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Blokchain Technology assignment

1. Public Distribution System(PDS)

Introduction:
Subsidised ration distribution takes place each month to the ration card holders across the
state under public distribution system (PDS). PDS involves procurement from the farmers till
distribution to ration card beneficiaries comprising different entities in between such as
central and state agencies, millers, transporters, shop owners and then finally to the
beneficiaries.

A major feature of the PDS is the general lack of accountability down the entire supply chain,
leaving the leakages that occur at different points completely unaccounted. Blockchain
technology can be useful in managing supply chain effectively using distributed ledger
technology. Entire supply chain starting from procurement till disbursement can be part of
blockchain

Process flow:
Farmer cultivates the foodgrains which is then procured by the government under minimum
support price (MSP). Millers identified by the government collects foodgrains initially and
then hull it (depending on the commodity) to be returned to government.

It is then moved to state godowns to be distributed to various block godowns. From the block
godowns these commodities gets distributed to various fair price shops (FPS) for beneficiary
distribution.

Government agencies identify and allow the millers to register with them for the purpose.
Farmers register with the millers to deposit their produce and collect their payment under
MSP.

A farmer gets paid under MSP based on the quantity supplied. Miller then processes these
commodities to make it available at storage points for further distribution. Miller gets paid for
processing these commodities. Miller also gets paid for transporting them to nearest state
godowns. Fair price shop owner collects his quota from these storage points to be distributed
to the beneficiaries.

Role of Blockchain:
Use of blockchain can remove at least delay in payment to the farmers based on procurement
done by the miller. Since miller is responsible for the collection and stock initially unless the
transaction is approved by the farmer, miller cannot register the quantity collected. This
makes each transaction Non-repudiation.

Since calculation and payment must happen based on this initial data, data provenance
(recording history of data) can be sealed using blockchain technology. The decentralized
distributed ledger makes all the stake holders refer to their local copy of the ledger to make
decisions and act accordingly.
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Certain activities such as payment to farmers can be done without waiting for the miller to
hull them. Since the procurement season is defined for each commodity, payment can start
immediately without waiting for the other actors to complete their process.

This makes each transaction as non-time critical and thus eligible to be part of blockchain
technology. Since farmer only interacts with the government identified millers it needs not be
part of a public chain where in transporter is participating in the network.

Current status of POC:

The POC application for PDS is developed as a python web application with three
stakeholders namely miller, farmer and the Admin user. The application interacts with the
blockchain node and to the RDBMS and is deployed in Docker container. The POC covers
the procurement process of PDS which involve the miller registration with the government
and the farmer registration with the miller. The registration modules writes the registration
details to the blockchain as well as to the database. The data updating modules read the
existing data from the block chain and write back the updated details. The super user module
provides option to read and compare the data from both the database and the blockchain
which in turn helps to identify any data update anomalies.
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2. Introduction to Blockchain

Blockchain is a peer-to-peer network; the word ‘blockchain‘ is made up of two separate

terms, ‘block’ and ‘chain’. A block being referred to a collection of data, alias data records,
and chain being referred to a public database of these blocks, stored as a list.

These lists are linked using cryptography, making it the most essential and fundamental
requirement for creating a blockchain. Blockchain is a growing list of records, and the blocks
get appended to the list with time. Cryptography in blockchain can be a tricky concept, but
we have tried to simplify it for your better understanding.

Cryptograph

Cryptography is a method of developing techniques and protocols to prevent a third party

from accessing and gaining knowledge of the data from the private messages during a
communication process. Cryptography is also made up of two ancient greek terms, Kryptos
and Graphein, the former term meaning “hidden” and latter being “to write”. There are
several terms related to cryptography, which are stated as follows:

Encryption: It is a process of plaintext (normal text) to a ciphertext (random sequence of

bits).
Decryption: The inverse process of encryption, conversion of ciphertext to plaintext.

Use of Cryptography in Blockchain

Blockchains make use of two types of cryptographic algorithms, asymmetric-key algorithms,
and hash functions. Hash functions are used to provide the functionality of a single view of
blockchain to every participant. Blockchains generally use the SHA-256 hashing algorithm as
their hash function.

Cryptographic hash functions provide the following benefits to the blockchain:

● Avalanche effect – A slight change in the data can result in a significantly different
output.
● Uniqueness – Every input has a unique output.
● Deterministic – Any input will always have the same output if passed through the
hash function.
● Quickness – The output can be generated in a very small amount of time.
● Reverse engineering is not possible, i.e. we cannot generate the input by having the
output and the hash function.

Hash functions have a major role in linking the blocks to one another and also to maintain the
integrity of the data stored inside each block. Any alteration in the block data can lead to
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inconsistency and break the blockchain, making it invalid. This requirement is achieved by
the property of the hash functions, called the ‘avalanche effect’.

According to this, if we make even a slight change in the input to the hash function, we will
end up getting a totally unrelated output as compared to the original output. Let us take an
example of an SHA-256 hash function, and compare their outputs,

Input: Blockchain at upGrad

Output: 04f0ecc95159533982d7571eada5f8d76592b6e97ead964467c603d31b9e7a9c

Input with a slight difference: Blockchain at upGrad

Output: 80b069904b6a8db46ed94e7091ff4e5fc72fae5422d46cc57d8f66db7abf4781

You can notice the huge difference in output after changing a single character at the input
from lowercase to uppercase. This makes the data reliable and secure on the blockchain; any
changes in the block data will lead to this difference in hash value and make the blockchain
invalid, making it immutable.

Asymmetric-key cryptography is where the private key generally needs to be produced by a

random number algorithm, and the public key is calculated by executing an irreversible
algorithm. The asymmetric encryption algorithm has the advantage of having separate public
and private keys, which can be transferred over unsecured channels.

Likely, it also has several disadvantages, some of them being low processing speed and
unsatisfactory encryption strength. It is very much necessary to ensure the security of the
asymmetric encryption algorithm during the transmission of data on the blockchain.

One of the major parts of asymmetric-key cryptography is digital signatures. Digital

signatures provide integrity to the process; they are easily verifiable and cannot be corrupted.
They also hold the quality of non-repudiation, making them similar to the signatures in the
real-world. The digital signatures ensure that the blockchain is valid and the data is verified
and correct.

Hashing, public-private key pairs, and the digital signatures together constitute the foundation
for the blockchain. These cryptographic features make it possible for blocks to get securely
linked by other blocks, and also ensure the reliability and immutability of the data stored on
the blockchain.

There are a huge number of applications of blockchain technology, and cryptography makes
it possible. One of the major real-world applications of cryptography in the blockchain is
cryptocurrencies. Let us look at its application in cryptocurrencies.
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