INTRODUCTION TO BLOCKCHAIN

OUTLINE

 Introduction to decentralized system,

 History, Conceptualization,

 Architectural principles behind Blockchain,

 Characteristics of Blockchain
INTRODUCTION TO DECENTRALIZED SYSTEM

 A decentralized system is an interconnected information system where no single entity is the sole authority. In the context
of computing and information technology, decentralized systems usually take the form of networked computers.
IMPORTANCE OF DECENTRALIZATION

Decentralization is very important because of the following reasons:

• Optimization of Resources: Each user does not have to have all resources. The decentralized setup allows the user to
share his burden with others at a lower level.
• Greater output: Since all users have the same authority, therefore each and every user work with greater efficiency so as
to enhance the maximum productivity.
• Flexibility: Users can share their own views as there are no restrictions imposed by any central authority. They also have
the flexibility to change their decisions.
WORKING OF DECENTRALIZATION

 In a decentralized network, a user wants to share some data. The user doesn’t have to take permission so has the full
authority to publish something. In the network, each user is connected to one another. So when the user shares the data,
the data is shared among the other peers with the help of protocols. Peers approve the data. When the data is approved the
protocols update the database. A database is maintained so as to keep track of all information.
Need of Decentralization
 Nowadays, technology is advancing day by day and the number of users is also increasing. For the administration of the
system, the centralized system is failing to meet all the criteria. So Decentralized system is becoming very useful day by
day. It creates an efficient, secured, and reliable administration. It improves peer-to-peer networks. It ensures the right of
each user. Each individual has the right to decision-making. Users also have access to the database. The biggest
advantage of decentralization is if a part of the network crashes, the whole network will work uninterrupted. The main
reason why decentralization is better than centralization is the flexibility and data to adapt to market demands quickly.
Is Decentralization secured?
 Decentralization is highly secured. Since there is no central authority, there is no central server. Each user’s server act as
a central server. Therefore there are multiple servers. Hacking all the servers is not a feasible option. Therefore many
organizations are now switching to a decentralized network. The prime example is Google. The products of Google from
online search to mobile Android are given the freedom to work independently.
BENEFITS OF DECENTRALIZATION

•The main benefit is if some nodes fail or the main node fails, the whole
system doesn’t crash.
•The decision-making process is done on the basis of voting.
•They are usually open development platforms and there is less
censorship.
•More machines can be added to the network.
DECENTRALIZATION COMPARES
HISTORY OF BLOCKCHAIN TECHNOLOGY
WHERE WE CAN
USE THE
BLOCKCHAIN
CONCEPT OF BLOCKCHAIN
 A blockchain is a distributed database or ledger shared among a computer
network's nodes. They are best known for their crucial role in cryptocurrency
systems for maintaining a secure and decentralized record of transactions, but they
are not limited to cryptocurrency uses. Blockchains can be used to make data in
any industry immutable—the term used to describe the inability to be altered.
 Because there is no way to change a block, the only trust needed is at the point
where a user or program enters data. This aspect reduces the need for trusted third
parties, which are usually auditors or other humans that add costs and make
mistakes.
 Since Bitcoin's introduction in 2009, blockchain uses have exploded via the
creation of various cryptocurrencies, decentralized finance (DeFi) applications,
non-fungible tokens (NFTs), and smart contracts.
KEY POINT ABOUT BC

• Blockchain is a type of shared database that differs from a typical

database in the way it stores information; blockchains store data in blocks
linked together via cryptography.
• Different types of information can be stored on a blockchain, but the
most common use for transactions has been as a ledger.
• In Bitcoin’s case, blockchain is decentralized so that no single person or
group has control—instead, all users collectively retain control.
• Decentralized blockchains are immutable, which means that the data
entered is irreversible. For Bitcoin, transactions are permanently recorded
and viewable to anyone.
WORKING OF
BLOCKCHAIN
BITCOIN EXAMPLE
BLOCKCHAIN ARCHITECTURE

 Blockchain is a technology where multiple parties involved in communication can perform different transactions without
third-party intervention. Verification and validation of these transactions are carried out by special kinds of nodes.
 Benefits of Blockchain:

• It is safer than any other technology.

• To avoid possible legal issues, a trusted third party has to supervise the transactions and validate the transactions.
• There’s no one central point of attack.
• Data cannot be changed or manipulated, it’s immutable.
 Header: It is used to identify the particular block in the entire blockchain.

 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.

 Nonce: A nonce number which uses only once. It is a central part of the proof of work in the block.

 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.
KEY CHARACTERISTICS OF BLOCKCHAIN ARCHITECTURE

 Decentralization

 Persistency: Transactions can be validated quickly and invalid transactions would not be admitted by persons or miners
who mining the crypto. It is not possible to delete or roll back transactions once they are included in the blockchain
network.
 Anonymity: Each user can interact with the blockchain with a generated address, which does not disclose the real
identity of the miner.
 Auditability: Blockchain stores data of users based on the Unspent Transaction Output (UTXO) model.

 Transparency: The transparency of blockchain is like cryptocurrency, in bitcoin for tracking every transaction is done by
the address.
 Cryptography: The blockchain concept is fully based on security and for that, all the blocks on the blockchain network
want to be secure.
POTENTIAL USE CASES OF THE BLOCK-CHAIN

 Proof of Existence : Demonstrating data ownership without revealing actual data, Document timestamping and Checking
for document integrity
 Record Keeping: Data inserted and hashed into secure blockchains like Bitcoin creates permanent and unforgeable
information. Projects such as Tierion utilize the Bitcoin blockchain to make .
 Identity: Onename uses an ID system using Blockchain technology, used to create Blockchain log in to websites without
any password.
 Forecasting Augur: Augur is built on the Ethereum blockchain. The idea is to create a “prediction market”

 Cloud Storage: Blockchain distributed storage cloud enables capacity to be decentralized and in this manner less inclined
to assaults that can cause data loss and damage. Ex.STORJ, an internet filesystem.
 Ascribe (Secure your work): Provides lock in attribution, Certification of Authenticity, securely share documents,
licensing of works.
 Supply Chain Management: With blockchain, as items change hands over a supply chain from production to sale, the
exchanges can be reported in a perpetual decentralized record decreasing time delays, included expenses, and human
mistakes.
 Blockchain and IoT: Universal digital ledger, ADEPT (Autonomous Decentralized Peer-to-Peer Telemetry) a
decentralized system of IoT gadgets, IBM Watson IOT, IOTA, Freight transportation, Log operational maintenance data,
 Banking: Payments, KYC, reduction of frauds, trading platforms.

 Government: Online voting, registering land, real estate, devising public policy. Also, countries like Dubai, Estonia,
USA, Georgia uses Blockchain for Digital Passport, Identity management, e-voting, smart contracts, public archives, and
land registry.
BANK VS BITCOIN