BLOCK CHAIN AND ITS SOCIAL IMPACT

Mrs. Mrunal Fatangare1, Rohan Divekar 2, Purvesh Chaudhari 3,

Satyajit Deshmukh 4, Manan Sancheti5
Branch of Information Technology, MIT Polytechnic Pune.
Diploma in Information Technology Department, MIT Polytechnic Pune.

I. ABSTRACT: II. INTRODUCTION:

Blockchain is a decentralized, distributed ledger Traditional database technologies present several

technology that records transactions across multiple
computers in a way that ensures security,
transparency, and immutability. It gained
prominence as the underlying technology powering
cryptocurrencies like Bitcoin and Etherum, but its
applications extend far beyond digital currencies.
Blockchain serves as an immutable ledger which
allows transactions take place in a decentralized
manner. Blockchain-based applications are
springing up, covering numerous fields including
financial services, reputation system and Internet of
Things (IoT), and so on. However, there are still
many challenges of blockchain technology such as
scalability and security problems waiting to be
overcome. This paper presents a comprehensive
overview on blockchain. Blockchain enables the
development of smart contracts, self-executing
agreements with predefined conditions, facilitating
automated and transparent transactions across
various domains. We provide an overview of
blockchain architecture, technical challenges and
recent advances are briefly listed. We also lay out
possible future trends for blockchain.
Index Terms—Blockchain, decentralization,
consensus, scalability.
challenges for recording financial transactions. For
instance, consider the sale of a property. Once the
money is exchanged, ownership of the property is
transferred to the buyer. Individually, both the
buyer and the seller can record the monetary
transactions, but neither source can be trusted. The
seller can easily claim they have not received the
money even though they have, and the buyer can
equally argue that they have paid the money even if
they haven’t. To avoid potential legal issues, a
trusted third party has to supervise and validate
transactions. The presence of this central authority
not only complicates the transaction but also creates
a single point of vulnerability. If the central
database was compromised, both parties could
suffer. Blockchain mitigates such issues by creating
a decentralized, tamper-proof system to record
transactions. In the property transaction scenario,
blockchain creates one ledger each for the buyer
and the seller. All transactions must be approved by
both parties and are automatically updated in both
of their ledgers in real time. Any corruption in
historical transactions will corrupt the entire ledger.
These properties of blockchain technology have led
to its use in various sectors, including the creation
of digital currency like Bitcoin [1].
III. IMPORTANCE OF BLOCKCHAIN: 2. Immutability
Immutability means something cannot be changed
The benefits of blockchain are increasing trust,
or altered. No participant can tamper with a
security and transparency among member
transaction once someone has recorded it to the
organizations by improving the traceability of data
shared ledger. If a transaction record includes an
shared across a business network, plus delivering
error, you must add a new transaction to reverse
cost savings through new efficiencies:
the mistake, and both transactions are visible to
1. It is an immutable public digital ledger, which the network.
means when a transaction is recorded, it cannot
be modified 3. Consensus
2. Due to the encryption feature, Blockchain is A blockchain system establishes rules about
always secure participant consent for recording transactions.
3. The transactions are done instantly and You can record new transactions only when the
transparently, as the ledger is updated majority of participants in the network give their
automatically consent.
4. As it is a decentralized system, no
intermediary fee is required
V. TYPES OF BLOCKCHAIN
5. The authenticity of a transaction is verified and
NETWORKS:
confirmed by participants
There are four main types of decentralized or

IV. FEATURES OF BLOCKCHAIN: distributed networks in the blockchain:

Blockchain technology has the following main 1. Public blockchain networks

features: Public blockchains are permissionless and allow

everyone to join them. All members of the
1. Decentralization
blockchain have equal rights to read, edit, and
Decentralization in blockchain refers to
validate the blockchain. People primarily use
transferring control and decision making from
public blockchains to exchange and mine
a centralized entity (individual, organization,
cryptocurrencies like Bitcoin, Ethereum, and
or group) to a distributed network.
Litecoin.
Decentralized blockchain networks use
transparency to reduce the need for trust
2. Private blockchain networks
among participants. These networks also deter
A single organization controls private
participants from exerting authority or control
blockchains, also called managed blockchains.
over one another in ways that degrade the
The authority determines who can be a member
functionality of the network.
and what rights they have in the network. Private
 blockchains are only partially decentralized
because they have access restrictions. Ripple, a
digital currency exchange network for businesses,
is an example of a private blockchain.
3. Hybrid blockchain networks
Hybrid blockchains combine elements from both
private and public networks. [2] Companies can
set up private, permission-based systems
alongside a public system. In this way, they
control access to specific data stored in the
blockchain while keeping the rest of the data
public. They use smart contracts to allow public
members to check if private transactions have
been completed. For example, hybrid blockchains
can grant public access to digital currency while
keeping bank-owned currency private.
4. Consortium blockchain networks
A group of organizations governs consortium
blockchain networks. Preselected organizations
share the responsibility of maintaining the
blockchain and determining data access rights.
Industries in which many organizations have
common goals and benefit from shared
responsibility often prefer consortium blockchain
networks. For example, the Global Shipping
Business Network Consortium is a not-for-profit
blockchain consortium that aims to digitize the
shipping industry and increase collaboration
between maritime industry operators.
VI. COMPONENTS OF BLOCKCHAIN:
Blockchain architecture has the following main
components:
1. A distributed ledger
A distributed ledger is the shared database in the
blockchain network that stores the transactions,
such as a shared file that everyone in the team can
edit. In most shared text editors, anyone with
editing rights can delete the entire file. However,
distributed ledger technologies have strict rules
about who can edit and how to edit. You cannot
delete entries once they have been recorded.
2. Smart contracts
Companies use smart contracts to self-manage
business contracts without the need for an assisting
third party. They are programs stored on the
blockchain system that run automatically when
predetermined conditions are met. They run if-then
checks so that transactions can be completed
confidently. For example, a logistics company can
have a smart contract that automatically makes
payment once goods have arrived at the port.
3. Public key cryptography
Public key cryptography is a security feature to
uniquely identify participants in the blockchain
network. This mechanism generates two sets of
keys for network members. One key is a public key
that is common to everyone in the network. The
other is a private key that is unique to every
member. The private and public keys work together
to unlock the data in the ledger.
VII. WORKING OF BLOCKCHAIN:
While underlying blockchain mechanisms are
complex, we give a brief overview in the following
steps. Blockchain software can automate most of
these steps:
1. Step 1 – Record the transaction
A blockchain transaction shows the movement
of physical or digital assets from one party to
another in the blockchain network. It is
recorded as a data block and can include
details like these:
Who was involved in the transaction?
What happened during the transaction?
When did the transaction occur?
Where did the transaction occur?
Why did the transaction occur?
How much of the asset was exchanged?
How many pre-conditions were met during the
transaction?
2. Step 2 – Gain consensus
Most participants on the distributed
blockchain network must agree that the
recorded transaction is valid. Depending on
the type of network, rules of agreement can
vary but are typically established at the start of
the network.
3. Step 3 – Link the blocks
Once the participants have reached
consensus, transactions on the blockchain are
written into blocks equivalent to the pages of a
ledger book. Along with the transactions, a
cryptographic hash is also appended to the new
block. The hash acts as a chain that links the
blocks together. If the contents of the block are
intentionally or unintentionally modified, the
hash value changes, providing a way to detect
data tampering. Thus, the blocks and chains
link securely, and you cannot edit them. Each
additional block strengthens the verification of
the previous block and therefore the entire
blockchain. This is like stacking wooden
blocks to make a tower. You can only stack
blocks on top, and if you remove a block from
the middle of the tower, the whole tower
breaks.
4. Step 4 – Share the ledger
The system distributes the latest copy of the
central ledger to all participants. Emerging
Technologies and Threats: The rapid evolution
of technology introduces new challenges for
digital forensics. Emerging technologies such
as IoT devices, blockchain, and AI-driven
attacks present novel forensic challenges that
require ongoing research and development of
new forensic techniques and methodologies.
Addressing these challenges requires continuous
research, collaboration among forensic
professionals, law enforcement agencies, industry
stakeholders, and policymakers, as well as
investment in training, tools, and resources for
digital forensic practitioners [3]
a
VIII. BLOCK CHAIN PROTOCOLS:
The term blockchain protocol refers to different
types of blockchain platforms that are available for
application development. Each blockchain protocol
adapts the basic blockchain principles to suit
specific industries or applications. Some examples
of blockchain protocols are provided in the
following subsections:
1. Hyperledger fabric
Hyperledger Fabric is an open-source project with
a suite of tools and libraries. Enterprises can use it
to build private blockchain applications quickly and
effectively. It is a modular, general-purpose
framework that offers unique identity management
and access control features. These features make it
suitable for various applications, such as track-and-
trace of supply chains, trade finance, loyalty and
rewards, and clearing settlement of financial assets.
2. Ethereum
Ethereum is a decentralized open-source
blockchain platform that people can use to build
public blockchain applications. Ethereum
Enterprise is designed for business use cases.
3. Corda
Corda is an open-source blockchain project
designed for business. With Corda, you can build
interoperable blockchain networks that transact in
strict privacy. Businesses can use Corda's smart
contract technology to transact directly, with value.
Most of its users are financial institutions.
4. Quorum
Quorum is an open-source blockchain protocol that
is derived from Ethereum. It is specially designed
for use in a private blockchain network, where only
a single member owns all the nodes, or in a
consortium blockchain network, where multiple
members each own a portion of the network.
IX. BENEFITS OF BLOCKCHAIN:
Blockchain technology brings many benefits to
asset transaction management. We list a few of
them in the following subsections:
1. Advanced security
Blockchain systems provide the high level of
security and trust that modern digital transactions
require. There is always a fear that someone will
manipulate underlying software to generate fake
money for themselves. But blockchain uses the
three principles of cryptography, decentralization,
and consensus to create a highly secure underlying
software system that is nearly impossible to
tamper with. [4] There is no single point of failure,
and a single user cannot change the transaction
records.
2. Improved efficiency
Business-to-business transactions can take a lot of
time and create operational bottlenecks, especially
when compliance and third-party regulatory
bodies are involved. Transparency and smart
contracts in blockchain make such business
transactions faster and more efficient.
3. Faster auditing
Enterprises must be able to securely generate,
exchange, archive, and reconstruct e-transactions
in an auditable manner. Blockchain records are
chronologically immutable, which means that all
records are always ordered by time. This data
transparency makes audit processing much faster.
X. POSSIBLE FUTURE OF
BLOCKCHAIN:
Blockchain has shown its potential in industry and
academia. [5] We discuss possible future
directions with respect to four areas: blockchain
testing, stop the tendency to centralization, big
data analytics and blockchain application.
1. Blockchain testing
Recently different kinds of blockchains appear and
over 700 cryptocurrencies are listed in up to now.
However, some developers might falsify their
blockchain performance to attract investors driven
by the huge profit. Besides that, when users want
to combine blockchain into business, they have to
know which blockchain fits their requirements. So,
blockchain testing mechanism needs to be in place
to test different blockchains.
Blockchain testing could be separated into two
phases: standardization phase and testing phase. In
standardization phase, all criteria have to be made
and agreed. When a blockchain is born, it could be
tested with the agreed criteria to valid if the
blockchain works fine as developers claim. As for
testing phase, blockchain testing needs to be
performed with different criteria. For example, an
user who is in charge of online retail business
cares about the throughput of the blockchain, so
the examination needs to test the average time
from a user send a transaction to the transaction is
packed into the blockchain, capacity for a
blockchain block and etc.
2. Stop the tendency to centralization
Blockchain is designed as a decentralized system.
However, there is a trend that miners are
centralized in the mining pool. Up to now, the top
5 mining pools together owns larger than 51% of
the total hash power in the Bitcoin network. Apart
from that, selfish mining strategy showed that
pools with over 25% of total computing power
could get more revenue than fair share. Rational
miners would be attracted into the selfish pool and
finally the pool could easily exceed 51% of the
total power. As the blockchain is not intended to
serve a few organizations, some methods should
be proposed to solve
this problem.
3. Big data analytics
Blockchain could be well combined with big data.
Here we roughly categorized the combination into
two types: data management and data analytics. As
for data management, blockchain could be used to
store important data as it is distributed and secure.
Blockchain could also ensure the data is original.
For example, if blockchain is used to store patients
health information, the information could not be
tampered and it is hard to stole those private
information. When it comes to data analytics,
transactions on blockchain could be used for big
data analytics. For example, user trading patterns
might be extracted. Users can predict their
potential partners’ trading behaviours with the
analysis.
4. Blockchain applications
Currently most blockchains are used in the
financial domain, more and more applications for
different fields are appearing. Traditional
industries could take blockchain into consideration
and apply blockchain into their fields to enhance
their systems. For example, user reputations could
be stored on blockchain. At the same time, the up-
and-coming industry could make use of
blockchain to improve performance. For example,
Arcade City, a ridesharing startup offers an open
marketplace where riders connect directly with
drivers by leveraging blockchain technology. A
smart contract is a computerized transaction
protocol that executes the terms of a contract . It 2. S. Nakamoto, “Bitcoin: A peer-to-peer
has been proposed for long time and now this electronic cash system,” 2008. [Online].
concept can be implemented with blockchain. In Available: https://bitcoin.org/bitcoin.pdf
blockchain, smart contract is a code fragment that
could be executed by miners automatically. Smart 3. G. W. Peters, E. Panayi, and A. Chapelle,
contract has transformative potential in various “Trends in crypto-currencies and blockchain
fields like financial services and IoT. technologies: A monetary theory and
regulation perspective,” 2015. [Online].
XI. CONCLUSION: Available: http://dx.doi.org/10.2139/ssrn.
2646618
Blockchain has shown its potential for transforming
traditional industry with its key characteristics:
4. G. Foroglou and A.-L. Tsilidou, “Further
decentralization, persistency, anonymity and
applications of the blockchain,” 2015.
auditability. In this paper, we present a
comprehensive overview on blockchain. We first
5. A. Kosba, A. Miller, E. Shi, Z. Wen, and C.
give an overview of blockchain technologies
Papamanthou, “Hawk: The blockchain model
including blockchain architecture and key
of cryptography and privacy-preserving smart
characteristics of blockchain. We then discuss the
contracts,” in Proceedings of IEEE
typical consensus algorithms used in blockchain.
Symposium on n Security and Privacy (SP),
We analyzed and compared these protocols in
San Jose, CA, USA, 2016, pp. 839–858.
different respects. Furthermore, we listed some
challenges and problems that would hinder
blockchain development and summarized some
existing approaches for solving these problems.
Some possible future directions are also proposed.
Nowadays blockchain-based applications are
springing up and we plan to conduct in-depth
investigations on blockchain-based applications in
the future.

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