BLOCKCHAIN

TECHNOLOGY
WITH FOCUS ON BITCOIN

ANAGH PAUL
ANGSHU ROY 1
Contents
Topics Page no.
Introduction to Blockchain 1
Brief History 2
Key Concepts 3-4
Working Mechanism 5
Consensus Mechanism 6-7
Advantages & Limitations 8-9
Bitcoin Overview 12
Bitcoin Transactions 13
Bitcoin Mining 14
Contents
Topics Page no.
Bitcoin Security 15
Future of Blockchain and Bitcoin 16
Conclusion 17
Bibliography 18
Introduction
▰ Blockchain is a revolutionary digital ledger
technology that securely records transactions
across a network of computers.
▰ It operates without a central authority, relying
on cryptography and consensus mechanisms
for data integrity. This decentralized system
ensures transparency and immutability, making
it ideal for managing and verifying various
digital assets and information.
1
Brief history of blockchain
▰ Introduced in 2008 by an individual or group using the pseudonym Satoshi
Nakamoto.
▰ The first implementation of blockchain emerged with the launch of Bitcoin in
2009, as a decentralized digital currency.
▰ Blockchain technology expanded beyond cryptocurrencies, finding applications
in various industries such as finance, supply chain management, and
healthcare.
▰ Ethereum, introduced in 2015, enabled the development of smart contracts
and decentralized applications (DApps).
▰ Ongoing research and innovation continue to enhance blockchain scalability,
interoperability, and security across diverse use cases and industries. 2
Key Concepts
▰ Decentralization: Decentralization, here, means transferring the control and
decision making from a centralized entity such as an individual or institution to a
distributed network. This is done by using transparency to eliminate the need of trust and
deterring participants from exerting authority and control over each other.

▰ Immutability: Immutability in blockchain ensures data permanence; once recorded,

transactions cannot be altered or deleted, enhancing the integrity and trustworthiness of
the system.

▰ Distributed Ledger: A distributed ledger is a synchronized database spread

across multiple nodes in a network. It records transactions transparently and securely,
ensuring consensus among participants without relying on a central authority.

3
Key Concepts
▰ Consensus Mechanisms: Algorithms validate transactions among network
participants without reliance on a central authority.

▰ Security: Utilizes cryptography and consensus mechanisms to safeguard data and

transactions, ensuring integrity and trustworthiness in the blockchain ecosystem.

▰ Smart Contracts: Self-executing agreements enforce predefined rules and

conditions, automating processes and reducing the need for intermediaries.

▰ Transparency: Participants openly view and verify transactions, enhancing trust

and accountability within the blockchain network.

4
Working Mechanism
▰ Blockchains have programs called scripts that enter and access the
information to save and store in somewhere while distributing it. So, it
is distributed among several machines and all should match i order to
be valid.
▰ Transaction information is collected and stored in a block and then run
through cryptographic hash function that converts it into a hexadecimal
number known as the hash.
▰ The hash is then entered into the following block header and encrypted
with the other information in the block. This creates a series of blocks
that are chained together
5
Consensus Mechanisms
▰ Proof of Work (PoW): It is used to select a miner for
the next block generation. The miners solve a complex
mathematical puzzle and give out a solution. This
mathematical puzzle requires a lot of computational power
and thus, the node which solves the puzzle first gets to
mine the next block.
▰ Proof of Stake (PoS): In PoS, validators are chosen to
create new blocks based on the amount of cryptocurrency
they hold and are willing to "stake". Validators are selected
based on factors like the amount of cryptocurrency they
hold or their reputation in the network. It also incentivizes
validators to act honestly since they have a stake in the
network.
6
Consensus Mechanisms
▰ Delegated Proof of Stake (DPoS): Token holders
elect delegates to validate transactions, ensuring scalability
and speed with a limited number of validators, enhancing
efficiency in the blockchain network.
▰ Practical Byzantine Fault Tolerance (PBFT):
Nodes communicate to achieve consensus, making it an
ideal choice for permissioned blockchains requiring rapid
and secure transaction processing.
▰ Proof of Authority (PoA): In PoA, trusted validators
propose and validate blocks, ensuring the security and
accountability essential for permissioned blockchain
environments.
7
Advantages of Blockchain
▰ Security: Blockchain is very secure because it uses
cryptographic hash codes and everyone in the network
agrees on what's happening, making it impossible for
anyone to cheat or hack.
▰ Transparency: Blockchain is like a transparent book
where everyone can look at the pages. This makes it easy to
know what's happening and trust the information. This is
due to the distributed ledger in the network.
▰ Efficiency: Blockchain helps things run smoothly and
quickly by doing tasks automatically. It doesn't need
third-party to check everything, which saves time and
money. This is done using smart contracts
8
Limitations of Blockchain
▰ Scalability: Blockchain struggles with scalability, resulting in slower transactions and
higher fees.

▰ Energy Consumption: Proof of Work mechanisms, like Bitcoin's, consume

significant energy, raising environmental concerns.

▰ Privacy Concerns: Blockchain's transparency poses privacy challenges due to

permanently recorded transactions.

▰ Regulatory Uncertainty: Evolving regulations create uncertainty, hindering

adoption and growth.

9
Application of blockchain
▰ Supply chain management: Blockchain ensures
transparency and authenticity in supply chains, tracking
products from creation to delivery, reducing fraud and
improving efficiency.
▰ Voting systems: Blockchain enables secure and
transparent voting, preventing tampering and ensuring election
integrity through immutable records and decentralized
verification processes.
▰ Cryptocurrencies (Bitcoin, Ethereum): Blockchain
facilitates secure and decentralized transactions, powering
digital currencies like Bitcoin and Ethereum, reducing reliance
on traditional banking systems
10
A CASE STUDY:
BITCOIN CRYPTOCURRENCY
Bitcoin overview
▰ Bitcoin was introduced in 2009 as a decentralized
digital currency.

▰ An anonymous entity or group, using the

pseudonym Satoshi Nakamoto, created Bitcoin.

▰ Satoshi Nakamoto's whitepaper, published in 2008,

outlined the principles and workings of Bitcoin.

▰ Bitcoin's emergence revolutionized finance by

offering a decentralized alternative to traditional
currencies

12
Bitcoin Transaction
▰ How transactions are verified and added to the
blockchain: Transactions are verified by miners, who use
computational power to solve complex mathematical puzzles,
ensuring their validity before adding them to the blockchain.

▰ Role of miners: Miners validate transactions, solve

cryptographic puzzles, and compete to add new blocks to the
blockchain, maintaining the network's security and integrity while
being rewarded for their efforts.

13
Bitcoin Mining
▰ How it works: Mining involves using computational power to
solve complex mathematical puzzles, validating transactions, and
adding new blocks to the blockchain, ensuring the network's
security and integrity.

▰ Rewards and incentives for miners: Miners are

rewarded with newly created bitcoins and transaction fees for
their role in securing the network and validating transactions.
These rewards serve as incentives to continue participating in the
mining process.

14
Bitcoin Security
▰ Cryptography in Bitcoin: Bitcoin relies on cryptographic techniques to secure
transactions and protect the integrity of the blockchain. Public-private key pairs and
cryptographic hashing ensure the security and authenticity of transactions, preventing
unauthorized access and tampering.

▰ 51% attack and other security concerns: A 51% attack occurs when a single
entity or group controls more than half of the network's computing power, enabling them
to manipulate transactions. Other security concerns include wallet security, phishing
attacks, and regulatory risks.

15
Future of Blockchain and Bitcoin
▰ Potential developments and applications: The future of blockchain and
Bitcoin holds potential for various developments and applications. These include
scalability solutions to address network congestion, interoperability improvements for
seamless integration with existing systems, and the exploration of blockchain
technology in fields like finance, supply chain management, healthcare, and
decentralized finance (DeFi).

▰ Challenges and opportunities: Blockchain and Bitcoin face challenges like

scalability and regulatory uncertainty. These can slow transactions and raise fees.
Governments are figuring out how to regulate cryptocurrencies. Yet, solving these can
drive innovation and change industries

16
Conclusion
▰ Blockchain technology is exceptionally valuable, offering safety,
transparency, and efficiency.
▰ Its importance remains, even if there are challenges like expansion and
regulatory shifts.
▰ It holds revolutionary potential across sectors such as commerce and
healthcare.
▰ Ultimately, blockchain represents a significant advancement with the
promise of profoundly impacting global systems and operations for the
betterment of society.
17
Bibliography
▰ Wikipedia - https://en.wikipedia.org/wiki/Blockchain
▰ IBM - https://www.ibm.com/topics/blockchain
▰ Amazon Web Services - https://aws.amazon.com/what-is/blockchain
▰ Investopedia - https://www.investopedia.com/terms/b/blockchain.asp
▰ Bitcoin - https://bitcoin.org/en/bitcoin-paper
▰ TechTarget - https://www.techtarget.com/whatis/definition/Bitcoin-mining
▰ YouTube - https://www.youtube.com/watch?v=bBC-nXj3Ng4

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Thank You