BLOCKCHAIN

9/16/2019
Submitted to Prof. M Minhaj

Group 6

Aman Kumar – 19066

Emani Nagi Reddy – 19078
Mohammed Umair – 19090
Ranjana Somani – 19102
Sudeep Rao – 19114
Contents

What is a Blockchain?...........................................................................2
How does a blockchain work?..............................................................3
A Blockchain Transaction......................................................................3
First Application for Blockchain............................................................4
Business Oppurtunities using Blockchain.............................................5
Banking...............................................................................................5
Smart contracts..................................................................................6
Healthcare..........................................................................................7
Identity...............................................................................................7
Blockchain in Industry..........................................................................8
Ethereum...........................................................................................8
How Ethereum uses blockchain technology?....................................9
Challenges faced by Blockchain:.........................................................10
Cost..................................................................................................10
Scalability.........................................................................................11
Data privacy.....................................................................................11
Lack of knowledge...........................................................................11
Finding appropriate partner............................................................12
Security............................................................................................12
Criminal Activity...............................................................................12
Lack of regularity clarity...................................................................13
Other Factors......................................................................................13
References:.........................................................................................15

1
What is a Blockchain?

Blockchain is shorthand for a whole suite of a distributed ledger technologies that can be
programmed to record and track anything of value, from financial transactions, medical
records or land titles.

In simple terms blockchain is a time stamped series of immutable records(i.e an object whose
state can’t be modified after its created) of data that is managed by cluster of computers not
owned by any single entity. Each of these blocks of data are secured and bound with each
other using cryptographic principle.

The blockchain is the very definition of a democratized system it has no central authority.
Since the information is shared and immutable, the information is open and available for
everyone to see. This makes blockchain very transparent in nature and everyone involved
accountable for their actions.

Inside a block

2
How does a blockchain work?

Blockchain stores information in batches, called blocks, that are linked together in a
chronological fashion to form a continuous line: metaphorically, a chain of blocks. If you
make a change to the information recorded in a particular block, you don’t rewrite it. Instead
the change is stored in a new block showing that x changed to y at a particular date and time.
That’s because blockchain is based on the centuries-old method of the general financial
ledger. It’s a non-destructive way to track data changes over time.

Now, here’s where things get really interesting. Unlike the age-old ledger method —
originally a book, then a database file stored on a single system — blockchain was designed
to be decentralized and distributed across a large network of computers.

This decentralizing of information reduces the ability for data tampering. Before a block can
be added to the chain, a few things have to happen. First, a cryptographic puzzle must to be
solved, thus creating the block. The computer that solves the puzzle shares the solution to all
of the other computers on the network. This is called proof-of-work. The network will then
verify this proof-of-work and, if correct, the block will be added to the chain. The
combination of these complex math puzzles and verification by many computers ensures that
we can trust each and every block on the chain. Because the network does the trust building
for us, we now can interact directly with our data, in real time.

A Blockchain Transaction

3
First Application for Blockchain

Bitcoin: A Peer-to-Peer Electronic Cash System

On 31st October 2008 Satoshi Nakamoto came out with a paper on the technology it talked
about a purely peer-to-peer version of cash transaction, but what was unique about this
technology was that it allowed payments to be sent from party to another with involving third
party mediator.

Evolution of blockchain applications overtime

4
Business Oppurtunities using Blockchain

Blockchain technology has completed its transition from geek tech to the mainstream
business. From baking to healthcare, blockchain has been of immense use in the way data is
stored and accessed.

Let us look different ways blockchain has added value into the real world scenarios to see the
impact it’s having across a wide variety of industries.

The blockchain uses we will discuss here include the following:

1. Banking
2. Smart Contracts
3. Connected Car
4. Healthcare
5. Internet of Things
6. Identity
7. Marriage Certificates
8. Insurance
9. Wills
10. Food Safety

Blockchain is majorly used in banking, smart contracts, healthcare and identity which are
discussed below:

Banking

Nevermind that blockchain — the backbone of Bitcoin — was created to circumvent

traditional financial institutions. Or that banks originally feared obsolescence if unregulated
currency ever went mainstream. Blockchain, it seems, now has a new friend, and it is none
other than the global banking system.

5
Blockchain Brings Banks Together

A consortium of the world’s largest banks joined forces to exploit the benefits of blockchain
technology. The consortium, known as the Unity Settlement Coin (USC), includes the
following member banks:

 Barclays
 Credit Suisse
 Canadian Imperial Bank of Commerce
 HSBC
 MUFG
 State Street

USC is a digital currency created by Switzerland’s UBS bank, in conjunction with UK-based
Clearmatics. By exploiting the benefits of blockchain technology, USC partners expect to
make it faster and safer for central banks to settle transactions.

Smart contracts

Anytime the question arises how can blockchain help business, smart contracts end up a part
of the answer. These “mini-programs” automatically execute agreements between various
parties when certain conditions are met.

Applications for Smart Contracts

What kind of agreements? All kinds. Stock trades, real estate transactions, and supply chain
management are just a few of the many applications for smart contracts.

Here are a few examples:

6
  Royalty distributions in the entertainment industry can be automated.
 Medical records can be secured by smart contracts so that only certain persons can
access them, and only under predefined conditions.
 Public transportation scheduling can be automated according to pre-programmed
rules.
 Property titles can be automatically managed and transferred
 Loans can be processed automatically.

Healthcare

The blockchain impact on business is being felt nowhere more than in the healthcare sector.
From patient admittance to recording surgical results, every patient represents a torrent of
data that must be kept accurate, accessible, as secure. No technology can satisfy the
requirements of healthcare like blockchain.

Blockchain Applications in Healthcare

Unlike conventional medical record databases, every entry or modification becomes a new,
sequential data block within the blockchain. Whether entering new patient data or updating a
patient’s contact information, every change becomes a new record with its own date and
timestamp.

Blockchain business examples in healthcare abound. Here are a few ways blockchain
technology is already being used to keep us well:

 Storage of patient medical records.

 Tracking data through clinical trials.
 Providing healthcare provider directory management.
 Automating insurance approvals and providing eligibility information.
 Tracking inventory for medical devices, supplies, and equipment.
 The healthcare blockchain market is both open to innovation and lucrative.

7
Identity
In today’s global environment, threats of terrorism require every valid solution we can throw
at them. Few concerns are more pressing than controlling who crosses our international
borders.

Blockchain Advantages for Passports and Visas

Because of its many security features, the adoption of blockchain for travel passports and
visas is inevitable. While counties are, so far, slow to transition to digitized passports, many
are considering it. Eventually, most will have no choice.

The advantages that blockchain-based travel authorization offers are manifold and include:

 The process of receiving a passport can be reduced significantly.

 The same information is available to all authorized users in real time.
 Changes that suddenly limit or restrict a person’s right to travel become effective
immediately.
 Travel providers can automatically check a customer’s travel authorization before
selling them a ticket.
 Authorities can quickly track suspected terrorists’ travels in real time.

Blockchain in Industry

Ethereum

Launched in 2015, Ethereum is the world’s leading programmable blockchain.

Like other blockchains, Ethereum has a native cryptocurrency called Ether (ETH). ETH is
digital money. If you’ve heard of Bitcoin, ETH has many of the same features. It is purely
digital and can be sent to anyone anywhere in the world instantly. The supply of ETH isn’t
controlled by any government or company - it is decentralized, and it is scarce. People all
over the world use ETH to make payments, as a store of value, or as collateral.

8
But unlike other blockchains, Ethereum can do much more. Ethereum is programmable,
which means that developers can use it to build new kinds of applications.

These decentralized applications (or “dapps”) gain the benefits of cryptocurrency and
blockchain technology. They can be trustworthy, meaning that once they are “uploaded” to
Ethereum, they will always run as programmed. They can control digital assets in order to
create new kinds of financial applications. They can be decentralized, meaning that no single
entity or person controls them.

Right now, thousands of developers all over the world are building applications on Ethereum,
and inventing new kinds of applications, many of which you can use today:

 Cryptocurrency wallets that let you make cheap, instant payments with ETH or other
assets
 Financial applications that let you borrow, lend, or invest your digital assets
 Decentralized markets, that let you trade digital assets, or even trade “predictions”
about events in the real world
 Games where you own in-game assets, and can even make real money

And much, much more.

The Ethereum community is the largest and most active blockchain community in the world.
It includes core protocol developers, crypto-economic researchers, cypher-punks, mining
organizations, ETH holders, app developers, ordinary users, anarchists, fortune 500
companies, and, as of now, you.

There is no company or centralized organization that controls Ethereum. Ethereum is

maintained and improved over time by a diverse global community of contributors who work
on everything from the core protocol to consumer applications. This website, just like the rest
of Ethereum, was built - and continues to be built - by a collection of people working
together.

9
How Ethereum uses blockchain technology?

Some of the important Ethereum components are Ethereum virtual machine, Miner, Blocks,
Transactions, Consensus algorithm, Accounts, Smart contracts, mining nodes, Ether and Gas.

A Blockchain network consists of multiple nodes belonging to miners and some nodes that do
not mine but helps in execution of smart contracts and transactions. These are known as
Ethereum virtual machines. Each node is connected to other node on the network. These
nodes use peer-to-peer protocol to talk to each other. They by default use 30303 port number
to talk among themselves.

Each miner maintains an instance of ledger. Ledger contains all blocks in the chain. With
multiple miners it is quite possible that each miner’s ledger instance might have different
blocks than other. The miners synchronize their blocks on an on-going basis to ensure that
every miner’s ledger instance is same as other.

Challenges faced by Blockchain:

As blockchain is an emerging technology, many of the user are relatively new to it and lack
proper knowledge about the technology. Due to which the technology faces certain
challenges. One of the major reasons for Blockchain facing difficulties is that the architecture
of the Blockchain Implementation is not standardized. There are many other factors that
make enterprise to avoid implementing Blockchain technology. Let’s take a brief look at
those factors.

Cost
Cost is the one of those things that every enterprise wants to minimize. The overall cost of
implementing this technology is high, as it consumes a lot of energy. The speed of transaction
and energy consumption is insufficient and relatively slow when compared to VISA. Let’s

10
take Bitcoin as an example, Bitcoin performs 3 to 5 transactions per second [TPS] whereas a
platform like Ethereum performs up to 15 TPS, all this pale in comparison to VISA as it
performs 1,667 TPS. Blockchain, for every 4 TPS consumes 32 Terawatts of electricity is
required annually. Hyper Ledger Fabric claims to provide 3,500 TPS which is twice the size
which VISA performs. Unlike the Blockchain, Hyper Ledger Fabric does not run on proof-
of-work platform which consumes less power. Since the technology is new, and users are
hesitant to use it, leading to low availability of right person to get the job done in terms of
minimizing cost while implementing.

Scalability
One of the major concerns of implementing this technology is its inability to serve many
users. As such problems are needed to be dealt with, investments are being made rapidly to
find solutions. It is estimated that the amount investments being made will accumulate around
$11.7 Billion by 2022. This has led to increase in demand for the solutions. To increase the
speed of the transactions and to optimize its ability in such a way that, it can serve many
users at a time, certain measures are being taken such as the Transaction speed increase
project. For a firm to adopt such technologies, these technologies must provide scalability, for
instance consider a bank which has 5-6 million of customers and all the customer access try
to access simultaneously, the platform must provide scalability such that there is no lag. To
add to the fact, most of the Blockchain networks are untested.

Data privacy
Before Blockchain, there were three entities involved for a transaction to occur that is sender,
receiver and a middleman. The biggest selling point of this technology was that it didn’t
require a middleman for a transaction to happen. Blockchain provides satisfaction to its users
over their transaction so there is transparency as well as Data integrity (during transaction).

One of the major drawbacks of this technology is that any user can view other user’s data.
Suppose Company X and Company Y are rival’s, and both are using same Blockchain
platform. The advantage one Company has over another diminishes as they both can view
each other’s data and their strategical move is compromised. Due to these factors, Companies
are sceptical about using this platform.

Lack of knowledge
The solutions that are coming up are unorthodox or one can say as novel, in general. These
solutions are very technical and hard to understand for a guy having non-IT background so
11
there is definitely lack of knowledge among people about this technology. As they have no
proper basic knowledge, there judgement to select which platform is the best for their
company is not optimal. Not only in selection but there is lack of awareness of appropriate
steps required in Blockchain Implementation, these steps help in providing better outcomes.

Finding appropriate partner

Another challenge is finding the appropriate partner to facilitate the implementation of any
Blockchain technology. The Blockchain is an emerging Technology and there is no clear road
map to implement this technology. Another factor for companies being sceptical to use this
platform is that there is no clear standard defined. but efforts are being made to overcome
such adversaries. Before entering into this platform, one must have appropriate partner to
guide them through this complicated network, this is very another hurdle comes up which is,
figuring out who is best for this job (partnering) and how to implement it appropriately. Some
Companies may even think of creating their own Blockchain platform, which is inadvisable
as it is very costly and very complex to build.

Security
Blockchain Technologies are known for resilience against Cybercrime. But what affecting
them is the pace of implementing this Technologies as it is exposing some parts of the
platforms to hackers. Since the Technology is an emerging one, it has immature processes
and defences. One of the major security issues is that any user can act as a fake Company and
trade, leading to phishing scams and lack of clear standard of development leads to the
platform being exposed to malware. Due to these factors the users are migrating towards
Private Blockchain which provides a higher privacy but does not allow the users to enjoy the
same autonomy as provided by the Public Blockchain. If Bad Actors successfully attack the
platform in any manner, this leads to the lose of credibility of the Technology. Due to these
factors, users with investments will experience losses.

Criminal Activity
One of the challenges the platform faces is from cleanness of the Technology. Two major
things occurred since the invention of Blockchain. First being the introduction of Bitcoin,
which is a revolutionizing the financial industry. Second, this technology has given rise to the
criminal activity such as money laundering and Bad Actors using this platform as media for

12
illegal transactions. There is also a distrust among people due to certaincontroversial
cryptocurrencies. Hackers ask for ransom in case of DDoS attack on computers.

Lack of regularity clarity

Due to some of the above-mentioned topics the government are reluctant towards the
implementation of this Technology. And it is hard to define what the actual legal
environment is for this Technology. And there’s no clarity on what law applies says.  The
EU’s General Data Protection Regulation wont work under such uncertain circumstances.
Apparently, data stored on the distributed ledger is available to all participants to view, but
not to alter. Also, not all the data belonging to a certain transaction is available for viewing
by the users. This is due to a blockchain network property called data minimization.
Therefore, this is evidence that data on a blockchain network is already protected.

Other Factors

The Hype Cycle

While blockchain is often seen as a transformative technology for businesses, many still have
unrealistic expectations for what it can actually do, the report noted. While survey
respondents on average said they expected a 24% return on investment (ROI) on their early
blockchain projects, they only saw a 10% return on average. 

It is important for organizations to carefully consider whether there are other technologies or
approaches to digitization that may deliver on their objectives more effectively or efficiently,
the report stated. 

Stake Holder Buy-In

Proof of concept blockchain projects are typically led by its biggest supporters, then
developed in R&D, always operating in controlled environments. Moving to production
requires stakeholder buy-in, which can be challenging, the report noted. 

Helping stakeholders to understand the technology and its benefits is an ongoing process and
it's proven to be hugely valuable, Peter Hiom, deputy chief executive officer of Australian
Securities Exchange, said in the report. It's enabled us to better understand the needs of our
customers and ensure we develop functionality that will make their lives easier.

Capturing Ecosystem Value

13
Working with others is key for successful blockchain implementation, the report said. The
whole point of doing blockchain is it's a team sport," Christopher G. McDaniel, president of
the Institutes Risk Block Alliance, said in the report. If you're trying to do it on your own,
maybe that's OK from a proof-of-concept standpoint, but if you ever want to get real
production value, you have to join with others. Otherwise there's no point.

To ensure that proof of concepts, standards, and solutions are adopted at industry scale,
organizations must work together to create an environment of shared values, and partner
together to solve challenges that arise, the report said. 

Complex Legacy System & Technical Debt

Some 87% of those surveyed said it was more challenging to implement a blockchain
solution as part of an existing digital transformation project, particularly when a substantial
amount of money had already been spent on legacy technology, the report found. 

Alternative digital solutions may offer faster returns and be more strategic in the short term,
but organizations should evaluate whether blockchain provides additional benefits in the
longer term, it stated. 

Uncertainty

As blockchain is a relatively new technology, prior to starting a blockchain project, 59% of

respondents said they had no confidence that the project would deliver a positive ROI. Many
also still lack certainty about whether the technology is production ready, due to its
limitations and scalability issues. 

Though many technologists and service providers classify the technology as and ready for
production, skepticism remains, the report stated. It is important to keep in mind that
blockchain is in its early stages and there are limitations as a result. Challenges exist in fully
addressing security, speed and efficiency, given the nascency of the technology.

Public Perception

It lacks public acknowledgement and marketing. Common folk should be educated on this
new field to pursue it.

14
15
References:

https://101blockchains.com/enterprise-blockchain-implementation-challenges/

https://medium.com/datadriveninvestor/challenges-involved-in-implementing-the-blockchain-
technology-in-financial-industry-c87e5e9c9d9e

https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/Innovation/deloitte-uk-blockchain-
key-challenges.pdf

https://blog.aeternity.com/5-issues-companies-are-facing-with-blockchain-5eb0cac0dc59

https://blockgeeks.com/guides/what-is-blockchain-technology/   

https://rubygarage.org/blog/how-blockchain-works 

https://medium.com/datadriveninvestor/what-is-a-block-in-the-blockchain-c7a420270373

https://medium.com/@preethikasireddy/how-does-ethereum-work-anyway-22d1df506369 

16
NAME PGDM NO. CONTRIBUTION

Aman kumar 19066 Blockchain

Introduction
Emani Nagi Reddy 19078 Other factors

Mohammed Umair 19090 Challenges

Ranjana Somani 19102 Business

Applications
Sudeep Rao 19114 Ethereum

17