Block chain Technology

1.INTRODUCTION

A block chain is a ledger of facts, replicated across several computers assembled in a

peer to peer network. Facts can be anything from monetary transactions to content signature.
Members of the network are anonymous individuals called nodes. All communication inside
the network take advantages of cryptography to securely identify the sender and the receiver.
When a node wants to add a fact to the ledger, a consensus forms in the network to determine
where this fact should appear in the ledger; this consensus is called a block.

A shared technology allowing any participants in the business network to see the
system of records (ledger).It is growing at a constant rate as miners add new blocks to it
every 10 minutes in order to record all the transactions that took place in recent times. The
blocks are always added to the Block chain in a linear and in chronological order. A block
chain is, in the simplest of terms, a time-stamped series of immutable record of data that is
managed by cluster of computers not owned by any single entities.

People use the term block chain technology to mean different things. Sometimes they
are talking about The Bitcoin Blockchain, sometimes it’s The Ethereum Block chain,
sometimes it’s other virtual currencies or digital tokens, sometimes its smart contracts. Most
of the time though, they are talking about distributed ledgers i.e., a list of transactions that is
replicated across a number of computers, rather than being stored on a central server.

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2. WORKING OF BLOCK CHAIN

Figure 1: Working of Block chain

The steps of working of Block chain are as follows:

 An individual in the Block chain networks requests for a transaction.

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 This request for the transactions is then displayed to the other

members(i.e., Nodes).

 The network of nodes by verified algorithms then approves the transaction.

 After the approval of the request by the nodes , they complete the
transactions.

 Immediately after the transaction, a new block is added to the Block chain
network which is immutable.

 Then verified transaction adds with other transactions making a new

blocks of data.

For example consider the following:

A block chain by itself is a data structure. That is how data is logically put
together and stored

Blocks in a chain=pages in a book

For analogy, a book is a chain of pages. Each page in a book contains:

The text: for example the story.

Information about itself: at the top of the page there is usually the title.

Similarly in a block chain block, each block has:

The contents of the block.

A ‘header’ which contains the data about the block.

Block ordering in a Block chain

Page by page: Each page reference a previous page by page number.

Block by block: Each block references a previous block, not by number but by
fingerprints or hash keys.

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3.PROPERTIES OF BLOCK CHAIN

 Decentralization

 Transparency

 Immutability

Decentralization

In a decentralized system, the information is not stored by one single entity. In fact,
everyone in the network owns the information.

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Figure 2: Types of network

In a decentralized network, if anyone wanted to interact with their friend then they
can do directly without going through a third party. That was the main ideology behind
Bit coin. If anyone want to send money to their friends without having to go through a
bank.

Transparency

The transparency of a block chain stems from the fact that the holdings and
transactions of each public address are open to viewing. A person’s identity is hidden via
complex cryptography and represented only by their public address. So, if we were to look up
a person’s transactions history, we will not see “Bob sent 1 BTC” instead we will see
“1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”

So, while the person’s real identity is secure, we will still see all the transaction that
work done by their public address. This level of transparency has never existed before within
a financial system. It adds that extra, and much needed level of accountability which is
required by some of these biggest institutions.

Immutability

Immutability, in the context of the block chain means that once something has been
entered into the block chain it cannot be changed. Block chain get this property is that of
cryptographic hash function.

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In simple terms hashing means taking an input string of any length and giving out an
output of fixed length. In the context of crypto currencies like bit coin, the transactions are
taken has a input and run through a hashing algorithm (bit coin uses SHA-256) which gives
an output of a fixed length

4.TYPES OF BLOCK CHAIN

 Public Blockchain

 Private Blockchain

 Federated/Consortium Blockchain

Table 1: Types of Block chain

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5.APPLICATIONS

Financial Services:

Blockchain financial services are redefining the existing rails of our current financial
markets infrastructure. Areas of this sector experiencing significant activity range from
backend clearing and settlement, to global capital markets architecture. Distributed ledger
systems in some of these cases do not need to be entirely decentralized, and several financial
institutions are looking at creating their own “private blockchains”.

Government:

Blockchain Technology is a potential vehicle to improve government services and

foster more transparent government-citizen relations. The distributed tech can work to
dramatically optimize business processes through more efficient and secure data sharing.

Insurance:

Blockchain Insurance allows for the entire insurance industry to dramatically optimize
business processes by sharing data in an efficient, secure and transparent manner. Using
blockchain revolutionize insurance policies shifts systems onto smart contracts operating
autonomously on peer-to-peer networks, helping to phase out antiquated pen and paper
processing and eliminate red tape the insurance industry is notoriously riddled with.

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Healthcare:

Blockchain technology has the potential to disrupt the healthcare industry’s

centralized operations, opening the door for optimized business and service delivery.

The distributed Ledger Technology(DLT) is an innovation fertile with the possibility

of improved transparency, security and efficiency. Smart contracts on the Blockchain operate
automatically without third-party personnel needed to verify documents or specific steps
using pen-and-paper processes. With automation comes a reduction in the notorious
bureaucracy that currently stand in the way of patients receiving the best care possible.

Music:

Applying Blockchain technology to music applications allows for a paradigm shift in

the way artists can control their musical work. From ownership rights, to royalty payments
and first edition rights, blockchain technology applications empower artists to extend
ownerships of their works.

Identity:

Blockchain technology provides the ideal engine to power digital identities. While
digital identities are emerging as an inevitable part of our connected world, how we secure
our online information is coming under intense scrutiny. Blockchain based identity systems
can provide a solution to this issue with hardened cryptography and distributed ledgers.

Contracts:

In Blockchain law applications, smart contracts are verified on the block chain,
allowing for programmable, self executing and self enforcing contracts. Block chain law also
encompasses the idea of “smart Corporations” which includes concept such as Decentralized
Autonomous Corporations (DAC) or Decentralized Autonomous Organization (DAO).

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6.ADVANTAGES

 Process integrity:

Due to the security reasons this program was made in such a way that any block even
a transaction that adds to the chain cannot be edited which ultimately provides a very high
range of security.

 Traceability:

The format of block chain designs in such a way that it can easily locate any problem
and correct if there is any. It also creates an irreversible audit trail.

 Security:

Block chain technology is highly secure because of the reason each and every
individual who enters into the Block chain network is provided with a unique identity which
is linked to his account. This ensures that the owner of the account himself is operating the
transactions. The block encryption in the chain makes it tougher for any hacker to disturb the
traditional setup of the chain.

 Faster processing:

Before the invention of the block chain, the traditional banking organization take a lot
of time in processing and initiating the transaction but after the block chain technology speed

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of the transaction increased to a very high extent. Before this the overall banking process
takes around three days to settle but after the introduction of block chain , the time reduced to
nearly minutes or even seconds.

7. DISADVANTAGES

Power use:

The consumption of power in the block chain is comparatively high as in a particular

year the power consumption of bit coin miners was alone more than the per capita power
consumption of 159 individual countries. Keeping a real time ledger is one of the reasons for
this consumption because every time it creates a new node, it communicates with each and
every other node at the same time.

Cost:

As per the studies as an average cost of bit coin transaction is $75-$160 and most of
this cost cover by the energy consumption. There are very fewer chances that this issue we
can resolve by the advancement in the technology. As the other factor that is the storage
problem might be covered by the energy issues can not be resolved.

Uncertain regulatory status:

In each and every part of world modern money has been created and control by the
central government . It becomes a hurdle for bit coin to get accepted by the pre existing
financial institutions.

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8. CONCLUSION

The blockchain will redefine the role of existing intermediaries (if they accept to
change), while creating new intermediaries, therefore it will disrupt the traditional boundaries
of value.

The blockchain’s biggest promise to get rid of the intermediaries, since no

government on earth would accept to give up any of it’s controlling power.

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