Chapter 1 : Blockchain Basics
- The Blockchain technology is actually a concept of the distributed ledger or P2P shared ledger on a peer-to-peer network.
- According to Block Chain Council, the term “Blockchain technology” refers to the transparent, trustless, publicly accessible ledger.
- It allows us to securely transfer the ownership of units of value using public key encryption and proof of work methods.
- The block chain technology is using decentralized network architecture to maintain its network.
- The purpose of blockchain is to establish and govern minimum standard and its development measurement.
- Inform the public that individual meet or exceed the minimum standard.
- Blockchain expert as a unique and self-regulating profession.
- This certification is well suited for an investment banker, consultant, and advisors or in supply chain, health care.
- The certification is also suited as, university professors, engineering and management students, programmers and developers, security professional, administrators, senior government officials, operation head in businesses.
Blockchain Different from Traditional Technologies
- In the blockchain database, each and every participant maintain updates and calculate the new entries into a database, and all nodes work together
- In traditional database running on the internet utilize client-server network architecture. Its mean client can change entries that are present in the centralized server.
|Blockchain Database||Traditional Database|
|Decentralized control, its allow different parties who donâ€™t know each other but share information without needing central system.||Centralized control, it is controlled by the administrator|
|History of records||No history of record|
|There is no confidentiality of information, information on blockchain is public.||In traditional database, information is accessible by authorized member.|
|No Access Control is required||Requires Access Control|
|There are two functions of the blockchain
||There are four functions of traditional
Benefits of using Blockchain Technology
The problem of Trusting
- The most important thing that blockchain offer is trustless. You donâ€™t have to trust on anyone to trust on the ledgerâ€™s data.
- When you are trusting with decentralized technology based ledger, you are actually trusting the brand who owns the inventory, the admin of the admin, or just the root user.
- This is not the case with blockchain-based ledger
- All blockchain-based ledger is maintained by multiples nodes through the consensus-based algorithm.
The immutable ledger of transparency
- The another most important thing that blockchain offer is an immutable ledger.
- The blockchain is purposefully made to be practically immutable, i.e., no one can alter the blockchain â€˜distributed ledgerâ€™ of every single committed block.
- Immutability is accomplished by means of â€˜proof of workâ€™ system.
Blockchain is a decentralized system, It is very difficult that all the nodes can go down at the same time so this makes a good choice if you are building a critical system
- The blockchain is more secure because of decentralized nature
- There are many honest nodes in the network. Corrupting anyone in the network at the same time is really not possible.
- Faking of the transaction because of other are honest nodes so that they will reject transaction easily.
- The blockchain is more secure. If proof of work is high.
Faster dealings and cost savings
- In financial services of blockchain is huge and have few applications like Capital market, Trade services, Investment, Payment, Wealth management, Securities and Commodities exchanges.
- The main advantage is to the goal of cost saving and distributed ledger technology that could be reduced the financial services cost between the US $15 billions and $20 billion per annum.
- Providing the decommissions in the legacy system and significantly reduce IT costs
Verifiability and Auditability
- Any record of transaction can be verified by anyone openly. if it is running on a public or private blockchain based on the permissions.
- When auditability or verifiability that does not mean the records are always openly accessible.
- It is easy to audit any transaction & the trail of it.
Different Blockchain Technologies
- Bitcoin is an application and implementation of the blockchain.
- Bitcoin is the cryptocurrency whose ledger which is maintained by the blockchain openly.
- In case of bitcoin proof of work is making through the process of â€œmining.â€
- The transactions are connected to the user bitcoinâ€™s address, which stored on a general ledger is called blockchain.
- Ethereum is a platform to build decentralization applications
- Ethereum is revolved around the smart contract execution platform where we can deploy the smart contract and execute them.
- Ethereum is the currency or token which is fueling the entire network
- Ethereum is also working on a proof of work algorithm and towards going on proof of stake.
- Recordkeeper is the database, storage of the blockchain
- It is decentralized public ledger technology to take audit, verifiability or trust to any kind of enterprise data and records.
- Recordkeeper is a public chain for record keeping and data security
- It can also allow the user to retrieve the uploaded data by the user using the key.
- It is an open source platform for private blockchain, which offers a set of key points including: Rapid deployment, Configurability, Data stream and Permission management.
- Multi-chain is another extended version of bitcoin they have to offer the data stream.
- We can record the key-value pair of the data and also customized and controllable permission based mining and translational, so we can control the entire network very well.
- Multichain is an open source, and it is the same as bitcoin.
- NEO is similar to the Ethereum.
- NEO runs the decentralized software.
- The difference of the NEO is that NEO is written in a programming language like pythons.
- The main focus of NEO is on the smart economy, on the other hand, Ethereum blockchain focuses on a smart contract.
- EOS is the one of the most or newest blockchain technology to enter the cryptocurrency network.
- EOS blockchain is aiming to build a decentralized operating system that can process fast and free transactions.
- Its ICO (Initial Coin Offering) has been interesting for a couple of reasons.
- ICO is a kind of funding using cryptocurrencies.
- The smart contract will allow being built on top of it and allow the developer to release the dApp.
- EOS also want to build a platform that functions as an operating system which is easy to utilize.
- Stellar is an open source or distributed. It is the network of the decentralized server, and complete copy of global ledger exists on each stellar
- The ledger records each and every transaction of the system for the companies and people alike.
- It also records your money as credits, which is some issued by Anchors, which acts as a bridge between given currencies and stellar of the network.
- Stellar does not manage all types of software like Ethereum. ICO aside is not only the choice of Ethereum.
- Stellar can manage exchanges between cryptocurrencies and fit-based currencies, like a ripple.
- In each blockchain, project has an ecosystem that they include a decentralized exchange.
- These may be developed by a developer, project team or community.
- There are some exchanges are as follow:
- Stellarâ€™s SDEX exchange
- NEOâ€™S NEX exchange
- Miner uses CPU power that to identify the random number through which they create a digest or signature of the next block.
- In such a way that the new signature is a particular order, it can be larger than the previous block or it some other logic, but it has to be some particular systematic way.
- In such a way a new signature is lesser than the previous digest it means whole change can be described in descending order.
Blockchain developers who design, implement and support a blockchain network.
The main role of blockchain core developer is as follow:
- Manage the architecture network
- Supervise the blockchain network
- Works on census algorithm
- Setup blockchain protocol
In blockchain ecosystem application, that is considered to be as developer, communities, and business which can be built to create their own particular services and projects.
As we know that the applications of blockchain are to
Blockchain Vs Bitcoin
- Blockchain is a technology whereas bitcoin is an implementation of blockchain and the application of blockchain.
- Bitcoin is the cryptocurrency whose ledger which is maintained by the blockchain openly.
- The transactions are connected to the user bitcoinâ€™s address, which stored on a general ledger is called blockchain.
Chapter 2: Blockchain Intermediate
Private vs. Public Blockchain
- A Public Blockchain is a block chaining network that is entirely open or public.
- Anyone having account on that public blockchain and a transaction ID can join and take a part.
- All the public blockchain requires very complex rules for increasing the security.
- Private blockchain requires explicit permissions or authorization to be accessed.
- It is similar to public blockchain but with access controls that restrict those who can join the chain.
- It is a private blockchain where security can implement in a very easy way by actually making someone responsible for it.
- The blockchain is a direct node interaction, decentralized, computer network, also known as the peer-to-peer network.
- It represents a system a network of interconnected computers that does not rely on a central party to facilitate interaction.
- Nodes in a peer-to-peer network both consume and deliver services at the same time with reciprocity performing as the incentive for participation.
- Block is an individual unit of blockchain containing records of some or all bitcoin transactions.
- These records are secure using Hashing algorithm to ensure the integrity of the information.
- It records a small number of or all the newest Bitcoin transactions that have not yet come into the prior blocks.
- A block is consequently a permanent store of records, which once written, cannot be changed or deleted.
- Transaction in a blockchain system is defined as â€œSmall unit of task recorded in a blockâ€.
- Transaction in blockchain is similar to banking transaction.
- Here the term transaction refers the transfer of bitcoins by one account holder to another.
- It is a secret key that allows bitcoins to be spent.
- Each and every Bitcoin wallet holds one or more private keys in wallet file.
- The private keys have mathematically related to all Bitcoin addresses generated for the wallet.
- It is a key that has kept in secret to ensure it is not misused and has used for authentication and encryption.
- Address is the identifier; to whom you are sending the bitcoins.
- Initially, Bitcoin directly pays to IP addresses using Pay-to-IP method.
- This method is now evolved into a more suitable method for the Bitcoins transactions using Pay-to-Public-Key-Hash (P2PKH).
- A standard P2PKH address contains 34 alphanumeric symbols, and beginning with a â€œ1â€.
- A Bitcoin transaction is an agreement sort of data that has shown to the network and, if legal, complete up in a block in the blockchain.
- The objective of a Bitcoin transaction is to transfer ownership of an amount of Bitcoin to a Bitcoin address.
How transaction gets executed & distributed?
When someone sends Bitcoin, a single data structure, namely a Bitcoin transaction, has produced your wallet client and then broadcast to the network. Bitcoin nodes on the network depend and rebroadcast the transaction, and if the transaction is valid, nodes comprise it in the block they are mining. Generally, within 10-20mins, the transaction has involved, besides with other transactions, in a block in the blockchain. At this instant, the receiver can see the transaction amount in their wallet.
- Consensus is an essential component of the blockchain system and is responsible for achieving agreement in a distributed environment.
- Consensus mechanism process when the blockchain confirms transactions and makes the blocks.
How conflicts are being resolved?
- The basic example of a consensus conflict is the hard fork of Bitcoin, where the birth of two Bitcoins and the division of the Bitcoin community is taking place.
- Conflicts are being resolved by designing a governance system for the blockchain itself.
- Required two kinds of consensus systems in blockchain: one is for data the other is for blockchain itself.
- Mining is the process of recording the pending transaction by adding a new Block into the Blockchain through a mathematical puzzle.
- Those puzzles have also called proof of work.
Types of Mining
There are two types of mining.
- It is a convinced network where we can search for a group of miners operating individually
- Shares their processing power through a network, to divide the reward equally
- It is a solo process where the miners do entirely his task of mining operations
- This process has mainly done single without joining a pool.
- These blocks have mined and produced in a way to the task completed by the minerâ€™s credit.
- Miners are the peoples that are individually verifying transactions on the coin’s network, and when that occurs extra coins have generated.
- Miners are efficiently continuing the network running and increase the coinâ€™s distribution worldwide.
Proof of Work v/s Proof of stake v/s Delegated POS v/s Proof of Importance
Proof of Work v/s Proof of stake
|Proof of Work||Proof of Stake|
|It is significant an expensive computer calculation called mining blocks.||The miner of a new block in the blockchain has selected in a deterministic method depending on wealth (stake).|
|A reward has given to the initial who resolves each block calculation.||The miners do not receive a block reward but collect network fees as the reward.|
|Miners complete using computer power to be the initial to search a solution.||This mechanism creates Proof of Stake mining much more energy efficient.|
Proof of stake v/s Delegated POS
- Proof of Stake systems, the designer of a new block, has chosen in a pseudo-random way, depending on the userâ€™s coins at stake.
- DPoS systems, users vote to elect some witnesses. The top tier of witnesses (typically 20) have rewarded for creating blocks and verifying transactions
- DPoS is more rapidly due to a significantly smaller number of users creating blocks and verifying transactions; DPoS is, therefore, more accessible.
- The main difference between DPoS and PoS is in DPoS consensus system; community members have more governance rights in the network.
Delegated POS v/s Proof of Importance
- DPoS had a newer consensus model that was invented by Dan Larimer as a consensus framework for Bitshares and applied to various further platforms such as Lisk (LSK), Steem, and EOS.
- DPoS has the fastest, most efficient, most decentralized, and most flexible consensus model.
- It is a blockchain consensus algorithm that first introduced by NEM.
- A mechanism that was used to determine which network participants mean that nodes are eligible to add a block to the blockchain.
Security: Why Blockchain is Secure
- Blockchain is securable and utilizes powerful cryptography to give individuals ownership of an address and the crypto assets associated with it, through a combination of public and private keys.
- It solves the issue of stolen identity, as addresses have not directly associated with usersâ€™ identity, while also being far inflexible to co-operation.
- It stores data using sophisticated math and innovative software rules that are extremely difficult for attackers to manipulate.
Attacks: How Blockchain Can Be Hacked
- There are many techniques used to hack a blockchain.
- These techniques depend upon the vulnerability & loopholes in the blockchaining system.
- A team of hackers called, “51 Crew” attacked blockchain Krypton and clones Shift.
- The team took the access of more than 51% of the network.
Chapter 3: Blockchain Advanced
Private blockchain is accessible to only those who get the permissions from the authorized parties, it may be an individual or an organization.
Following are the features of private blockchain:
- Only authorized nodes can read and write the ledger information
- Implementation of security become easy
- One authorized node can be the authority for any dispute
- Approximately inexpensive to add a new block
- Single or multiple private entities own the blockchain
- Many legal authorities can be given to one party
Can I Setup my own Blockchain?
Yes, of course, you can easily setup your own blockchain and become the owner of the blockchain that can control by you, and you are the responsible for its security.
But keep a few things in mind that you have to take care of miners and setup your own miners.
- Ethereum is one of the best example of the Private blockchain.
- Private blockchain can be easily setup by private Ethereum blockchain by using Ethereum clients like Geth, C++ or python clients.
To setup private blockchain in Ethereum following should be followed:
- Custom Genesis File
- Custom Data Directory
- Custom Network ID
- Disable Node Discovery
- Multichain is one of the most simplified methods to develop private blockchain.
- Multi-chain is an open source platform and founded by Mr. Gideon Greenspan.
- It has many remarkable features like permissions, data streams, etc.
- Private blockchain can be setup by Hyperledger fabric because it doesn’t have the concept of Mining or Cryptocurrency.
- Hyperledger Fabric is mainly contributed by IBM. Hyperledger is actually the project hosted by Linux foundation umbrella and fabric is one of the project hosted under the Hyperledger project.
- Hence, private blockchain can easily setup by using Hyperledger fabric at any time.
- IBM also offers private blockchain setup using IBM bluemix platform.
Openchain is one of the way to setup private blockchain. It is an open source distributed ledger mechanism. Following are the steps used to setup the Openchain as a private blockchain:
- An individual can spin up a new Openchain instance in a few seconds.
- The administrator of an Openchain instance defines the rules of the ledger.
- End-users can interchange value on the ledger according to those rules defined by the administrator.
- Each transaction on the ledger is digitally signed.
When to use a Blockchain & when NOT
When to Use a Blockchain
The blockchain is best suited in the following scenarios:
- Share Common Database
- Conflict Incentives
- Transaction Policy
- System Transparency
- Data Immutability
When NOT to Use blockchain
Some scenarios where blockchain are violated are described here:
- Store Large Data
- Rules of Transactions
- Extract Data from outsource
How to build your own Blockchain Solution?
This section will describe the method to build your own blockchain solution.
It takes several major steps:
â€¢ Step 01: Defining the Goal
â€¢ Step 02: Specify the most favorable Consensus Method
â€¢ Step 03: Specify the Most Suitable Platform
â€¢ Step 04: Designing the Architecture
â€¢ Step 5: Designing the Blockchain Instance
â€¢ Step 6: Building the APIs
â€¢ Step 7: Designing the Admin-User Interface
â€¢ Step 8: Integrate Upcoming Technology
Working with Blockchain Architecture
A blockchain technology comprises of number of nodes fashioned in a decentralized network holding a copy of a ledger.
The decentralized ledger keeps record of all transactions that perform over the peer-to-peer network.
Steps of architectural working of blockchain are represented here:
- Step 01: Proposed Transaction
- Step 02: P2P Network
- Step 03: Validation & Verification
- Step 04: Create New Block
- Step 05: Added A New Block
- Step 06: Transaction Complete
The smart contract is a terminology used to define software program code that has the facilitating, executing, and enforcing capability to negotiate the performance of a contract with Blockchain technology.
It is an agreement between the two parties that agreed upon the rules directing a business transaction.
â€¢ Ethereum is the most preferred choice because it provides scalable processing capabilities.
â€¢ Ethereum permits developers to code their own smart contracts.
Smart Contract Works
The process of smart contract includes three main steps;
It is a pre-defined coding stored in a blockchain by a smart contract developer.
If the pre-defined rules are settled down, then distribute ledgers among all the nodes of a network.
If any network met the agreement, then event is triggering, and transaction is executing as per the coded terms.
When both parties agreed upon the code execution then the network update the distributed ledgers to document the execution of the contract
Then monitor for compliance with the terms of the smart contract.
Chapter 4: Blockchain Use-cases
Supply chain use cases apply on the following applications:
APPLICATION 1: Records management
Enabling Interoperability among participants using distributed ledger
APPLICATION 2: Supply chain management
Material/supply tracking and fast vendor payments
APPLICATION 3: Invoice & Receipts verification
Fast verification of Invoices & receipts authenticity without using third parties
APPLICATION 4: Vendor payments
Pre-authorization, fast payment by cutting down reconciliation time
APPLICATION 5: Data security
Most secure system for maintaining and sharing any critical business data among departments
Healthcare Record Keeping
The healthcare industry needs a more efficient and secure system for managing medical records, pre-authorizing payments, settling insurance claims, and performing and recording other complex transactions.
Blockchain holds the complete medical history for each patient, with multiple granularities of control by the patient, doctors, regulators, hospitals, insurers, and so on.
Personal health records could be encoded and stored on the blockchain with a private key which would grant access only to specific individuals.
Blockchain is designed to be decentralized, immutable, and traceable, and it solves most of the security challenges at the core.
Some of its use cases are as follows:
- Identity and access management
- DDoS protection
- Decentralized storage
- Protection against man-in-the-middle (MITM) attacks
Blockchain technology enables organizations to compensate consumers for the use of their data through digital assets.
Reduced advertising fraud
Blockchain technology empowers marketers to fight display advertising fraud with ease
Improved SEO with enhanced tracking capabilities
Blockchain technology could help organizations ensure high-quality inbound traffic to boost their SEO.
Optimized cross-platform digital advertising
Optimizing oneâ€™s digital advertising efforts online is a key area of focus for the blockchain marketing community right now.
Enhanced customer marketing, and improved loyalty
Improving customer loyalty through relevant marketing is one of the most exciting use cases for blockchain.
Blockchain works the best in situations where auditability and immutability are key requirements and multiple parties are involved.
Each land asset can be brought onto Blockchain as a token, secured using cryptography and complete ownership trail created even retrospectively on Blockchain.
Blockchain ensures the ownersâ€™ rights will be protected, transactions will be safer, faster and easier to run and dispute resolution if any will be fairly black-and-white.
Businesses need to purchase goods and services on credit with end-to-end visibility to avoid and resolve transaction disputes.
The benefits for trade finance include the following:
- Complex processes simplified into a single process, all accessing a shadow ledger
- Increased access to capital, because itâ€™s not caught up in long settlement times or errors and disputes
- Increased trust and accountability among enterprises, regulators, and consumers