Blockchain Technology
Name: Anish
Roll Number: 2317657
College: CGC LANDRAN
1. What is blockchain?
Blockchain is a decentralized and distributed digital ledger that records transactions across many
computers so that the record cannot be altered retroactively without the consensus of the network.
Each block contains a set of transactions and is linked to the previous block through a cryptographic
hash, forming a chain-hence the name "blockchain."
It ensures transparency, security, and immutability of data. Blockchain technology is the backbone
of cryptocurrencies like Bitcoin and Ethereum. It also finds applications in supply chain, finance,
healthcare, and many other sectors. The key features include decentralization, consensus
mechanism, cryptography, and immutability.
2. Justify your statement: "Blockchain is a distributed ledger."
Blockchain is considered a distributed ledger because it maintains records across a network of
computers rather than on a single centralized server. In a distributed ledger, each participant (node)
holds a copy of the entire blockchain, ensuring data transparency and integrity.
Whenever a transaction occurs, it is broadcasted to the network. Once validated, it is recorded on
every participant's copy of the ledger. This eliminates the need for a central authority and reduces
the chances of fraud, data tampering, or system failure. The distributed nature also ensures that the
ledger is always up-to-date across all nodes, making it highly reliable and secure.
3. Explain the meaning of a smart contract.
A smart contract is a computer program or a set of code stored on a blockchain that automatically
executes, controls, or documents events and actions according to the terms of a contract or
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agreement. Once deployed on the blockchain, it functions autonomously without human
intervention.
Smart contracts are self-verifying, self-enforcing, and tamper-proof. They are widely used in financial
services, insurance, real estate, and supply chains. For example, a smart contract can automatically
transfer ownership of a digital asset when payment is received. Their main advantage is that they
remove the need for intermediaries, reduce operational costs, and increase trust between parties.
4. How is cryptocurrency used in blockchain?
Cryptocurrency is a digital asset used as a medium of exchange within a blockchain network. It
plays a vital role in the blockchain ecosystem by enabling secure, peer-to-peer transactions and
serving as an incentive mechanism for network participants (like miners or validators).
In proof-of-work blockchains like Bitcoin, miners are rewarded with cryptocurrency for validating and
adding blocks to the chain. In proof-of-stake systems like Ethereum 2.0, validators earn rewards in
the native cryptocurrency for securing the network.
Cryptocurrencies are also used in smart contracts, decentralized finance (DeFi), tokenized assets,
and governance mechanisms. They help drive innovation and facilitate trustless transactions on
blockchain platforms.
5. Compare the private and public blockchain.
Feature | Public Blockchain | Private Blockchain
----------------------|--------------------------------------------------|-------------------------------------------------
Accessibility | Open to all; anyone can join and participate | Access restricted to selected
users
Governance | Decentralized and community-driven | Centralized or controlled by a
single entity
Transparency | Highly transparent; all transactions visible | Limited transparency; only
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authorized users
Speed & Scalability | Slower due to more nodes and consensus time | Faster and more scalable
due to fewer nodes
Examples | Bitcoin, Ethereum | Hyperledger Fabric, R3 Corda
Public blockchains are trustless and fully decentralized, ideal for cryptocurrencies. Private
blockchains are better suited for enterprises requiring privacy and faster transactions.
6. Explain the working of smart contract. Describe the benefits of smart contract.
Working:
Smart contracts are deployed on a blockchain with coded rules and conditions. Once the predefined
conditions are met (e.g., payment received), the smart contract automatically executes the next
action (e.g., release of goods). These actions are irreversible and permanently recorded on the
blockchain.
Benefits:
- Automation: Executes transactions automatically without third-party involvement.
- Transparency: Contract terms are visible and verifiable by all participants.
- Security: Immutable and encrypted code protects against fraud and tampering.
- Speed and efficiency: Reduces delays associated with manual processes.
- Cost-effectiveness: Cuts down on intermediary and operational costs.
Smart contracts improve the efficiency, trust, and accountability of digital transactions.
7. Comment on the security aspect of blockchain.
Blockchain is inherently secure due to its cryptographic structure, decentralized design, and
consensus mechanisms. Each block contains a unique hash and the hash of the previous block. If
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someone tries to alter a block, the hash changes, breaking the chain and alerting the network.
Blockchain uses strong encryption (e.g., SHA-256) to secure data. Decentralization makes it
resistant to single-point failures and hacking. Moreover, consensus protocols like Proof of Work
(PoW) and Proof of Stake (PoS) ensure that only valid transactions are added to the chain.
However, vulnerabilities can arise from poor smart contract coding or private key exposure. Hence,
blockchain offers strong security, but it must be implemented and used carefully.
8. How does blockchain prevent double spending of Bitcoin?
Double spending means using the same digital currency more than once. Blockchain prevents this
using a decentralized ledger and consensus mechanism. When a Bitcoin transaction is made, it is
broadcasted to the entire network.
Miners verify the transaction and once it's confirmed, it's added to the blockchain. Each transaction
is timestamped and linked to the previous ones. If someone tries to reuse the same Bitcoin, the
network nodes will recognize that it has already been spent and reject the transaction.
The consensus algorithm (e.g., PoW) ensures that only valid transactions are added to the chain,
making double spending nearly impossible without controlling 51% of the network's computational
power.
9. How does blockchain drive supply chain transparency?
Blockchain brings transparency to supply chains by providing a tamper-proof, shared ledger that
records every step of a product's journey-from raw materials to end consumer. Each participant in
the supply chain (manufacturer, transporter, retailer, etc.) adds data to the blockchain, which is
visible and verifiable by others.
It enables real-time tracking, reduces fraud and counterfeiting, improves inventory management,
and builds consumer trust by proving product authenticity. For instance, a food company can trace
contaminated items to the source quickly and accurately using blockchain.
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Smart contracts can also automate payments and logistics when conditions are met, further
improving supply chain efficiency and accountability.
10. Analyze the concept of Block Mining.
Block mining is the process of validating and adding new blocks of transactions to the blockchain. It
is primarily used in Proof of Work (PoW) blockchains like Bitcoin. Miners use computational power to
solve complex mathematical puzzles. The first to solve it gets to add the block to the chain and is
rewarded with cryptocurrency.
This process secures the network, ensures the authenticity of transactions, and prevents tampering.
Mining requires high processing power and energy, but it plays a vital role in maintaining the
blockchain's integrity. Over time, block rewards decrease (as in Bitcoin halving), which ensures
controlled supply of the cryptocurrency.
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