A Seminar Report On " "

A
Seminar Report
On
“Bitcoin using Block Chain Technology”
A Seminar Report Submitted To
Jawaharlal Nehru Technological University,Anantapur

in partial fulfillment of the requirement for the award of
degree of
Bachelor of Technology
in
Computer Science and Engineering
By
BHAVANI J
Reg No: 172U1A0520
Department of
GEETHANJALI INSTITUTE OF SCIENCE &

TECHNOLOGY: NELLORE
(Approved By A.I.C.T.E & Permanently Affiliated to

J.N.T.U. Ananthapur, NAAC ‘A’ Grade)
3 rd Mile Bombay Highway, Gangavaram (V), Kovur (M),

SPSR Nellore (Dt), AP-524137.
www.gist.edu.in
(2017-2021)
Department of Computer Science and Engineering

GEETHANJALI INSTITUTE OF SCIENCE &
TECHNOLOGY: NELLORE
(Approved By A.I.C.T.E & Permanently Affiliated to

J.N.T.U. Ananthapur, NAAC ‘A’ Grade)
3 rd Mile Bombay Highway, Gangavaram (V), Kovur (M),

SPSR Nellore (Dt), AP-524137.
www.gist.edu.in
CERTIFICATE
This is to certify that seminar report entitled “Bitcoin using Block Chain
Technology” is submitted by Bhavani J (Reg No: 172U1A0520)
in the partial fulfillment of requirements for the award of degree of
Bachelor of Technology
in
Seminar Incharge Head of the Department
Dr. Y. Pavan Kumar Reddy, Dr. V. Sireesha

Assoc. Prof / CSE,GIST Professor & HoD / CSE, GIST

Institute Vision
 To emerge as a leading Engineering institution imparting quality education.
Institute Mission
 Effective teaching-learning strategies for quality education
 Congenial academic ambience for progressive learning
 Skill development through Industry-Institute initiatives
 Nurturing environmentally conscious and socially
responsible technocrats

Vision
 To develop as a lead learning resource center producing skilled
professionals.
Mission
 Provide dynamic and application-oriented education through advanced
teaching learning methodologies
 Provide sufficient physical infrastructural facilities to enhance learning
 Strengthen the professional skills through effective Industry Institute
Interaction
 Organizing personality development activities to educate life skills and
ethical values

INDEX
S.NO TITLE Page No
1. Abstract 1
2. 1.Introduction 2
3. 2.Bitcoin 4
2.1 A Block in Block Chain 6
2.2 Block Header 7
4. 3. Bitcoin Mining 9
3.1Double SHA-256 10
3.2Bitcoin Transaction 12
5. 4.Different types of Crypto currencies 15
6. 5.Advantages 18
7. 6.Disadvantages 20
8. 7.Conclusion 21
9. 8.References 22

List of Figures
S.NO Figure No TITLE Page No
1. 1 Properties of Distributed Ledger Technology. 2
2. 2.2 Block Header 7
3. 3 Bitcoin Mining 9
4. 3.1 Overview Architecture of Double SHA-256 11

in Bitcoin Mining
5. 3.21 Bitcoin Components 12
6. 3.2. A sample Bitcoin Transaction 12

BITCOIN USING BLOCK CHAIN TECHNOLOGY 172U1A0520
Abstract
Bitcoin is a completely decentralized, peer to peer permission-less cryptocurrency
developed by NAKAMOTO, SATOSHI. Technology behind Bitcoin is Block Chain
Technology. A Block Chain is a open distributed ledger that can record transactions
between two parties, efficiently (fast and scalable), verifiable (everyone can check
and validate the info) in a permanent way. The Block in Bitcoin includes digitally
signed and encrypted transactions verified by peers, cryptography security algorithms,
Block header which contains (previous block hash, mining statistics used to construct
the block and Merkle tree root). Mining statistics provides the mechanism to generate
Hash value that is complicated enough to make the Block chain Tamper Proof. This
task is performed by the Miner. They generate Nonce value that ensures difficulty on
the generated Hash value. The algorithm used to generate Hash value is Double
SHA256. The basic paradigms of Bitcoin are : “ Distributed Ledger, Tamper Proof
Architecture, Permission less environment based on Challenge Response Scenario,
The Economy of Revenue Model ”.
DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 1 | Page

1. Introduction
A Block Chain is an open distributed ledger that can record transactions between two
parties efficiently and in a verifiable and permanent way. A blockchain is
essentially a digital ledger of transactions that is duplicated and distributed
across the entire network of computer systems on the blockchain. Each block
in the chain contains a number of transactions, and every time a new
transaction occurs on the blockchain, a record of that transaction is added to
every participant’s ledger. The decentralized database managed by multiple
participants is known as Distributed Ledger Technology (DLT).Blockchain is
a type of DLT in which transactions are recorded with an immutable
cryptographic signature called a Hash.
Fig 1 Properties of Distributed Ledger Technology.

From Fig 1.1, if one block in one chain was changed, it would be immediately
apparent it had been tampered with. If hackers wanted to corrupt a
blockchain system, they would have to change every block in the chain,
across all of the distributed versions of the chain. Blockchains such
as Bitcoin and Ethereum are constantly and continually growing as blocks
are being added to the chain, which significantly adds to the security of the
ledger.
One key difference between a typical database and a blockchain is the way the data is
structured. A blockchain collects information together in groups, also known as

blocks, that hold sets of information. Blocks have certain storage capacities and, when
filled, are chained onto the previously filled block, forming a chain of data known as
the “blockchain.” All new information that follows that freshly added block is
compiled into a newly formed block that will then also be added to the chain once
filled.
A database structures its data into tables whereas a blockchain, like its name
implies, structures its data into chunks (blocks) that are chained together. This makes
it so that all blockchains are databases but not all databases are blockchains. This
system also inherently makes an irreversible timeline of data when implemented in a
decentralized nature. When a block is filled it is set in stone and becomes a part of this
timeline. Each block in the chain is given an exact timestamp when it is added to the
chain.
Blockchain technology accounts for the issues of security and trust in several
ways. First, new blocks are always stored linearly and chronologically. That is, they
are always added to the “end” of the blockchain. If you take a look at Bitcoin’s
blockchain, you’ll see that each block has a position on the chain, called a “height.”
As of November 2020, the block’s height had reached 656,197 blocks so far.
For the purpose of understanding blockchain, it is instructive to view it in the

context of how it has been implemented by Bitcoin. Like a database, Bitcoin needs a
collection of computers to store its blockchain. For Bitcoin, this blockchain is just a
specific type of database that stores every Bitcoin transaction ever made. In Bitcoin’s
case, and unlike most databases, these computers are not all under one roof, and each
computer or group of computers is operated by a unique individual or group of
individuals.
The goal of blockchain is to allow digital information to be recorded and
distributed, but not edited.The Bitcoin protocol is built on a blockchain.The Bitcoin
protocol is built on a blockchain.The key thing to understand here is that Bitcoin
merely uses blockchain as a means to transparently record a ledger of payments, but
blockchain can, in theory, be used to immutably record any number of data points.

2. BITCOIN
Bitcoin is a digital currency created in January 2009. It follows the ideas set
out in a whitepaper by the mysterious and pseudonymous Satoshi Nakamoto. The
identity of the person or persons who created the technology is still a mystery. Bitcoin
offers the promise of lower transaction fees than traditional online payment
mechanisms and, unlike government-issued currencies, it is operated by a
decentralized authority.
Bitcoin is a type of cryptocurrency. There is no physical bitcoin, only balances
kept on a public ledger that everyone has transparent access to. All bitcoin
transactions are verified by a massive amount of computing power. Bitcoin is not
issued or backed by any banks or governments, nor is an individual bitcoin valuable
as a commodity. Despite it not being legal tender in most parts of the world, bitcoin is
very popular and has triggered the launch of hundreds of other cryptocurrencies,
collectively referred to as altcoins. Bitcoin is commonly abbreviated as "BTC."
The bitcoin system is a collection of computers (also referred to as "nodes" or
"miners") that all run bitcoin's code and store its blockchain. Metaphorically, a
blockchain can be thought of as a collection of blocks. In each block is a collection of
transactions. Because all the computers running the blockchain have the same list of
blocks and transactions, and can transparently see these new blocks being filled with
new bitcoin transactions, no one can cheat the system.
Anyone—whether they run a bitcoin "node" or not—can see these transactions
occurring in real-time. To achieve a nefarious act, a bad actor would need to operate
51% of the computing power that makes up bitcoin. Bitcoin has around 10,000 nodes,
as of June 2021, and this number is growing, making such an attack quite unlikely.But
if an attack were to happen, bitcoin miners—the people who take part in the bitcoin
network with their computers—would likely fork to a new blockchain, making the
effort the bad actor put forth to achieve the attack a waste.Balances of bitcoin tokens
are kept using public and private "keys," which are long strings of numbers and letters
linked through the mathematical encryption algorithm that was used to create them.
The public key (comparable to a bank account number) serves as the address
published to the world and to which others may send bitcoin.The private key
(comparable to an ATM PIN) is meant to be a guarded secret and only used to
authorize bitcoin transmissions. Bitcoin keys should not be confused with a bitcoin

wallet, which is a physical or digital device that facilitates the trading of bitcoin and
allows users to track ownership of coins. The term "wallet" is a bit misleading, as
bitcoin's decentralized nature means it is never stored "in" a wallet, but rather
decentrally on a blockchain.
Bitcoin is one of the first digital currencies to use peer-to-peer technology to

facilitate instant payments. The independent individuals and companies who own the
governing computing power and participate in the bitcoin network—bitcoin
"miners"—are in charge of processing the transactions on the blockchain and are
motivated by rewards (the release of new bitcoin) and transaction fees paid in bitcoin.
These miners can be thought of as the decentralized authority enforcing the

credibility of the bitcoin network. New bitcoin are released to the miners at a fixed,
but periodically declining rate. There are only 21 million bitcoin that can be mined in
total. As of June 2021, there are over 18 million bitcoin in existence and less than 3
million bitcoin left to be mined.
In this way, bitcoin and other cryptocurrencies operate differently from fiat
currency; in centralized banking systems, the currency is released at a rate matching
the growth in goods; this system is intended to maintain price stability. A
decentralized system, like bitcoin, sets the release rate ahead of time and according to
an algorithm.
A variety of hardware can be used to mine bitcoin. However, some yield

higher rewards than others. Certain computer chips, called Application-Specific
Integrated Circuits (ASIC), and more advanced processing units, like Graphic
Processing Units (GPUs), can achieve more rewards. These elaborate mining
processors are known as "mining rigs." One bitcoin is divisible to eight decimal
places (100 millionths of one bitcoin), and this smallest unit is referred to as a
Satoshi.If necessary, and if the participating miners accept the change, bitcoin could
eventually be made divisible to even more decimal places.

2.1 A Block in Block Chain:

Blocks are files where data pertaining to the Bitcoin network are permanently
recorded. A block records some or all of the most recent Bitcoin transactions
that have not yet entered any prior blocks. Thus, a block is like a page of a ledger or
record book. Each time a block is ‘completed’, it gives way to the next block in
the blockchain. A block is thus a permanent store of records which, once written,
cannot be altered or removed.
A block can be thought of like a link in a chain. It possesses parts or all of the
records of the transactions that preceded it.the blockchain network is comprised of
millions of blocks that are in a constant state of flux.A block is virtually impossible to
hack. If it was possible, it would have the same effect as a bank robber reaching over
the counter and not only taking money but all the bank's records as well.Bitcoin
miners can solve complex mathematical equations, and are awarded BTC, or bitcoins,
for their effort in finding the solutions.
The Bitcoin network witnesses a great deal of transaction activity. Maintaining

a record of these transactions helps users track what was paid for and by whom. The
transactions executed during a given period of time are recorded into a file called a
block, which is the basis of the blockchain network.
A block represents the ‘present’ and contains information about its past and
future. Each time a block is completed it becomes part of the past and gives way to a
new block in the blockchain. The completed block is a permanent record of
transactions in the past and the new transactions are recorded in the current one.This
way, the whole system works in a cycle and data gets permanently stored. Each block
comprises records of some or all recent transactions, and a reference to the block that
preceded it which, along with Bitcoin's peer-to-peer verification system, makes it
virtually impossible for a user to tamper with previously recorded transaction data.
A blockchain is like a record of bank transactions, whereas a block might be a
single transaction confirmation that a bank ATM prints out after you use the machine.
Within the blockchain network, the individual blocks build a 'ledger' much like an
ATM or bank would record your transactions.Blockchain though, records the chain

across all their users instead of one. This is similar to a bank, but the blockchain offers
an increased level of privacy versus normal banking institutions.
2.2 Block Header
A block header is used to identify a particular block on an entire blockchain and is

hashed repeatedly to create proof of work for mining rewards. A blockchain consists
of a series of various blocks that are used to store information related to transactions
that occur on a blockchain network. Each of the blocks contains a unique header, and
each such block is identified by its block header hash individually.
Fig 2.2 Block Header
Block headers identify individual blocks in a blockchain.They’re hashed to

create a proof of work for mining rewards. The blocks are layered vertically, starting
with the “genesis block.”Each block header contains three sets of block metadata and
multiple individual components. The Bitcoin version number helps you to keep track
of changes in the protocol.
Block headers are commonly used in Bitcoin developer documentation, and

help to record tasks quickly and relatively easily. Entire blockchains can be stored in a
simple database or as a flat-file. When considering blockchains as a whole, it helps to
picture them as a vertical stack.

The blocks get layered—one on top of the other, with the first block being the
foundation—and they grow in height until the end of the blockchain is reached and
the sequence is complete. The first block in the chain is also known as the “genesis
block.” The layers and deep history of each sequence is one of the things that makes
Bitcoin so secure. As a part of a standard mining exercise, a block header is hashed
repeatedly by miners by altering the nonce value. Through this exercise, they attempt
to create a proof of work, which helps miners get rewarded for their contributions to
keep the blockchain system running smoothly and efficiently.
Requirements of Block Header
The block header contains three sets of block metadata. It is an 80-byte long string,
and it is comprised of the 4-byte long Bitcoin version number, 32-byte previous block
hash, 32-byte long Merkle root, 4-byte long timestamp of the block, 4-byte
long difficulty target for the block, and the 4-byte long nonce used by miners.
Block Header Components :
 The primary identifier of each individual block is the cryptographic hash it

contains. It is essentially a digital fingerprint, and it is created by hashing the
block header through the applicable algorithm twice.
 The Bitcoin version number is useful in keeping track of changes and updates
throughout the protocol. The previous block hash links to the previous block, or
its parent block, effectively securing the chain.
 The Merkle root is made up of all of the hashed transaction hashes within the
transaction. This is not as complicated as it sounds, each hashed is just further
hashed. The timestamp is included so that everyone working on the project will
be able to see a permanent, encoded record of when a particular event occurred. It
typically provides the date and time of day for that particular event and is often
narrow enough to be accurate within just a fraction of a second.
 The difficulty target is used, simply, to adjust how hard it is for the miners
working to solve the block. Lastly, the nonce is the value that miners can alter to
create different permutations and generate a correct hash in the sequence.

3. BITCOIN MINING
Bitcoin mining is the process by which new bitcoins are entered into circulation, but it
is also a critical component of the maintenance and development of the blockchain
ledger. It is performed using very sophisticated computers that solve extremely
complex computational math problems.
Cryptocurrency mining is painstaking, costly, and only sporadically rewarding.
Nonetheless, mining has a magnetic appeal for many investors interested in
cryptocurrency because of the fact that miners are rewarded for their work with crypto
tokens.
Fig 3: Bitcoin Mining
By mining, you can earn cryptocurrency without having to put down money
for it.Bitcoin miners receive Bitcoin as a reward for completing "blocks" of verified
transactions, which are added to the blockchain.Mining rewards are paid to the miner
who discovers a solution to a complex hashing puzzle first, and the probability that a
participant will be the one to discover the solution is related to the portion of the total
mining power on the network.You need either a GPU (graphics processing unit) or an
application-specific integrated circuit (ASIC) in order to set up a mining rig.
The Bitcoin reward that miners receive is an incentive that motivates people to
assist in the primary purpose of mining: to legitimize and monitor Bitcoin transactions,

ensuring their validity. Because these responsibilities are spread among many users all
over the world, Bitcoin is a "decentralized" cryptocurrency, or one that does not rely
on any central authority like a central bank or government to oversee its regulation.
Miners are getting paid for their work as auditors. They are doing the work of
verifying the legitimacy of Bitcoin transactions. This convention is meant to keep
Bitcoin users honest and was conceived by Bitcoin's founder, Satoshi Nakamoto. By
verifying transactions, miners are helping to prevent the "double-
spending problem."
Double spending is a scenario in which a Bitcoin owner illicitly spends the

same bitcoin twice. With physical currency, this isn't an issue: once you hand
someone a $20 bill to buy a bottle of vodka, you no longer have it, so there's no
danger you could use that same $20 bill to buy lotto tickets next door. While there is
the possibility of counterfeit cash being made, it is not exactly the same as literally
spending the same dollar twice. With digital currency, "there is a risk that the holder
could make a copy of the digital token and send it to a merchant or another party
while retaining the original." What a Bitcoin miner does is analogous to that—they
check transactions to make sure that users have not illegitimately tried to spend the
same bitcoin twice.
Once miners have verified 1 MB (megabyte) worth of Bitcoin transactions,

known as a "block," those miners are eligible to be rewarded with a quantity of
bitcoin (more about the bitcoin reward below as well). The 1 MB limit was set by
Satoshi Nakamoto, and is a matter of controversy, as some miners believe the block
size should be increased to accommodate more data, which would effectively mean
that the bitcoin network could process and verify transactions more quickly.
3.1 DOUBLE SHA-256 :
In Bitcoin mining, the double SHA-256 algorithm is used to compute the hash value
of the bitcoin block header, which is a 1024-bit message. The use of double SHA-256
protects against the length extension attack . Technically, SHA-256 consists of a
message expander (ME) and a message compressor (MC). During the SHA-256

operation, the ME expands the 512-bit input message into 64 chunks of 32-bit data.
The MC compresses these 64 32-bit data chunks into a 256-bit hashed output.
Fig 3.1 :Overview Architecture of Double SHA-256 in Bitcoin Mining.
Fig. 3.1 shows the overview architecture of double SHA-256 applied for Bitcoin
mining. The input to the double SHA-256 process is a 1024-bit message, which
includes a 32-bit version, a 256-bit hash of the previous block, a 256-bit hash of the
Merkle root, a 32-bit timestamp, a 32-bit target, a 32-bit nonce, and 384 bits of
padding. The 1024-bit message is split into two 512-bit message parts; then SHA-
2561 calculates a hash value of the first 512-bit message, and SHA-2562 computes a
hash value of the final 512-bit message. Due to the double SHA-256 requirement, the
256-bit hash output from SHA-2562 must be compressed into the final 256-bithash
by using SHA-2563 . In the Bitcoin mining process, the final 256-bit hash output from
SHA-2563 is compared to the target value. If the final hash is smaller than the target
value, the valid 32-bit nonce is specified, and a new Bitcoin block is successfully
created. Otherwise, the 32-bit nonce is increased by one and the double SHA-256
circuit recomputes to find a new hash value. This process is repeated until the 256-bit
hash of SHA-2563 meets the target requirement.

Computation inside all three blocks (SHA-2561, SHA-2562, and SHA-2563) follows
the SHA-256 algorithm, which has two processes: a message expander (ME) and a
message compressor (MC).
3.2 Bitcoin Transactions:

A Bitcoin transaction is composed of 4 key elements:
 Input (Origin): Bitcoin address (public) of the origin wallet .
 Amount: Amount of bitcoins to be sent on the transaction.
 Output (Destination): Bitcoin address (public) of the destination wallet.
 Metadata (Optional): The metadata or message has a maximum size of 80

bytes.The metadata is stored in the OP_RETURN part of the transaction.
Fig 3.2.1 Bitcoin Components
A transaction doesn’t simply move some bitcoin from one address to another address.
A Bitcoin transaction moves bitcoins between one or more inputs and outputs. Each
input is a transaction and address supplying bitcoins. Each output is an address
receiving bitcoin, along with the amount of bitcoin going to that address.
Fig 3.2.2 A Sample Bitcoin Transaction

From the Fig 3.2.2, shows a sample transaction “C”. In this transaction, .005 BTC is
taken from an address in Transaction A, and .003 BTC is taken from an address in
Transaction B. For the outputs, .003 BTC are directed to the first address and .004
BTC are directed to the second address. The leftover .001 BTC goes to the miner of
the block as a fee. Each input used must be entirely spent in a transaction. If an address
received 100 bitcoins in a transaction and you just want to spend 1 bitcoin, the
transaction must spend all 100. The solution is to use a second output for change,
which returns the 99 leftover bitcoins back to you.
Transactions can also include fees. If there are any bitcoins left over after
adding up the inputs and subtracting the outputs, the remainder is a fee paid to the
miner. The fee isn’t strictly required, but transactions without a fee will be a low
priority for miners and may not be processed for days or maybe discarded entirely. A
typical fee for a transaction is 0.0002 bitcoins (about 20 cents), so fees are low but not
trivial.
STEPS INVOLVED IN TRANSACTIONS:
1. Transaction creation and signing :
Anyone can create a transaction with 3 necessary components. The Input,
Amount and Output. For example, let´s say that Bob and Alice are exchanging bitcoin
for dollars. As Bob sends the bitcoin to Alice, Alice needs to send her bitcoin address
(public) and Bob creates the transaction and sign it with his private key.
2. Broadcasting :
Once the transaction is created, it is sent to the closest node on the bitcoin
network. Note: The transaction does not need to be sent right after the creation. It
could be sent a long time after the creation (just need to be sure that you have enough
bitcoins in the wallet when you decide to send it).
3. Propagation and verification :
Once the transaction arrives at the closest node, then it is propagated into the
network and verified. After it successfully passes verification it goes and sits inside the
“Memory pool” and patiently waits until a miner picks it up to include it in the next
block.
4. Validation :
Once the transaction is on the Memory pool, then the miners pick up the
transactions (First those who pays more transaction fee) and group them in blocks. As

on May 2017, each block has a maximum size limit of 1 MB (change in this limit is
under discussion by the community) and contains around 2.000 to 3000 transactions,
depending on the size of each transaction. Then, by using the Proof-of-Work
Consensus Algorithm, the network agrees on the valid block, and consequently the
transactions, on average every 10 minutes.

4.DIFFERENT TYPES OF CRYPTO CURRENCIES

 Bitcoin Cash (BCH) :
BCH began its life in August 2017 as a result of one of these splits. The debate
that led to the creation of BCH had to do with the issue of scalability; the Bitcoin
network has a limit on the size of blocks: one megabyte (MB). BCH increases the
block size from one MB to eight MBs, with the idea being that larger blocks can hold
more transactions within them, and the transaction speed would therefore be increased.
It also makes other changes, including the removal of the Segregated Witness
protocol that impacts block space. As of January 2021, BCH has a market
capitalization of $8.9 billion and a value per token of $513.45.
 Ethereum (ETH) :
Ethereum is a decentralized software platform that enables smart
contracts and decentralized applications to be built and run without any downtime,
fraud, control, or interference from a third party. The goal behind Ethereum is to
create a decentralized suite of financial products that anyone in the world can freely
access, regardless of nationality, ethnicity, or faith. This aspect makes the
implications for those in some countries more compelling, as those without state
infrastructure and state identifications can get access to bank accounts, loans,
insurance, or a variety of other financial products.
 Litecoin (LTC) :
Litecoin, launched in 2011, was among the first cryptocurrencies to follow in
the footsteps of Bitcoin and has often been referred to as “silver to Bitcoin’s gold.” It
was created by Charlie Lee, an MIT graduate and former Google engineer. Litecoin is
based on an open-source global payment network that is not controlled by any central
authority and uses “scrypt” as a proof of work, which can be decoded with the help of
consumer-grade CPUs. Although Litecoin is like Bitcoin in many ways, it has a faster
block generation rate and hence offers a faster transaction confirmation time. Other
than developers, there are a growing number of merchants that accept Litecoin. As of
January 2021, Litecoin has a market capitalization of $10.1 billion and a per-token
value of $153.88, making it the sixth-largest cryptocurrency in the world.

 Cardano (ADA) :
Cardano is an “Ouroboros proof-of-stake” cryptocurrency that was created
with a research-based approach by engineers, mathematicians, and cryptography
experts. The project was cofounded by Charles Hoskinson, one of the five initial
founding members of Ethereum. After having some disagreements with the direction
Ethereum was taking, he left and later helped to create Cardano.
 Polkadot (DOT) :
Polkadot is a unique proof-of-stake cryptocurrency that is aimed at delivering
interoperability among other blockchains. Its protocol is designed to connect
permissioned and permission-less blockchains, as well as oracles, to allow systems to
work together under one roof.
 Stellar (XLM) :
Stellar is an open blockchain network designed to provide enterprise solutions
by connecting financial institutions for the purpose of large transactions. Huge
transactions between banks and investment firms—typically taking several days,
involving a number of intermediaries, and costing a good deal of money—can now be
done nearly instantaneously with no intermediaries and cost little to nothing for those
making the transaction.
 Chainlink :
Chainlink is a decentralized oracle network that bridges the gap between smart
contracts, like the ones on Ethereum, and data outside of it. Blockchains themselves
do not have the ability to connect to outside applications in a trusted manner.
Chainlink’s decentralized oracles allow smart contracts to communicate with outside
data so that the contracts can be executed based on data that Ethereum itself cannot
connect to.
 Binance Coin (BNB) :

Binance Coin is a utility cryptocurrency that operates as a payment method for
the fees associated with trading on the Binance Exchange. Those who use the token as
a means of payment for the exchange can trade at a discount. Binance Coin’s
blockchain is also the platform that Binance’s decentralized exchange operates on.
The Binance exchange was founded by Changpeng Zhao and is one of the most
widely used exchanges in the world based on trading volumes.

 Tether (USDT) :
Tether was one of the first and most popular of a group of so-
called stablecoins, cryptocurrencies that aim to peg their market value to a currency or
other external reference point to reduce volatility. Because most digital currencies,
even major ones like Bitcoin, have experienced frequent periods of dramatic volatility,
Tether and other stablecoins attempt to smooth out price fluctuations to attract users
who may otherwise be cautious. Tether’s price is tied directly to the price of the U.S.
dollar. The system allows users to more easily make transfers from other
cryptocurrencies back to U.S. dollars in a more timely manner than actually
converting to normal currency.
 Monero (XMR) :
Monero is a secure, private, and untraceable currency. This open-source
cryptocurrency was launched in April 2014 and soon garnered great interest among
the cryptography community and enthusiasts. The development of this cryptocurrency
is completely donation-based and community-driven. Monero has been launched with
a strong focus on decentralization and scalability, and it enables complete privacy by
using a special technique called “ring signatures.”

5. ADVANTAGES
 Accuracy of the Chain
Transactions on the blockchain network are approved by a network of thousands of
computers. This removes almost all human involvement in the verification process,
resulting in less human error and an accurate record of information. Even if a
computer on the network were to make a computational mistake, the error would only
be made to one copy of the blockchain. In order for that error to spread to the rest of
the blockchain, it would need to be made by at least 51% of the network’s
computers—a near impossibility for a large and growing network the size of Bitcoin’s.
 Cost Reductions
Typically, consumers pay a bank to verify a transaction, a notary to sign a document,
or a minister to perform a marriage. Blockchain eliminates the need for third-party
verification and, with it, their associated costs. Business owners incur a small fee
whenever they accept payments using credit cards, for example, because banks and
payment processing companies have to process those transactions. Bitcoin, on the
other hand, does not have a central authority and has limited transaction fees.
 Decentralization
Blockchain does not store any of its information in a central location. Instead, the
blockchain is copied and spread across a network of computers. Whenever a new
block is added to the blockchain, every computer on the network updates its
blockchain to reflect the change. By spreading that information across a network,
rather than storing it in one central database, blockchain becomes more difficult to
tamper with. If a copy of the blockchain fell into the hands of a hacker, only a single
copy of the information, rather than the entire network, would be compromised.
 Efficient Transactions
Transactions placed through a central authority can take up to a few days to settle. If
you attempt to deposit a check on Friday evening, for example, you may not actually
see funds in your account until Monday morning. Whereas financial institutions
operate during business hours, five days a week, blockchain is working 24 hours a day,
seven days a week, and 365 days a year. Transactions can be completed in as little as
ten minutes and can be considered secure after just a few hours. This is particularly

useful for cross-border trades, which usually take much longer because of time-zone
issues and the fact that all parties must confirm payment processing.
 Private Transactions
Many blockchain networks operate as public databases, meaning that anyone with an
internet connection can view a list of the network’s transaction history. Although
users can access details about transactions, they cannot access identifying information
about the users making those transactions. It is a common misperception that
blockchain networks like bitcoin are anonymous, when in fact they are only
confidential.
 Secure Transactions
Once a transaction is recorded, its authenticity must be verified by the blockchain
network. Thousands of computers on the blockchain rush to confirm that the details of
the purchase are correct. After a computer has validated the transaction, it is added to
the blockchain block. Each block on the blockchain contains its own unique hash,
along with the unique hash of the block before it. When the information on a block is
edited in any way, that block’s hash code changes—however, the hash code on the
block after it would not. This discrepancy makes it extremely difficult for information
on the blockchain to be changed without notice.
 Transparency
Most blockchains are entirely open-source software. This means that anyone and
everyone can view its code. This gives auditors the ability to review cryptocurrencies
like Bitcoin for security. This also means that there is no real authority on who
controls Bitcoin’s code or how it is edited. Because of this, anyone can suggest
changes or upgrades to the system. If a majority of the network users agree that the
new version of the code with the upgrade is sound and worthwhile then Bitcoin can be
updated.

6. DISADVANTAGES
 Technology Cost
Although blockchain can save users money on transaction fees, the technology is far
from free. The “proof of work” system that bitcoin uses to validate transactions, for
example, consumes vast amounts of computational power. Assuming electricity costs
of $0.03~$0.05 per kilowatt-hour, mining costs exclusive of hardware expenses are
about $5,000~$7,000 per coin.
Despite the costs of mining bitcoin, users continue to drive up their electricity bills in
order to validate transactions on the blockchain. That’s because when miners add a
block to the bitcoin blockchain, they are rewarded with enough bitcoin to make their
time and energy worthwhile. When it comes to blockchains that do not use
cryptocurrency, however, miners will need to be paid or otherwise incentivized to
validate transactions.
 Speed Inefficiency
Bitcoin is a perfect case study for the possible inefficiencies of blockchain. Bitcoin’s
“proof of work” system takes about ten minutes to add a new block to the blockchain.
At that rate, it’s estimated that the blockchain network can only manage about seven
transactions per second (TPS). Although other cryptocurrencies such as Ethereum
perform better than bitcoin, they are still limited by blockchain. Legacy brand Visa,
for context, can process 24,000 TPS.

7. CONCLUSION
Bitcoin is a digital currency, a decentralized system which records transactions in a

distributed ledger called a blockchain. Bitcoin miners run complex computer rigs to
solve complicated puzzles in an effort to confirm groups of transactions called blocks;
upon success, these blocks are added to the blockchain record and the miners are
rewarded with a small number of bitcoins.Other participants in the Bitcoin market can
buy or sell tokens through cryptocurrency exchanges or peer-to-peer.The Bitcoin
ledger is protected against fraud via a trustless system; Bitcoin exchanges also work
to defend themselves against potential theft, but high-profile thefts have
occurred.Blockchain technology has far-reaching applications across many
industries.Blockchain is already used to facilitate identity management, smart
contracts, supply chain analysis, and much more.The full potential of blockchain
technology likely remains to be discovered.Blockchain technology has far-reaching
applications across many industries. Blockchain is already used to facilitate identity
management, smart contracts, supply chain analysis, and much more.The full
potential of blockchain technology likely remains to be discovered.

8. REFERENCES
 https://www.investopedia.com/tech/forget-bitcoin-blockchain-future/
 https://www.investopedia.com/news/how-bitcoin-works/
 Bitcoin Fundamentals: Step by step explanation of a peer-to-peer Bitcoin
transaction.
 Double SHA-256 Hardware Architecture with Compact Message Expander for
Bitcoin Mining.

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A Seminar Report Submitted To

Jawaharlal Nehru Technological University,Anantapur

GEETHANJALI INSTITUTE OF SCIENCE &

(Approved By A.I.C.T.E & Permanently Affiliated to

3 rd Mile Bombay Highway, Gangavaram (V), Kovur (M),

Department of Computer Science and Engineering

(Approved By A.I.C.T.E & Permanently Affiliated to

3 rd Mile Bombay Highway, Gangavaram (V), Kovur (M),

Department of Computer Science and Engineering

Seminar Incharge Head of the Department

Dr. Y. Pavan Kumar Reddy, Dr. V. Sireesha

Department of Computer Science and Engineering

Department of Computer Science and Engineering

Department of Computer Science and Engineering

S.NO TITLE Page No

Department of Computer Science and Engineering

S.NO Figure No TITLE Page No

1. 1 Properties of Distributed Ledger Technology. 2

2. 2.2 Block Header 7

4. 3.1 Overview Architecture of Double SHA-256 11

6. 3.2. A sample Bitcoin Transaction 12

Department of Computer Science and Engineering

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 1 | Page

Fig 1 Properties of Distributed Ledger Technology.

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 2 | Page

For the purpose of understanding blockchain, it is instructive to view it in the

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 3 | Page

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 4 | Page

Bitcoin is one of the first digital currencies to use peer-to-peer technology to

These miners can be thought of as the decentralized authority enforcing the

A variety of hardware can be used to mine bitcoin. However, some yield

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 5 | Page

2.1 A Block in Block Chain:

The Bitcoin network witnesses a great deal of transaction activity. Maintaining

A blockchain is like a record of bank transactions, whereas a block might be a

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 6 | Page

2.2 Block Header

A block header is used to identify a particular block on an entire blockchain and is

Fig 2.2 Block Header

Block headers identify individual blocks in a blockchain.They’re hashed to

Block headers are commonly used in Bitcoin developer documentation, and

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 7 | Page

Requirements of Block Header

Block Header Components :

 The primary identifier of each individual block is the cryptographic hash it

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 8 | Page

Fig 3: Bitcoin Mining

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 9 | Page

Double spending is a scenario in which a Bitcoin owner illicitly spends the

Once miners have verified 1 MB (megabyte) worth of Bitcoin transactions,

3.1 DOUBLE SHA-256 :

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 10 | Page

Fig 3.1 :Overview Architecture of Double SHA-256 in Bitcoin Mining.

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 11 | Page

3.2 Bitcoin Transactions:

 Amount: Amount of bitcoins to be sent on the transaction.

 Output (Destination): Bitcoin address (public) of the destination wallet.

 Metadata (Optional): The metadata or message has a maximum size of 80

Fig 3.2.1 Bitcoin Components

Fig 3.2.2 A Sample Bitcoin Transaction

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 12 | Page

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING 13 | Page