BLOCK CHAIN TECHNOLOGY

AND
ITS APPLICATIONS

A Seminar Report Submitted in Partial

Fulfillment of the Requirement for the Award of

the Degree of

“MASTERS OF BUSINESS ADMINISTRATION’’

Supervisor: Student Name:

MISS. SONAM YADAV Prachi

Assistant Professor Roll No-

2306000020

FACULTY OF COMMERCE & BUSINESS STUDIES

MOTHERHOOD UNIVERSITY, ROORKEE

DISTRICT HARIDWAR, UTTRAKHAND

 2024

ACKNOWLEDGEMENT
It is our privilege to express our deep sense of gratitude and thanks to our supervisor, Miss. Sonam
Yadav Faculty of commerce and Business Studies, Motherhood University, Roorkee for giving me this
opportunity. I also thankfully acknowledge the Dean, Faculty of Commerce & Business Studies. Dr.
P.K. Aggrawal who gave us their valuable suggestions for their busy schedule.

Our heartiest gratitude to our parent, family members and mentors for their continuous Encouragement
and blessings, best wishes, and moral support which was a constant source of assurance, guidance,
strength, and inspiration to us .

Finally, we would like to express our deepest gratitude to almighty and thank him from the bottom of our
heart .

PLACE: MOTHERHOOD UNIVERSITY

DATE: ……………………………………..
Signature of the Student
Name of the student

2
 CERTIFICATE

This is to certify that the project entitled “Block chain technology and its applications” being submitted by
Miss. Prachi in partial fulfillment for the award of the degree Master of Business Administration” 2 nd
semester to Motherhood university, Roorkee, a record of bonafied work carried out by him under my
guidance and supervision.

MISS. SONAM YADAV

Assistant Professor
(Signature)

3
 DECLARATION
I hereby declare that the project works with the title study on Block chain technology and its application
Submitted me for fulfilment of the degree of “MASTER OF BUSINESS ADMINISTRATION” in
commerce department the MOTEHRHOOD UNIVERSITY of is my origin and has not been submitted
earlier to any other university/Institution for the fulfillment of the requirement for any course of study. I also
declare that no chapter of this manuscript in whole or in part has been incorporated in this report from any
earlier work done by me. However, extracts of any literature which has been used for this report has been
duly acknowledge providing details such literature in the reference.

Name: Prachi

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 TABLE OF CONTENTS

Page Teacher’s
S.No. Particulars
No. Signature

1 Introduction

1.1 blockchain terms

1.2 How block chain works

2 History of block chain technology

3. Global scenario

4 Types of blockchain

5 Primary features of blockchain

6. Research scope

7. Research objectives

8. Application of blockchain technology

8.1 Cryptocurrency

8.1.1 Key feature of cryptocurrency

8.1.2 Scope

8.1.3 Indian Scenario

9 Blockchain beyond cryptocurrencies

10 Blockchain technology application in financial services

11 Features of blockchain

12 Advantages and disadvantages of block chain technology

13 Role of blockchain technology

14 Conclusion

15 References

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Abstract
The real-world use cases of blockchain technology, such as faster cross-border payments, identity
management, smart contracts, cryptocurrencies, and supply chain–blockchain technology are here to stay and
have become the next innovation, just like the Internet. There have been attempts to formulate digital money,
but they have not been successful due to security and trust issues. However, blockchain needs no central
authority, and its operations are controlled by the people who use it. Furthermore, it cannot be altered or
forged, resulting in massive market hype and demand. Blockchain has moved past cryptocurrency and
discovered implementations in other real-life applications; this is where we can expect blockchain technology
to be simplified and not remain a complex concept. Blockchain technology’s desirable characteristics are
decentralization, integrity, immutability, verification, fault tolerance, anonymity, audibility, and transparency.
We first conduct a thorough analysis of blockchain technology in this paper, paying particular attention to its
evolution, applications and benefits, the specifics of cryptography in terms of public key cryptography, and
the challenges of blockchain in distributed transaction ledgers, as well as the extensive list of blockchain
applications in the financial transaction system. This paper presents a detailed review of blockchain
technology, the critical challenges faced, and its applications in different fields. Blockchain in the transaction
system is explained in detail with a summary of different cryptocurrencies. Some of the suggested solutions
are given in the overall study of the paper.
The main hypothesis is that the blockchain establishes a system of creating a distributed consensus i n
the digital online world. This allows participating entities to know for certain that a digital event happened by
creating an irrefutable record in a public ledger. I t opens the door for developing a democratic open and
scalable digital economy from a centralized one. There are tremendous opportunities in this disruptive
technology and revolution in this space has just begun.

This white paper describes blockchain technology and some compelling specific applications in both financial
and nonfinancial sector. We then look at the challenges ahead and business opportunities in this fundamental
technology that is all set to revolutionize our digital world.

As blockchain is a distributed ledger, hence every transaction is stored on more than one computer, which
makes us sure, that every transaction is going to be permanent without any fear of loss. As blockchain is
distributed, it can neither be owned nor be fully controlled by a single entity. Transactions are between two
parties, and no other parties are involved, this results in lower cost, and once a transaction is performed, it
cannot be changed under any circumstances.

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 1.Introduction

Twenty first century is all about technology. With the increasing need for modernization in our day-to-day
lives, people are open to accepting new technologies. Throughout history, humanity has tried different ways
to exchange values and protect buyers and sellers. Credit card system, the internet and mobile technologies
were all important innovations, that improved the convenience, speed and efficiency of transaction. But they
had their own limitations like limited transaction size, the need for third party validation, increasing
transaction
cost and a weak trust-based model. Besides, fraud and cyber-attacks are unavoidable.

To address these challenges, the world needed a new type of payment system or rather a network, that
could establish trust, remove intermediary institutions, eliminate fraud and provide secure and efficient
transaction mechanisms to protect payers and payee. So, Blockchain technology is one such important
technology.

Blockchain, is one of the emerging technologies currently in the market attracting a lot of attention from
enterprises, start-ups and media. Financial players are the first driving force to capitalize on this technology
even though it is still in an emerging stage. A study by the World Economic Forum envisages banks and
regulators around the world are poised to experiment multiple Blockchain models in 2017. With 90+ central
banks involved in Blockchain discussion globally, 2500+ patents filed over the last three years and 80 per
cent of the banks predicted to initiate Blockchain and distributed ledger technology (DLT) projects by 2017,
the Blockchain technology is on its way to become the new normal in the world of financial services. Since
the
advent of steam engines, electricity and information technology, blockchain has been seen as part of the
fourth industrial revolution (Chung and Kim, 2016). Blockchain technology could not draw much attention
during the initial stages of its existence and Bitcoin continues to run safely and steadily over the years, the
world has since become aware of the massive potential of this invention's underlying technology in applying
it not only to cryptocurrencies but also to many other fields (Collins, 2016).
The concept where it is possible to perform transactions without having to trust any central party has
been unimaginable for a long time until Bitcoin emerged with its underlined blockchain technology. Bitcoin
showed for the first time, that it is possible for two parties, who do not necessarily trust each other, to perform
transactions without any central authority as intermediary. Both sender and receiver trust only the underlying
architecture which guarantees the security of the system. The application of the blockchain technology has
been until recently primarily in cryptocurrency sector, but new potential areas emerged such as distributed

7
storage, smart contracts etc. which extend the functionality of the blockchain and open doors for the new
breakthroughs.
The key principle behind blockchain is its distributed nature and lack of central authority. In the world where
trusted parties represent an overall weakens of any system, but it’s being justified as necessity by
governments and other” trusted authorities”, blockchain technology brings new concept which embraces new
technological developments and shifts the power from one to many, or from central concept to distributed
one.

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2. Blockchain

2.1 Definition:

A blockchain is “a type of distributed ledger of digital records that is comprised of unchangeable data in
packages called blocks, where each block is then chained to the next block, using a cryptographic function
called hash function” (FAO,2019). “Distributed ledger is a type of database or system of records, that is
shared, replicated and synchronized among the members of a network.”

Each block is linked to its previous block using the cryptographic hash of the previous block; hence, the
process is named as blockchain. A blockchain is a historical record of all the transactions that have taken
place in the network from the beginning of the blockchain to the end. The blockchain serves as a single source
of genuineness for the network.

2.2 Blockchain terms

Block: Each block contains data, its own hash and the hash of the previous block.
Data: A unit of data stored inside a block may be represented by any value depending on the type of
blockchain. A block can store an amount of money, a share in a company, a digital certificate of ownership, a
vote during an election or any other value.
Hash: Each block also has a hash. This hash is a value generated from a string of text using a mathematical
function. A hash can be compared to a fingerprint, as each hash is unique. Its role is to identify a block and
the block’s contents. Any changes inside the block causes the hash to change. If anyone changes the data in a
single block, hash of that particular block changes, it also makes the whole chain invalid.
Hash of previous block: Each block contains a hash of the previous block. For instance, if there are three
blocks in a blockchain, block three will contain the hash of block two, and block two will contain the hash of
block one.
Node: A device that works on the blockchain network. Are individual computers that take input
and performs a function on them and gives an output.
Wallet: All the transactions take place on the internet. So, no banks and no bankers are involved in the
process. Transactions are stored in a virtual account called wallet. Money can be transferred from one wallet
to another. Single person can hold more than one account.
Public and private key: The generation of a Bitcoin address begins with the generation private key.
Corresponding public key can be derived using a known algorithm. Public keys are publicly known and
essential for identification. Private keys are kept secret and used for authentication and encryption. It is
impossible to derive the private key from the public key.

9
 Anyone can send a transaction using a public key to the address of a receiver. But only the
owner of that address, who has the private key can access the value of that transaction.

10
3. How blockchain works?

The working of a blockchain be public or private is as described below:

Let us consider five participants in our blockchain; A, B, C, D, E who are on a decentralized,

distributed network. This blockchain example will implement the blockchain technology in the
bitcoin system.

Fig. 1: Steps in working of blockchain

(1) A want to send 50 bitcoins to B.

(2) This transaction of 50 bitcoins is represented online as a block.

(3) This block is then broadcasted to each and every participant in the network [C, D and E]. (4)
In this example, C, D and E will serve as the validators in the network. This approve that the
transaction is valid.
(5) This block containing the transaction then is added to the blockchain.

(6) The 50 bitcoins are transferred from A to B.

In Step (4), the validator, C, D and E execute cryptographic algorithms and conduct an
evaluation and verification of the history of the individual blockchain under consideration. If the
evaluation proves that history and the hash values are all valid, then the transaction is accepted. This
is known as distributed consensus. If C, D and E for some reason cannot validate the information in
11
 the blockchain, then the data is rejected and entry for the block is denied and it is not added into the
blockchain.

4. HISTORY OF BLOCK CHAIN TECHNOLOGY

Although blockchain is a new technology, it already boasts a rich and interesting history. The following is a
brief timeline of some of the most important and notable events in the development of blockchain.

2008

• Satoshi Nakamoto, a pseudonym for a person or group, publishes “Bitcoin: A Peer to Peer Electronic Cash
System."

2009

• The first successful Bitcoin (BTC) transaction occurs between computer scientist Hal Finney and the
mysterious Satoshi Nakamoto.

2010

• Florida-based programmer Laszlo Hanycez completes the first ever purchase using Bitcoin — two Papa
John’s pizzas. Hanycez transferred 10,000 BTC’s, worth about $60 at the time. Today it's worth $80
million.

• The market cap of Bitcoin officially exceeds $1 million.

2011

• 1 BTC = $1USD, giving the cryptocurrency parity with the US dollar.

• Electronic Frontier Foundation, Wikileaks and other organizations start accepting Bitcoin as donations.

2012

• Blockchain and cryptocurrency are mentioned in popular television shows like The Good Wife, injecting
blockchain into pop culture.

• Bitcoin Magazine launched by early Bitcoin developer Vitalik Buterin.

2013

• BTC market cap surpassed $1 billion.

• Bitcoin reached $100/BTC for first time.

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• Buterin publishes “Ethereum Project" paper suggesting that blockchain has other possibilities besides
Bitcoin (e.g., smart contracts).

2014

• Gaming company Zynga, The D Las Vegas Hotel and Overstock.com all start accepting Bitcoin as
payment.

• Buterin’s Ethereum Project is crowd funded via an Initial Coin Offering (ICO) raising over $18 million in
BTC and opening up new avenues for blockchain.

• R3, a group of over 200 blockchain firms, is formed to discover new ways blockchain can be implemented
in technology.

• PayPal announces Bitcoin integration.

2015

• Number of merchants accepting BTC exceeds 100,000. • NASDAQ and San-Francisco blockchain company
Chain team up to test the technology for trading shares in private companies.

2016

• Tech giant IBM announces a blockchain strategy for cloud-based business solutions.

• Government of Japan recognizes the legitimacy of blockchain and cryptocurrencies.

2017

• Bitcoin reaches $1,000/BTC for first time.

• Cryptocurrency market cap reaches $150 billion. • JP Morgan CEO Jamie Demon says he believes in
blockchain as a future technology, giving the ledger system a vote-of-confidence from Wall Street.

• Bitcoin reaches its all-time high at $19,783.21/BTC. • Dubai announces its government will be blockchain
powered by 2020.

2018
13
• Facebook commits to starting a blockchain group and also hints at the possibility of creating its own
cryptocurrency. • IBM develops a blockchain-based banking platform with large banks like Citi and Barclays
signing on.

The blockchain technology promises to revolutionize the way of business. It has effects on various sectors,
from financial to manufacturing as well as education. Satoshi Nakamoto released the well-known whitepaper
about the technology in 2009. In the paper, he provided details of how the technology was well equipped to
enhance digital trust given the decentralization aspect that meant nobody would ever be in control of
anything. Ever since Satoshi.

Figure 2. The History of Blockchain Technology Source: Url-4, 2018.

Moreover, blockchain technology has several essential features developed in time. One is that
it allows a deep transition from a centralized transactional model, which until today has
prevailed, to a decentralized one. distributed system should turn out to be a more robust and
reliable solution than is usually provided by a centralized authority to its stakeholders – such as
a government to its citizens (Colombo, Sok, 2016). Table below summarized standard
transactions versus blockchain ones.
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Blockchain history dates back to the early 1990’s. Stuart Haber and Scott Stornetta work on
the first Blockchain. But being into use only with the introduction of first cryptocurrency,
Bitcoin. Blockchain technology was first introduced in a whitepaper entitled: “Bitcoin: A Peer-
to-Peer Electronic Cash System,” by Satoshi Nakamoto in 2008. Blockchain technology made
its public debut in 2009 with cryptocurrency.

5. Global scenario
According to STATISTA (2019), global market for blockchain technology,

 The Global Blockchain market size which was $708 million in 2017 and is expected to grow to $20
billion by 2024
 Major players like IBM, Microsoft, Facebook, Amazon, Google and many more are now exploring
blockchain
 42 per cent of world’s top Universities including Stanford, Yale, Harvard and Princeton offering
courses on blockchain and cryptocurrencies
 90 per cent of American and European banks, now adopted blockchain technology in their financial
activities
 The World Economic Forum anticipated that 10 per cent of world’s GDP will be stored in blockchain
by 2025
 Since 2017, there has been increase in jobs related to blockchain and cryptocurrencies

6. Types of blockchain

There are two types of blockchain

6.1 Private /Permissioned blockchains: This is controlled by a centralized entity. Only people with specific
authentication and permission can be part of this network and thereby can verify and add records to the
ledger.

6.2 Public /Permissionless blockchains: Public or permissionless blockchain are decentralized and are
visible to the public, anyone can join or leave the blockchain and anyone can verify and mappend transactions
to the blockchain. This type of blockchain facilitates the dynamic collection of participants who may not
know each other.

15
7. Primary features of blockchain

7.1 Decentralization: The network is decentralized, meaning it doesn’t have any governing authority or a
single person looking after the framework rather a group of nodes maintains the network making it
decentralized.

7.2 Immutability: Immutability means something that can’t be changed or altered. This is one of the
blockchain features that help to ensure that the technology will remain as it is a permanent, unalterable
network.

7.3 Improved security: As it gets rid of the need for central authority, no one can just simply change any
characteristics of the network for their benefit. Using encryption ensures another layer of security for the
system.

7.4 Distributed ledger: A blockchain is a public ledger that provides information of all the participants and
all digital transactions that have ever been executed. A block is the “prevailing” part of a blockchain which is
supposed to keep the record of the recent transactions and once they are completed, it goes into the
blockchain.

7.5 Consensus: In simple terms, the consensus is a decision-making process for the group of nodes active on
the network. Here, the nodes can come to an agreement quickly and relatively faster. When millions of nodes
are validating a transaction, a consensus is absolutely necessary for a system to run smoothly.

7.6 Faster settlement: Blockchain offers a faster settlement compared to traditional banking systems. This
way a user can transfer money relatively faster, which saves a lot of time in the long run.

Research Scope

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Blockchain technology, often called the "Internet of Value," holds immense potential for transforming
industries through its decentralized and secure nature. Here are some of the broad scopes of this innovative
technology across various sectors.

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Research Objective

The main objective of this research is to identify the useful applications of blockchain for the finance
sector. This research first intends an overview how blockchain and the underlying Distributed Ledger
Technology work. Also, an overview on the blockchain based Smart Contracts is given. The possible
advantages of implementing the various technological for the financial sector are described. This paper
uses documentary research to examine the relationships and implications between the keywords.

Research questions:
• What is blockchain and it´s underlying Distributed Ledger Technology?

• What are blockchain basedSmart Contracts and how theyoperate?

• Which are the advantages of an implementation?

• What are useful applications for the finance sector

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8. Applications of Blockchain technology

8.1 Cryptocurrency

A cryptocurrency is a digital currency that uses cryptography for security. It is also called as virtual currency.
Cryptocurrency is associated with the internet that uses cryptography. Cryptography is the process of
converting legible information into an almost uncrackable code, to track purchases and transfers.
Cryptocurrency is a way to secure communications, information and money online. It has evolved in the
digital era with elements of mathematical theory and computer science.

8.1.1 Key features of Cryptocurrency

• Decentralized/No Central Authority: No central authority is needed to control the transaction.

Transactions are verified by a network node through cryptography and recorded in a public distributed ledger
called a blockchain. The transaction is propagated across the peer-to-peer network and is replicated by every
node, reaching a large percentage of the nodes within a few seconds.

• Intangible: Exists only on the internet, only in virtual form.

• Anonymous: Since there is no need for a central authority, users do not need to identify themselves when
transacting with cryptocurrency.

• Irreversible and Immutable: Which means that, it is impossible for anyone, but the owner of the
respective private key to move their digital assets and that transactions cannot be changed once it is recorded
on the blockchain.

• Limited Supply and Scarcity: Unlike fiat currency there is no central banks to manipulate the value of the
cryptocurrencies as part of its economic policies. On the other hand, most cryptocurrencies have a limited and
pre-determined supply of the cryptocurrency that is coded into its underlying algorithm when it is created.

• Generated by algorithm: Crypto coins are generated by mathematical computation.

• Highly volatile: Value of the cryptocurrency has large fluctuation more or less daily.

8.1.2Scope

• Useful in making purchases via mobile, recharges and even in paying bills, online shopping etc.

• Transfer of funds: Inter-border money transactions can be made safely, quickly and cheaply.

• No transaction limit: There is no maximum and minimum limit for the transaction.

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• High returns: From single transaction lump sum amount can be gained.

1 bitcoin = 6,19,327.74 Indian Rupee (as on 15 November 2019)

According to CoinMarketCap (2019), at present, there are over 2500 cryptocurrencies are exist, with a total
market capitalization of $ 244,539,412,448. Bitcoin is the most successful and most widely circulated
cryptocurrency with a market capitalization of nearly $ 159,973,658,317. Major Cryptocurrencies in
circulation are Bitcoin, Ethereum, Rippel, Stellar, Bitcoin cash, Litecoin etc. Among all cryptocurrencies,
bitcoin holds maximum share of about 58 percent.

8.1.3 Indian scenario

The finance minister in the country has labelled cryptocurrencies are not being legal tender. In recent time a
debate has emerged within the country as to whether profits from crypto transaction should be taxed or not. In
India it is neither legal nor illegal.

India’s Department of Economic Affairs in its Ministry of Finance met to discuss how. Bitcoin could
be regulated. The committee suggested the following, that cryptocurrencies should be governed by the
Reserve Bank of India Act of 1934, Bitcoin investors should be taxed, guidelines for buying and investing in
cryptocurrencies should be drafted. According to the Indian government, people using these types of
currencies should take certain caution because there is no lawful protection for these currencies. And no help
can be provided to the people from the government side if some fraud is faced by the people (Kumar and
Singh, 2018).

9. Blockchain beyond Cryptocurrencies:

According to The National Association of Software and Services Companies (NASSCOM) [which is a trade
association of Indian Information Technology (IT) and Business Process Outsourcing (BPO) industry],
Banking Finance Services and Insurance (BFSI) holds maximum share of 60 per cent in adoption of
blockchain in India.

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10. Blockchain technology applications in financial services

Financial service industry is currently the leader in experimenting with the technology. The shift
from a centralized technical infrastructure to distributed, ecosystem-enabling platforms is laying the
foundations for new business models in payments, digital banking and financial transaction
technologies.

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  Security: Its distributed consensus based architecture eliminates single points of failure and
reduces the need for data intermediaries such as transfer agents, messaging system operators and
inefficient monopolistic utilities. Ethereum also enables implementation of secure application code
designed to be tamper-proof against fraud and malicious third parties — making it virtually impossible
to hack or manipulate.
 Transparency: It employs mutualized standards, protocols, and shared processes, acting as a single
shared source of truth for network participants
 Trust: Its transparent and immutable ledger makes it easy for different parties in a business network
to collaborate, manage data, and reach agreements
 Programmability: It supports the creation and execution of smart contracts — tamper proof,
deterministic software that automates business logic – creating increased trust and efficiency
 Privacy: It provides market-leading tools for granular data privacy across every layer of the software
stack, allowing selective sharing of data in business networks. This dramatically improves
transparency, trust and efficiency while maintaining privacy and confidentiality.
 High-Performance: It’s private and hybrid networks are engineered to sustain hundreds of
transactions per second and periodic surges in network activity
 Scalability: It supports interoperability between private and public chains, offering each enterprise
solution the global reach, tremendous resilience, and high integrity of the main net .

According to a report by Jupiter Research, blockchain deployments will enable banks to realize savings on
cross-border settlement transactions of up to $27 billion by the end of 2030, reducing costs by more than
11%. Ethereum specifically has already demonstrated disruptive economics, creating over 10x cost
advantages against incumbent technologies. Financial institutions acknowledge that distributed ledger
technology will save billions of dollars for banks and major financial institutions over the next decade

How does the Digitization of Financial Instruments Impact Finance?

The digitization of financial instruments – comprising digital assets, smart contracts and programmable
money – takes the benefits of blockchain further by forging unprecedented levels of connectivity and
programmability between products, services, assets and holdings. These digitized instruments will redefine
the processes of commercial and financial markets, creating a new paradigm where value is brought at every
touch point. Digital financial instruments offer the following business benefits:

 Authenticity and scarcity: Digitization ensures data integrity, and enables asset provenance and full
transaction history in a single shared source of truth

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 Programmable capabilities: Code that addresses governance, compliance, data privacy, identity
(KYC/AML attributes), system incentives and features that manage stakeholder participation (for
voting and other rights) — can be built into the assets themselves
 Streamlined processes: Heightened automation increases overall operational efficiency. It enables
real-time settlement, audit and reporting; and it reduces processing times, the potential for error and
delay, and the number of steps and intermediaries required to achieve the same levels of confidence in
traditional processes
 Economic benefits: Automated, more efficient processes trigger reduced infrastructure costs,
operation costs, and transaction costs
 Market reactivity: Digital securities allow greater customization than standardized securities, and can
be issued within shorter timeframes. Issuers can create bespoke digital financial instruments directly
matched to investor demand.
 New products and markets: Secure, scalable and rapid asset transfers, fractionalized ownership of
real-world assets, tokenized micro-economies, an

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11. Features of block chain

1.Immutable: Immutability means that the blockchain is a permanent and unalterable network. Blockchain
technology functions through a collection of nodes. Once a transaction is recorded on the blockchain, it
cannot be modified or deleted. This makes the blockchain an immutable and tamper-proof ledger that
provides a high degree of security and trust.

 Every node in the network has a copy of the digital ledger. To add a transaction every node checks
the validity of the transaction and if the majority of the nodes think that it is a valid transaction then
it is added to the network. This means that without the approval of a majority of nodes no one can
add any transaction blocks to the ledger.

2. Distributed: All network participants have a copy of the ledger for complete transparency. A public
ledger will provide complete information about all the participants on the network and transactions. The
distributed computational power across the computers ensures a better outcome.

Distributed ledger is one of the important features of blockchains due to many reasons like:
 In distributed ledger tracking what’s happening in the ledger is easy as changes propagate really
fast in a distributed ledger.
 Every node on the blockchain network must maintain the ledger and participate in the
validation.
 Any change in the ledger will be updated in seconds or minutes and due to no involvement of
intermediaries in the blockchain, the validation for the change will be done quickly.
 If a user wants to add a new block then other participating nodes have to verify the transaction.
For a new block to be added to the blockchain network it must be approved by a majority of the
nodes on the network.
 In a blockchain network, no node will get any sort of special treatment or favors from the
network. Everyone will have to follow the standard procedure to add a new block to the network.
3. Decentralized: Blockchain technology is a decentralized system, which means that there is no central
authority controlling the network. Instead, the network is made up of a large number of nodes that work
together to verify and validate transactions. Each and every node in the blockchain network will have the
same copy of the ledger.
Decentralization property offers many advantages in the blockchain network:
 As a blockchain network does not depend on human calculations it is fully organized and fault-
tolerant.

25
 The blockchain network is less prone to failure due to the decentralized nature of the network.
Attacking the system is more expensive for the hackers hence it is less likely to fail.

 There is no third-party involved hence no added risk in the system.

 The decentralized nature of blockchain facilitates creating a transparent profile for every
participant on the network. Thus, every change is traceable, and more concreate.
 Users now have control over their properties and they don’t have to rely on third-party to
maintain and manage their assets.

26
4. Secure: All the records in the blockchain are individually encrypted. Using encryption adds another
layer of security to the entire process on the blockchain network. Since there is no central authority, it does
not mean that one can simply add, update or delete data on the network.
Every information on the blockchain is hashed cryptographically which means that every piece of data has
a unique identity on the network. All the blocks contain a unique hash of their own and the hash of the
previous block. Due to this property, the blocks are cryptographically linked with each other. Any attempt
to modify the data means to change all the hash IDs which is quite impossible.

5. Consensus: Every blockchain has a consensus to help the network to make quick and unbiased
decisions. Consensus is a decision-making algorithm for the group of nodes active on the network to reach
an agreement quickly and faster and for the smooth functioning of the system. Nodes might not trust each
other but they can trust the algorithm that runs at the core of the network to make decisions. There are many
consensus algorithms available each with its pros and cons. Every blockchain must have a consensus
algorithm otherwise it will lose its value.

12. Advantages of blockchain technology

1. Trust
Blockchain creates trust between different entities where trust is either non-existent or unproven. As a result,
these entities are willing to engage in business dealings that involve transactions or data sharing they may not
have otherwise done or would have required an intermediary.
Enabling trust is one blockchain's most cited benefits. Its value is evident in early blockchain use cases
that facilitated transactions among entities that didn't have direct relationships yet still had to share data or
payments. Bitcoin and cryptocurrencies in general are quintessential examples of how blockchain enables
trust between participants who don't know each other.
2. Decentralized structure
Blockchain proves its value when there's no central actor who enables trust, said Daniel Field, director of
innovation and global head of blockchain at UST, a provider of digital technology and services. In addition to
enabling trust among participants who are unknown to each other, blockchain enables data sharing within an
ecosystem of businesses where no single entity is exclusively in charge.
Supply chain is an example. Multiple businesses -- from suppliers and transportation companies to
producers, distributors and retailers -- want or need information from others in the chain, yet no one is in

27
charge of facilitating all that information sharing. Blockchain, with its decentralized nature, solves that
dilemma.

3. Improved security and privacy

The security of blockchain-enabled systems is another leading benefit of the technology. Blockchain creates
an unalterable record of transactions with end-to-end encryption to shut out fraud and unauthorized activity.
Additionally, data on the blockchain is stored across a network of computers, making it nearly impossible to
hack, unlike conventional systems that store one copy of the data on servers. Furthermore, proponents
say blockchain can address privacy concerns better than traditional systems by anonymizing data and, in some
cases, requiring permission to limit access.

4. Reduced costs

Blockchain's inherent design can also cut costs for organizations. It brings certain efficiencies to transaction
processing, reduces manual tasks such as aggregating and amending data, and eases reporting and auditing
processes.
Experts like Field pointed to the savings that financial institutions see when using blockchain,
explaining that blockchain's ability to streamline clearing and settlement translate directly into cost savings.
More broadly, blockchain helps businesses cut costs by eliminating middlemen -- vendors and third-party
providers -- that have traditionally handled the processing that blockchain can do. However, some experts
assert that blockchain is more expensive than most alternatives, primarily because of the substantial
investment in computing resources that it requires.

5. Speed
By eliminating intermediaries and replacing many of the manual processes of transactions, blockchain can
handle transactions significantly faster than some conventional methods. However, times can vary, and how
quickly a blockchain-based system can process transactions depends on multiple factors, such as network
traffic, the size of each block of data and the speed of the process used to establish consensus.

Some experts have concluded that blockchain is faster than other processes and technologies when all the
steps – including the manual ones – are taken into account. For example, in one of the most prominent
applications of blockchain, Walmart used the technology to trace the source of sliced mangoes in seconds -- a
process that previously took seven days.

However, for processes that are already mostly or fully digitized, blockchain is often slower than
conventional financial and data-processing systems, according to many experts.

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6. Visibility and traceability

Walmart's use of blockchain isn't just about speed. It's also about the ability to trace the origin of mangoes and
other products. Blockchain visibility and traceability applications also help retailers manage inventory,
respond to problems or questions, and confirm the origin of merchandise.

If a farm recalls its produce because of contamination, a retailer can use blockchain to identify and remove the
produce. According to experts, blockchain can help track the origins of a variety of items, such as medicines
to confirm that they're legitimate and not counterfeit as well as organic items to confirm they're organic.

7. Immutability

Immutability simply means that transactions, once recorded on a blockchain, can't be changed or deleted. All
transactions are time- and date-stamped, so there's a permanent record that can be used to track information
over time, enabling secure, reliable auditing of information. Paper-based filing and older computer systems, in
contrast, are error prone, and they can be more easily corrupted or retired.

Omar pointed to Sweden's use of blockchain to digitize real estate transactions to keep track of property titles
even as they change hands as an example of the benefit of immutability. On the other hand, some observers
see immutability as a drawback if, for example, someone wants to remove damaging or inaccurate
information.

8. Individual control of data

Blockchain gives individuals unprecedented control over their digital data. "In a world where data is a very
valuable commodity, the technology inherently protects the data that belongs to you while allowing you to
control it," said Michela Menting, senior research director at ABI Research. Individuals and organizations can
decide what pieces of their digital data they want to share and with whom and for how long, with limits
enforced by blockchain-based smart contracts.

9. Tokenization

Tokenization is the process whereby the value of a physical or digital asset is converted into a digital token
that is then recorded and shared on a blockchain. Tokenization has caught on with digital art and other virtual
assets, but it has broader applications that could smooth business transactions, said Joe Davey, a partner at the

29
technology consulting firm West Monroe. Utilities, for example, could use tokenization to trade carbon
emission allowances under carbon cap-and-trade programs.

10. Innovation

Leaders across many industries are exploring and implementing blockchain-based systems to solve intractable
problems and streamline cumbersome practices. Field cited the use of blockchain to verify the information on
job applicant resumes as an example.

The prevalence of resume fraud leaves hiring managers with the time-consuming task of manually verifying
the information. But pilot programs that allow participating universities to put data about their graduates and
their awarded degrees on a blockchain that can then be accessed by authorized hiring managers helps solve
both problems, getting the truth and getting it quickly and efficiently.

30
13. Disadvantages of block chain technology

1. Private keys: The blockchain network maintains its high level of security through private keys. It comes in
handy when you validate a blockchain address. Moreover, when you open a crypto wallet, you get a private
key. It is a password that allows you to withdraw funds from your wallet.

By chance, if you lose this key, you cannot withdraw funds from your account. So, you need to store multiple
copies of it just so that if you lose the original one, you can rely on one of the copies.

The downside is that your crypto wallet is compromised if anyone can access one of these copies. Moreover,
unlike your social media or e-mail id password, changing a private key once generated is impossible.

2. Possibility of disruption of network security: Blockchain technology is known worldwide for its top-
notch security. However, there is a chink in its armour that you should know of. The validation process in a
blockchain is done through miners having a lot of computing power. If you are a miner with enough
computing power to control more than 50% of a blockchain's mining hash rate, you can launch a 51% attack.

You can prevent transactions from gaining confirmations and even pause payments between users. Also, you
can reverse completed transactions leading to double spending on the cryptocurrency.

An attack like this is unlikely on bigger blockchains like Bitcoin or Ethereum. However, new blockchains or
forked cryptos can suffer massive damage from this activity. Furthermore, there are also instances of fraud in
various cryptocurrencies.

3. High costs of implementation: It costs a lot of money to implement blockchain in a company. This
capital-intensive investment deters most companies from adopting this technology. If you are a company
owner looking to implement blockchain, you have to hire core blockchain developers and blockchain
software developers. This requires substantial funds. After that, you have to create blockchain-based
applications. Plus, there are hardware requirements too.

4. Inefficient mining process: Each block in a blockchain is mined through a mechanism called Proof-of-
Work. Each miner needs a high-powered computer to compete in the mining process. Many miners may
compete to mine a block; only one gets the block rewards. There is a massive waste of energy and resources.

5. Environmental impacts: Mining, minting and validating transactions require high-powered systems to run
24/7. Apart from heavy investments, these processes require a lot of power. This can lead to serious
environmental consequences. Due to disproportionate environmental impacts, China has banned blockchain
mining in its Inner Mongolia region.

31
6. Storage problems: On a blockchain, all the information is shared across different nodes on the network. In
this respect, all the data on a particular blockchain is stored on the hard drive of a miner's system.

As the number of users increases, so will the data; hence, the hard disk space will also need an upgrade. A
time may come when a blockchain's total amount of data may exceed the available hard disk sizes.

7. Anonymity: Anonymity is the main selling point of blockchain technology. People may not be able to
track your real identity but think on this matter from the money laundering perspective. A person with an
anonymous identity can send money to any part of the world, and no one will have a trace of those
transactions except for the wallet addresses. Investigations have often found that cybercriminals were using
blockchains as money laundering platforms.

8. Immutability: Once you enter information on a blockchain, it becomes unchangeable. If any errors or
information need updating, it is simply impossible to do so. On the flip side, this feature is an advantage of
blockchain, as the data cannot be violated in any way. But there are always two sides to a coin, and you must
be aware of both.

9. Scalability: Each block has a specific capacity to store data. This makes the validation of transactions very
slow and tedious. There is no scope to increase the size of the block on a blockchain. Networks like Polygon
have features to upscale the transaction speed of Ethereum, which is quite well-known for its slow network
speeds. This may be a temporary solution, but the main problem remains unsolved.

10. Hard forks: Hard forks occur when most blockchain members want to implement new rules. It may also
happen when a major group on the blockchain wants to create a new cryptocurrency. In this case, the old and
new cryptocurrencies operate as separate entities. Many users face difficulties as the new coin is not readily
available on exchange platforms upon it

32
14. Role of block chain technology

 Voting: Electronic voting government are considering blockchain based voting platforms due to
concerns about election security, voter registration integrity.
 Financial transaction: Private transaction many blockchain networks operate as public databases,
meaning anyone with an internet connection can view list of the network blockchain technology
enables cross-border transaction in cryptocurrencies by eltimating the need for traditional
intermediaries and currency conversion.
 Automated payments: The currents healthcare system often employ centralized third-party services
to settle payments among patient’s caregiver and insurance blockchain technology can provide
templates for these contracts and simplify payments since they don’t need intermediary’s placeholder.
Payment they key thing to understand is that bitcoin uses blockchain as a means to transparently
record a ledger of payment or other transaction.
 Transparency: Most block chain are entirely open-sources software. This means that everyone can
view its code. This gives auditors the ability to review. More ever blockchain technology provides
transparency. Anyone can view the transaction history on a public blockchain, promoting
accountability and trust. All network participates wit permissioned access see the same information as
the same time, providing full transparency. All transaction are it eliminates the drawbacks of
centralization, DLT distributes data throughout a P2P network.
 Decentralization; Blockchain does not store any of its information in a central location. Instead, the
blockchain is copied and spread across a network of decentralization. Allowing participating
stakeholders to see and verify data. In addition, blockchain can enables independent verification of
government.

33
 CONCLUSION

This work addresses primarily companies and their employees in the financial sector. They should get
an overview of what is behind the technology, what advantages it offers and what use cases are
possible. Since this is a very current topic and an extremely interesting one for start-ups in the financial
sector, companies should try to keep an eye on current developments (comdirect, 2019). It would make
sense for companies to analyze their own processes for the use of the block chain. The result should be
to find applications where such an implementation of distributed ledger, blockchain or smart contracts
could be worthwhile.

The advantages of an implementation are mainly on the side of the companies, but also customers
could benefit from it. This is illustrated by the example of the large number of customers without access
to a bank account (McCarthy, 2018). At the moment, they still depend on the service of companies like
Western Union. Where they pay horrendous fees and take several days to transfer the money (Chow,
2018; Wikipedia 2020).

The customer scan for example also benefits from the development in the KYC sector. Theydon ́t
has to re-identify themselves with the scan of their ID card on every platform again. It is simply enough
to have their data record stored on a blockchain platform. It is simply enough to store a unique data
record on the blockchain. The time saved during verification is also an advantage for the customer
(Shumsky 2019)

Based on this work, further applications could be selected and companies already working on platforms
and solutions could be contacted. A well-known platform in development is for example the one of the
R3 consortium. About 300 companies are involved, including global players in the finance sector like
Deutsche Bank or BNP Paris. This definitely speaks for the interest of the blockchain technology in the
financial sector (R3, 2020).

Because we are still at a very early stage of this development, the topic should be taken slowly.
Currently 87% of the companies researching blockchain are in the early stage of development. Only 3%
are in the final stage and actually use the technology. Really big development steps are not to be
expected immediately. However, it is assumed that blockchain will be suitable for mass production by
the year 2025. The world leaders in blockchain research are currently England, USA and France. The
reasons for research in this area are mainly cost savings, enhancing traceability and enhancing
transparency. So, it remains exciting to see what developments there will be in the coming years. In any
case, companies should observe the market closely, 2018.

34
Blockchain technology can help to create a transparent, secure, and decentralized system for various
application. As the technology continuous to evolve, we can expect to see more innovative use cases in
the future.

Blockchain technology is an advanced database mechanism that allows transparent information

sharing within a business network. A blockchain database stores data in block that are linked together in
a chain. Blockchain ensures that patient data is secure and tamper-resistant by using a decentralized and
immutable ledger.

This lowers the possibility of data breached and illegal access, fostering more confidence in the
healthcare. Blockchain technology is a promising innovation, which can be used in different microgrid
area. Probably the most popular use case application P2P. trading where the blockchain enables energy
trading between peers in a secure survey.

Most project are based on Ethereum, which offers the possibility of smart contract
implementation. The effect of blockchain technology on the profession is not fully anticipated and
smaller auditing firms. Collection of evidence will be faster, safer, more efficient, with lower risk of
human errors.

35
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