standards for
developing various blockchain-based systems and applications for
industrial use.
-
It gets rid of the complex nature of contractual agreements, as the
legal issues are taken care of.
-
Hyperledger offers the physical separation of sensitive data.
-
It decreases the need for verification and enhances trust, thus
optimizing network performance and scalability.
-
•
Hyperledger technology layers:
Consensus layer: It takes care of creating an agreement on the order
and confirming the correctness of the set of transactions that
constitute a block.
1.
Smart layer: This layer is responsible for processing transaction
requests and authorizing valid transactions.
2.
Communication layer: It takes care of peer-to-peer message
transport.
3.
Identity management services: These are important for establishing
trust on the blockchain.
4.
API: It enables external applications and clients to interface with
the blockchain.
5.
•
There are four distinct Hyperledger frameworks:
Hyperledger Sawtooth:
Permissioned modular blockchain platform.
-
Led by Intel to build, run and deploy distributed ledger.
-
An active Hyperledger project.
-
Implements transaction-based updates to shared state among
untrusted parties synchronized by a consensus algorithm.
-
Includes a novel consensus algorithm called Proof of Elapsed
Time.
-
Features include Dynamic consensus, Transaction families,
Parallel Transaction Execution (allows creation of individual
chains) and Private transactions.
-
Software Development Kits (SDKs) for python, Go,
JavaScript, Rust, Java and C++ are also available.
-
Sawtooth is meant for businesses need a permissioned and
modular blockchain platform.
-
1.
Hyperledger Iroha:
Led by Sora Mitsu.
-
Aims to provide a developing environment where mobile
application and C++ developers can contribute to the
Hyperledger.
-
It has a permissioned network developed in C++, and pre-
defined commands, queries, and permissions to develop
applications for mobile and desktop platform conveniently.
-
Has a modular design, control based access, access to many
libraries, as well as asset and identity management.
-
Used in fields such as financial services, healthcare and
education.
-
2.
Hyperledger Fabric:
Most popular Hyperledger project.
-
IBM initiated it for Digital Assets.
-
Uses container technology to host "chain code" like smart
contracts in Ethereum.
-
Blockchain framework allows different components like
membership services and consensus to be plug-and-play.
-
It is a permissioned blockchain infrastructure used to build
blockchain based products, software and applications.
-
Core of the platform is written in the Go programming
language.
-
Its distributed ledger and smart contract platform allows for
private channels.
-
If you have a large blockchain network, and you want to share
data with only certain parties, you can create a private channel
with just those participants.
-
Used with integration projects that need a distributed ledger.1
-
3.
Hyperledger Burrow:
Project is from Monax and co-sponsored by Intel.
-
Monax- famous for creating a permissioned blockchain on top
of Ethereum framework.
-
Gives a blockchain client a permissioned smart contract which
is somewhat developed to specification of the Ethereum
Virtual Machine.
-
Handles transactions and smart contract code.
-
4.
•
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9. There are four major tools initiatives, each having its distinct role in the
development of the environment, applications, etc.
Hyperledger Cello:
Objective is to simplify the management and creation of
blockchain networks.
-
Deploying cello provides a Blockchain-as-a-Service (BaaS)
environment.
-
Provides an efficient way for a multi-tenant chain service on top
of different infrastructure.
-
Toolkit used to create, terminate and manage blockchain
services.
-
1.
Hyperledger Explorer:
Web-based application where one can view all the transactions.
-
A dashboard utility tool that allows a user to monitor, search and
maintain blockchain and related data.
-
Provides visibility over a running Hyperledger blockchain
network.
-
Can view, deploy, or query blocks, network information, chain
codes, transaction, and any other information stored in the
ledger.
-
With it, an organization can check nodes, blocks, transactions
and smart contracts.
-
Also users to make code changes.
-
2.
Hyperledger Composer:
Used for creating and deploying business network applications
like smart contracts over Hyperledger network utilizing high-
level composer language.
-
3.
Hyperledger Quilt:
Used for interoperability among multiple blockchain networks
by implementing the Interledger protocol (ILP).
-
Protocol designed to transfer value across distributed ledgers.
-
4.
•
IOTA
IOTA is an open-source distributed ledger and cryptocurrency designed
for the Internet of Things (IoT).
•
Uses a directed acyclic graph to store transactions on its ledger,
motivated by a potentially higher scalability over blockchain based
distributed ledgers.
•
Does not use miners to validate transactions, instead nodes that issue a
new transaction on the network must approve two previous transactions.
•
Transactions can therefore be issued without fees, facilitating
microtransactions.
•
The network currently achieves consensus through a coordinator node,
operated by the IOTA foundation. As the coordinator is a single point of
failure, the network is currently centralized.
•
Named after the smallest letter of the Greek alphabet, created in 2015.
•
As a speculative blockchain and cryptocurrency-related technology,
IOTA has been the target of phishing, scamming and hacking attempts.
•
These attempts have resulted in the thefts of user tokens and extended
periods of downtime.
•
Characteristics:
The Tangle:
Name used to describe IOTAs directed acyclic graph (DAG)
transaction settlement and data integrity layer.
-
It is structured as a string of individual transactions that are
interlinked to each other and stored through a network of node
participants.
-
The Tangle does not have miners validating transactions, rather,
network participants are jointly responsible for transaction
validation, and must confirm two transactions already submitted
to the network for every one transaction they issue.
-
Transactions can therefore be issued to the network at no cost,
facilitating micropayments.
-
To avoid spam, every transaction requires computational
resources based on Proof of Work (PoW) algorithms, to find the
answer to a simple cryptographic puzzle.
-
IOTA supports both value and data transfers.
-
A second layer protocol provides encryption and authentication
of messages, or data streams, transmitted and stored on the
Tangle as zero-value transactions.
-
Each message holds a reference to the address of a follow-up
message, connecting the messages in a data stream, and
providing forward secrecy.
-
Authorized parties with the correct decryption key can therefore
only follow a datastream from their point of entry.
-
When the owner of the datastream wants to revoke access, they
can change the decryption key when publishing a new message.
This provides the owner granular controls over the way in
which data is exchanges to authorized parties.
-
1.
IOTA token:
The IOTA token is a unit of value in the IOTA network.
-
There is a fixed supply of 2,779,530,283,277,761 IOTA tokens
in circulation on the IOTA network.
-
IOTA tokens are stored in IOTA wallets protected by an 81-
character seed, similar to password.
-
To access and spend the tokens, IOTA provides a
cryptocurrency wallet.
-
A hardware wallet can be used to keep credentials offline while
facilitating transactions.
-
2.
•
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10. Fast Probabilistic Consensus (FPC):
Core of cryptocurrencies is to stop double spends, the ability
to spend the same money twice in two simultaneous
transactions.
-
Bitcoin uses Proof of Work (PoW) as a solution making it a
significant financial burden to have a minted block be
rejected for a double spend.
-
IOTA has designed a voting algorithm called Fast
Probabilistic Consensus to form a consensus on double
spends.
-
3.
Markets:
IOTA is traded in mega IOTA units (1,000,000 IOTA) on
digital currency exchanges such as Bitfinex, and listed under
the MIOTA ticker symbol.
-
Like other digital currencies, IOTA's token value has soared
and fallen.
-
4.
Corda
The Corda platform was created by the enterprise blockchain and
software development company R3.
•
Corda is an open source enterprise based blockchain designed to offer
interoperability. (Interoperability- Ability of blockchains to
communicate with other blockchains)
•
Corda is a blockchain based distributed ledger technology and smart
contract platform operating on a decentralized global network.
•
It is a platform intended to record, manage, and synchronize agreements
and transfer anything valuable.
•
It is also designed to automate legal agreements between business
partners.
•
Allows enterprises to communicate and transact directly while
maintaining transparency and without worrying about privacy and
integrating blockchain across their operations immediately and
efficiently.
•
Corda offers timestamping services to order transactions temporarily and
ignore disputes.
•
It has smart contract logic, which specifies constraints that ensure state
transitions are valid as outlined in the contract code.
•
It seeks to create a digital ledger that removes the need of businesses
transacting with each other to make sure their ledgers line up with each
other.
•
Corda is available in two fully supported editions- community and
enterprise- that align to where builders are in their blockchain journey.
•
The community edition is ideal for participants who are just getting
started and offers production-ready open source code and additional
support packages.
•
The enterprise edition is a licensed version with mission-critical features
and capabilities, along with premium support and is ideally suited for
production in regulated environments.
•
Features of Corda:
Data privacy:
Corda is permissioned or private blockchain as it shares data
only with the parties involved in the transaction unlike public
blockchains and DSL based solutions which broadcast
transaction data to the entire network.
-
1.
Security:
Each entity must be tied to a legal entity and granted access to
join the network.
-
2.
Integration with existing systems:
Applications built on top Corda work seamlessly with most
business systems including Azure SQL, SQL server, Oracle and
PostgreSQL and the Java Virtual Machine.
-
3.
Performance:
Corda enables up to 20,000 transactions per second which
guarantees scalability.
-
The consensus model also guarantees that assets have
deterministic settlement finality and cannot be walked back.
-
4.
Sustainability:
Transactions don't need to be sequential, ensuring the system is
incredibly efficient and uses far less energy than a public Proof
of Work or Proof of Stake blockchain.
-
5.
•
R3
R3 is a provider of enterprise technology and services that enable direct
digital collaboration in regulated industries where trust is critical.
•
It was founded in 2014 by nine banks including Goldman Sachs, Credit
Suisse, JP Morgan and others with the goal of applying blockchain
technology to commercial markets.
•
The company works to improve processes with banking, capital markets,
global trade and insurance clients.
•
R3 delivers a private, distributed ledger technology (DLT) application
platform and confidential computing technology.
•
The company maintains a DLT production ecosystem connecting over
400 institutions, including global systems integrators, cloud providers,
technology firms, software vendors, corporates, regulators, and financial
institutions from the public and private sectors.
•
R3 developed Corda, an open source distributed ledger project.
•
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11. Consensus in Blockchain
We know that Blockchain is a distributed decentralized, self-regulating
network that provides immutability, privacy, security and transparency.
•
There is no central authority present to validate and verify the
transactions, yet every transaction in blockchain is considered to be
completely secured and verified.
•
This is possible only because of the presence of the consensus protocol
which is a core part of any blockchain network.
•
A consensus algorithm is a fault-tolerant mechanism through which all
the peers of the blockchain network reach a common agreement about
the present state of the distributed ledger.
•
These algorithms are designed to achieve reliability in a network
involving multiple users or nodes.
•
Essentially, the consensus protocol makes sure that every new block
that is added to the blockchain is the one and only version of the truth
that is agreed upon by all the nodes in the blockchain.
•
The protocol consists of some specific objectives such as coming to an
agreement, collaboration, cooperation, equal rights to every node, and
mandatory participation of each node in the consensus process.
•
Consensus Approach:
A consensus based decision-making process is an effort in which
affected parties (stakeholders) seek to reach agreement on a course of
action to address an issue or set of related issues.
•
In a consensus pro cess, the stakeholders work together to find a
mutually acceptable solution.
•
Each consensus process is unique because parties design their
agreement to fit their circumstances. However, successful consensus
processes follow several guiding principles:
Consensus decision-making: Participants make decisions by
agreement rather than by majority vote.
1.
Inclusiveness: To the extent possible, all necessary interests are
represented or, at a minimum, approve of the decision.
2.
Accountability: Participants usually represent stakeholder groups
or interests. They are accountable to both their constituents and to
the process.
3.
Facilitation: An impartial facilitator accountable to all participants
manages the process, ensures the ground rules are followed, and
helps to maintain a productive climate for communication and
problem solving.
4.
Flexibility: Participants design a process and address the issues in
a manner they determine most suitable to the situation.
5.
Shared control/Ground rules: Participants share with the facilitator
responsibility for setting and maintaining the ground rules for a
process and for creating outcomes.
6.
Commitment to implementation: All stakeholders commit to
carrying out their agreement.
7.
•
Elements of a Consensus Based Decision:
All parties agree with the proposed decision and are willing to
carry it out.
1.
No one will block or obstruct the decision or its implementation.
2.
Everyone will support the decision and implement it.
3.
•
Levels of Consensus:
I can say an unqualified "yes"!
1.
I can accept the decision.
2.
I can live with the decision.
3.
I do not fully agree with the decision, however, I will not block it
and will support it.
4.
•
Consensus Algorithms
Consensus algorithms have many real-world applications in
decentralized or distributed computer networks.
•
One of the most common applications is blockchain.
•
Blockchain is the distributed ledger most associated with bitcoin
cryptocurrency.
•
This decentralized database is collectively managed by distributed
computers or nodes on a distributed peer-to-peer network.
•
Each peer or node maintains a copy of the ledger to prevent a single
point of failure.
•
Any updates or validations on the network reflect in all copies
simultaneously.
•
This guarantees the fidelity and security of data records and generated
trust in the system without the need for a centralized trusted third party.
•
Blockchain networks rely on consensus algorithms to reach agreement
among various distributed nodes.
•
A consensus mechanism such as proof of work (PoW) or proof of stake
(PoS) secures the network and prevents unauthorized users from
validating bad transactions.
•
Proof of Work (PoW)
The PoW algorithm is one of the oldest types of consensus algorithms.
•
First introduced in 1993, reintroduced in 2008 by Satoshi Nakamoto.
•
Central idea of PoW is to have nodes solve complex mathematical
puzzles and make as many guesses as possible in the fastest possible
time.
•
In cryptocurrency blockchains based on the PoW algorithm, miners or
validators- also known as participant nodes- must prove that the work
they've done and submitted gives them the right to add new
transactions to the blockchain.
•
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12. They must solve a complex mathematical problem by finding a
cryptographic hash of a particular block.
•
This is done by taking data from a block header as an input, and
continuously running this data through a cryptographic hash function.
•
Every time this is done, small changes are made to the input data by
including an arbitrary number called a nonce.
•
This is the blockchain version of guesswork to find a solution.
•
Ultimately, when the miner finds the solution that leads to consensus,
they're rewarded in cryptocurrency.
•
However, all these actions require multiple iterations that consume a
considerable amount of computational power.
•
That's why PoW is considered an inefficient consensus mechanism.
•
Nonetheless, the PoW algorithm continues to be popular because it
maintains network security and is fairly resistant to cyber-attacks like
DDoS attacks.
•
It's also the oldest consensus algorithm and is known to work well on
blockchains.
•
Byzantine General Problem
It is a game theory problem, which describes the difficulty
decentralized parties have in arriving at consensus without relying on a
trusted central party.
•
IN 1982, The Byzantine General's problem was invented by Leslie
Lamport, Robert Shostak, and Marshall Pease.
•
It is an impossibility result which means that the solution to this
problem has not been found yet.
•
The Byzantine army is divided into many battalions, with each division
led by a general.
•
The generals connect via messenger in order to agree to a joint plan of
action in which all battalions coordinate and attack from all sides in
order to achieve success.
•
It is probable that traitors and enemy will try to sabotage their plan by
intercepting or changing the messages.
•
As a result, the purpose of this challenge is for all of the faithful
commanders to reach an agreement without the imposters tampering
with their plans.
•
Only decentralized systems face the Byzantine Generals problem, as
they have no reliable source of information and no way of verifying the
information they receive from other members of the network.
•
In centralized systems, an authority is trusted to publish true
information and prevent false or fraudulent information from being
spread throughout the network.
•
For example, in the traditional financial system, banks are trusted to
show clients their balances and transaction histories in an honest
manner. If a bank did attempt to lie or defraud their customers, a
central bank or government is trusted to rectify the breach of trust.
•
However, centralized systems are vulnerable to corruption by the
central authority.
•
Money and Byzantine General's Problem
Money is a prime example of the Byzantine Generals Problem. How
should a society establish a money that all members of a society can
trust and agree upon?
•
For much of history, societies have selected precious metals or other
rare goods, such as shells or glass beads, as money.
•
In some ways, gold solved the Byzantine Generals Problem: it was
trusted and recognized across decentralized systems, such as
international trade.
•
However, its weight and purity remained unreliable, and still does to
this day.
•
The failure of gold to completely solve the Byzantine Generals
Problem resulted in trusted central parties, usually governments, taking
over the establishment and issuance of money.
•
Governments monopolized mints in order to inspire trust in the weight
and purity of the money.
•
Centralized systems obviously did not solve the Byzantine Generals
Problem.
•
Governments, constantly violated that trust by seizing, debasing, or
changing the money.
•
Centralized systems do not address the Byzantine Generals problem,
which requires that truth be verified in an explicitly transparent way,
yet centralized systems give no transparency, increasing the likelihood
of data corruption.
•
They forgo transparency in order to attain efficiency easily and prefer
to avoid dealing with the issue entirely.
•
The fundamental issue of centralized systems, however, is that they are
open to corruption by the central authority, which implies that the data
can be manipulated by anyone who has control of the database itself
because the centralized system concentrates all power on one central
decision maker.
•
Therefore, Bitcoin was invented to make the system of money
decentralized using blockchain to make money verifiable, counterfeit-
resistant, trust less, and separate from a central agency.
•
Nonce (number only used once): A random 32-bit number that
miners use as a base for their hash calculations. Miners
compete with each other, trying to guess a valid nonce as they
attempt to calculate a block hash.
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13. How Bitcoin solves the Byzantine General's Problem?
In the Byzantine Generals Problem, the untampered agreement that all
the loyal generals need to agree to is the blockchain.
•
Blockchain is a public, distributed ledger that contains the records of all
transactions.
•
If all users of the Bitcoin network, known as nodes, could agree on
which transactions occurred and in what order, they could verify
the ownership and create a functioning, trust less money system without
the need for a centralized authority.
•
Due to its decentralized nature, blockchain relies heavily on a consensus
technique to validate transactions.
•
It is a peer-to-peer network that offers its users transparency as well as
trust.
•
Its distributed ledger is what sets it apart from other systems. Blockchain
technology can be applied to any system that requires proper verification.
•
The network would have to be provable, counterfeit-resistant, and trust-
free in order to solve the Byzantine General’s Problem.
•
Bitcoin overcame the Byzantine General’s Problem by employing a
Proof-of-Work technique to create a clear, objective regulation for the
blockchain.
•
Proof of work (PoW) is a method of adding fresh blocks of transactions
to the blockchain of a cryptocurrency.
•
In this scenario, the task consists of creating a hash (a long string of
characters) that matches the desired hash for the current block.
•
In order to add information, called blocks, to the blockchain, a member
of the network must publish proof that they invested considerable work
into creating the block.
•
This work imposes large costs on the creator, and thus incentivizes them
to publish honest information.
•
Because the rules are objective, there can be no disagreement or
meddling with the information the bitcoin network.
•
The ruleset governing which transactions are valid and which are invalid
is also objective, as is the system for determining who can mint new
bitcoin.
•
Additionally, once a block has been added to the blockchain, it is
extremely difficult to remove, making bitcoin's past immutable.
•
Thus, at all times, members of the Bitcoin network can agree on the state
of the blockchain and all transactions therein.
•
Each node verifies for itself whether blocks are valid based on the Proof-
of-Work requirement and whether transactions are valid based on other
requirements.
•
If any member of the network attempts to broadcast false information, all
nodes on the network will immediately recognize it as objectively invalid
and ignore it.
•
Because each node can verify all information on the Bitcoin network
itself, there is no need to trust other members of the network, making
Bitcoin a trust less system.
•
Proof of Stake (PoS)
PoS is considered as a low-cost, low-energy consuming alternative to
PoW.
•
Ethereum has shifted from PoW to PoS consensus.
•
PoS required little specialized hardware or software resources to mine
cryptocurrencies since it doesn't involve solving complex computational
problems.
•
In this blockchain method, the block producers are not miners, but they
act like validators.
•
They get the opportunity to create a block over everyone which saves
energy and reduces the time.
•
However, for them to become a validator, they are supposed to invest
some amount of money or stake.
•
Rather, crypto validators lock up or stake some of their coins in a wallet.
•
They then validate blocks if they discover a block that can be added to
the blockchain.
•
Validators get a reward -- or their stake increases -- proportionate to their
bets based on the blocks added to the blockchain.
•
Since the algorithm is incentive-based, it consumes less computational
energy than PoW.
•
Despite this advantage, the PoS algorithm has a serious drawback. The
mining capacity of a validator depends on the number of tokens they
have, so a miner who starts with more coins gets more control over the
consensus mechanism.
•
Additionally, a few miners can purchase many coins, further diluting the
mechanism and reducing the system's decentralization property.
•
PoS is seen as a more sustainable and environment friendly alternative to
PoW, and one that's more secure against 51% attack.
•
This system is secure crypto-economically because an attacker
attempting to take control of the chain must destroy a massive amount of
ETH.
•
A system of rewards, incentivizes individual stakers to behave honestly,
and penalties disincentivize stakers from acting maliciously.
•
Proof of Elapsed Time (PoET)
PoET was introduced by Intel with an intent to take over cryptographic
puzzles involved in PoW mechanism by considering the fact that the
CPU architecture and the quantity of mining hardware knows when and
at what frequency does a miner win the block.
•
PoET is one of the fairest consensus algorithms which chooses the next
block using fair means only.
•
It is based on the idea of fairly distributing and expanding the odds for a
•
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14. bigger fraction of participants.
It is widely used in permissioned Blockchain networks.
•
In this algorithm, every validator on the network gets a fair chance to
create their own block.
•
Every participating node is asked to wait for a particular time to
participate in the next mining process, adding a proof of their wait in the
block.
•
At the same time, every node also comes up with their own waiting time,
after which they go into sleep mode.
•
The created blocks are broadcasted to the network for others
consideration.
•
The winner is the validator which has least timer value in the proof part.
•
The block from the winning validator node gets appended to the
Blockchain.
•
There are additional checks in the algorithm to stop nodes from always
winning the election, stop nodes from generating a lowest timer value.
•
Proof of Activity (PoA)
Proof of activity (PoA) is a hybrid of the PoW and PoS consensus
mechanisms.
•
It is used by the Decred (DCR) and Espers (ESP) blockchain projects.
•
The mining process begins like PoW, with miners competing to solve an
elaborate mathematical problem using immense computing power.
•
Once the block is mined, however, the system switches to resemble PoS,
with the successfully generated block header being broadcast to the PoA
network.
•
A group of validators are then randomly selected to sign off on the hash,
validating the new block.
•
Like with PoS, the more crypto the validator holds, the higher their
chances of being selected.
•
Once every chosen validator has signed the block, it is added to the
blockchain network and ready to record transactions.
•
The block rewards are then shared among the miner and validators.
•
Though the PoA system was designed with the intention of combining
the very best features of PoW and PoS, while avoiding their
shortcomings, it has drawn criticism for its energy-intensive mining
phase and inherent partiality towards validators holding a greater number
of coins.
•
Proof of Burn (PoB)
Another mo0re sustainable alternative to Bitcoin's PoW algorithm.
•
In PoB, miners gain the power to mine a block by ‘burning’ (destroying)
a predetermined amount of tokens in a verifiable manner – namely,
sending them to an ‘eater address’ where they cannot be recovered or
spent.
•
The more coins burned, the greater the chances of being randomly
selected.
•
Unlike in PoS where miners are able to retrieve or sell their locked coins
should they ever leave the network, burned coins are irretrievably lost.
•
This method of requiring miners to sacrifice short-term wealth in order to
gain the lifetime privilege to create new blocks helps to encourage long-
term commitment from miners.
•
The act of burning coins also leads to coin scarcity, limiting inflation and
driving up demand.
•
Cryptocurrencies that use the proof of burn protocol include Slim coin
(SLM), Counterparty (XCP), and Factom (FCT).
•
While PoB is an interesting alternative to PoW, the protocol still wastes
resources needlessly.
•
And it is also questioned that mining power simply goes to those who are
willing to burn more money.
•
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