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 DEDICATED TO OUR PARETS
AD
MR SOURAV MAJUMDAR





 COTETS

CHAPTER-1 Introduction to Block Chain ()

CHAPTER-2 Use Of Decentralization and Cryptography In Block Chain ()

CHAPTER-3 Bitcoin ()

CHAPTER-4 Alternative Coins ()

CHAPTER-5 Ethereum Block Chain ()

CHAPTER-6 Alternative Block Chain ()

CHAPTER-7 Applications of Block Chain ()



 CHAPTER-1

ITODUCTIO TO BLOCK CHAI

1.1 History Of Block Chain

Following the creation of bitcoin in 2008, a brand-new idea that is now poised to
completely transform society was introduced to the world. Every industry, including
but not limited to the financial, governmental, and media sectors, have been predicted
to be impacted by it. While some see it as a revolution, others believe it will be more
of an evolution, and it will be several years before any tangible benefits from
blockchain are realised.Blockchain could represent a growing collection of data
chunks structured into a data structure. Since the knowledge blocks are linked
together, they cannot be altered or withdrawn. The foundational technology of the
digital currency Bitcoin is blockchain. A distributed database of all executed
transactions or digital events that have been shared among participating parties makes
up the blockchain. The vast majority of the system's users verify each transaction. It
includes every single transaction record. The most prominent cryptocurrency, Bitcoin,
is an illustration of the blockchain. When "Satoshi Nakamoto" or a group of
individuals with that name issued a white paper in 2008 titled "BitCoin: A Peer-to-
Peer Electronic Cash System," the world first learned about blockchain technology.
Blockchain technology records transactions in an uncorruptible digital ledger that is
spread across the network. Any item of value, including cars, real estate, and other
items, can be recorded on the blockchain as a transaction.

The world's largest companies and organisations are now conducting research on
blockchain technology, investing millions of dollars to adopt and experiment with this
technology. Previously dismissed by some as geek money from the perspective of
cryptocurrencies or as something that was not really considered worthwhile, interest
in blockchain technology has risen dramatically in recent years.

In this chapter, blockchain technology, its theoretical underpinnings, technological

underpinnings, and numerous technologies that have been integrated to create what is
now known as blockchain are introduced.

Stuart Haber and W. Scott Stornetta, two research scientists, first discussed
blockchain technology in 1991. So that digital papers could not be altered or
retroactively time-stamped, they sought to develop a computationally feasible method.
To store the time-stamped papers, they create a system based on the idea of a chain of
blocks that is cryptographically secured.Merkle Trees were introduced into the design
of blockchain in 1992, increasing its efficiency by enabling multiple documents to be
gathered into a single block. A "secured chain of blocks" is made using Merkle Trees.
Each data record connected to the one before it and was kept in a series. The history
of the entire chain is contained in the most recent record in the chain. But since no one
exploited this method, the patent expired in 2004.



 Fig 1: Merklee Tree

Hal Finney, a computer scientist and advocate for cryptography, developed a system
called Reusable Proof Of Work (RPoW) in 2004 as a working model for electronic
money. In the early history of cryptocurrencies, it was a crucial step. In order to
construct an RSA-signed token that could be passed from one person to another, the
RPoW system required a non-fungible or non-exchangeable Hashcash-based proof of
work token.

Furthermore, Satoshi Nakamoto conceived of the idea of distributed blockchains in

2008. To add blocks to the initial chain without requiring them to be signed by
reputable parties, he innovates the concept in a novel method. A secure history of data
exchanges would be present in the changed trees. For timestamping and confirming
each trade, it makes use of a peer-to-peer network. Without the need for a centralised
authority, it might be controlled independently. Because of these developments,
blockchains are now the foundation of cryptocurrencies. For all transactions in the
bitcoin industry today, the design acts as the
The following section first outlines the theoretical underpinnings of distributed
systems, then discusses e-cash and hashcash, two forerunners of bitcoin, which
introduced blockchain technology, before ultimately introducing blockchain
technology itself. This is a sensible approach to think about blockchain technology
because it has its roots in distributed systems.

1.2 DISTRIBUTED SYSTEM

Comprehending distributed systems is crucial to understanding blockchain since, at its

foundation, the technology is a distributed system. It is actually a distributed,
decentralised system.
A distributed system is a computing paradigm in which two or more nodes collaborate
in a coordinated way to achieve a common goal. It is modelled so that end users
perceive it as a single logical platform.





 Fig 2: Distributed System

One of the core computing concepts that underpins Blockchain technology is

distributed computing. The basic definition of distributed computing is just a network
where various machines connect to create a single system. The systems can be
geographically distributed and connected online, or they can be physically coupled to
form a local network. It is a time-tested idea that has been adjusted throughout time to
meet demands.

Coordination between nodes and fault tolerance present the biggest design challenges
for distributed systems. The distributed system should be able to tolerate this and
continue to operate perfectly in order to produce the intended results, even if some of
the nodes malfunction or network links fail. For many years, this has been a topic of
active research, and numerous techniques and mechanisms have been suggested to
address these problems.A statement known as the CAP theorem, which asserts that a
distributed system cannot have all highly desirable features simultaneously, has been
proven due to the difficulty in designing distributed systems. The CAP theorem will
be briefly explained in the section that follows.

1.3 CAP THEOREM

This is frequently alluded to as Brewer's theorem, and it was initially put forward by
Eric Brewer in 1998 as a conjecture before being established as a theorem in 2002 by
Seth Gilbert and Nancy Lynch.Consistency, Availability, and Partition Tolerance is
the abbreviation for the CAP Theorem. A distributed system cannot always guarantee
consistency, availability, and partition tolerance, claims the theory. When something
goes wrong, we must prioritise no more than two distributed system features and their
trade-offs. According to the CAP Theorem or Brewer's Theorem, which is a theory
from theoretical computer science about distributed data stores, it is possible to ensure
either consistency or availability—but not both—in the event of a network failure on
a distributed database. Therefore, the CAP theorem states that a distributed database
system that undergoes a split must decide between

*CONSISTENCY: Consistency is a quality that guarantees that every node in a

distributed system has access to the same copy of the most recent data.





*AVAILABILITY: Availability signifies that the system is operational, reachable,
accepting incoming requests, and providing data without any errors as and when
necessary.

*PARTITION TOLERANCE:The distributed system will continue to function

properly even if a group of nodes fails thanks to partition tolerance.Any distributed
system can be impacted by a network failure, hence network partitioning is typically
necessary. In the event of a partition, there are just two options left: consistency or
availability.

A shared ledger that cannot be changed is managed through a decentralised database

called blockchain. The shared ledger is constructed from transactions. Transactions in
the shared ledger are recorded using consensus mechanisms. It makes sense that
sharing distributed transactions would cast doubt on the CAP theorem.
Due to the importance placed on Availability and Partition Tolerance in Blockchain,
Consistency is lost. The blockchain's partition tolerance (P), availability (A), and
consistency (C) in this scenario are not reached all at once; rather, they are acquired
gradually.

Fig 3: CAP THEOREM

There are typically two different types of faults that a node can have: either the node
has crashed or it is acting maliciously or inconsistently at random. This is the kind
that is challenging to handle because it may lead to confusion due to false information.

Byzantine Generals problem

In general, there are two types of faults that a node can have: one in which the node
has simply crashed, and the other in which the node may demonstrate arbitrary malice
or inconsistent behaviour. As a result of the potential for misunderstanding caused by
false information, this category is challenging to deal with.
In this well-known puzzle known as the Byzantine General's Problem, the Byzantine
army is divided into numerous battalions, each of which is commanded by a different
general.





The generals communicate through messenger to come to an understanding on a
common course of action, in which all battalions work together and launch
simultaneous attacks from all directions to be successful.
It is likely that traitors will attempt to foil their scheme by intercepting or altering the
transmissions.
The aim of this challenge is therefore for all the true commanders to come to an
agreement without the imposters interfering with their schemes.
The unaltered agreement that all the devoted generals must concur to in the Byzantine
Generals Problem is the blockchain. Blockchain is a decentralised, open ledger that
stores all transactional data. The Bitcoin network's nodes, or users, might establish a
working, decentralised financial system without the need for a central authority
provided they could all agree on the transactions that took place and in what order.
Blockchain largely relies on a consensus approach to validate transactions because of
its decentralised nature. It is a peer-to-peer network that provides users with trust and
transparency.

*PROOF OF WORK: To solve the Byzantine General's Problem, the network would
need to be verifiable, counterfeit-proof, and trustless. By using a Proof-of-Work
method to establish a precise, impartial regulation for the blockchain, Bitcoin
overcame the Byzantine General's Problem. A cryptocurrency's blockchain can be
updated with new transaction blocks using the proof of work (PoW) technique. The
job in this case is to generate a hash (a lengthy string of characters) that corresponds
to the desired hash for the current block.
Castro and Liskov published the Practical Byzantine Fault Tolerance (PBFT) method
in 1999 as a solution to this issue. Later in 2009, the Proof of Work (PoW) algorithm
was created as a way to reach consensus, and with the introduction of bitcoin, the first
real-world application was made.

Consensus
Consensus is the process of agreeing on a final state of data between distrusting nodes.
Various algorithms can be applied to reach consensus. It is simple to come to an
agreement between two nodes (for instance, in client-server systems), but when
several nodes are involved in a distributed system and they must all agree on a single
value, consensus becomes exceedingly challenging. Distributed consensus is the idea
that numerous nodes can come to an agreement.

MECHAISMS FOR COSESUS

A collection of procedures that all or the majority of nodes do in order to concur on a

proposed state or value is known as a consensus mechanism. Computer scientists in
academia and industry have been studying this idea for more than 30 years. With the
introduction of bitcoin and blockchain, consensus techniques have recently garnered
significant appeal. For a consensus method to produce the intended results, a number
of conditions must be satisfied. Here are their specifications along with brief
descriptions:

Agreement: The same value is selected by all truthful nodes.

Termination: The consensus process has concluded and a decision is made by all
honest nodes.





Validity: At least one honest node must offer the starting value, and it must match the
value that all honest nodes agree upon. Consensus algorithm should be able to
function in the absence of errors.

Integrity: The aforementioned requirement states that no node may make the same
decision more than once. In a single consensus cycle, the nodes only ever take a
single choice.

1.4 TYPES OF SYSTEM

1. CETRALIZED SYSTEM:

Systems with client/server architecture that are centralised are those in which one or
more client nodes are directly linked to a centralised server. In many organizations,
this is the type of system that is most frequently used, where a client sends a request
to a business server and then receives the response.

Example –

Wikipedia. Consider a massive server to which we send our requests and the server
responds with the article that we requested. Suppose we enter the search term ‘junk
food’ in the Wikipedia search bar. This search term is sent as a request to the
Wikipedia servers (mostly located in Virginia, U.S.A) which then responds back with
the articles based on relevance. In this situation, we are the client node, Wikipedia
servers are the central server.

Fig 4. Centralized System

Advantages:

Easy to physically secure. It is easy to secure and service the server and client nodes
by virtue of their location





Smooth and elegant personal experience – A client has a dedicated system which he
uses(for example, a personal computer) and the company has a similar system which
can be modified to suit custom needs

Dedicated resources (memory, CPU cores, etc)

More cost-efficient for small systems up to a certain limit – As the central systems
take fewer funds to set up, they have an edge when small systems have to be built
Quick updates are possible – Only one machine to update.

Easy detachment of a node from the system. Just remove the connection of the client
node from the server and voila! Node detached.

Centralized control: In a centralized system, the central authority has complete control
over the system, which can lead to better coordination and decision-making.

Disadvantages of Centralized System

Highly dependent on the network connectivity – The system can fail if the nodes lose
connectivity as there is only one central node.

No graceful degradation of the system – abrupt failure of the entire system

Less possibility of data backup. If the server node fails and there is no backup, you
lose the data straight away.

Difficult server maintenance – There is only one server node and due to availability
reasons, it is inefficient and unprofessional to take the server down for maintenance.
So, updates have to be done on-the-fly(hot updates) which is difficult and the system
could break.

Single point of failure: Centralized systems have a single point of failure, which can
cause the entire system to fail if the central node goes down.
Lack of transparency: Centralized systems lack transparency as the central authority
has complete control over the system, which can lead to issues like censorship and
bias.

2. DECETRALIZED SYSTEM

These are other types of systems that have been gaining a lot of popularity, primarily
because of the massive hype of Bitcoin. Now many organizations are trying to find
the application of such systems.
In decentralized systems, every node makes its own decision. The final behavior of
the system is the aggregate of the decisions of the individual nodes. Note that there is
no single entity that receives and responds to the request.

Example –

Bitcoin. Let’s take Bitcoin for example because it is the most popular use case of
decentralized systems. No single entity/organization owns the bitcoin network. The





network is a sum of all the nodes who talk to each other for maintaining the amount of
bitcoin every account holder has.

Fig 5: Decentralizes System

Limitations of Decentralized System –

May lead to the problem of coordination at the enterprise level – When every node is
the owner of its own behavior, its difficult to achieve collective tasks.

Not suitable for small systems – Not beneficial to build and operate small
decentralized systems because of the low cost/benefit ratio
No way to regulate a node on the system – no superior node overseeing the behavior
of subordinate nodes

Advantages of Decentralized System –

Minimal problem of performance bottlenecks occurring – The entire load gets

balanced on all the nodes; leading to minimal to no bottleneck situations

High availability – Some nodes(computers, mobiles, servers) are always

available/online for work, leading to high availability

More autonomy and control over resources – As each node controls its own behavior,
it has better autonomy leading to more control over resources.

Improved fault tolerance: Decentralized systems are designed to be fault tolerant,

meaning that if one or more nodes fail, the system can still continue to function. This
is because the workload is distributed across multiple nodes, rather than relying on a
single point of failure.

Increased transparency: Decentralized systems often have a transparent and open

structure, which allows for greater accountability and trust. Each node has access to
the same information, making it more difficult to manipulate or corrupt the data.





Greater security: Decentralized systems can be more secure than centralized systems
because there is no single point of failure or vulnerability that can be exploited by
attackers. Data is distributed across multiple nodes, making it more difficult to hack
or compromise.

3. DISTRIBUTES SYSTEM

A distributed system is a collection of computer programs that utilize computational

resources across multiple, separate computation nodes to achieve a common, shared
goal. Also known as distributed computing or distributed databases, it relies on
separate nodes to communicate and synchronize over a common network. These
nodes typically represent separate physical hardware devices but can also represent
separate software processes, or other recursive encapsulated systems. Distributed
systems aim to remove bottlenecks or central points of failure from a system.

Example :

Google search system. Each request is worked upon by hundreds of computers that
crawl the web and return the relevant results. To the user, Google appears to be one
system, but it actually is multiple computers working together to accomplish one
single task (return the results to the search query).

Figure 6: Distributed Systems

Advantages of Distributed System –

Low latency than a centralized system – Distributed systems have low latency
because of high geographical spread, hence leading to less time to get a response.

Scalability: Distributed systems are highly scalable as they can be easily expanded by
adding new nodes to the network. This allows the system to handle a large amount of
data and traffic without compromising on performance.

Fault tolerance: Distributed systems are fault-tolerant, meaning they can continue to
function even if some nodes fail or go offline. This is because the workload is





distributed among multiple nodes, so the system can continue to operate even if some
nodes are down.

Increased reliability: With multiple nodes in the network, distributed systems are
more reliable than centralized systems. Even if one node fails, there are still other
nodes that can provide the required service.

Cost-effective: Distributed systems are often more cost-effective than centralized

systems, as they can be built using off-the-shelf hardware and software components.
This makes them a more affordable option for many organizations.

Disadvantages of Distributed System –

Difficult to achieve consensus

The conventional way of logging events by absolute time they occur is not possible
here.

Network complexity: Distributed systems require a complex network infrastructure to

operate, which can be difficult to set up and maintain. Network outages and
bottlenecks can cause system failures and data loss.

Security challenges: Distributed systems can be vulnerable to security threats such as

cyber-attacks, data breaches, and unauthorized access. It can be challenging to
implement robust security measures across all nodes and ensure data privacy and
integrity.

High development and maintenance costs: Distributed systems require specialized

skills and expertise to design, develop, and maintain. This can lead to high
development and maintenance costs, especially for large-scale systems.

Limited scalability: Distributed systems can have limited scalability due to network
constraints, synchronization challenges, and other technical limitations. Scaling up the
system requires significant investment and can be challenging to implement.

Figure 7: Comparison of different Systems



 1.5 Benefits and Limitations of Block Chain

  is the backbone Technology of Digital Crypto Currency    .

Blockchain
technology is a digital or ledger technology that evaluates the records
and makes track of it in a peer-to-peer network. Each transaction is verified by the
majority of participants of the system. It contains every single record of each
transaction. Benefits of Blockchain Technology

The following are some of the benefits of blockchain technology:

1. Efficiency: By simplifying these methods with blockchain, dealings can be
achieved quickly and more efficiently.
x Efficiency only indicates that transactions once registered on the blockchain,
can’t be modified or removed.
x On the blockchain, all transactions are timely and date-wise noted, so there’s
a permanent chronology.
x Therefore, blockchain can be employed to track information over the short
and long term, allowing a secure, trustworthy version of knowledge.
x Blockchain is utilized to digitize genuine estate transactions to keep control
of property headers.
2. Transparency: Blockchain produces a track that establishes the origin of an
investment at every step of its records. It is achievable to transfer data regarding
origin directly with clients.
x Transparency is one of the major difficulties in the IT world.
x To enhance transparency, associations have attempted to execute more rules
and protocols.
x The main goal of the blockchain is to make the business model transparent
which includes transactions, wallets, etc.
x So that no single individual can make the changes without knowing other
participants in the business model.
3. Security: By building a document that can’t be changed and is encrypted end to
end, blockchain allows for preventing copying and unauthorized movement. Privacy
problems can likewise be managed on blockchain by individual data and individual
authorizations to maintain access.
x It focuses on the security part also as blockchain is mainly known for its
security.
x The security is so tight that it is very difficult to hack the ledger and steal or
manipulate the information because of using a consensus algorithm.
x Any trades that are ever registered require to be decided upon according to
the agreement approach.
x Furthermore, the individual transaction is encrypted and has a verified
connection with the previous transactions with help of hashing algorithms.
4. Network distribution: When users load data into the approach, users cannot
modify it and it’s hard to eliminate. Even small differences can be traceable, tracked,
and registered then distributed on the blockchain ledger for all to view.





x It also concentrates on educating or making awareness regarding network
distribution.
x This particular supplies, at the identical moment, various advantages, by
having this network distributed, in the foremost example, no one holds the
network, permitting various users to consistently have numerous documents of
the exact data.
x Moreover, this feature causes it immune and distributed to any kind of defeat
as the point that a node dies accomplishes not suggest generalized failures in the
P2P network.
5. Traceability: With blockchain technology, users can stop all of the errors. Users’
store chains can evolve totally translucent and manageable to track. It allows users
to join, outline, and track goods or assets to confirm they are not misapplied or
returned during the procedure.
x Participants or members can easily track their business model using
blockchain.
x This will increase the growth of businesses as they will get the fault at the
right time.
x In blockchain technology, the collection chain evolves better transparently
than ever.
x It allows every group to trace the interests and confirm that it is not
substituted or misapplied during the collection chain approach.
x Associations can also create the most out of blockchain traceability by
executing it in place.
6. Reduced Costs: It delivers protected surroundings where encrypted enterprise
transactions between customer and seller can transpire without the requirement for
third groups to moderate.
x Associations desire to decrease costs and delay the funds into creating
something unique or enhancing existing approaches.
x By operating blockchain, associations can obtain at cheaper costs associated
with third-party agents.
x Blockchain includes no inherited centralized performer, there is no necessity
to consume on any dealer charges.
x Moreover, there is a minor exchange must when it comes to validating a
trade.
7. Availability: Parties of blockchain P2P networks can get shut down from
analyzing the shape and correcting it when union producers submit the condition of
the design.
x Higher availability, efficiency, confidentiality, and flexibility to adjust any
desired solution model.
x The data can be recovered by users from anywhere around the world.
x The availability is higher as productivity increases by using blockchain
because it divides each section into each department so that every individual can
focus on a particular task or work.
8. Automation: Blockchain transactions can be automated with smart contracts.
Using smart contracts increases efficiency and speeds up the process. Once the pre-
specified conditions in smart contracts are met then the next steps in the transaction
or process are automatically triggered.
x Smart contracts reduce human intervention.





x They also reduce reliance on third parties to verify that the terms of the
contracts have been met.
9. Decentralized: Blockchain technology is used to hold data in a decentralized
manner so everyone can confirm the accuracy or correctness of the data by using nil
understanding evidence via which one group confirms the correctness of data to
another group without disclosing anything regarding the information.
x Decentralization indicates the transfer of control and judgment created from
a centralized organization to a P2P network.
x These networks attempt to reduce the level of trust that partners should put
in individually and prevent their ability over each other.
x It creates blockchain and enhances security for users.
x In demand for someone to meddle with the blockchain, they would have to
meddle with all the units of the chain and hack every node, which is unthinkable.

10. Tokenization: Tokenization is the method where the worth of an asset including
digital as well as material, is transformed into a digital token that is then registered
on and then transmitted through blockchain.
x It has been noticed with digital skills and other virtual support, but
tokenization has more general applications that could smooth business
transactions.It is used to change carbon emission fundings under carbon cap
schedules.

Blockchain technology has enormous potential in creating trustless, decentralized

applications. But it is not perfect. There are certain barriers which make the
blockchain technology not the right choice and unusable for mainstream application.
We can see the limitations of blockchain technology in the following image.

*Lack of Awareness

There is a lot of discussion about blockchain, but people do not know the true value
of blockchain and how they could implement it in different situations.

*Limited availability of technical talent

Today, there are a lot of developers available who can do a lot of different things in
every field. But in the blockchain technology, there are not so many developers
available who have specialized expertise in blockchain technology. Hence, the lack
of developers is a hindrance to developing anything on the blockchain.

*Immutable

In immutable, we cannot make any modifications to any of the records. It is very

helpful if you want to keep the integrity of a record and make sure that nobody ever
tampers with it. But immutability also has a drawback.





We can understand this, in the case, when you want to make any revisions, or want
to go back and make any reversals. For example, you have processed payment and
need to go back and make an amendment to change that payment.

*Key Management

As we know, blockchain is built on cryptography, which implies that there are

different keys, such as public keys and private keys. When you are dealing with a
private key, then you are also running the risk that somebody may lose access to
your private key. It happens a lot in the early days when bitcoin wasn't worth that
much. People would just collect a lot of bitcoin, and then suddenly forgot what the
key was, and those may be worth millions of dollars today.

Scalability

Blockchain like bitcoin has consensus mechanisms which require every

participating node to verify the transaction. It limits the number of transactions a
blockchain network can process. So bitcoin was not developed to do the large scale
volumes of transactions that many of the other institutions are doing. Currently,
bitcoin can process a maximum of seven transactions per second.

Consensus Mechanism

In the blockchain, we know that a block can be created in every 10 minutes. It is

because every transaction made must ensure that every block in the blockchain
network must reach a common consensus. Depending on the network size and the
number of blocks or nodes involved in a blockchain, the back-and-forth
communications involved to attain a consensus can consume a considerable amount
of time and resources.

Distributed ledger


Distributed Ledger Technology (DLT) is essentially a decentralized data storage
technology that can perform data sharing, synchronization and replication in a
network of multiple network nodes, multiple physical addresses or multiple
organizations. Compared with traditional distributed storage systems, distributed
ledger technology has two different characteristics.
First, the traditional distributed storage system implements a data management
mechanism controlled by a central node, while the distributed ledger is based on
certain consensus rules and uses multi-party decision-making and common
maintenance for data storage and replication. With the explosive growth of Internet
data, the data management system constructed by a single central organization is
facing more challenges, and service providers have to continue to invest in the
construction of large data centers. The ever-increasing scale and complexity of the
system created increasingly severe reliability issues. However, DLT’s decentralized
data maintenance strategy can effectively reduce the burden on the system.
Second, the traditional distributed storage system decomposes the data into several
pieces for storage, while each node in the distributed ledger system has its own





independent and complete copy of data storage. In the traditional business system, the
shortcomings of highly centralized data management system in data credibility
and network security are increasingly exposed. In order to cope with these problems,
experts added additional management mechanisms, which further pushed up the
maintenance costs of traditional business systems and reduced the operational
efficiency. DLT can radically improve this phenomenon. Since each node maintains a
complete set of data copies, any single node or a small number of clusters cannot
modify the data to affect other copies. This greatly improves the credibility and
security guarantee of data in the business system.





 CHAPTER-2

USE OF DECETRALIZATIO AD CRYPTOGRAPHY I BLOCK CHAI

2.1 BLOCKS I BLOCK CHAI

An ordered collection of blocks of transactions with backlinks makes up the

blockchain data structure. The blockchain can be kept in a straightforward database or
as a flat file. Using Google's LevelDB database, the Bitcoin Core client maintains the
blockchain metadata. When a block is connected "back," it refers to the block before
it in the chain. The blockchain is sometimes represented as a vertical stack of blocks,
with the first block acting as the foundation of the stack. When blocks are visualised
piled on top of one another, terminology like "height" and "top" or "tip" are used to
describe the most recent block added and the distance from the initial block,
respectively. Each block within the blockchain is identified by a hash, generated using
the SHA256 cryptographic hash algorithm on the header of the block. Each block also
references a previous block, known as the parent block, through the “previous block
hash” field in the block header. In other words, each block contains the hash of its
parent inside its own header. The sequence of hashes linking each block to its parent
creates a chain going back all the way to the first block ever created, known as
the genesis block.Although a block has just one parent, it can temporarily have
multiple children. Each of the children refers to the same block as its parent and
contains the same (parent) hash in the “previous block hash” field. Multiple children
arise during a blockchain “fork,” a temporary situation that occurs when different
blocks are discovered almost simultaneously by different miners (see Blockchain
Forks). Eventually, only one child block becomes part of the blockchain and the “fork”
is resolved. Even though a block may have more than one child, each block can have
only one parent. This is because a block has one single “previous block hash” field
referencing its single parent.

The “previous block hash” field is inside the block header and thereby affects
the current block’s hash. The child’s own identity changes if the parent’s identity
changes. When the parent is modified in any way, the parent’s hash changes. The
parent’s changed hash necessitates a change in the “previous block hash” pointer of
the child. This in turn causes the child’s hash to change, which requires a change in
the pointer of the grandchild, which in turn changes the grandchild, and so on. This
cascade effect ensures that once a block has many generations following it, it cannot
be changed without forcing a recalculation of all subsequent blocks. Because such a
recalculation would require enormous computation, the existence of a long chain of
blocks makes the blockchain’s deep history immutable, which is a key feature of
bitcoin’s security.One way to think about the blockchain is like layers in a geological
formation, or glacier core sample. The surface layers might change with the seasons,
or even be blown away before they have time to settle. But once you go a few inches
deep, geological layers become more and more stable. By the time you look a few
hundred feet down, you are looking at a snapshot of the past that has remained





undisturbed for millions of years. In the blockchain, the most recent few blocks might
be revised if there is a chain recalculation due to a fork. The top six blocks are like a
few inches of topsoil. But once you go more deeply into the blockchain, beyond six
blocks, blocks are less and less likely to change. After 100 blocks back there is so
much stability that the coinbase transaction—the transaction containing newly mined
bitcoins—can be spent. A few thousand blocks back (a month) and the blockchain is
settled history, for all practical purposes. While the protocol always allows a chain to
be undone by a longer chain and while the possibility of any block being reversed
always exists, the probability of such an event decreases as time passes until it
becomes infinitesimal.

Structure of a Block

A block is a container data structure that aggregates transactions for inclusion in the
public ledger, the blockchain. The block is made of a header, containing metadata,
followed by a long list of transactions that make up the bulk of its size. The block
header is 80 bytes, whereas the average transaction is at least 250 bytes and the
average block contains more than 500 transactions. A complete block, with all
transactions, is therefore 1,000 times larger than the block header. Table 7-
1 describes the structure of a block.

Table 2.1.1: Structure of a block In Block chain





 Fig 8: Blocks in Block Chain

1. Header: It is used to identify the particular block in the entire blockchain. It

handles all blocks in the blockchain. A block header is hashed periodically by
miners by changing the nonce value as part of normal mining activity, also Three
sets of block metadata are contained in the block header.
2. Previous Block Address/ Hash: It is used to connect the i+1th block to the
ith block using the hash. In short, it is a reference to the hash of the previous
(parent) block in the chain.
3. Timestamp: It is a system verify the data into the block and assigns a time
or date of creation for digital documents. The timestamp is a string of characters
that uniquely identifies the document or event and indicates when it was created.
4. once: A nonce number which uses only once. It is a central part of the
proof of work in the block. It is compared to the live target if it is smaller or equal
to the current target. People who mine, test, and eliminate many Nonce per
second until they find that Valuable Nonce is valid.
5. Merkel Root: It is a type of data structure frame of different blocks of data.
A  
  stores all the transactions in a block by producing a digital
fingerprint of the entire transaction. It allows the users to verify whether a
transaction can be included in a block or not.

2.2 DECETRALIZATIO USIG BLOCK CHAI

Decentralization is not a new concept; it has been used in strategy, management, and
governance for a long time. The basic idea of decentralization is to distribute control
and authority to peripheries instead of one central authority being in full control of the
organization. This results in several benefits for organizations. such as increased
efficiency, quicker decision making, better motivation, and a reduced burden on top
management.Methods of decentralization and routes to decentralization with some
examples will also be presented. Also, the decentralization of the blockchain
ecosystem, decentralized applications, and platforms for decentralization will be
discussed in detail. Many exciting applications and ideas emerge out of the
decentralized blockchain technology, and will be introduced in this chapter





Decentralization is a core benefit and service provided by the blockchain technology.
Blockchain by design is a perfect vehicle for providing a platform that does not need
any intermediaries and can function with many different leaders chosen via consensus
mechanisms. This model allows anyone to compete to become the decision-making
authority. This competition is governed by a consensus mechanism and the most
commonly used method is known as Proof of Work (PoW). Decentralization is
applied in varying degrees from semi- decentralized to fully decentralized depending
on the requirements and circumstances. Decentralization can be viewed from a
blockchain perspective as a mechanism that provides a way to remodel existing
applications and paradigms or build new applications in order to give full control to
users. Centralized systems are conventional (client--server) IT systems whereby there
is a single authority that controls the system and is solely in-charge of all operations
on the system. All users of a central system are dependent on a single source of
service. Online service providers, such as eBay, Google,Amazon, Apple's App Store,
and the majority of other providers, use this common model of delivering services. On
the other hand, in a distributed system, the data and computation are spread across
multiple nodes in the network. Sometimes, this term is confused with parallel
computing. While there is an overlap in the definition, the main difference between
both these systems is that in a parallel system, computation is performed by all nodes
simultaneously in order to achieve a result, whereas in a distributed system,
computation may not happen in parallel and data is only replicated on multiple nodes
that users view as a single coherent system.

2.2 METHODS OF DECETRALIZATIO

There are two methods that can be used to achieve decentralization. These methods
are discussed in detail in the following sections.

Disinter mediation

This can be explained with the help of an example. Imagine you want to send money
to your friend in another country. You go to a bank that will transfer your money to
the bank in the country of your choice for a fee. In this case, the bank keeps a central
database that is updated, confirming that you have sent the money. With block chain
technology, it is possible to send this money directly to your friend without the need
for a bank. All you need is the address of your friend on the block chain. This way,
the intermediary is no longer required and decentralization is achieved by disinter-
mediation. However, it is debatable how practical decentralization is in the financial
sector by disinter-mediation due to heavy regulatory and compliance requirements.
Nevertheless, this model can be used not only in finance but also in many other
different industries.

Through competition

In this method, a group of service providers compete with each other in order to be
selected for the provision of services by the system. This paradigm does not achieve
complete decentralization, but to a certain degree ensures that an intermediary or
service provider is not monopolizing the service. In the context of blockchain





technology, a system can be envisioned in which smart contracts can choose an
external data provider from a large number of providers based on their reputation,
previous score, reviews, and quality of service. This will not result in full
decentralization, but it allows smart contracts to make a free choice based on the
criteria mentioned earlier. This way, an environment of competition is cultivated
among service providers, whereby they compete with each other to become the data
provider of choice.

In the following diagram, varying levels of decentralization are shown. On the left-
hand side, there is a conventional approach where a central system is in control; on
the right-hand side, complete disintermediation is achieved; and in middle, competing
intermediaries or service providers are shown. In the middle, intermediaries or service
providers are selected based on reputation or voting, thus achieving partial
decentralization.

Fig 9: Scale of decentralization

There are many benefits of decentralization, including transparency, efficiency, cost

saving, development of trusted ecosystems, and in some cases privacy and anonymity.
Some challenges, such as security requirements, software bugs, and human error,
need to be examined thoroughly.

2.3 Strategies To Achieve Decentralisation

Even though there are some systems that predate bitcoin and the blockchain that can
be categorised as being somewhat decentralised, such as BitTorrent or Gnutella file
sharing, many initiatives are being taken in order to take advantage of this new
technology for decentralisation with the advent of the blockchain. Many people
typically choose the bitcoin blockchain first since it has shown to be the most reliable
and secure blockchain with a market cap of close to $12 billion. Utilising different
blockchains is an alternate strategy; many developers

Suggestions for decentralisation

Arvind Narayanan and colleagues have presented a paradigm that can be used to
assess the decentralization needs of many different items in the context of blockchain
technology. In essence, the framework offers four questions, the answers to which





offer a clear understanding of how a system might be decentralized. The following is
a list of these queries:
1. What is being decentralized?
2. What level of decentralization is required?
3. What blockchain is used?
4. What security mechanism is used?

Simply identifying the decentralized system is the first question. Any system might be
used for this, such as a commerce or identity system. Defining the required amount of
decentralization by considering the magnitude of decentralisation covered earlier can
help with the next question. It might be either full or partial disinter-mediation.
Choosing which blockchain is best for a given application is up to developers in the
third and easiest of the three questions. Blockchains for specialized applications may
include those for bitcoin, Ethereum, or any other blockchain. Finally, a crucial query
regarding the security method must be addressed in order to determine how the
security of a decentralised system can be ensured. Atomicity, for instance, when
either the money has tobe transferred or not. There is no intermediatory case.

Decentralized organizations (DOs) are computer programmes that operate on a

blockchain and are inspired by actual, physical organisations with personnel and
procedures. A DO becomes decentralised once it is uploaded to the blockchain in the
form of a smart contract or group of smart contracts, and parties interact with one
another according to the code specified in the DO software.
A Decentralized Autonomous Organisation (DAO) is a type of organization that, like
DOs, is controlled by a computer programme on top of a blockchain and has business
and governance regulations. DAOs and DOs are essentially the same thing, but the
key distinction is that DAOs are autonomous, meaning they are fully automated and
contain artificially intelligent logic, whereas DOs are not autonomous and depend on
user input to carry out business logic. With the debut of DAOs, the Ethereum
blockchain set the bar high. In the DAO, the code, not people or written contracts, is
thought of as the ruling entity.

2.4 CRYPTOGRAPHY I BLOCKCHAI

Cryptography is a method of securing data from unauthorized access. In

the blockchain, cryptography is used to secure transactions taking place between two
nodes in a blockchain network. As discussed above, in a blockchain there are two
main concepts cryptography and hashing. Cryptography is used to encrypt messages
in a P2P network and hashing is used to secure the block information and the link
blocks in a blockchain.
Cryptography primarily focuses on ensuring the security of participants, transactions,
and safeguards against double-spending. It helps in securing different transactions on
the blockchain network. It ensures that only the individuals for whom the transaction
data is intended can obtain, read and process the transaction.

Role of Cryptography in Blockchain

Blockchain is developed with a range of different cryptography concepts. The

development of cryptography technology promotes restrictions for the further





development of blockchain. In the blockchain, cryptography is mainly used to protect
user privacy and transaction information and ensure data consistency.
The core technologies of cryptography include symmetric encryption and asymmetric
encryption.
Asymmetric cryptography uses digital signatures for verification purposes, every
transaction recorded to the block is signed by the sender by digital signature and
ensures that the data is not corrupted. Cryptography plays a key role in keeping the
public network secure, so making it fit to maintain the integrity and security of
blockchain.

Cryptography

Cryptography is a technique or a set of protocols that secure information from any

third party during a process of communication. It is also made up of two Greek terms,
Kryptos term meaning “hidden” and Graphein, a term meaning “to write”. Numerous
security functions, including confidentiality, integrity, authentication (including entity
and data origin authentication), and non-repudiation, are provided by cryptography.
Accountability is also necessary in a number of security systems.Some terminologies
related to Cryptography:
*Encryption: Conversion of normal text to a random sequence of bits.
*Key: Some amount of information is required to get the information of the
cryptographic algorithm.
*Decryption: The inverse process of encryption, conversion of a Random sequence
of bits to plaintext.
*Cipher: The mathematical function, i.e. a cryptographic algorithm which is used to
convert plaintext to cipher text(Random sequence of bits).

Types of Cryptography

The two types of cryptography are:

Symmetric -key cryptography.
Asymmetric -key cryptography.
Let’s discuss each of these topics in detail.
1. Symmetric-key Encryption: It focuses on a similar key for encryption as well as
decryption. Most importantly, the symmetric key encryption method is also applicable
to secure website connections or encryption of data. It is also referred to as secret-key
cryptography. The only problem is that the sender and receiver exchange keys in a
secure manner. The popular symmetric-key cryptography system is Data Encryption
System(DES). The cryptographic algorithm utilizes the key in a cipher to encrypt the
data and the data must be accessed. A person entrusted with the secret key can decrypt
the data. Examples: AES, DES, etc.
Features:
It is also known as Secret key cryptography.
Both parties have the same key to keeping secrets.
It is suited for bulk encryptions.





It requires less computational power and faster transfer.

Fig 10: Symmetric Key Cryptography

2. Asymmetric-key Encryption: This cryptographic method uses different keys for

the encryption and decryption process. This encryption method uses public and
private key methods. This public key method help completely unknown parties to
share information between them like email id. private key helps to decrypt the
messages and it also helps in the verification of the digital signature. The
mathematical relation between the keys is that the private key cannot be derived from
the public key, but the public key can be derived from the private
key. Example: ECC,DSS etc.

Features:

It is also known as Public-key cryptography.

It is often used for sharing secret keys of symmetric cryptography.

It requires a long processing time for execution.

Plays a significant role in website server authenticity.





 Fig 11: Asymmetric Key Cryptography

Wallets And Digital Signatures

A blockchain wallet is a special software or a hardware device that is used to keep the
transaction information and personal information of the user. Blockchain wallets do
not contain the actual currency. The wallets are used to keep private keys and
maintain a transaction balance.
Wallets are only a communication tool to communicate to carry out transactions with
other users. The real data or currency is stored in blocks in the blockchain.
Digital signatures are like proofs that the user gives to the recipient and other nodes in
the network to prove that it is a legitimate node in the network to carry out
transactions. While initiating a transaction with other nodes in the blockchain network,
the user first has to create a unique digital signature by combining the transaction data
with the user’s private key using a special algorithm. This process will guarantee the
authenticity of the node and the integrity of the data.

Cryptography Hash Function in Blockchain

One of the most notable uses of cryptography is cryptographic
hashing. Hashing enables immutability in the blockchain. The encryption in
cryptographic hashing does not involve any use of keys. When a transaction is
verified hash algorithm adds the hash to the block, and a new unique hash is added to
the block from the original transaction. Hashing continues to combine or make new
hashes, but the original footprint is still accessible. The single combined hash is called
the root hash. Hash Function helps in linking the block as well as maintaining the
integrity of data inside the block and any alteration in the block data leads to a break
of the blockchain. Some commonly used hashed function is MD5 and SHA-1.
2.5 Features of Cryptography in Block Chain
Integrity Integrity is the guarantee that only authorised parties can alter information.
Authentication Authentication gives reassurance on the legitimacy of a message or the
identity of an entity. Here, two different sorts of authentications are covered.





ETITY AUTHETICATIO

It is guaranteed through entity authentication that an entity is actively participating in

a communication session. In the past, users were given usernames and passwords that
they could use to get into the platforms they were utilising. The password and
username are the only two factors, making this process known as single factor
authentication. Due to a number of issues, such as password leaks, this sort of
authentication is not very safe; as a result, more factors are increasingly frequently
utilised to ensure better security. Multifactor authentication, or two-factor
authentication if just two procedures are employed, is the use of additional measures
for user identification. Multifactor authentication is the use of more than two factors
for authentication.
Your possession of a hardware token or smart card counts as the first factor. In this
instance, a person can access a system using both login credentials and a hardware
token. By requiring two authentication factors, this offers protection. A user can
access the system if they have access to the hardware token and have the necessary
log-on information. This approach uses two-factor authentication, requiring both
factors to be available in order to access the system.
The second identifier is something you are and it makes use of biometric
characteristics to identify the user. In this technique, the user adds an extra
identification factor by using their fingerprint, retina, iris, or hand shape. Due to the
fact that biometric traits are specific to each individual, this method can guarantee that
a user was present during the authentication mechanism. However, careful
implementation is necessary to guarantee a high level of security because some
research suggests that biometric systems can be defeated in specific circumstances.

DATA ORIGI AUTHETICATIO

This is a guarantee that the information source is confirmed and is sometimes referred
to as message authentication. Data integrity is implied by data origin authentication
because if a source can be confirmed, then the data was not altered. The most popular
techniques include message authentication codes (MACs) and digital signatures. Later
in the chapter, these words will be defined in further detail.

on-repudiation

By presenting incontrovertible proof, non-repudiation guarantees that an entity cannot

retract a prior pledge or conduct. It is a security solution that offers incontrovertible
proof that a specific action has taken place. This feature is crucial in disputed
circumstances where a party has disputed actions taken, like placing an order on an e-
commerce platform. This service creates cryptographic proof of electronic
transactions so that it can be used as action confirmation in the event of a dispute.
Non-repudiation has long been a topic of ongoing research. In order to boost
consumer confidence in the service, disputes in electronic transactions are a common
problem that need to be addressed.





Accountability

Accountability is the promise that security-threatening conduct can be linked back to

the culprit. This is typically offered through logging and auditing methods in systems
where a thorough audit is necessary owing to the nature of the business, such as in
electronic trading systems. For instance, when a trade is entered into an audit record
with a date and time stamp and the entity's identity is formed and kept in the log file,
detailed logs are essential to track an entity's activity.



 CHAPTER-3

BITCOI

3.1 BITCOI HISTORY

Cryptocurrency is one of the most hotly debated global financial topics today. In 2013,

Forbes named Bitcoin (BTC) the year's best investment. In 2014, Bloomberg
countered with its proclamation of Bitcoin being the year's worst investment. From
the early days of the FBI shutting down crypto-funded darknet black markets to
the Securities and Exchange Commission approving ProShares Bitcoin Strategy
(ticker: BITO), the first Bitcoin ETF, in October 2021, cryptocurrency has had an
exciting and volatile history.Bitcoin was the first cryptocurrency created and is now
the most valuable and well-known. It was first launched in January 2009 by a
computer programmer or group of programmers under the pseudonym Satoshi
Nakamoto, whose actual identity has never been verified. A 2008 white paper by
Bitcoin's mysterious creator originally revealed the blockchain system that would be
the backbone of the cryptocurrency market. A blockchain is a digital ledger of
transactions that is replicated and distributed across a network of computer systems to
secure information.

The Bitcoin supply was capped from the beginning by Nakamoto. The maximum
number of coins stipulated to be in existence was 21 million. As of May 10, there
were 19.36 million Bitcoins in existence. However, the mining operators of Bitcoin
regularly cut in half the rewards for mining each block in a process known as Bitcoin
halving, leading experts to believe that it will take until the year 2140 before the
supply cap of 21 million is reached.After Nakamoto rolled out Bitcoin in 2009, he
mined approximately 1.1 million Bitcoin and disappeared in 2010. He ceded the
responsibility of development to Gavin Andresen, formerly known as Gavin Bell,
who worked to see Bitcoin's decentralized vision realized. This meant that there was
no central authority, server, storage or administrator. All the parties were peer-to-peer
and the blockchain was distributed to all. The network existed merely to legitimize
and confirm the transactions. The price of Bitcoin dropped with the new uncertainty
surrounding these actions.However, control issues emerged when GHash.io, a
cryptocurrency mining pool, exceeded 51% hashing power for the first time. One of
Bitcoin's tenets is that power cannot be accumulated in too few hands, and GHash's
popularity meant that it was possible for coins to be double-spent, or counterfeited,
and they could push other miners out of being rewarded for their activity. Fortunately
for the Bitcoin industry, the parties voluntarily enacted provisions that redistributed
hashing power to acceptable, sustainable limits.

Artificial intelligence is also rising in trading applications. Blockchain technology

may be the key to determining what content is AI-driven versus uniquely human, a
differentiator that has great potential impact on the overall public adoption of
AI.However, despite the bumps in the road, blockchain technology is here to stay,
says Marion Laboure, a senior economist at Deutsche Bank Research. The $1 trillion
market cap for cryptocurrencies is simply too big to ignore, Laboure says.





3.2 Bitcoin Halving

One of the most pivotal events on Bitcoin's blockchain is a halving, when the reward
for mining is cut in half. As of 2023, network participants who validate transactions
are awarded 6.25 bitcoins (BTC) for each block successfully mined.The next halving
is expected to occur in April or May 2024, when the block reward will fall to 3.125.
Over time, the impact of each halving will diminish as the block reward approaches
zero.

KEY POITS

x A Bitcoin halving event occurs when the reward for mining Bitcoin
transactions is cut in half.
x Halvings reduce the rate at which new coins are created and thus lower the
available amount of new supply.
x Bitcoin last halved on May 11, 2020, resulting in a block reward of 6.25
BTC.The final halving is expected to occur in 2140 when the number of
bitcoins circulating will reach the maximum supply of 21 million.

Bitcoin has a total supply of 21 million. The underlying code ensures that only 21
million bitcoins will ever exist. Bitcoin’s finite supply is a strong economic statement
and supports its value system.Bitcoin is distributed through mining. The 21 million
bitcoins in existence are scheduled to be mined through the year 2140. That is, the last
bitcoin is expected to be mined in the year 2140. At the current rate of emission, the
unmined bitcoin will be exhausted before this speculated time. Almost 90% of
bitcoin’s total supply has been mined. About 900 bitcoins are mined per day,
currently.

To sustain the emission and increase scarcity, the number of bitcoin emitted per block
is regularly reduced. This process of reducing the bitcoin emission per block is known
as Bitcoin Halving.After a predetermined block height (a number that is used to
indicate a particular block), the amount of bitcoin emitted per block is reduced to half
of the previous number. For bitcoin new halving occurs after an interval of 210,000
blocks or 4 years.The most recent (2020) halving reduced bitcoin emission from 12.5
bitcoin per block to 6.25 bitcoin per block. This means that instead of 12.5 bitcoins,
miners will now be rewarded with 6.25 bitcoins per block mined.The halving of
bitcoin is both profitable and necessary.

When it comes to the economy of bitcoin, halving induces a pattern of scarcity. The
halving of bitcoin slows down supply in response to fluctuating demand. Over the
years, the demand for bitcoin has steadily increased, and this has been matched by a
steadily declining supply rate.It, to put it mildly, strengthens bitcoin's reputation as a
store of value. A slower supply compared to an increasing demand guarantees that
bitcoin will increase in value over time. The impact of halving on bitcoin's value goes
beyond the bounds of demand and supply economics when taking into account market
sentiments and the need for rare goods.According to current estimates, 3 million
bitcoins are lost due to misplaced wallet information, misplaced





 Figure 12: Bitcoin Halving chart

The initial Bitcoin release saw the development of the halving algorithm. A
justification for a continuous decrease in emissions, as well as a timeline for it, were
included in the white paper for Bitcoin.The first halving took place on November 28,
2012, over 10 million bitcoins and 210,000 blocks after the genesis block of bitcoin
was mined. The bitcoin mining incentive was originally 50 bitcoins every block,
however the first halving event decreased it to 25 bitcoins per block.The block reward
for bitcoin decreased from 12.5 to 6.25 bitcoin as a result of the most recent halving,
which took place on May 11, 2020, at a block height of 630,000.It is often thought
that in 2140, the last bitcoin will be mined. However, if the reward is halved every
210,000 blocks, there will always be a mining reward—assuming the blockchain still
exists at that time. The reward will just get smaller and smaller every time there is a
halving if the practice continues

3.3 Bitcoin Mining

Bitcoin mining is the practise of using computers or other mining equipment to take
part in the blockchain network of Bitcoin as a transaction processor and validator. A
mechanism known as proof-of-work (PoW) is used by Bitcoin. The reason it's called
proof-of-work is because it requires time and effort to solve the encrypted hash, which
serves as evidence that work was done.The word "mining" is figuratively used to
describe the process of obtaining valuable metals. A block is closed and placed in a
mining queue once it has received enough transactions to fill it. Bitcoin miners fight
to be the first to discover a number with a value lower than the hash once it has been
queued up for verification. The encrypted data of the hash is all included in a
hexadecimal number.

Bitcoin miners fight to be the first to discover a number with a value lower than the
hash once it has been queued up for verification. The encrypted data from the





 previous block is all contained in the hash, which is a hexadecimal number.A new
block is created when mining validates the validity of the transactions in an existing
one. Nodes follow up with further confirmations to further confirm the transactions. A
chain of data blocks is formed by this process, establishing the blockchain.

3.4 Bitcoin Transaction Life Cycle

Blockchain technology mostly relates to the digital transactions we conduct for our
own benefit. These transactions eventually find their way to the numerous blocks that
later comprise the Blockchain. Therefore, it is crucial to comprehend the Blockchain
technology's transaction life cycle.This lifetime tracks a single transaction as it passes
through each step of the blockchain integration process. The process of sending
money by the sender and receiving it by the recipient is referred to as a transaction.
Although conducted digitally, a blockchain transaction is also very comparable.

Let us understand the various stages in a blockchain transaction life cycle with the
help of an example.
Sourav and Suraj are two Bitcoin users. Sourav wants to send 1 bitcoin to Suraj.
1. First, Sourav gets Suraj’s wallet address (a wallet in the blockchain is a
digital wallet that allows users to manage their transactions). Using this
information, he creates a new transaction for 1 bitcoins from his wallet and
includes a transaction fee of 0.003 bitcoin.
2. Next, he verifies the information and sends the transaction. Each transaction
that is initiated is signed by a digital signature of the sender that is basically the
private key of the sender. This is done in order to make the transaction more
secure and to prevent any fraud.
3. Sourav’s wallet then starts the transaction signing algorithm which signs his
transaction using his private key.
4. The transaction is now broadcasted to the memory pool within the network.
5. This transaction is eventually accepted by the miners. These miners, group
this transaction into a block, find the Proof of Work, and assign this block a hash
value to be mapped into the blockchain.
6. This block is now placed on the Blockchain.
7. As this block gains confirmation, it is accepted as a valid transaction in the
network.
8. Once this transaction is accepted, Suraj finally gets his bitcoin.

Specifically transaction outputs are the foundation of transactions on the bitcoin

blockchain. They consist of indivisible chunks of bitcoins stored on the distributed
ledger managed by full nodes that are recognized by all network nodes as valid and
spendable. These spendable outputs are referred to as UTXOs(Unspent Transaction
Outputs).When person A sends person B some bitcoins during a transaction, person A
encrypts person B's wallet address in the transaction. When B receives the money, it
implies that the wallet address associated with that address has discovered UTXOs that
can be spent using one of the wallet's keys. Keep in mind that a bitcoin wallet is used to
hold keys rather than actual bitcoins. The total amount of UTXOs that the user's wallet
keys have access to and can spend is the recipient's balance following the transaction.
A wallet must scan the entire blockchain and add up the value of all UTXOs
controlled by keys it owns in order to determine the owner's balance. To achieve this,
they keep a database that serves as a quick reference for any UTXOs that can be





spent with the keys they control.Transaction outputs are discrete and indivisible units
of value denominated using satoshis, they can have an arbitrary value and once created
cannot be divided. This means that an unspent output is consumed whole. For example,
if we buy goods worth 3 bitcoins using 10 bitcoins, a UTXO worth 10 bitcoin is
generated, the transaction consumes the whole 10 bitcoins and produces two
transaction outputs, the first pays the seller 3 bitcoins and the second pays 7 bitcoins
back to the buyer's wallet. This is not the case for the Etherium blockchain as we shall
come to learn.A transaction input consists of previously recorded UTXOs, after the
transaction new outputs are created that will be used as inputs for future transactions.
What about the first transaction, this is the first transaction in a block, it has no inputs.
It is created by a successful miner who solved a puzzle specified by the network for an
incentive. Mining is a way to create new bitcoins, this incentive can be spent by the
miner.

Figure 12: Bitcoin Transaction Life Cycle

3.4 Bitcoin Payment Methods

Unsurprisingly, a Bitcoin payment is a financial transaction that a consumer conducts

to send money in Bitcoins to purchase products or services.A consumer needs a
cryptocurrency wallet with Bitcoins in it and the merchant's bitcoin wallet address in
order to make a bitcoin payment. A customer sends money using Bitcoin by entering
the recipient address into a specific field in their wallet, entering the amount to send,
and confirming the transfer.The security of online payments, the lack of chargebacks
and fraud, as well as the low transaction costs, were all appealing features for many
businesses that had previously adopted the Bitcoin payment method. Since
credit/debit card transactions, bank transfers, and ApplePay all involve traditional
currencies, accepting cryptocurrencies as a form of payment is more difficult than
using them. A user must have a cryptocurrency wallet (like Ledger) and a retailer
must offer a service that accepts Bitcoin as payment in order to deal in
cryptocurrencies. But lately, it's been easier to set up bitcoin acceptance on a business





website. The acceptance of cryptocurrency by businesses is made easy by many
services.To accept BTC or another cryptocurrency, a merchant needs to connect special
payment services or integrate technical solutions that generate a wallet address to which
customers can transfer funds. Bitcoin payment method is quite easy and fast. A customer
opens their crypto wallet, scans the QR code of the payment account on the merchant's
website, and confirms the action with a pin code (or other means). After funds are credited
to the specified account, the Bitcoin network recognises and confirms the transaction.
Thanks to blockchain technology, each transaction conducted is stored in a single ledger.
Everyone has access to information about all transactions, but none of the parties can
change or falsify the transaction record.

Benefits of paying in bitcoins

* o chargebacks

Crypto transactions cannot be disputed. Plus, blockchain technology verifies that funds are
available before the transaction is completed. This makes it nearly impossible for
customers to complete a purchase without sufficient funds in their accounts. What's more,
unlike credit card payments, the Bitcoin payment cannot be cancelled, and merchants
receive all funds immediately.

* Peer-to-peer transactions

Almost every e-commerce business relies on financial institutions, which complicates the
transaction processing and increases the transaction cost for the company. BTC is one of
the first cryptocurrencies to use peer-to-peer technology to facilitate instant payments. This
technology allows online payments to be sent directly from one side to the other,
bypassing any financial institutions, thereby reducing costs and increasing security.

* o banks fees

Banks and other intermediaries involved in the transaction charge fees (usually 2% to 5%
per transaction). With cryptocurrency, the payment is routed directly from the sender to the
recipient, eliminating all intermediaries and significantly reducing costs. But there is also a
drawback — high fees for withdrawing bitcoins to a card or e-wallet. Moreover, the
Bitcoin price is not stable, which may cause certain losses.

* Top-level security

The security of BTC payments is guaranteed by decentralisation: each block in the system
is protected by encryption, and the database is distributed among the participants in the
blockchain. It is almost impossible to wedge into a chain, cancel an operation, or assign a
different address.





* Fast access to the international market

Since cryptocurrency is decentralised, businesses avoid the hassle and expense associated
with international transaction fees and exchange rates. Thus, merchants worldwide have a
single form of currency that is uniformly applicable regardless of location. The presence of
Bitcoin as a payment method allows merchants to quickly and easily enter the global
market and increase profits.

Wallet

To make a payment using cryptocurrency, you'll also need to have a wallet application.
Wallets can be installed on your computer or mobile devices, and act as an interface for
accessing your crypto.Your wallet doesn't actually store crypto; it holds the keys you need
to access them—these are your private keys. Your wallet has a public key that is used in
transactions; it acts like an email address that that's used to send and receive
payments.Most cryptocurrency exchanges provide a wallet for their users that lets them
transfer funds to other exchange users or make payments using services that are
compatible with the exchange's services. Many wallets can use your device's camera to
scan QR codes to create unique addresses for sending and receiving crypto. Some even
have near-field communication capabilities that let you make touchless payments in
cryptocurrency.





 CHAPTER-4

ALTERATIVE COIS

Bitcoin, the world’s first decentralized cryptocurrency, has gained significant

popularity since its inception in 2009. As the demand for Bitcoin continues to rise, so
does the process of Bitcoin mining. Bitcoin mining is the reason behind Bitcoins
being circulated in the market.Bitcoin mining, a subset of the cryptocurrency
mining ecosystem focuses solely on the validation and security of Bitcoin transactions.
The process of validating and recording transactions on the Bitcoin network, the main
purpose of Bitcoin mining is validating transactions to prevent fraud and adding new
blocks to the blockchain that results in the decentralized creation of new Bitcoins. As
per a recent estimate, the Bitcoin price value is around US$27, 269.78 on the
exchange market. Over the years, the Bitcoin currency value has grown with future
promises to Bitcoin miners who usually validate transactions. Let’s now delve into
Bitcoin Mining: Pros and Cons.

4.1 Cons of Bitcoin Mining

1.Volatility and Market Risk: Bitcoin’s price volatility poses risks to miners. The
profitability of mining depends not only on the amount of Bitcoin mined but also on
its market value. Fluctuations in Bitcoin’s price can affect mining profitability,
potentially rendering some mining operations unprofitable, especially during bear
markets. Miners must carefully manage their operational costs and be prepared for
market uncertainties.

2.High Energy Consumption: Bitcoin mining is an energy-intensive process,

primarily due to the computational power required to solve complex mathematical
puzzles. As a result, mining operations consume significant amounts of electricity,
contributing to environmental concerns and carbon emissions. Critics argue that the
energy consumption associated with mining is unsustainable and exacerbates climate
change.

3.Cost of Equipment and Maintenance: Mining Bitcoin requires specialized

hardware, such as ASICs, which can be expensive to purchase and maintain.
Additionally, as the network difficulty increases, miners need to continually upgrade
their equipment to stay competitive. The capital expenditure and ongoing
maintenance costs can pose a barrier to entry for aspiring miners.

4.Long-Term Viability: A greater supply of coins result in a decrease in mining

rewards through a mechanism called halving. The decreased block rewards combined
with the increasing difficulty level can make mining less profitable over time. Miners
will need to rely more on transaction fees to sustain their operations with some
challenges too regarding profitability.

5.Centralization Concerns: While Bitcoin is designed to be decentralized, the reality

is that mining has become increasingly concentrated in the hands of a few large
players. Large-scale mining operations have access to more resources, allowing them
to dominate the network and potentially control the consensus process. This





concentration of power raises concerns about the centralization of Bitcoin mining and
the security of the network.

4. 2 Forking In Block chain

A Bitcoin hard fork is a protocol change that creates a new set of rules for the
computers that make up the blockchain network. If a hard fork is implemented
without the complete agreement of other network participants, it can cause the
cryptocurrency network to split into two.

A hard fork is different from a soft fork, a protocol change that does not reject the
pre-existing rule set. A hard fork requires all network participants to upgrade to the
new rule set and reject the old rules, while a soft fork will continue to accept
transactions created by the old rule set.The terms were adopted from software
programming, where forks can sometimes occur when two groups of developers
choose to build out competing versions of the same project. However, a blockchain
hard fork usually results in two distinct ledgers and transaction networks—
effectively creating a new cryptocurrency.

Over the years, many developers have attempted to hard fork the Bitcoin protocol,
either to fix the perceived flaws of the original system or to enrich themselves. There
have been dozens of Bitcoin hard forks, but none have had the staying power of the
original.It is through this forking process that various digital currencies with names
similar to bitcoin have been created. These include Bitcoin Cash and Bitcoin Gold,
among others. For the casual cryptocurrency investor, it can be difficult to tell the
difference between these cryptocurrencies and to map the various forks onto a
timeline. Below, we'll walk through many of the most important forks to the bitcoin
blockchain over the past several years.

Bitcoin Hard Forks

In 2009, shortly after releasing bitcoin, Satoshi mined the first block on the bitcoin
blockchain. This has come to be referred to as the Genesis Block, as it represented
the founding of the cryptocurrency as we know it. Satoshi was able to make
numerous changes to the bitcoin network early on in this process; this has become
increasingly difficult and bitcoin's user base has grown by a tremendous margin.2

The fact that no one person or group can determine when and how bitcoin should be
upgraded has similarly made the process of updating the system more complex. In
the years following the genesis block, there have been several hard forks.

The most common examples of hard forks are Bitcoin Cash (BCH), Bitcoin SV
(BSV), and Bitcoin Gold (BTG). The Ethereum DAO hack in 2016 is another event
that led to an Ethereum hard fork. Ethereum was split into Ethereum Classic (ETC)
and standard Ethereum (ETH).



Bitcoin Soft Forks

A soft fork is a backward-compatible upgrade of the blockchain protocol. The

upgrade allows nodes running previous versions to interact with other nodes, although
with some functional limitations.Unlike hard forks, soft forks do not generate a new
cryptocurrency coin. However, the network can slowly shift to the new rules as more
users accept the upgrade. Soft forks make cryptocurrencies more sustainable in the
long run.

A typical rule change in soft forks involves changing the block size limit or block
time. These are simple changes to implement without negatively affecting many users
on the blockchain network.

Examples: Bitcoin: Segregated Witness (SegWit),Taproot Upgrade (ovember

2021)

Ethereum: Beacon Chain (December 2020),Bellatrix Upgrade (September 2022)

4. 3 amecoin

One definition of Namecoin is "a peer-to-peer naming system based on Bitcoin." It is

a token for a blockchain that initially split off from the blockchain of Bitcoin. A
blockchain fork occurs when a modification is made that renders the new branch
incompatible with the primary branch. As a blockchain and token for a decentralized
domain name system (DNS), Namecoin was created. The makers of Namecoin
describe it as "an experimental open-source technology which
improves decentralization, security, censorship resistance, privacy, and speed of
certain components of the internet infrastructure such as DNS and identities."
Namecoin uses the concept of data name/value pairs attached to a coin. A
name/value pair is a data value and a name used to identify the value in a database.
"Name-Value Pair Support."

In this case, the name/value pair is a computer-readable numeric address with a

human-readable name. A token for the name/value pair is created, and the token
holder owns the name/value pair. Thus, a Namecoin is used to establish ownership of
a domain name.

How Is amecoin Different From Bitcoin?

Namecoin features several Bitcoin similarities, currently the top digital currency by
market capitalization. Namecoin's fork was initiated to create a new way to establish
ownership of the human-readable addresses assigned to the machine-readable
addresses used on the web—domain names.





The main difference between Bitcoin and Namecoin is the purpose of the technology.
Bitcoin creators wanted a viable alternative currency; Namecoin creators wanted a
domain naming system. Because of this, there are different consensus and protocol
rules that exist within each project. Certain features are necessary when conducting
financial transactions that are not necessary when completing name registrations for
new internet domains.

Because Namecoin utilizes the same proof-of-work (PoW) algorithm as Bitcoin, you
can merge-mine Namecoins without additional hardware (and without any extra
electricity) if you are already mining Bitcoin. Both Bitcoin and Namecoin are limited
to a total of 21 million coins. The critical difference in Namecoin is that tokens are
used up as domain names are registered. The cost of one domain name to Namecoin's
usable supply is .01 NMC.

4.4 Zcash

ZCash emerged in 2016 when a group of scientists decided they wanted to create a
cryptocurrency similar to Bitcoin but with some additional features. They developed
a fork of the Bitcoin blockchain, with enhanced user security and anonymity. The
scientists first invented Zerocoin, which became Zerocash not too long after its initial
release. Eventually, the cryptocurrency was renamed ZCash.

ZCash is forked from the original Bitcoin codebase. In 2014, Eli Ben-Sasson,
Alessandro Chiesa, Christina Garman, Matthew Green, Ian Miers, Eran Tromer, and
Madars Virza believed there were security flaws in the way transactions were tracked
through Bitcoin's blockchain. In their whitepaper outlining their ideas, they called
their crypto currency Zerocash.The scientists created Zerocoin (Electric Coin
Company) in 2015. In 2016, the name changed to Zcash, by the Electric Coin
Company.ZCash uses the zk-SNARK security protocol to ensure the parties involved
in a transaction are verified without revealing any information to each other or the
network.

Zk-Snark allows for fully shielded transactions in which the sender, recipient, and
amount are encrypted. This feature is a large deviation from other cryptocurrencies,
where transaction transparency is an underlying concept aside from securing user
information.

How Is ZCash Different from Bitcoin?

The Bitcoin community prides itself on transparent transactions while maintaining

anonymity. However, anyone interested or who has a stake in a transaction could
trace the parties within it.ZCash doesn’t eliminate transaction information. Instead, it
encrypts it so that it cannot be tracked. The ZCash blockchain is still encrypted, but
the security protocol zk-SNARK adds additional user security and anonymity.

Bitcoin uses the hashing algorithm SHA-256. ZCash uses Equihash, which is
incompatible with hardware and software designed for Bitcoin mining. It also has
larger blocks and increased hashing times, which increases the network's hash rate. A





cryptocurrency’s hash rate is the processing power of the network of miners—it's a
measure of how fast the transactions can be verified and validated to open a new
block.

How to Mine ZCash

New coins are produced by mining. You can use an application-specific integrated
circuit (ASIC) miner or your computer if it has a graphics card capable of mining.
Operating systems supported by ZCash are Docker, Debian/Ubuntu, Mac, and other
Linux flavors. However, ZCash recommends using an ASIC miner and mining pool
because the network difficulty has gotten high enough that PC mining is not worth
the time and costs.

4.5 Prime Coin

In peer-to-peer cryptocurrency designs, a new sort of proof-of-work based on

looking for prime integers is introduced. Cunningham chains of the first kind,
Cunningham chains of the second kind, and bi-twin chains are three varieties of
prime chains that are acceptable as proofs of work. In order to maintain the security
feature of Nakamoto's Bitcoin, prime chain is connected to block hashes. A
continuous difficulty evaluation system is created to allow prime chain to function as
adjustable-difficulty proof-of-work in a cryptocurrency similar to Bitcoin.

Useful PoW

Primecoin's Prime Chain Proof of Work secures the blockchain through the search
for Twin Prime Chains and Cunningham Chains.

Energy Multi-Use

Primecoin is the first cryptocurrency to achieve energy multi-use, offering an

alternative paradigm for blockchain security.

Mystery of Sciences

Primecoin pays homage to the deepest mysteries in Arithmetics, which are now more
and more seen as deeply connected to the mysteries of our physical Universe.

Smooth Experience

Primecoin's transaction confirmation is both faster and smoother.. Primecoin adjusts

both network difficulty and mining output smoothly.

Gold Simulation





As a cryptocurrency Primecoin simulates Gold better. Gold has restricted production
rather than artificial supply cap, which may compromise network security.\

Balanced Inflation

Primecoin's security is independent of network transaction fee, and only provided for
through balanced inflation to compensate for mining.

4.6 Litecoin

One of the first alternative coins to be developed was Litecoin (LTC). A former
Google developer named Charlie Lee started the project in October 2011. Despite
sharing many similarities with Bitcoin, Litecoin has seen some noteworthy changes.
Due of this, Litecoin has been able to grow and establish itself as a significant player
in the cryptoasset industry.
Litecoin is the "Silver to Bitcoin's Gold" and has its own blockchain. While Litecoin
aspires to play the part of digital (metal) money, Bitcoin can be compared to digital
gold.
Open-source cryptocurrency Litecoin was developed in 2011. Similar to Bitcoin, the
main goal of Litecoin is to function as a digital currency that can be safely, swiftly,
and cheaply transacted between peers without the use of a middleman. Transactions
become incredibly quick and cheap as a result. Its founder and former Google
employee, Charlie Lee, describes it as an addition to bitcoin.

Because most of the innovation came from Bitcoin, the changes made to the Bitcoin
blockchain to create the Litecoin blockchain only required minimal development
work. The advantage of Litecoin is that these few modifications are extremely
substantial. As a digital currency, Litecoin rapidly encountered the same issue as
Bitcoin: high volatility with significant price swings in both directions. In the
beginning, Litecoin too had some issues establishing a reputation. Cryptocurrency
fans were devoted to Bitcoin when it first emerged. However, by capitalizing on its
reputation as "Bitcoin's little brother" and Charlie Lee's social media clout, Litecoin
was able to create a community that believes in its potential and future price growth.

Litecoin is one of the most famous cryptocurrencies and is found on the majority of
trading platforms. You can buy them on Coinhouse with euros or trade cryptos for
Litecoin.
You can then store your Litecoins directly on our platform with our integrated wallets,
linked to your account and secured with Ledger technology. Because Litecoin is so
well known, it can also be stored in most personal wallets and hardware wallets. The
French company Ledger is the most famous provider of these wallets.

4.7 Other Consensus Mechanisms

4.7.1 Proof Of Stake

Proof-of-stake is a cryptocurrency consensus mechanism for processing transactions

and creating new blocks in a blockchain. A consensus mechanism is a method for
validating entries into a distributed database and keeping the database secure. In the





case of cryptocurrency, the database is called a blockchain—so the consensus
mechanism secures the blockchain. Proof-of-stake reduces the amount of
computational work needed to verify blocks and transactions. Under proof-of-work,
hefty computing requirements kept the blockchain secure. Proof-of-stake changes the
way blocks are verified using the machines of coin owners, so there doesn't need to
be as much computational work done. The owners offer their coins as collateral—
staking—for the chance to validate blocks and earn rewards. Validators are selected
randomly to confirm transactions and validate block information. This system
randomizes who gets to collect fees rather than using a competitive rewards-based
mechanism like proof-of-work.

To become a validator, a coin owner must "stake" a specific amount of coins. For
instance, Ethereum requires 32 ETH to be staked before a user can operate a
node.1 Blocks are validated by multiple validators, and when a specific number of
validators verify that the block is accurate, it is finalized and closed.

How Is Proof-of-Stake Different From Proof-of-Work?

Both consensus mechanisms help blockchains synchronize data, validate

information, and process transactions. Each method has proven successful at
maintaining a blockchain, although each has pros and cons. However, the two
algorithms have very different approaches.

Under PoS, block creators are called validators. A validator checks transactions,
verifies activity, votes on outcomes, and maintains records. Under PoW, block
creators are called miners. Miners work to solve for the hash, a cryptographic
number, to verify transactions. In return for solving the hash, they are rewarded with
a coin.

To "buy into" the position of becoming a block creator, you need to own enough
coins or tokens to become a validator on a PoS blockchain. For PoW, miners must
invest in processing equipment and incur hefty energy charges to power the
machines attempting to solve the computations.

The equipment and energy costs under PoW mechanisms are expensive, limiting
access to mining and strengthening the security of the blockchain. PoS blockchains
reduce the amount of processing power needed to validate block information and
transactions. The mechanism also lowers network congestion and removes the
rewards-based incentive PoW blockchains have.

Proof of Stake Proof of Work

Block creators are called validators Block creators are called miners
Participants must own coins or tokens to Participants must buy equipment and
become a validator energy to become a miner
Energy efficient Not energy efficient
Security through community control Robust security due to expensive upfront
requirement
Validators receive transactions fees as Miners receive block rewards
rewards





4.7.2 Proof Of Burn

What is proof of burn?

Proof of burn is a consensus mechanism that requires the users to destroy or "burn" a
certain amount of coins in order to participate in the network. The more coins a user
burns, the higher their chances of being selected as a validator. Validators receive
rewards in the form of transaction fees and newly minted coins. PoB aims to mimic
the concept of proof of work (PoW), which is the original consensus mechanism of
Bitcoin, but without the high energy consumption and hardware requirements.

Benefits of proof of burn

Proof of burn has some advantages over proof of stake and proof of work. First, it
reduces the risk of centralization and collusion, as the validators have to prove their
commitment to the network by burning their own coins. Second, it eliminates the
problem of "nothing at stake", which occurs when validators have no incentive to act
honestly and can stake on multiple competing chains. Third, it creates a deflationary
effect on the coin supply, as the burned coins are permanently removed from
circulation.

Challenges of proof of burn

Proof of burn also has some drawbacks and challenges that need to be addressed. First,
it may not be sustainable in the long run, as the coin supply may eventually run out or
become too scarce to support the network. Second, it may not be fair or accessible to
all users, as the users with more coins have more influence and power over the
network. Third, it may not be compatible with some regulatory frameworks or legal
jurisdictions, as the act of burning coins may be considered as a taxable event or a
waste of resources.

4.7.3 Proof Of Activity

Proof of Activity is a hybrid consensus mechanism that is a combination of two other

Blockchain consensus mechanisms: Proof of Work (POW) and Proof of Stake (POS).
It attempts to leverage the best of both PoW and PoS consensus mechanisms to
validate and generate new blocks in the Blockchain.

How does Proof of Activity work?

(i) The mechanism in Proof of Authority goes through two phases before a new block
is ready to be added to the blockchain.

First phase: The first phase uses the approach from Proof of Work. The miners on
the network, with higher computing power, compete to be the first to solve a complex
mathematical puzzle to find a valid hash for the block. After finding the valid hash, a





new block is generated. The new block will have a header and the reward address of
the winning miner. The block header contains information like Merkel root,
Timestamp, Block Version number, Difficulty Target, Nonce, and Previous Hash.

Second phase: Once the block is generated, the system is directed into the second
phase, i.e., Proof of Stake. In this phase, a group of validators is randomly selected
from the network. The chances of getting selected increase with the number of coins a
participant owns in that network — just like in traditional Proof of Stake. The
validators will be in charge of validating the generated block and signing it to confirm
its validity.

Once the selected validators have signed or confirmed the block, the block is
completed. The complete block is then added to the Blockchain.

(ii) The winning miner and the validators who played a role in contributing to the new
block will be rewarded.

Advantages of Proof of Activity

(i) PoA mechanism makes the Blockchain more secure than either POW or POS
separately. The probability of a 51% attack drops nearly to 0%. A successful attack
means gaining control of over 50% of a Blockchain network. This can happen if an
individual or a group has control of at least 51% of the entire network’s mining
computing power like in PoW, plus at least 51% of the coins that are staked in the
network are required to be owned like in PoS. As a result, the loss is significantly
more than anyone could gain from the attack.

Disadvantages of Proof of Activity

(i) Proof of Activity carries with it problems that POW receives criticism for. Similar
to POW, Proof of Activity uses high computational power for solving the
mathematical puzzle. This means that this consensus mechanism also results in
relatively high power consumption and the need for powerful hardware.

(ii) Proof of Activity doesn’t have any solution to stop the double signing by the
validators.





 CHAPTER-5

ETHEREUM BLOCK CHAI

At its core, Ethereum is a decentralized global software platform powered

by blockchain technology. It is most commonly known for its native cryptocurrency,
ether (ETH).Ethereum can be used by anyone to create any secured digital
technology. It has a token designed to pay for work done supporting the blockchain,
but participants can also use it to pay for tangible goods and services if accepted.

Ethereum is designed to be scalable, programmable, secure, and decentralized. It is

the blockchain of choice for developers and enterprises creating technology based
upon it to change how many industries operate and how we go about our daily
lives.It natively supports smart contracts, an essential tool behind decentralized
applications.1 Many decentralized finance (DeFi) and other applications use smart
contracts in conjunction with blockchain technology.

Learn more about Ethereum, its token ETH, and how they are an integral part of non-
fungible tokens, decentralized finance, decentralized autonomous organizations, and
the metaverse.

Vitalik Buterin, credited with conceiving Ethereum, published a white paper to

introduce it in 2014.3 The Ethereum platform was launched in 2015 by Buterin and
Joe Lubin, founder of the blockchain .

The founders of Ethereum were among the first to consider the full potential of
blockchain technology beyond just enabling the secure virtual payment method.

Since the launch of Ethereum, ether as a cryptocurrency has risen to become the
second-largest cryptocurrency by market value. It is outranked only by Bitcoin.
Ethereum, like other cryptocurrencies, involves blockchain technology. Imagine a
very long chain of blocks. All of the information contained in each block is added to
every newly-created block with new data. Throughout the network, an identical copy
of the blockchain is distributed.

This blockchain is validated by a network of automated programs that reach a

consensus on the validity of transaction information. No changes can be made to the
blockchain unless the network reaches a consensus. This makes it very secure.

Consensus is reached using an algorithm commonly called a consensus mechanism.

Ethereum uses the proof-of-stake algorithm, where a network of participants called
validators create new blocks and work together to verify the information they
contain. The blocks contain information about the state of the blockchain, a list of
attestations (a validator's signature and vote on the validity of the block),
transactions, and much more.

Proof-of-Stake Mechanism





Proof-of-stake differs from proof-of-work in that it doesn't require the energy-
intensive computing referred to as mining to validate blocks. It uses a finalization
protocol called Casper-FFG and the algorithm LMD Ghost, combined into a
consensus mechanism called Gasper, which monitors consensus and defines how
validators receive rewards for work or are punished for dishonesty.7

Solo validators must stake 32 ETH to activate their validation ability. Individuals can
stake smaller amounts of ETH, but they are required to join a validation pool and
share any rewards. A validator creates a new block and attests that the information is
valid in a process called attestation, where the block is broadcast to other validators
called a committee who verify it and vote for its validity.

Validators who act dishonestly are punished under proof-of-stake. Validators who
attempt to attack the network are identified by Gasper, which identifies the blocks to
accept and reject based on the votes of the validators.

Wallets

Ethereum owners use wallets to store their ether. A wallet is a digital interface that
lets you access your ether stored on the blockchain. Your wallet has an address,
which is similar to an email address in that it is where users send ether, much like
they would an email.

5.1 Ethereum Vs. Bitcoin

Ethereum is often compared to Bitcoin. While the two cryptocurrencies have many
similarities, there are some some important distinctions.

Ethereum is described by founders and developers as “the world’s programmable

blockchain,” positioning itself as an electronic, programmable network with many
applications.The Bitcoin blockchain, by contrast, was created only to support the
bitcoin cryptocurrency.

The maximum number of bitcoins that can enter circulation is 21 million.14 The
amount of ETH that can be created is unlimited, although the time it takes to process
a block of ETH limits how much ether can be minted each year.15 The number of
Ethereum coins in circulation is more than 122 million.16

Another significant difference between Ethereum and Bitcoin is how the respective
networks treat transaction processing fees. These fees, known as gas on the Ethereum
network, are paid by the participants in Ethereum transactions. The fees associated
with Bitcoin transactions are absorbed by the broader Bitcoin network.

Ethereum, as of September 2022, uses a proof-of-stake consensus mechanism.

Bitcoin uses the energy-intensive proof-of-work consensus, which requires miners to
compete for rewards.

Bitcoin Ethereum
Basis





 Bitcoin Ethereum
Basis

Ethereum is a decentralized
Bitcoin (abbreviation: BTC; global software platform
sign: ) is a decentralized digital powered by blockchain
currency that can be transferred technology. It is most
on the peer-to-peer bitcoin commonly known for its
network. native cryptocurrency, ether
Definition (ETH).

The word bitcoin was defined Ethereum was conceived in

in a white paper published on 2013 by programmer Vitalik
31 October 2008. The currency Buterin, and then went live on
History began use in 2009. 30 July 2015.

The purpose of Ethereum was

The purpose of bitcoin was to to utilize blockchain
replace national currencies technology for maintaining a
during the financial crisis of decentralized payment
2008. network and storing computer
Purpose code.

Although bitcoin do have smart

Ethereum allows us to create
contracts, they are not as
smart contracts. Smart
flexible or complete as
contracts are computer codes
Ethereum smart contracts.
that is stored on a blockchain
Smart contracts in Bitcoin does
and executed when the
not have all the functionality
predetermined terms and
Smart that a programming language
conditions are met.
Contracts would give them.

Smart contracts on Ethereum

Smart contracts on Bitcoin are
Smart Contract are written in programming
written in programming
Programming languages like Solidity,
languages like Script, Clarity.
Language Vyper, etc.

Ethereum transactions may

Generally, bitcoin transactions
contain some executable
are only for keeping notes.
Transactions code.

Ethereum runs on
Bitcoin runs on the SHA-
the Keccak-256 hash
256 hash algorithm.
Hash Algorithm algorithm.

Consensus The Proof-of-Work (PoW) is The Proof-of-Stake is the



 Bitcoin Ethereum
Basis

Mechanism the consensus mechanism used consensus mechanism used by

by the Bitcoin network. Ethereum.

The block time of bitcoin is 10 The block time of Ethereum is

Block Time minutes. 14 to 15 seconds.

The bitcoin blockchain has a The Ethereum blockchain

Block Limit block limit of 1 MB. does not have a block limit.

5.2 Smart Contract In Ethereum

Smart contracts are simply programs stored on the blockchain that are executed when
certain conditions are met. They are usually used to automate the execution of a
contract so that all participants can be immediately sure of the result without
involving an intermediary or wasting time. They can also automate the workflow and
trigger the next action when the conditions are met.A smart contract is a self-
executing program that automates the actions required in an agreement or contract.
Once completed, the transactions are trackable and irreversible.

Smart contracts permit trusted transactions and agreements to be carried out among
disparate, anonymous parties without the need for a central authority, legal system,
or external enforcement mechanism. Ethereum has smart contract capabilities
inherent to its blockchain. The Bitcoin blockchain received smart contract abilities
after its Taproot upgrade, which allowed it to communicate to layers that have smart
contracts enabled on their blockchains. he most popular smart contract platform
is Ethereum, which is also a widely used cryptocurrency platform. The Ethereum
community has developed the Solidity language for writing smart contract
applications that are designed to run on the Ethereum Virtual Machine (EVM)
execution environment.Other popular programming environments include the
WebAssembly (WASM) language and the Digital Asset Modeling Language
(DAML). WASM allows developers to create smart contracts that can run in a web
browser and be integrated into blockchains and other distributed ledgers using
various programming languages such as C, JavaScript, TypeScript and Rust. DAML
is an enterprise-focused language that is designed to model various business use
cases, and which also helps to enforce privacy safeguards.

How smart contracts work

Smart contracts work by following simple “if/when…then…” statements that are

written into code on a blockchain. A network of computers executes the actions when
predetermined conditions have been met and verified. These actions could include
releasing funds to the appropriate parties, registering a vehicle, sending notifications,





or issuing a ticket. The blockchain is then updated when the transaction is completed.
That means the transaction cannot be changed, and only parties who have been
granted permission can see the results.

Within a smart contract, there can be as many stipulations as needed to satisfy the
participants that the task will be completed satisfactorily. To establish the terms,
participants must determine how transactions and their data are represented on the
blockchain, agree on the “if/when...then…” rules that govern those transactions,
explore all possible exceptions, and define a framework for resolving disputes.

Then the smart contract can be programmed by a developer – although increasingly,

organizations that use blockchain for business provide templates, web interfaces, and
other online tools to simplify structuring smart contracts.

Benefits of smart contracts

Speed, efficiency and accuracy

Once a condition is met, the contract is executed immediately. Because smart

contracts are digital and automated, there’s no paperwork to process and no time spent
reconciling errors that often result from manually filling in documents.

Trust and transparency

Because there’s no third party involved, and because encrypted records of transactions
are shared across participants, there’s no need to question whether information has
been altered for personal benefit.

Security
Blockchain transaction records are encrypted, which makes them very hard to hack.
Moreover, because each record is connected to the previous and subsequent records
on a distributed ledger, hackers would have to alter the entire chain to change a single
record.

Savings
Smart contracts remove the need for intermediaries to handle transactions and, by
extension, their associated time delays and fees.

Automatic updates

Thanks to its technological and autonomous nature, the terms of the contract are
automatically adjusted and updated, thus dispensing not only with the presence of
intermediaries, but also with new processes that carry out these updates.

Cost reduction

This advantage is also linked to the elimination of intermediaries. By not having to

rely on a third party to verify the terms of the contract and provide the necessary
confidence, the associated costs are reduced. Intermediary fees disappear in this type
of contract.



 Figure 13: Working of Smart Contact

Common issues and challenges with smart contracts

There are numerous issues and challenges that need to be considered when planning a
smart contract rollout.

Security. Smart contracts secure certain key elements in a business process that
involves multiple parties. However, the technology is new, and hackers continue to
identify new attack surfaces that allow them to compromise the intent of the
businesses that specified the rules. In the early days of Ethereum, smart contract
hackers managed to steal $50 million in cryptocurrency. The IEEE has also
documented concerns about inconsistencies in the tools used to detect different
vulnerabilities in smart contract security.

Integrity. One oracle (one of the streaming data sources that sends event updates)
needs to protect against hackers faking events that trigger smart contracts into
executing when they should not. It must be programmed to accurately generate
events, which can be challenging for complex scenarios.

Alignment. Smart contracts can speed the execution of processes that span multiple
parties regardless of whether they are in alignment with all parties' intention and
understanding. But this capability can also magnify the impact of the damage that can
occur when events spiral out of control, particularly when there is no way to stop or
unwind unintended behavior. The Gartner research firm has noted that this issue poses
challenges in smart contract scalability and manageability that have yet to be fully
addressed.


Management. Smart contracts are complicated to implement and manage. They are
often configured in ways that make them difficult or impossible to change. Although
this could be considered a security advantage, the parties cannot make any changes to
the smart contract agreement or incorporate new details without developing a new
contract.

5.3 Ethereum Forks

A fork in the cryptocurrency world is known as a change in that currency's protocol.

This type of change makes previous versions of blocks valid and the current
version invalid (or the other way around).

Ethereum Hard Forks

The main reason why we’re specifically talking about Ethereum HARD forks is that
they are so detrimental and significant to Ethereum’s well-being, that it becomes
impossible to ignore.

Ethereum Classic, EtherZero and Metropolis - these are the main three Ethereum
hard forks, and we’ll talk about each of them to an extent.

Ethereum Classic

This is the very first hard fork that Ethereum had. It is also the most controversial of
all of the ETH's hard forks.

Ether Zero

EtherZero is another well-known Ethereum fork. It’s not as extreme as Ethereum

Classic - this one is aimed towards improvement rather than a revolution.
EtherZero aims to improve the transaction rate speeds that occur within the
Ethereum network. Furthermore, this Ethereum fork is determined to make these
transactions completely free.

Metropolis

Metropolis is the current Ethereum fork. This fork wasn’t created because of any
extreme situations, though - it’s part of a plan to improve the existing Ethereum
blockchain.

Metropolis is composed of three phases. The phase of “Constantinople” is currently

the active one (Byzantium is considered to have ended).

Serenity

Ethereum Serenity is considered to be the last big step in Ethereum’s development.

Serenity is dedicated to one goal, and one goal only - to transition the Ethereum
blockchain from PoW to PoS.



Ethereum Fork Summary

Cryptocurrency forks are events within the cryptocurrency's blockchain that aim to
change certain specific aspects of the crypto in question. There are two types of forks
- soft ones and hard ones.

Soft forks change minor and cosmetic issues, while hard forks are usually
complete game-changers.

Throughout Ethereum’s lifespan, there have been (and still will be) three big ETH
hard forks - Ethereum Classic, EtherZero, and Metropolis.

The Metropolis Ethereum fork (which is the current fork) ultimately aims to prepare
Ethereum for the transition between a Proof of Work system-based altcoin into a
Proof of Stake one.

Serenity will be the final step in completing the above-mentioned task and is
scheduled to happen at some point in time in 2023.At a certain point in time, the
development team behind Ethereum noticed that the decentralized autonomous
organization (DAO) that Ethereum had been using was hacked. The decision to
implement a hard fork that would restore all of the stolen crypto coins was swift, but
it also received quite some backlash.

Ethereum supporters and enthusiasts divided into two camps. The first ones we’re
happy that the team behind this cryptocurrency was going to take quick action and not
let such a thing pass. A hard fork would mean that the developers have learned their
lesson and are now better prepared for similar future attempts of a hack or a breach.

5.4 Transactions in Ethereum

Gas is the fee required to successfully conduct a transaction or execute a contract on

the Ethereum blockchain platform. Fees are priced in tiny fractions of the
cryptocurrency ether (ETH)—denominations called gwei (10-9 ETH). Gas is used to
pay validators for the resources needed to conduct transactionsThe exact price of the
gas is determined by supply, demand, and network capacity at the time of the
transaction.

Gas refers to the unit that measures the amount of computational effort required to
execute specific operations on the Ethereum network.

Since each Ethereum transaction requires computational resources to execute, each

transaction requires a fee. Gas refers to the fee required to execute a transaction on
Ethereum, regardless of transaction success or failure.



Transaction complexity is measured by computational effort, which is delineated in
units of "gas." For example, sending ETH from one wallet to another (one of the
simplest transactions you can make), may consume up to 21,000 units of gas. One
unit of gas is equal to 0.000000001 ETH (10-9 ETH). Note that this denomination of
ETH is also known as a giga-wei, or gwei.

"Gas limit" is the maximum amount of work you're estimating a validator will do on
a particular transaction. A higher gas limit usually means the user believes the
transaction will require more work. "Gas price" is the price per unit of work done. So,
a transaction cost is the gas limit multiplied by the gas price. Many transactions also
include tips, which are added to the gas price (the more you pay, the faster your
transaction is completed). The lower a user estimates their gas limit, the lower the
priority in the queue they will be. Ethereum validators, who perform the essential
tasks of verifying and processing transactions on the network, are awarded this fee in
return for staking their ether and verifying blocks.

Gas and the Ethereum Virtual Machine (EVM)

Etherium, as platform and system, is designed to be used by others to create more use
cases for blockchain and cryptocurrency. For this reason, it is commonly called the
Ethereum Virtual Machine, because applications can be created that run on it. The
EVM is essentially a large virtual computer, like an application in the cloud, that
runs other blockchain-based applications within it.

Many decentralized application, cryptocurrencies, and tokens have been created

using the EVM. Because the Ethereum blockchain is part of the EVM, the
cryptocurrencies built on that blockchain require gas fees. For example, a popular
token built on Ethereum's blockchain is DAI. Because it uses the Ethereum
blockchain, users need to pay gas fees in gwei to conduct

Why Do I Have to Pay a Gas Fee?

The Ethereum gas fee exists to pay network validators for their work securing the
blockchain and network. Without the fees, there would be few reasons to stake ETH
and become a validator. The network would be at risk without validators and the
work they do.

How Is the Gas Fee Calculated?

The gas fee is calculated using Gas Limit * Gas Price per Unit.1 So if the gas limit
was 20,000 and the price per unit was 200 gwei, the calculation would be 20,000 *
200 = 4,000,000 gwei or 0.004 ETH.

Gas fees are used on the Ethereum blockchain and network as incentives for users to
stake their ETH. Staking works to secure the blackchain because it discourages
dishonest behavior. For staking their ETH, owners are given small payments as a
reward for helping to secure the blockchain and help it function.





Fees are determined by the amount of network traffic, supply of validators, and
demand for transaction verification. The higher the demand and traffic, the higher
the fees. When traffic and demand is lower, fees become lower.

5.5 Consensus

GHOST protocol is a chain selection rule that makes use of previously orphaned
blocks and adds them to the main blockchain and partially rewards the miner also.
This increases the difficulty of an attack on the network as now winning miner is not
the only one who owns the computing power.

Ethereum uses a simpler version of this protocol, where the chain that has most
computational effort spent on it in order to build it is identified as the definite
version.
Another way of looking at it is to find the longest chain, as the longest chain must
have been built by consuming adequate mining effort. Greedy Heaviest Observed
Subtree (GHOST) was first introduced as a mechanism to alleviate the issues arising
out of fast block generation times that led to stale or orphan blocks. In GHOST, stale
blocks are added in calculations to figure out the longest and heaviest chain of
blocks. Stale blocks are called Uncles or Ommers in Ethereum.

Implementation of GHOST Protocol

Bitcore, a bitcoin development team implemented the GHOST Protocol. This is also
the first public implementation of the GHOST protocol.

GHOST Protocol and Bitcoin:

The two are complementary, not mutually exclusive.

x They can be used together in various ways to maximize their effectiveness.
x For example, a GHOST channel can be used to exchange coins or other
digital assets that do not benefit from the benefits of Bitcoin’s block verification
times and consensus process (e.g., coins that require trustless processing such as
stablecoins).

How Does the GHOST Protocol Work?

x GHOST works by sending dummy/empty packets or ‘ghosts’ to the receiver.

x A sender sends a ghost packet with a header and encrypted payload, but no
block reward (i.e., no transactions), and waits for an empty packet from the
receiver.
x If an empty packet is received, then it means that the receiver received the
ghost, so he can send up to 2*pending txns to the network without broadcasting
them.
x When more than one node has a pending transaction in the queue, then there
must be some sort of protocol in place for deciding which node will broadcast its
block (i.e., which node will win).





5.6 Cryptocurrency Vs Token

x A non-tangible item that is created, traded, and stored in a digital format is

known as a digital asset. Digital assets in the context of blockchain include
cryptocurrencies and crypto tokens. The use of cryptography, a sophisticated
encryption technology that ensures the legitimacy of crypto assets by eliminating
the potential of counterfeiting or double-spending, distinguishes cryptocurrency
and tokens as special subclasses of digital assets. Cryptocurrencies, like BTC or
ETH, are the native assets of a blockchain, whereas tokens are created as part of
a platform that is built on an existing blockchain, like the numerous ERC-20
tokens that make up the Ethereum ecosystem. This is the key difference between
the two classes of digital assets.

x A cryptocurrency is a digital asset that may be traded, used as a means of

exchange, and kept as a store of value on a blockchain network.
A cryptocurrency is often referred to as a blockchain’s native currency because
the blockchain protocol on which it operates directly issues them. Typically,
cryptocurrencies act as a store of value or a medium of exchange. A resource
used to purchase goods or services are known as a medium of exchange. The
following traits are frequently present in cryptocurrencie.

x Crypto coins are native to their own blockchain. The Bitcoin blockchain coin
is BTC. The Ethereum blockchain has ETH. And the Litecoin blockchain uses
LTC. These crypto coins are primarily designed to store value and work as a
medium of exchange, similar to traditional currencies. This is why crypto coins
are also referred to as cryptocurrencies.

x One of the other unique things about coins is the way they come into being.
Generally, crypto coins are either mined using a Proof of Work (PoW) consensus
mechanism or earned via a Proof of Stake (PoS) mechanism.

x Blockchains rely on cryptocurrency to incentivize individuals, groups, and

sometimes even organizations to run the network. To understand why financial
incentive is necessary, it’s helpful to know—very generally—how blockchains
work.

x A blockchain is a type of distributed database, meaning it’s hosted (or

“lives”) on computers all over the world. These computers—which can even be
in someone’s home—are referred to as “nodes” of the blockchain. This
distribution of data (core to the new version of the Internet called “Web3”)
means the cost of operating nodes is distributed as well.

x By contrast, in the current version of the Internet—Web 2.0—databases,

websites, and applications often live on centralized servers. The company that
runs the database, site, or service also pays for the servers.



x Running nodes costs money, both in the form of hardware and electricity. So
blockchain networks need a financial reward system to incentivize people to
operate nodes. To compensate node operators for their costs, and the work of
processing, validating, and adding new transactions, each blockchain will have a
corresponding cryptocurrency. This cryptocurrency (e.g. SOL or BTC) is native
to one—and only one—blockchain.

If crypto coin transactions are handled by blockchain, then tokens rely on smart
contracts. They're an array of codes that facilitate trades or payments between users.
Each blockchain uses its smart contract. For example, Ethereum uses ERC-20, and
NEO uses Nep-5. When a token is spent, it physically moves from one place to
another. A great example of this is the trading of NFTs (non-fungible tokens.) They
are one-of-a-kind items, so a change in ownership must be manually handled. NFTs
often carry only sentimental or artistic value, so in a way, they're similar to utility
tokens, except you can't oblige any services. A crypto token is a representation of an
asset or interest that has been tokenized on an existing cryptocurrency's blockchain.
Crypto tokens and cryptocurrencies share many similarities, but cryptocurrencies are
intended to be used as a medium of exchange, a means of payment, and a measure
and store of value.

Crypto tokens, like cryptocurrencies, can store value and be traded, but they can also
be made to seem like real-world objects, more conventional digital objects, or even a
specific utility or service. Moreover, tokens are widely utilized as a governance
mechanism for voting on particular criteria like protocol updates and other choices
that determine the course that various blockchain projects will take in the future.
Tokenization is the process of developing crypto tokens to carry out these diverse
purposes. Crypto tokens can be created using some widely accepted token standards,
the bulk of which are based on Ethereum. The two most popular token standards are
ERC-721, which enables non-fungible tokens that are uniquely unique and cannot be
exchanged for other similar tokens, and ERC-20, which enables the creation of tokens
that may interact inside Ethereum’s ecosystem of decentralized apps. In circulation as
of 2020 will be thousands of ERC-721 tokens and hundreds of distinct ERC-20 tokens.





 CHAPTER-6

ALTERATIVE BLOCK CHAI

6.1 Side Chains

A sidechain consists of a blockchain network tied to the main chain via a two-way

peg. Let’s use Bitcoin as an example.If one wants to utilize a sidechain connected to
the Bitcoin protocol, they must lock up a certain amount of BTC by sending it to an
output address on the sidechain. After a short time, the sent funds are now available
on the sidechain.Sidechains are not to be confused with blockchain forks, which occur
when a group of users on the network decides to split into a new blockchain
altogether. In the case of blockchain hard forks, the goal is to create an entirely new
mainchain that has complete autonomy. The BCH blockchain is the most prominent
example of a Bitcoin fork. In contrast, sidechains aim to work alongside the
mainchain to achieve a high level of interoperability. Developers and blockchain
participants use sidechains to test features and experience other use cases not
normally available on the network main chain. Sidechains can also be used to speed
up transaction finality and lower overall transaction costs.

Sidechains are vital for blockchain accessibility, as they enable users to harness their
held crypto assets for various use cases. For example, in the case of Bitcoin
transactions, there’s no need to spend a ton on fees or wait potentially hours for the
transaction to validate.

Sidechain security varies based on the network. In most cases, a sidechain utilizes its
own form of security through a consensus method like Proof of Work (PoW) or Proof
of Stake (PoS). That said, sidechains need various dedicated members to keep their
security strong. Otherwise, they’ll fall victim to hacks and other threats.

In some special cases, like with Ardor, sidechains inherit the security of the main
chain. All transactions are checked and validated via the main chain, with the
sidechain acting more as an improved way to interact with certain protocols.

Sidechain Blockchain Platforms

Today many projects are working on sidechain technology. Let's take a look at a few
popular examples and dive into how they work.

RSK (RootStock)

Reason of Creation
RootStock is pegged to the Bitcoin blockchain and features decentralized applications
for users to interact with. When locking up their Bitcoin (BTC), assets are turned into
Smart Bitcoin (SBTC), which holders can utilize with the network’s smart contracts.
As you may learn in a blockchain developer course, smart contracts are a popular
technology used on many blockchain networks, especially for Ethereum programming.





For example, if a worker and a client work together using Ethereum, they’ll want to
establish a smart contract. The client would lock up whatever payment is agreed upon
in a smart contract. From there, they’ll fill out the requirements for the payment to
release, along with a set timeframe to do so. A worker then fulfills those
requirements, submits their work, and the payment is automatically released.

Smart contracts enable decentralized applications on the Ethereum network, but the
code for such agreements isn’t natively integrated on the Bitcoin mainchain.
RootStock's Bitcoin sidechain enables the use of smart contracts via a sidechain,
meaning users don’t have to convert Bitcoin to other assets to make use of this same
functionality. RSK smart contracts are automated, secure if-then statements used to
create a trustless environment for two parties to transact value.

Sidechain Details
More specifically, RootStock enables users to lend and borrow their Bitcoin. Lenders
can earn interest on their lent Bitcoin, and borrowers have a fair amount of control
over their interest payments.

6.2 Types Of Block Chain

Mainly, there are three types of blockchain networks: public, private, and
consortium. However, currently, there are four types of blockchain
networks available:

1. Public Blockchain

How it works?

A public blockchain is the first type of blockchain technology. The public

blockchain is a permissionless distributed ledger technology that allows anyone to
join and conduct transactions. It is an open variant in which each user keeps a copy
of the ledger. It implies that anyone with access to the internet can explore the
public blockchain.

The bitcoin public blockchain was among the first public blockchains to be made
available to the general public. It made it possible for anyone with an internet
connection to conduct decentralized transactions.

Advantages

x The public blockchain is open to everyone.

x It fosters trust throughout the entire user community.
x Everyone is motivated to work toward enhancing the public network.
x No middlemen are needed for the public blockchain to function.
x Depending on how many nodes are involved, public blockchains are mostly
safe.
Disadvantages





 x The network may be slow, and businesses cannot impose access or use
restrictions. According to Godefroy, attackers can unilaterally change a public
blockchain network if they control 51% or more of its computing power.
x Public blockchains also struggle with scalability. As more nodes connect to
the network, it becomes slower.
Use cases with examples

x The public blockchain has several applications. Let us list a few of them below
so you can get a better sense.
x Voting: Authorities can conduct public blockchain voting using credibility and
accountability.
x Fundraising: Organizations or projects can use the open blockchain to increase
trust and accountability.
. Private (or Managed) Blockchain

How it works?

The easiest way to describe a private blockchain is as one that operates in a

constrained setting, such as a closed network. Additionally, it is a blockchain with
permissions that are managed by an organization. Private blockchains are fantastic
if a privately held firm or organization wishes to use a blockchain for personal use
cases. One can employ the blockchain efficiently and restrict access to the
blockchain network. The company can also specify various network parameters,
such as authorization, accessibility, etc.

Advantages

x Private blockchains operate quickly. It is because there are fewer users than on
a public blockchain. Simply put, faster transactions occur from the network,
reaching an agreement more quickly.
x Private blockchains can scale better. Since only a restricted number of nodes
in a private blockchain are authorized to validate transactions, scalability is
made possible.
Disadvantages

x One of the greatest drawbacks of private blockchain is that it works against the
fundamental principles of blockchain and distributed ledger technology as a
whole.
x It is challenging to establish confidence inside the private blockchain because
the centralized nodes have the final say.
x Last but not least, the security isn't too great because there aren't many nodes
in this type of blockchain.
Use cases with examples

x Management of the supply chain: Businesses can use a private blockchain to

administer their supply chain.



 x Asset ownership: Assets can be traced and validated using a private
blockchain.
x Internal voting is another area where private blockchain is useful.

3. Consortium Blockchain

How it works?

Another different type of blockchain technology is consortium blockchain. When

an organization needs both public and private blockchain functionality, a
consortium blockchain (sometimes referred to as federated blockchains) is an
innovative way to address the issue. Some organizational characteristics in a
consortium blockchain are made public, whereas others are kept private.

The predetermined nodes in a consortium blockchain regulate the consensus

processes. Even more so, it retains a decentralized aspect despite not being
accessible to many people. How? A consortium blockchain is one that is controlled
by numerous organizations. Therefore, there isn't just one centralized authority
driving this outcome.

Advantages

x Blockchains created by consortiums are more scalable and secure.

x Additionally, it is more efficient in comparison to public blockchain
networks.
x Features clear governing structures.
Disadvantages

x The integrity of the member makes the network vulnerable even when it is
secure.
x Less transparency.
x Laws and censorship can significantly impact the effectiveness of a network.
Use cases with examples

x Banking and Payments: A consortium of banks is a group working together.

They have control over which nodes validate transactions.
x Research: Data and findings from research can be shared using a consortium
blockchain.
x It is excellent for meal tracking as well.

4. Hybrid Blockchain

How it works?

One of the various varieties of blockchain technology is hybrid blockchain. A

hybrid blockchain, in particular, may appear like a consortium blockchain, but it
isn't. There may be some commonalities between them, though.



The easiest way to describe a hybrid blockchain is as a blend of a private and
public blockchain. It has applications in organizations wishing to implement the
greatest private and public blockchain features.

Transactions and records in a hybrid blockchain are typically private, but they can
be affirmed as needed, for example, by granting access via a smart contract. Private
data can still be verified even though it is protected within the network. A private
organization can own the hybrid blockchain but cannot change transactions.

Advantages

x Operates without the requirement to make everything public in a closed

ecosystem.
x Rules can be modified based on circumstances.
x It provides privacy while remaining a part of a public network.
Disadvantages

x Not transparent enough.

x The transition to the hybrid blockchain can be difficult.
x There is no reward for joining the network and participating.
Use cases with example

x Real Estate: Hybrid networks can be used for this industry, allowing real
estate firms to use them to operate their systems and share information with
the public.
x Retail: The hybrid network can be used to improve process efficiency.
x Highly Regulated Industries: Hybrid blockchains are perfect for industries
with strict regulations, such as the banking sector.

6.3 Kadena Blockchain

Blockchain has soared in terms of popularity and has found adoption across many
industries. At the same time, concerns regarding blockchain safety have also evolved
over the course of time. Since cryptographic security is one of the key value
propositions of blockchain technology, you should think about how blockchain
technology can ensure security. The vision of Kadena blockchain relies profoundly on
addressing the requirement of security with blockchain technology.
It can ensure attributes of the Proof of Work consensus algorithm, which has
safeguarded Bitcoin for a long time. Doesn’t it round up back on the problem of
energy efficiency in the operations of blockchain networks? You can find a credible
answer through a detailed introduction to Kadena and special highlights of its work.
The following post offers easy answers to some of the common doubts regarding
Kadena and its significance.
The blockchain trilemma problem served as the root of the foundation of Kadena. The
founders of Kadena envisioned a radical change in the chain technology alongside the
interactions with the business landscape. With the help of a proprietary chain
architecture, Kadena provided the tools that could help businesses capitalize on the
value of blockchain technology. As a matter of fact, Kadena is the first layer-1 or L1





blockchain which can offer permanent solutions for scalability. At the same time,
Kadena also offers the assurance of security with Proof of Work consensus alongside
the benefits of decentralization.
With a clear response to “Is Kadena a layer 1 blockchain?” you might have doubts
regarding the advantage of scalability. What does Kadena have that you cannot find
in Bitcoin? Kadena is different from Bitcoin as it follows a unique architecture with
multiple parallel blockchains arranged with a Proof of Work consensus. The
consensus could facilitate a rise in throughput alongside resolving the scalability
issues without reducing security and decentralization

An Overview Of Kadena Blockchain (KDA)

Blockchain has soared in terms of popularity and has found adoption across many
industries. At the same time, concerns regarding blockchain safety have also evolved
over the course of time. Since cryptographic security is one of the key value
propositions of blockchain technology, you should think about how blockchain
technology can ensure security. The vision of Kadena blockchain relies profoundly on
addressing the requirement of security with blockchain technology.
It can ensure attributes of the Proof of Work consensus algorithm, which has
safeguarded Bitcoin for a long time. Doesn’t it round up back on the problem of
energy efficiency in the operations of blockchain networks? You can find a credible
answer through a detailed introduction to Kadena and special highlights of its work.
The following post offers easy answers to some of the common doubts regarding

Problem with Mass Adoption

The best approach to start an introduction to Kadena would be an overview of the
issues with mass adoption. The basics of Kadena blockchain explained for beginners
must emphasize the problems such as price volatility, usability issues, and scams. One
of the biggest problems which have hindered mass adoption in the blockchain and
crypto industry is scalability. When users adopt a cryptocurrency in large numbers,
the network must be capable of handling the increase in traffic. In addition,
transaction finality is also a crucial metric for defining the scalability of a blockchain.
Lower transaction speed and longer transaction finality times can result in negative
user experiences. In addition, low scalability can also lead to higher fees, which
served as a notable reason for Ethereum transitioning to the Proof of Stake consensus
protocol. The answers to “How does Kadena blockchain work?” would revolve
around resolving the problem of scalability.
Why do blockchain networks struggle to achieve scalability? Blockchain networks
cannot achieve security, scalability, and decentralization together. For example,
Bitcoin offers formidable security and decentralization, albeit with the setback of
limited scalability. On the other hand, new blockchain networks feature the
advantages of decentralization and scalability with the Proof of Stake consensus
mechanism. However, such blockchain networks have to compromise in terms of
security.

The blockchain trilemma problem served as the root of the foundation of Kadena. The
founders of Kadena envisioned a radical change in the chain technology alongside the
interactions with the business landscape. With the help of proprietary chain
architecture, Kadena provided the tools that could help businesses capitalize on the



value of blockchain technology. As a matter of fact, Kadena is the first layer-1 or L1
blockchain which can offer permanent solutions for scalability. At the same time,
Kadena also offers the assurance of security with Proof of Work consensus alongside
the benefits of decentralization.
With a clear response to “Is Kadena a layer 1 blockchain?” you might have doubts
regarding the advantage of scalability. What does Kadena have that you cannot find
in Bitcoin? Kadena is different from Bitcoin as it follows a unique architecture with
multiple parallel blockchains arranged with a Proof of Work consensus. The
consensus could facilitate a rise in throughput alongside resolving the scalability
issues without reducing security and decentralization.

Unique Highlight of Kadena

The review of responses for “How does Kadena blockchain work?” would draw
attention to the multi-chain architecture based on Proof of Work consensus. The
architecture has been titled ‘Chainweb,’ which helps in scaling up to almost 480,000
transactions per second. Around 20 chains can operate simultaneously on the network,
thereby helping in adapting to new scalability demands.
As compared to Bitcoin and Ethereum, with a TPS of 7 and 15 to 25, Kadena is a
humongous improvement. Kadena achieves the improvement in scalability
through smart contracts, which facilitate cross-chain interoperability. The use of
multiple Proof of Work-based blockchains helps Chainweb in ensuring energy
efficiency even with constantly increasing network demand

Working of Kadena


The Chainweb is not the only highlight in the working of the Kadena KDA network.
You can find a private blockchain at the second layer, known as Kuro, and both layers
can support the scalability demands. Both blockchains work with each other in a
multiple-braided chain approach. Chainweb can achieve scalability
by sharding transactions.
However, a detailed understanding of Kadena architecture could help you identify the
relevance of every layer and chain. The complex design can help in combining the
Proof of Work mining model with the desired level of privacy. Here is an overview of
the important elements in the architecture of Kadena.

ƒ Chainweb


Chainweb is the core element of the Kadena blockchain, which serves a network of 20
chains. The 20 chains in Chainweb connect with each other to power the Kadena
chain. You can find answers for “Is Kadena a layer 1 blockchain?” with references to
Chainweb, which serves as the foundation of the layer-1 network in Kadena.
Chainweb runs through sharding, which involves the distribution of the load across 20
different chains. Subsequently, users could set up their accounts on a chain with
limited congestion, which allows lower transaction costs. In addition, Chainweb
offers the advantage of Simple Payment Verification or SPV smart contract protocol
for ensuring cross-chain interoperability.
The understanding of the layer 1 public blockchain architecture in Chainweb
emphasizes on effective advantages of interoperability. Chainweb has been subject to
different types of stress tests at 8000 TPS for proving network resiliency and





efficiency. The code for Chainweb has been created in Haskell, which also serves as
the programming language for the Cardano blockchain.

ƒ Layer 2 Blockchain


The detailed architecture of the Kadena blockchain explained for beginners would
refer to the layer-2 solution of Kadena, i.e., Kuro. It is a private blockchain tailored
for commercial applications with the use of smart contracts. Layer 2 on Kadena or
Kuro serves as a valuable solution for businesses that want to send private
transactions without leaking customer data.
On top of it, Kuro also facilitates flexibility for the execution of coin swaps on the
Kadena network through decentralized exchanges. While transactions on the Kuro
chain require gas fees, just like Ethereum, Kadena has come up with an innovative
solution. Kadena introduced the Gas Stations in 2020, which help in covering up the
swap fees, thereby enabling zero-fee transactions.
ƒ Pact
Pact is an important highlight in any guide on Kadena as it serves the role of the smart
contract programming language. It has been created specifically to drive the growth
of DeFi ecosystems in Kadena. Interestingly, the Kadena blockchain is different
from other blockchains with the facility of a Turing-complete smart contract language
in Pact. The Turing-complete nature of Pact implies that it includes all functions
which can be executed by computers. For instance, C and C++ are Turing-complete
languages.

Why Should Users and Businesses Choose Kadena?

The sheer range of options available for users and businesses in terms
of blockchain networks can be quite overwhelming. One of the first highlights which
favor Kadena blockchain is the assurance of scalability and decentralization with the
security of Proof of Work consensus. The working of Kadena with a multi-chain
Proof of Work architecture shows that it can accommodate more chains for adapting
to the demand of scalability.
In addition, a Turing-complete smart contract programming language with Pact is a
promising reason to choose Kadena for better developer experiences. On top of it, the
facility of automatic bug detection on Pact can help in avoiding the common exploits
visible on Ethereum. Furthermore, the Formal Verification feature on Pact ensures
that you can ensure desired functionality of smart contracts.
The responses and explanation for “How does Kadena blockchain work?” would draw
attention toward the capability of Kadena to compete with other cryptocurrencies. As
a matter of fact, Kadena is one of the top alternatives for blockchain adoption in the
global banking and financial services industry.

6.4 Quorum Blockchain

Quorum is an “Enterprise-focused” Ethereum blockchain that tries to improve

blockchain technology. Although the first generation Blockchain provides scalability,
peer-to-peer networks, interoperability, transparency, and other features, it is still not
perfect. Researchers around the world are working hard to improve the state of the
blockchain. Quorum was the brainchild of JP Morgan, which developed to advance
blockchain technology in the financial industry but J.P. Morgan handover the Quorum





Blockchain to ConsenSys which provides the services and support for Quorum
Blockchain.

eed For Quorum

At present, the finance sector’s information is handled by more than one organization,
but still, the finance sector suffers from a lack of transparency, information control,
and security. The traditional blockchain also does not fulfill the finance sector
requirements even if it provides traceability and immutability. There is a need for a
system that provides private control on the blockchain through automation which is
customizable according to needs.

Features of Quorum

x Performance: Quorum is faster than Bitcoin and Ethereum. It carries out

more than 150 transactions per second. This is because of the simple consensus
mechanism used by quorum. By default, quorum uses 
   for fault-
tolerance and IBFT consensus for Byzantine fault tolerance, which is quite faster
than Ethereum’s proof of work consensus.
x Permission Management: It limits participation to a known set of nodes
that have to be provisioned to be part of the blockchain network, so it is not open
to all and implemented only between participants that are pre-approved by a
designated authority
x Elimination of transaction pricing: It eliminated the concept of adding cost
to a transaction using gas. There is no need for any cryptocurrency costs
associated with running transactions on the quorum network. The Quorum code
was initially forked off Ethereum, the usage of the gas itself exists but is set to
zero.
x Better Privacy: Quorum provides on-chain public and private transactions.
The open transactions are similar to Ethereum, whereas private transactions are
not exposed to the public. It uses Constellation technology which encrypts
specific messages in a place called an enclave and stores information about
previous transactions.
x Assets Management: It allows an entity to create, manage, and distribute
digital assets without going through a third party. This gives the owner
autonomy over how to manage their assets.





 CHAPTER-7

APPLICATIOS OF BLOCK CHAI

Blockchain technology’s popularity has grown enormously over the last decade. As
a game changer in technology, it is viewed as the next great revolution following
the birth of the internet. A blockchain stores information in a digital form
electronically like a database. Blockchains are well recognized for playing an
important part in cryptocurrency networks such as Bitcoin, where they keep a
secure and decentralized record of transactions.

The blockchain is special as it generates confidence without a reliable third party’s

aid while maintaining the accuracy and security of a data record.Blockchain aims to
allow digital information to be stored and distributed but not changed. In this sense,
a blockchain serves as the foundation for irreversible ledgers or accounts of
transactions that cannot be altered, deleted, or destroyed. Blockchain technology
enables decentralized security and trust in a variety of ways. To start, new blocks
are always inserted chronologically and linearly. They are always added to the “end”
of the blockchain. Modifying the contents of a block after it has been added to the
end of the blockchain is exceedingly difficult unless a substantial proportion of the
network decides to do so.

This is because every block will have its own hash, as well as the preceding block’s
hash and the previously set date.To produce hash codes, a mathematical function
turns digital information into a string of numbers and characters. If that data is
altered in any way, the hash code will also be altered. This is what makes
blockchain safe.

Top Applications of Blockchain Technology

1. Blockchain in Healthcare

Blockchain technology is being used to track and trace prescription medications

throughout supply networks. Using this tool, it is possible to simply and swiftly
prevent and regulate the distribution of counterfeit pharmaceuticals and recall
ineffective and unsafe drugs.Customer data security is a primary goal in healthcare,
as is data exchange and dissemination, which aids in improving healthcare services
among hospitals, governments, and research institutes. Blockchain’s ability to keep
an incorruptible, decentralized and transparent log of all patient data makes it a
technology ideal for security applications. Additionally, while blockchain is
transparent, it is also private, concealing the identity of any individual with complex





and secure codes that can protect the sensitivity of medical data. The decentralized
nature of the technology also allows patients, doctors and healthcare providers to
share the same information quickly and safely. Few companies that apply block chain
in their healthcare industry.

(A) AKIRI

Location: Foster City, California

Akiri operates a network-as-a-service optimized specifically for the healthcare

industry, helping protect transportation of patient health data. The Akiri system
does not store data of any kind. It operates as both a network and a protocol to set
policies and configure data layers while verifying the sources and destinations of
data in real time.

Akiri ensures healthcare data remains secure and shareable with only the parties
authorized for access at the moment when they need it.

(B) BUSTIQ

Location: Denver, Colorado

BurstIQ’s platform helps healthcare companies safely and securely manage

massive amounts of patient data. Its blockchain technology enables the
safekeeping, sale, sharing or licensing of data while maintaining strict compliance
with HIPAA rules.Because BurstIQ’s platform includes complete and up-to-date
information about patients’ health and healthcare activity, it could help to root out
abuse of opioids or other prescription drugs.

(C) MEDICALCHAI

Location: London, England

Medicalchain’s blockchain maintains the integrity of health records while

establishing a single point of truth. Doctors, hospitals and laboratories can all
request patient information that has a record of origin and protects the patient’s
identity from outside sources.





(D) GUARDTIME

Location: Lausanne, Switzerland

Guardtime is helping healthcare companies and governments implement

blockchain in their cybersecurity methods. The company was vital in helping
implement blockchain in Estonia’s healthcare systems, and it signed a deal with a
private healthcare provider in the United Arab Emirates to bring blockchain to its
data privacy systems.

(E) 






 
 

   

 


 
 

 
 


 
 
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2. Voting

Blockchain has emerged as a key issue in debates on secure voting. Although

electronic voting solves most of the difficulties associated with old manual voting,
issues such as voter privacy, voter fraud, and the high cost of legacy digital voting
technologies remain key concerns.

Through smart contracts and encryption, blockchain can make voting safer, more
transparent, and more private for voters. Blockchain can fulfill these goals, as well
as allow customization of the voting process through the use of multiple types of
ballots and logic-based voting. It is used in university-scaled elections.
   




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3. Blockchain applications for anti-money laundering

Blockchain anti-money laundering apps have intrinsic properties that might prevent
money laundering. Every blockchain transaction produces a permanent trail of
unalterable records. As a result, it is easy for authorities to trace the origin of the
money.A blockchain ledger can discharge functions like monitoring, validating,
and recording the whole history of each transaction. If all transaction stages,
including the destination wallet, currency type, departure wallet, and amount, are
left unconfirmed, the transaction is immediately terminated.

Blockchain also allows risk analysis and reporting tools for money laundering. It
enables system-wide analysis rather than merely monitoring entry and exit points.

4. Blockchain for Advertising

Advertising blockchain applications are a type of distributed digital ledger

technology that encourages decentralization while providing the highest level of
security, traceability, and transparency.Once a digital record is recorded on the
blockchain, it is immutable, which means that individuals with access may read but
not amend the transactions.Advertisers may use blockchain to track ad expenditure
since it stores information and transactions in real-time. Finally, this can give
transparency that present systems cannot.

Transparency isn’t the sole advantage. In advertising, speed is critical. It is difficult

to keep track of inventories and ensure high-quality products. Blockchain
technology is capable of keeping up. Once a content creator has registered their
property on a blockchain platform, the blockchain records every usage of that piece
of content. This tracking enables real-time, flexible, and fully transparent
consumption-based pricing mechanisms, e.g., metered billing. A smart contract can
be utilized to execute automatic micropayments between the consumer and the
creator. Utilizing Ethereum, artists can automate a large portion of the business
administration work surrounding licensing, contracts, and payments. Once the
contractual-based work, usually rife with intermediaries, is automated and
performed at a fraction of the cost, creators can sell their work directly peer to peer.
Blockchain-based marketplaces for digital content allow creators and consumers to
interact without costly intermediaries. Blockchain creates the potential to transform
how media content—such as music, video and other types of entertainment—is
delivered, consumed and paid for. Current systems were not designed to manage
complex, personalized content and service bundles. It is extremely difficult in





today’s digital ecosystems to manage the digital rights, royalty collections and the
transactions among a large number of intermediaries.

5. Blockchain applications for anti-money laundering

Blockchain anti-money laundering apps have intrinsic properties that might prevent
money laundering. Every blockchain transaction produces a permanent trail of
unalterable records. As a result, it is easy for authorities to trace the origin of the
money.

A blockchain ledger can discharge functions like monitoring, validating, and

recording the whole history of each transaction. If all transaction stages, including
the destination wallet, currency type, departure wallet, and amount, is left
unconfirmed, the transaction is immediately terminated. Blockchain also allows
risk analysis and reporting tools for money laundering. It enables system -wide
analysis rather than merely monitoring entry and exit points.

6. The Internet of Things (IoT)

The Internet of Things (IoT) is a system of networked devices that may exchange
data and communicate with one another to provide useful insights. When a system
of “things” is linked, it becomes IoT. The most prominent example of IoT is the
Smart Home, in which all home equipment such as lighting, thermostats, air
conditioners, smoke alarms, and so on may be connected on a single platform.

Blockchain, on the other hand, is required to provide security for this enormously
dispersed system. In IoT, system security is only as good as the least secure device,
which is the weak link. In this case, blockchain can ensure that the data received by
IoT devices are safe and visible only to trustworthy parties.

7. Cryptocurrency
Cryptocurrency is one of the most prominent blockchain applications. Everyone is
aware of bitcoin. One of the numerous benefits of adopting blockchain for
cryptocurrencies is that it has no territorial boundaries. As a result,
cryptocurrencies may be utilized for global transactions.

The only thing to remember is that exchange rates may fluctuate and that
consumers may lose money in the process. This alternative, however, is far
superior to localized payment applications, such as Paytm in India, which are only
applicable in a single nation or geographical region and cannot be used to send
money to individuals in other countries..





8. Government Sector
Public blockchains may transform the foundations upon which every government
sector operates. Blockchain technology could accelerate key government functions.
Such functions entail identity verification and certifying transactions such for land-
use registry and safekeeping of medical records.A blockchain-based digital
government can protect data, streamline processes, and reduce fraud, waste, and
abuse while simultaneously increasing trust and accountability. On a blockchain -
based government model, individuals, businesses, and governments share resources
over a distributed ledger secured using cryptography. This structure eliminates a
single point of failure and inherently protects sensitive citizen and government
data. A smart city uses information technology and data to integrate and manage
physical, social, and business infrastructures to streamline services to its
inhabitants while ensuring efficient and optimal utilization of available resources.
In combination with technologies, IoT, cloud computing, and blockchain
technology, governments can deliver innovative services and solutions to the
citizens and local municipalities.

Blockchain can provide the mechanism to create a secure infrastructure to manage

these functions. Specifically, it can provide a secure interoperable infrastructure
that allows all smart city services and functions to operate beyond currently
envisioned levels. ConsenSys has worked toward realizing smart city initiatives in
Dubai and Zug.





REFERENCE:

x Kumar Saurabh (Author), Ashutosh Saxena (Author); Blockchain

Technology; Wiley; ISBN 13 - 978-8126557660

x Chandramouli Subramanian (Author), Asha A George (Author), Abhilash K

A (Author), Meena Karthikeyan (Author); BLOCKCHAIN
TECHNOLOGY; Universities Press (India) Pvt. Ltd.; ISBN 13 - 978-
9389211634

x Prateek Tripathi (Author); The Blockchain Path: A Guide to Understanding

and Implementing Blockchain Technology : The Essential Guide to
Harnessing the Power of Blockchain; Notion Press; ISBN 13 - 979-
8889595809

x Matevž Pustišek (Author), Nataša Živić (Author), Andrej Kos (Author);

BLOCKCHAIN: TECHNOLOGY AND APPLICATIONS FOR
INDUSTRY 4.0, SMART ENERGY, AND SMART CITIES; De Gruyter ;
ISBN 13 - 978-3110681123





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