6.

BLOCKCHAIN AND
CRYPTOCURRENCIES
- Sweta Chheda
WHAT IS A BLOCKCHAIN?
2

• A blockchain is a constantly growing ledger which keeps a permanent record of all

the transactions that have taken place in a secure, chronological, and immutable way.
• Ledger: It is a file that is constantly growing.
• Permanent: It means once the transaction goes inside a blockchain, you can put up
permanently in the ledger.
• Secure: Blockchain places information in a secure way. It uses very advanced
cryptography to make sure that the information is locked inside the blockchain.
• Chronological: Chronological means every transaction happens after the previous
one.
• Immutable: It means as you build all the transaction onto the blockchain, this ledger
can never be changed.

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• A blockchain is a chain of blocks which contain information.

• Each block records all of the recent transactions, and once completed
goes into the blockchain as a permanent database.
• Each time a block gets completed, a new block is generated.

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• The technique is intended to timestamp digital documents so that it’s not possible to
backdate them or tamper them.
• The purpose of blockchain is to solve the double records problem without the need for a
central server.
• The blockchain is used for the secure transfer of items like money, property, contracts, etc.,
without requiring a third-party intermediary like a bank or government.
• Once data is recorded inside a blockchain, it is very difficult to change it.
• The blockchain is a software protocol (like SMTP is for email). However, Blockchains could
not be run without the Internet. It is also called meta-technology as it affects other
technologies.
• It is comprised of several pieces: a database, software application, some connected
computers, etc.
• Sometimes the term is used for Bitcoin Blockchain or The Ethereum Blockchain, and
sometimes, it’s other virtual currencies or digital tokens. However, most of them are talking
about distributed ledgers.
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• Blockchain can be described as a data structure that holds transactional

records and while ensuring security, transparency, and decentralization.
• You can also think of it as a chain or records stored in the forms of blocks
which are controlled by no single authority.
• A blockchain is a distributed ledger that is completely open to any and
everyone on the network.
• Each transaction on a blockchain is secured with a digital signature that
proves its authenticity.
• Due to the use of encryption and digital signatures, the data stored on the
blockchain is tamper-proof and cannot be changed.

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• Blockchain technology allows all the network participants to

reach an agreement, commonly known as consensus.
• All the data stored on a blockchain is recorded digitally and has
a common history which is available for all the network
participants.
• This way, the chances of any fraudulent activity or duplication
of transactions is eliminated without the need of a third-party.

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• Example:You are looking for an option to send some money to your friend who
lives in a different location. A general option that you can normally use can be a
bank or via a payment transfer application like PayPal or Paytm. This option
involves third parties in order to process the transaction due to which an extra
amount of your money is deducted as transferring fee. Moreover, in cases like
these, you cannot ensure the security of your money as it is highly possible that a
hacker might disrupt the network and steal your money. In both the cases, it is the
customer who suffers. This is where Blockchain comes in.
• Instead of using a bank for transferring money, if we use a blockchain in such
cases, the process becomes much easier and secure. There is no extra fee involved
as the funds are directly processed by you thus, eliminating the need for a third
party. Moreover, the blockchain database is decentralized and is not limited to any
single location meaning that all the information and records kept on the blockchain
are public and decentralized. Since the information is not stored in a single place,
there’s no chance of corruption of the information by any hacker.

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• A blockchain is a chain of blocks that contain data or information.

• Despite being discovered earlier, the first successful and popular application of the
Blockchain technology came into being in the year 2009 by Satoshi Nakamoto. He created
the first digital cryptocurrency called Bitcoin through the use of Blockchain technology.

Genesis Block

The first block in the chain is called the Genesis block. Each new block in the
chain is linked to the previous block.

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• For Example: A Bitcoin Block contains information about the Sender, Receiver,
number of bitcoins to be transferred.

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• A hash function takes an input string (numbers, alphabets, media files) of

any length and transforms it into a fixed length. The fixed bit length can
vary (like 32-bit or 64-bit or 128-bit or 256-bit) depending on the hash
function which is being used. The fixed-length output is called a hash.

• The hash algorithm has certain unique properties:

1.It produces a unique output (or hash).
2.It is a one-way function.

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• Understanding SHA256 – Hash (Secure Hash Algorithm)
• Each block in a blockchain network stores some information along with
the hash of its previous block.
• A hash is a unique mathematical code which belongs to a specific block.
If the information inside the block is modified, the hash of the block will
be subject to modification too. The connection of blocks through unique
hash keys is what makes blockchain secure.
• It can be understood as a fingerprint which is unique to each block. It
identifies a block and all of its contents, and it’s always unique, just like a
fingerprint. So once a block is created, any change inside the block will
cause the Hash to change.
• While transactions take place on a blockchain, there are nodes on the
network that validate these transactions.
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Therefore, the Hash is very useful when you want to detect changes to
intersections. If the fingerprint of a block changes, it does not remain the
same block.
Each Block has
1.Data
2.Hash
3.Hash of the previous block

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• Consider the following example, where we have a chain of 3 blocks. The 1st block has no
predecessor. Hence, it does not contain the previous block. Block 2 contains a hash of block
1. While block 3 contains Hash of block 2.

Hence, all blocks are contained hashes of previous blocks.

This is the technique that makes a blockchain so secure.

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• Assume an attacker can change the data present in Block 2. Correspondingly, the Hash of the
Block also changes. But Block 3 still contains the old Hash of Block 2. This makes Block 3,
and all succeeding blocks invalid as they do not have the correct Hash of the previous block.

Therefore, changing a single block can quickly make all following blocks invalid.

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• While transactions take place on a blockchain, there are nodes on the network that
validate these transactions.
• In Bitcoin blockchain, these nodes are called as miners and they use the concept
of proof-of-work in order to process and validate transactions on the network.
• In order for a transaction to be valid, each block must refer to the hash of its
preceding block.
• The transaction will take place only and only if the hash is correct. If a hacker
tries to attack the network and change information of any specific block, the hash
attached to the block will also get modified.
• The breach will be detected as the modified hash will not match with the original
one. This ensures that the blockchain is unalterable as if any change which is
made to the chain of blocks will be reflected throughout the entire network and
will be detected easily.

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Proof of Work
• Hashes are an excellent mechanism to prevent tempering, but computers
these days are high-speed and can calculate hundreds of thousands of
hashes per second.
• In a matter of a few minutes, an attacker can tamper with a block and then
recalculate all the hashes of other blocks to make the blockchain valid
again.
• To avoid the issue, blockchains use the concept of Proof-of-Work. It is a
mechanism that slows down the creation of the new blocks.
• A proof-of-work is a computational problem that takes a certain effort to
solve. But the time required to verify the results of the computational
problem is very less compared to the effort it takes to solve the
computational problem itself.

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• Proof of Work (PoW) is the original consensus algorithm in a

blockchain network.
• The algorithm is used to confirm the transaction and creates a new block
to the chain.
• In this algorithm, minors (a group of people) compete against each other
to complete the transaction on the network. The process of competing
against each other is called mining.
• As soon as miners successfully created a valid block, he gets rewarded.
• The most famous application of Proof of Work(PoW) is Bitcoin.

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• In the case of Bitcoin, it takes almost 10 minutes to calculate the required proof-of-
work to add a new block to the chain. Considering our example, if a hacker would
like to change data in Block 2, he would need to perform proof of work (which would
take 10 minutes) and only then make changes in Block 3 and all the succeeding
blocks.

• This kind of mechanism makes it quite tough to tamper with the blocks, so even if
you tamper with even a single block, you will need to recalculate the proof-of-work
for all the following blocks. Thus, hashing and proof-of-work mechanisms make a
blockchain secure.

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• What is a Blockchain
• https://youtu.be/SSo_EIwHSd4

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HOW BLOCKCHAIN ALLOWS TRANSACTIONS TO TAKE PLACE

1.A blockchain network makes use of public and private keys in order to
form a digital signature ensuring security and consent.
2.Once the authentication is ensured through these keys, the need for
authorization arises.
3.Blockchain allows participants of the network to perform mathematical
verification and reach a consensus to agree on any particular value.
4.While making a transfer, the sender uses their private key and announces
the transaction information over the network. A block is created
containing information such as digital signature, timestamp, and the
receiver’s public key.
5.This block of information is broadcasted through the network and the
validation process starts.
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6.Miners all over the network start solving the mathematical puzzle related
to the transaction in order to process it. Solving this puzzle requires the
miners to invest their computing power.
7. Upon solving the puzzle first, the miner receives rewards in the form of
bitcoins. Such kind of problems is referred to as proof-of-work
mathematical problems.
8.Once the majority of nodes in the network come to a consensus and agree
to a common solution, the block is time stamped and added to the existing
blockchain. This block can contain anything from money to data to
messages.
9.After the new block is added to the chain, the existing copies of
blockchain are updated for all the nodes on the network.
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• Bitcoin Mining
Bitcoin mining is the process of adding transaction records to Bitcoin's public
ledger of past transactions. This ledger of past transactions is called the
blockchain as it is a chain of blocks. Bitcoin mining is used to secure and verify
transactions to the rest of the network.
• Role of Bitcoin Miners
Within the bitcoin networks, there are a group of people known as Miners. In
miners, there is a process to confirm transactions. Anybody can apply for a
minor, and you could run the client yourself. However, these minors use very
powerful computers that are specifically designed to mine bitcoin transaction.
They do this by actually solving math problems and resolving cryptographic
issues because every transaction needs to be cryptographically encoded and
secured. These mathematical problems ensure that nobody is tampering with that
data.
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HOW DOES BLOCKCHAIN TECHNOLOGY WORK?

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FEATURES OF BLOCKCHAIN
• 1. Decentralized: No single person or group holds the authority of the overall
network. While everybody in the network has the copy of the distributed ledger
with them, no one can modify it on his or her own.
• 2. Peer-to-Peer Network: The interaction between two parties through a peer-to-
peer model is easily accomplished without the requirement of any third party.
• 3. Immutable: The immutability property of a blockchain refers to the fact that
any data once written on the blockchain cannot be changed.
• 4.Tamper-Proof: Blockchains are considered tamper-proof as any change in
even one single block can be detected and addressed smoothly. There are two key
ways of detecting tampering namely, hashes and blocks.

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Peer-to-Peer Network

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APPLICATIONS OF BLOCKCHAIN TECHNOLOGY

1. Smart Contracts
• Blockchain smart contracts can be used in healthcare to manage drug supply.
• Once the name and quantity of a drug is shipped from a manufacturing company to
be delivered ahead to the pharmacist, a smart contract with all the valid data like the
information of the drug, the quantity of supply etc. can be created.
• This smart contract will be responsible for managing the entries throughout the entire
supply chain between different intermediaries.
• Since the smart contract works on certain defined conditions, no one can alter them
or make any changes in the contract thus, ensuring trust and authenticity of the
drugs.

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• 2. Government Elections
• No matter how secure government elections are made, the chances of
frauds through anti-social elements always persists.
• The current voting system relies on manual processing and trust. Even if
security breaches and frauds are eliminated, the chances of manual errors
cannot be ignored.
• In such cases, the best solution is to automate the overall process with
the help of smart contracts.
• Blockchain smart contracts provide a modern system through which
these common issues can be easily eliminated.
• Entries in the smart contracts will allow transparency and security while
maintaining the privacy of the voters thus, enabling fair elections.
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• 3. Identity Management
• The need of the hour is to have a system that manages individual identification on the
web.
• The distributed ledger technology used in blockchains offers you advanced methods
of public-private encryption using which, you can prove your identity and digitize
your documents.
• This unique secure identity can work as a saviour for you while conducting any
financial transactions or any online interactions on a shared economy.
• Moreover, the gap between different government bodies and private organizations can
be filled through a universal online identity solution that blockchain can provide.

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• 4. Intellectual Property Protection

• Even if there’s any copyright applied to any intellectual property, people
easily lose control over their data and suffer on financial terms.
• With the aid of Blockchain technology, all the copyrights can be stored in
the form of smart contracts which will enable automation in businesses
along with the increase in online sale thus, eliminating the redistribution
risk.
• Blockchain for IP registry will help the authors, owners or users to get
clarity of copyright. Once they register their work online, they’ll own the
evidence which will be tamper-proof.
• As blockchain is immutable in nature, any entry once stored on the
Blockchain cannot be changed or modified. The owner of the work will
have the overall authority over the ownership as well as the distribution of
the content.
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BLOCKCHAIN VERSIONS
1. Blockchain 1.0: Currency
• The implementation of DLT (distributed ledger technology) led to its first and obvious
application: cryptocurrencies. This allows financial transactions based on blockchain
technology. It is used in currency and payments. Bitcoin is the most prominent example in
this segment.
2. Blockchain 2.0: Smart Contracts
• The new key concepts are Smart Contracts, small computer programs that “live” in the
blockchain. They are free computer programs that execute automatically and check
conditions defined earlier like facilitation, verification, or enforcement. It is used as a
replacement for traditional contracts.
3. Blockchain 3.0: DApps:
• DApps is an abbreviation of decentralized application. It has its backend code running on a
decentralized peer-to-peer network. A DApp can have frontend Blockchain example code
and user interfaces written in any language that can make a call to its backend, like a
traditional App.
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BLOCKCHAIN VARIANTS
1. Public:
• In this type of blockchain, ledgers are visible to everyone on the internet.
It allows anyone to verify and add a block of transactions to the
blockchain. Public networks have incentives for people to join and are
free for use. Anyone can use a public blockchain network.

2. Private:
• The private blockchain is within a single organization. It allows only
specific people of the organization to verify and add transaction blocks.
However, everyone on the internet is generally allowed to view it.

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BLOCKCHAIN USE CASES

• 1. Markets: Billing, monitoring and Data Transfer, Quota management in the Supply
Chain Network
• 2. Government Sector: Transactional personalized governance services, Voting,
propositions P2P bond, Digitization of documents/ contracts and proof of ownership
for transfers, Registry & Identity, IP registration and exchange, Tax receipts Notary
service and document registry.
• 3. IOT: Agricultural & drone sensor networks, Smart home networks, Integrated
smart city, Smart home sensors, Self-driving car, Personalized robots, robotic
component, Personalized drones, Digital Assistants.
• 4. Science and Art: Supercomputing, Crowd analysis, P2P resources, Digital mind
fit services.

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• 5. Health: Data management, Universal EMR Health databanks, Big

health data stream analytics, Digital health wallet Smart property, Health
Token, Personal development contracts.

• 6. Finance and Accounting: Digital Currency Payment, Payments &

Remittance, Inter-divisional accounting, Clearing & Trading &
Derivatives, Book-keeping.

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IMPORTANT REAL-LIFE USE CASES OF BLOCKCHAIN

• 1.Dubai: The Smart City

• In the year 2016, smart Dubai office introduced Blockchain strategy.
Using this technology, entrepreneurs and developers will be able to
connect with investor and leading companies.
• The objective is to implement blockchain based system which favors the
development of various kinds of industries to make Dubai ‘the happiest
city in the world.

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• 2. Incent Customer retention

• Incent is CRaaS (Consumer retention as a service) based on Blockchain
technology. It is a loyalty program which is based on generating tokens for
businesses affiliated with its related network. In this system, blockchain is
exchanged instantaneously, and it can be stored in digital portfolios of user’s
phones or accessing through the browser.

• 3. Blockchain for Humanitarian Aid

• In January 2017, the united nations world food program started a project called
humanitarian aid. The project was developed in rural areas of the Sindh region
of Pakistan. By using the Blockchain technology, beneficiaries received money,
food and all type of transactions are registered on a blockchain to ensure
security and transparency of this process.

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CRYPTOCURRENCY
• Cryptocurrency, also known as crypto, is a type of online payment method that can
be exchanged online to purchase goods and services.
• It is much similar to real-world currency, but it does not have any physical
appearance.
• It is encrypted, transparent, and decentralized digital money, which is based
on blockchain technology.
• There are approximately 5000 different types of cryptocurrencies, among
which Bitcoin and Ethereum are the popular ones.
• The most important feature of cryptocurrency is that it is a decentralized currency.
Decentralized means it is not issued by the central authorities, the user owns it, and
neither government nor the bank controls it. It is also known as the money of the
future.
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FEATURES OF CRYPTOCURRENCY
• It has a limit to how many units can exist, such that bitcoin has 21
million limits.
• It performs easy verification of transfer of funds with the help of hashing
algorithms that verify each transaction.
• It is independent of any central authority or a bank.
• The new units can only be added after certain conditions are met.

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HOW CRYPTOCURRENCY WORKS?

• One user or sender who wants to send funds to another user starts the
transaction.
• In this, each transaction is represented as a block. And this block is
forwarded over the blockchain network.
• This block is validated by the users of the chain, and once it is verified as
a valid transaction, a block is added to the chain.
• Each transaction is encrypted and contains a unique set of keys, and
whoever has those set of keys, he can only own the amount of
cryptocurrency.

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• Types of Cryptocurrencies: 40

• 1. Bitcoin : Bitcoin is the most recognizable type of cryptocurrency system. As per the
studies, there are approximately more than 18.5 million bitcoin tokens available for
circulation, with a capped limit of 21 million.
• 2. Bitcoin Cash: Bitcoin cash was introduced in the year 2017, and it is one of the
most popular types of cryptocurrencies available in the market.
• 3. Litecoin: Litecoin is gaining popularity day by day, and it works the same as
bitcoin. It was developed by Charlie Lee(former employee of Google) in the year
2011.
• 4. Ethereum: Ethereum is heard in the same context as Bitcoin, but itself, it is not a
cryptocurrency. Instead, it is an online programmable platform that uses blockchain
technology. It helps the developer to develop and run DAapps within the system.
Ethereum can be understood as an app store.
• 5. Ripple: Ripple is also a type of cryptocurrency, but it does not use Blockchain
technology. It is not for the particular user; rather, it mainly works for large companies
or corporations to move a huge amount of money across the world.

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ADVANTAGES OF CRYPTOCURRENCY
1. Fraud Proof: When a cryptocurrency is created, all the user's confirmed
transactions are saved in the public ledger. The identity of coin owners is kept
encrypted. Hence there is no chance for a fraudulent transaction.
2. User Ownership: Since the cryptocurrency is decentralized, the user owns it. No,
any government or bank has any control over it. There is also not any electronic
cash system.
3. Easy Transaction: In the traditional economy system, for doing any type of
business or deal, there is always a lot of transaction fees applicable that we need to
pay for each transaction. Apart from this, there are also various paper works,
brokerage fees, commissions, etc., users need to pay. But when we use
cryptocurrency, all these things are removed; as for any transaction, there is no
middle man. Every transaction is performed between one to one within a secured
network. This one-to-one transaction makes it easier and more transparent than the
traditional one.
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• 4.Confidential Transaction: When we perform any transaction in a traditional

transaction system with either cash or credit, each transaction is recorded in our bank
history. It means each transaction data remains with banks.
• In cryptocurrency, every transaction with the recipients would be unique. The
information is exchanged on the basis of the push concept. It means we are allowed to
share only that information that we want to disclose to the recipients.
• 5. Instant Settlement: For starting any transaction, we just need a smart device such
as a Mobile phone, internet connection, and instantly we will become our own bank to
make online payments and transactions.
• 6. Identity Theft: Blockchain technology makes secure digital transactions through
encryption and "smart contracts" that make the entity virtually unhackable and
immune to fraud.

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RISKS OF INVESTING IN CRYPTOCURRENCY

• Operates without any government Authority
The fact raises many questions, such that what type of taxes are to be paid for any
gain or loss of the assets. So, this is the main risk for investing in cryptocurrency.
• No physical existence
As cryptocurrency is a virtual currency, and hence there is no physical existence of this. It
neither represents a company like stock or bond nor a tangible asset like Gold. It is not
printed on papers similar to other currencies. Hence, it does not have its fundamental value
but only its trading value.
• Volatile in Nature
The last risk factor of cryptocurrency is its volatile nature. The prices of crypto vary very
irregularly, and it may sometimes get reduced or increased by 100 $ in an hour. In contrast,
other currencies have a limited variation.

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LIMITATIONS OF BLOCKCHAIN TECHNOLOGY

• Higher costs: Nodes seek higher rewards for completing Transactions in a business that
work on the principle of Supply and Demand
• Slower transactions: Nodes prioritize transactions with higher rewards, backlogs of
transactions build-up.
• Smaller ledger: It is not possible to a full copy of the Blockchain, potentially which can
affect immutability, consensus, etc.
• Transaction costs, network speed: The transactions cost of Bitcoin is quite high after being
touted as ‘nearly free’ for the first few years.
• Risk of error: There is always a risk of error, as long as the human factor is involved. In
case a blockchain serves as a database, all the incoming data has to be of high quality.
However, human involvement can quickly resolve the error.
• Wasteful: Every node that runs the blockchain has to maintain consensus across the
blockchain. This offers very low downtime and makes data stored on the blockchain forever
unchangeable. However, all this is wasteful because each node repeats a task to reach a
consensus.
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BENEFITS OF BLOCKCHAIN IN LEGAL INDUSTRY

• Accessibility
• Transparency
• Cost savings
• Automation
• Data Integrity

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• How will blockchain technology make the legal sector more

accessible?
• Lawyers can leverage blockchain technology to streamline and simplify
their transactional work, digitally sign and immutably store legal
agreements. Using scripted text, smart contracts, and automated contract
management reduces excessive time spent preparing, personalizing and
maintaining standard law documents. These cost savings are passed on
to the customer. Additionally, blockchain democratizes access to the
justice system by cutting down on consumer complexity and lowering
hefty legal fees.

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• How will blockchain technology make the legal sector more

transparent?
• Distributed ledger technology creates a shared ledger accessible by all
parties to an agreement.
• Blockchain-based contracts have baked-in compliance, no surprises, and
no room for misinterpretation.
• Additionally, non-technologists can better understand the transactions
they enter into and what the smart contract represents.

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• How will blockchain technology reduce costs in the legal industry?

• Many of the manual tasks can be carried out automatically, which
significantly decreases the hours allocated to drafting and amending legal
documents. This cost is generally passed down to clients, which pushes
hourly lawyer fees to astronomical rates. The introduction of smart
contracts will accelerate and lower the cost of transactions between
parties. A cost-efficient algorithm can automatically and transparently
manage escrow accounts at a fraction of the cost of manual labor. Lower
costs will increase the overall demand and accessibility for legal services.

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• How will blockchain technology bring automation to the legal

industry?
• Lawyers spend up to 48% of their time on administrative tasks, including
transferring information between software and updating client trust
ledgers. Utilizing a legal agreement repository and pre-fabricated smart
contracts, lawyers can automate non-billable administrative tasks and
transactional work. Cutting down on excessive manual labor will also
accelerate legal proceedings, which decreases costs to customers.

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• How will blockchain technology make the legal industry more

efficient?
• Blockchain technology can streamline, re-engineer, automate,
disintermediate, and secure many processes in the legal industry without
losing any of the judicial authority. Optimizing various industry features
will make the legal and financial sectors more efficient and productive
while lowering friction and costs.

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• How will blockchain technology bring data integrity and

transparency to the legal industry?
• Legal documents act as a honeypot for ill-intentioned hackers who seek
to profit from the valuable confidential information created and
maintained by lawyers. Instead of emailing sensitive data back and forth,
lawyers can choose to store legal information on a decentralized,
distributed ledger for append-only feeds, which increases data integrity. If
evidence is tampered with or changed, the associated hash value will not
match, making it clear that a change has occurred.

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What are the Blockchain Use Cases in the Legal Industry?

• Electronic Signatures
• Intellectual Property
• Property Rights
• Chain of Custody
• Tokenization
• Decentralized Autonomous Organizations (DAO)
• Limited Liability Autonomous Organizations (LAO)
• Automated Regulatory Compliance
• Machine to Machine Payments
• Blockchain-Based Arbitration System

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• How will blockchain technology impact electronic signatures?

• Electronic signatures bring speed, efficiency, and cost savings to the
authentication process. Signing on blockchain costs the signer a fraction
of the cost compared to e-signature platforms like DocuSign. Currently, it
costs an average of 7-8 cents to sign a smart contract on Ethereum
electronically. Moving signatures to Ethereum also cuts down on manual
tasks and the high costs associated with coordinating and facilitating
signature authentication. Electronic signatures stored on the Ethereum
blockchain live independently of the object being signed, which allows for
parallel signing and independent verification without granting full read
access to the content. When two parties digitally sign a smart contract,
they simultaneously agree to the terms and conditions associated with the
agreement.

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• How will blockchain technology impact intellectual property?

• A critical blockchain-based innovation impacting intellectual property is
non-fungible-tokens or NFTs. NFTs are cryptographic tokens that can be
used to represent unique property on a blockchain. NFT standards allow
for robust property rights schemes in the digital realm. With blockchain,
creators of a product or piece of content can upload, register, and time-
stamp their original work on a public ledger to create an undeniable
proof of ownership. From there, a blockchain-based IP enforcement
system could help creators monitor exactly how and by whom their
creations are being used.

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• How will blockchain technology impact property rights?

• The distribution of property rights and the existence of transaction costs
impacts a society’s economic activities, yet property rights and
transaction cost structures are primarily based on the pre-digital era.
Utilizing blockchain architecture, property owners can subvert costly
central intermediaries, and elect to register and sell their properties on the
blockchain in a transparent and immutable way. Blockchain-based public
ledgers offer a new form of property rights management, which allows
for a measurable reduction in transaction costs.

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• How will blockchain technology impact chain of custody?

• Chain of custody is the process of handling evidence from the time it is
collected until the time it is presented as evidence in a court of law.
Evidence exchanges hands numerous times; interested parties log
evidence in and out of storage, physically sign forms that create a paper
trail to record its movements. Unfortunately, this process creates several
opportunities for nefarious actors to taint the evidence. It also opens the
door for defense attorneys to claim the evidence has been tampered with.
Utilizing blockchain technology, one could generate and track a unique
evidence token for every item of data collected and received – stored and
auditable in a public/private blockchain.

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• How will blockchain technology impact tokenization?

• Tokenization is a method that converts rights to an asset into a digital token.

Interested parties can issue tokens on a platform that supports smart contracts which
will enable the purchase and vending of this token on exchanges. Coupled with IP
rights and microtransactions, this opens up a world where creators can tokenize and
legally sell fractions of their assets.
• For example, artists could tokenize and log a piece of work onto the public Ethereum
blockchain, create a license around it, and program real-time royalty payments.

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• How will blockchain technology impact decentralized autonomous

organizations (DAOs)?
• A DAO is a decentralized autonomous organization whose decisions are
made electronically through code or the vote of the supporting members.
DAOs create scalable, borderless online cooperation and have been used
to coordinate grants and to fund public goods. Having the proper legal
wrapping for DAOs is critical.

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• What is a limited liability autonomous organizations (LAO)?

• LAOs are for-profit limited liability decentralized organizations. It
enables its members to invest in early-stage Ethereum ventures and share
in the profits.

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• How will blockchain technology impact automated

regulatory compliance?
• Blockchain technology gives us the framework to create a
shared ledger system where various parties can report their
compliance data/documentation to the appropriate authorities in
an automatic manner. Additionally, a blockchain-based
framework can automate various functions of the law, such as
tax compliance.

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• How will blockchain technology impact machine to machine

(IoT) payments?

• IoT applications rely on machine-to-machine communication.

Smart contracts present a unique interface for machine-to-
machine communication that provides a secure, append-only
record that can be shared without a central administrator. Using
smart contracts addresses the challenges of transparency,
longevity, and trust in IoT applications.

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• How will blockchain technology create a blockchain-based

arbitration system?
• In a blockchain-based arbitration system, users program their agreements
into a smart contract that manages the arbitration procedure. These
agreements seamlessly interact with smart contract code to ensure the
enforceability of any arbitral awards. An integrated reputation system
could help the community select arbitrators to resolve disputes.
Blockchain-based arbitration systems will create a global, universally
available judicial system that delivers low cost and high-quality dispute
resolutions online.

Prepared by: Prof.Sweta Chheda