Blockchain

Technology
V Mohan Raje Urs
22MEM3R18
WHAT IS
BLOCKCHAIN
TECHNOLOGY ?
• Blockchain technology is a decentralized,
distributed ledger that stores the record of
ownership of digital assets.
• Any data stored on blockchain is unable to be
modified, making the technology a legitimate
disruptor for industries like payments,
cybersecurity and healthcare.
• A blockchain database stores data in blocks that
are linked together in a chain. The data is
chronologically consistent because you cannot
delete or modify the chain without consensus
from the network.
• As a result, you can use blockchain technology
to create an unalterable or immutable ledger for
tracking orders, payments, accounts, and other
transactions.
• The system has built-in mechanisms that
prevent unauthorized transaction entries and
create consistency in the shared view of these
transactions.
WHY IS
BlOCKCHAIN
IMPORTANT ?
Traditional database technologies present several
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 must 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.
Features of
blockchain
technology
Decentralization
Decentralization in blockchain refers
to transferring control and decision
making from a centralized entity
(individual, organization, or group) to
a distributed network.
Immutability
Immutability means something cannot be
changed or altered. No participant can tamper
with a transaction once someone has recorded it
to the shared ledger. If a transaction record
includes an error, you must add a new
transaction to reverse the mistake, and both
transactions are visible to the network.
Consensus
A blockchain system establishes rules about
participant consent for recording transactions.
You can record new transactions only when
most participants in the network give their
consent.
Key components
of blockchain
technology
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.
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.
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. 
For example, John and Jill are two members of the network.
John records a transaction that is encrypted with his private
key. Jill can decrypt it with her public key. This way, Jill is
confident that John made the transaction. Jill's public key
wouldn't have worked if John's private key had been
tampered with.
 What Is a Basic Block?

Data

Hash

Nonce
Data • Nothing but the information the user wants to store

Nonce • A “number used only once.” A nonce in blockchain is a whole number that’s
randomly generated when a block is created, which then generates a block header
hash. 

Hash • a hash in blockchain is a number permanently attached to the nonce. For Bitcoin
hashes, these values must start with a huge number of zeroes (i.e., be extremely
small).
• the hash value is answer to a complex mathematical problem created using an
irreversible cryptographic hash function. The only way to solve such a
mathematical problem is to guess random numbers that, combined with the
previous block content, generate a defined result
General structure of a chain of blocks
Header: It is used to identify the particular block in the entire blockchain. It
handles all blocks in the blockchain. A block header is hashed periodically
by miners by changing the nonce value as part of normal mining activity,
also Three sets of block metadata are contained in the block header.
Previous Block Address/ Hash: It is used to connect the i+1th block to the
ith block using the hash. In short, it is a reference to the hash of the previous
(parent) block in the chain.
Timestamp: It is a system verify the data into the block and assigns a time
or date of creation for digital documents. The timestamp is a string of
characters that uniquely identifies the document or event and indicates when
it was created.
 Header: It is used to identify the particular block in the entire blockchain. It handles
all blocks in the blockchain. A block header is hashed periodically by miners by
changing the nonce value as part of normal mining activity, also Three sets of block
metadata are contained in the block header.
Previous Block Address/ Hash: It is used to connect the i+1th block to the ith block
using the hash. In short, it is a reference to the hash of the previous (parent) block in
the chain.
Timestamp: It is a system verify the data into the block and assigns a time or date
of creation for digital documents. The timestamp is a string of characters that
uniquely identifies the document or event and indicates when it was created.

Nonce: A nonce number which uses only once. It is a central part of the
proof of work in the block. It is compared to the live target if it is smaller or
equal to the current target. People who mine, test, and eliminate many
Nonce per second until they find that Valuable Nonce is valid.
Merkel Root: It is a type of data structure frame of different blocks of data.
A Merkle tree stores all the transactions in a block by producing a digital
fingerprint of the entire transaction. It allows the users to verify whether a
transaction can be included in a block or not.
Blockchain market size in
billion US dollars
Industrial Case studies
 - Blockchain ease supplier master data management

Business challenge:
Trust Your Supplier saw an opportunity to reduce costs and effort when it came to finding and
onboarding a reputable supplier. Supply chain interruptions and quality expectations to comply
with regulations or stakeholders’ environmental and social concerns, are two important risk
aspects that firms must deal with. Finding a suitable supplier is a time-consuming and expensive
process for businesses because verifying and obtaining data from providers is difficult since
companies do not want to share their data openly.
Initiative:
Trust Your Supplier  collaborated with IBM to create an open source blockchain platform that allows businesses
to securely and effectively share data with permissioned partners. Platform allows businesses to have their data
confirmed by third-party verifiers such as:
• Dun & Bradstreet (business data).
• Eco Vadis (ESG data).
• Rapid Ratings (finance data).
Once your company’s data is confirmed, a blockchain-based corporate digital passport is created, allowing:
• Enhanced compliance.
• Enhanced risk management.
• Reduced onboarding duration of suppliers.
Results:
• Reduce supplier onboarding duration more than 70%.
• Lessen the cost for data verification to work with a suitable supplier 50%.
• Improve compliance by almost instantaneously checking international quality certificates of other parties like
GRI, ISO, SASB etc.
 - Blockchain eases trade finance

Business challenge:
For both exporters and importers, international trading can be risky. When an importer pays in
advance for goods, the exporter may collect the cash without sending the goods. However, if the
exporter agrees to receive payment after delivery, the importer may refuse to pay after receiving
the products. To overcome this problem, traders collaborate with third parties such as banks that
employ instruments like letters of credit, which guarantee payment once goods are delivered to
the importer.
Initiative:
Marco Polo Network utilizes blockchain technology to provide a platform for exporters and
importers to transparently share delivery data by integrating with supply chain ERP systems and
creating an irrevocable contract for parties that guarantees the exchange of money and goods under
specified conditions (e.g. money transferred when goods receives the importer).
Initiative potentially eliminates the need for third party existence that solves “trust issue”. However,
third parties also involve and benefit while they are using Marco Polo Network’ solution since the
platform increases transparency.   
Results:
• Enhances working capital cycle for both buyer and seller.
• Automates transaction settlement process.
• Reduced complexity by digitizing documents.
 - Blockchain improves compliance

Business challenge:
The automotive sector is highly regulated. Renault, for example, deals with 6,000 regulatory and
quality characteristics relating to:
• Safety regulations
• Geometric features
• Material quality
• Environmental concerns
A vehicle must meet certain internal and external compliance criteria in order to be offered on
the market. A change in regulations needs to be communicated downstream to suppliers and
suppliers of suppliers to ensure that they all build according to the new specifications.
Therefore,  Renault needed a platform throughout the ecosystem in a transparent manner to
ensure compliance. 
Initiative:
Renault and IBM collaborated to create the automotive industry’s first extended compliance end-
to-end distributed blockchain platform for the traceability of components internal and external
regulatory compliance. 
Results:
• Reduces expense of non-compliance by half. 
• The initiative reduces the cost of managing non-quality/non-compliance by 10%. 
• Renault wants to invest more in blockchain technology for the visibility of product carbon
footprints and recycling operations as a result of the initiative’s success, aligning with the
company’s ESG and circular economy ambitions.
 - Blockchain authenticates infant products quality

Business challenge:
After 300,000 newborns were sickened with melamine from powdered milk products in 2008,
Chinese parents’ trust in infant nourishment products was damaged. Nestle was looking for ways
to reassure Chinese parents about the quality of their newborn nourishment product NAN A2 to
penetrate the market effectively.
Initiative:
Nestle teamed up with Techrock, a Chinese technology firm, to create a public blockchain
platform that integrates with a mobile app. As a result, parents can verify the NAN A2’s
following characteristics using their phone:
• Ingredients 
• Place the ingredients sourced from
• Origin of production
• Packaging details including the photos.
Result:
• Due to the transparency provided by blockchain, Nestle held the largest market share in
China’s infant nourishment sector.
 - Blockchain assists the tracking of intellectual property (IP)

Business challenge:
Many businesses do not have the opportunity to present the true value of their assets to potential
investors, so some companies are undervalued. IPwe intended to transform the inefficient old IP
system, in which patent holders, lawyers, corporations, intermediaries, and global patent offices
lack communication for a variety of reasons, including the inability to transfer information from
one source to another transparently.
Initiative:
IPwe teamed up with IBM to create a blockchain that allows IP to be tokenized and stored in the
cloud. As a result, traders have easy access to IP and can invest in it based on clear data. IPwe
also provides a place for businesses to fairly advertise their intellectual property.
Result:
• IPwe’s blockchain database has 80% of global patents.
References
• https://research.aimultiple.com/blockchain-case-studies/
• https://aws.amazon.com/what-is/blockchain/?aws-products-all.sort-b
y=item.additionalFields.productNameLowercase&aws-products-all.so
rt-order=asc
• https://builtin.com/blockchain
• https://www.ibm.com/topics/blockchain
• https://www.geeksforgeeks.org/blockchain-structure/
• https://www.mckinsey.com/featured-insights/mckinsey-explainers/w
hat-is-blockchain