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BLOCKCHAIN TECHNOLOGYA Technical Seminar Report submitted to Jawaharlal Nehru Technological University in partial fulfillment of the requirements for the award of degree ofBACHELOR OF TECHNOLOGYINCOMPUTER SCIENCE AND ENGINEERINGSubmitted ByKrishna Kavya Motamarri 17P71AUnder the Guidance ofMrs. K. J...

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BLOCKCHAIN TECHNOLOGY A Technical Seminar Report submitted to Jawaharlal Nehru Technological University in partial fulfillment of the requirements for the award of degree of

BACHELOR OF TECHNOLOGY IN COMPUTER SCIENCE AND ENGINEERING

Submitted By Krishna Kavya Motamarri

17P71A0540

Under the Guidance of Mrs. K. J. Archana Associate Professor

DEPARTMENT OF COMPUTER SCIENCE AND ENGINEERING

SWAMI VIVEKANANDA INSTITUTE OF TECHNOLOGY (Approved by AICTE & Affiliated to Jawaharlal Nehru Technological University,Hyderabad) Mahbub College Campus, Patny Centre, Secunderabad Year of submission: 2020-2021

SWAMI VIVEKANANDA INSTITUTE OF TECHNOLOGY (Approved by AICTE & Affiliated to Jawaharlal Nehru Technological University,Hyderabad) Mahbub College Campus, Patny Centre, Secunderabad Year of submission: 2020-2021

COMPUTER SCIENCE AND ENGINEERING

CERTIFICATE

This is to certify that the technical seminar entitled “Blockchain Technology” Submitted by Krishna Kavya Motamarri (17P71A0540), In partial fulfilment for the award of the Degree of Bachelor of Technology in Computer Science and Engineering to the Jawaharlal Nehru Technology University is a record of bonafide work carried out by them under my guidance and supervision.

Internal Guide

Head of the Dept.

Mrs . K. J. ARCHANA

DR.Y.L.MALATHI LATHA

External Examiner

ACKNOWLEDGMENT

We are extremely grateful to Dr. M. B. Raju , Principal and Dr. Y. L. Malathi Latha , HOD, Department of CSE, Swami Vivekananda Institute of Technology for their constant support. We are extremely thankful to Mrs. K. J. Archana, Associate Professor, Department of CSE, for her constant guidance, encouragement, and moral support throughout the project. We express my thanks to all staff members and friends for all the help and co-ordination extended in bringing out this Project successfully in time. Finally, we are very much thankful to our parents who guided me for every step.

Submitted By: Krishna Kavya Motamarri 17P71A0540

DECLARATION

I hereby declare that the work reported in the present technical seminar entitled “Blockchain Technology” submitted to JNTU Hyderabad, is a record of original work done by us under the guidance of Mrs. K. J. Archana, Associate professor, Swami Vivekananda Institute of Technology, and that this project work is submitted in the partial fulfilment of the requirements for the award of the degree of Bachelor of Technology in Computer Science & Engineering. The results embodied in this project have not been submitted to any other university or institute for the award of any degree or diploma to the best of my knowledge and belief.

Submitted By: Krishna Kavya Motamarri 17P71A0540

CONTENTS TITLE

PAGE NO.

Abstract

ii

List of Figures

iii

1. INTRODUCTION 1.1 Introduction

1

1.2 History

1

2. WORKING 4

2.1 Components 2.1.1 Transaction

4

2.1.2 Block

4 4

2.2 Working 2.2.1 Blocks

4

2.2.2 Miners

5

2.2.3 Nodes

5

3. TYPES OF BLOCKCHAINS 3.1 Public Blockchain

8

3.2 Private Blockchain

9

3.3 Consortium Blockchain

11

3.4 Hybrid Blockchain

12

4. ADVANTAGES

14

5. DISADVANTAGES

15

6. APPLICATIONS

16

7. CONCLUSION 7.1 Project Conclusion

17

7.2 Future of Blockchain

17 18

8. REFERENCES i

ABSTRACT Blockchain technology has been described as the biggest technical revolution since the Internet. The technology – which is the basis for the cryptocurrency Bitcoin, but which can be used for much more – enables digital transactions without the use of intermediaries, which are much faster and also more secure than has previously been possible. Blockchain technology is expected to change a wide range of business sectors fundamentally, such as banks and finance, consumer goods, supply chain, automotive, energy, legal services, etc. With Blockchain technology in financial sector, the participants can interact directly and can make transactions across the internet without the interference of a third party. Such transactions through Blockchain will not share any personal information regarding the participants and it creates a transaction record by encrypting the identifying information. The most exciting feature of Blockchain is that it greatly reduces the possibilities of a data breach. In contrast with the traditional processes, in Blockchain there are multiple shared copies of the same data base which makes it challenging to wage a data breach attack or cyber-attack . With all the fraud resistant features, the block chain technology holds the potential to revolutionize various business sectors and make processes smarter, secure, transparent, and more efficient compared to the traditional business processes.

ii

LIST OF FIGURES

Title

Page No.

Fig 1.1 Blockchain technology

1

Fig 2.2 operation of blockchain

6

Fig 6.1 Applications of blockchain

16

iii

1. INTRODUCTION 1.1 INTRODUCTION The

Blockchain

is

an

encrypted,

distributed database that records data, or in other words it is a digital ledger of any transactions, contracts - that needs to be independently recorded. One of the key features of Blockchain is that this digital ledger is accessible across several hundreds and thousands of computer and is not bound

Fig 1.1: blockchain technology

to be kept in a single place. Blockchain chain has already started disrupting the financial services sector, and it is this technology which underpins the digital currency- bitcoin transaction.

Blockchain is an open and distributed ledger that can be used to record transactions between two parties. This way of recording a transaction is both permanent as well as verifiable, which makes it one of the best ways to keep transactions. Blockchains are built on the open-source platform. So different versions of these blockchains are possible, which are developed as per the needs of different industries. 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.

1.2 HISTORY 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. 1

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.

•

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 crowdfunded via an Initial Coin Offering (ICO) raising over $18 million in BTC and opening up new avenues for blockchain.

2

•

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 Dimon 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 •

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.

3

2. WORKING 2.1 COMPONENTS A Blockchain comprises of two different components, as follows: 2.1.1. Transaction: A transaction, in a Blockchain, represents the action triggered by the participant. 2.1.2. Block: A block, in a Blockchain, is a collection of data recording the transaction and other associated details such as the correct sequence, timestamp of creation, etc. The Blockchain can either be public or private, depending on the scope of its use. A public Blockchain enables all the users with read and write permissions such as in Bitcoin, access to it. However, there are some public Blockchains that limit the access to only either to read or to write. On the contrary, a private Blockchain limits the access to selected trusted participants only, with the aim to keep the users’ details concealed. This is particularly pertinent amongst governmental institutions and allied sister concerns or their subsidies thereof. One of the major benefits of the Blockchain is that it and its implementation technology is public. Each participating entities possesses an updated complete record of the transactions and the associated blocks. Thus the data remains unaltered, as any changes will be publicly verifiable. However, the data in the blocks are encrypted by a private key and hence cannot be interpreted by everyone.

2.2 WORKING The whole point of using a blockchain is to let people — in particular, people who don't trust one another — share valuable data in a secure, tamperproof way.Blockchain consists of three important concepts: blocks, nodes and miners. 2.2.1 Blocks: Every chain consists of multiple blocks and each block has three basic elements: •

The data in the block.

•

A 32-bit whole number called a nonce. The nonce is randomly generated when a block is created, which then generates a block header hash. 4

•

The hash is a 256-bit number wedded to the nonce. It must start with a huge number of zeroes (i.e., be extremely small).

When the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and forever tied to the nonce and hash unless it is mined.

2.2.2 Miners: Miners create new blocks on the chain through a process called mining.In a blockchain every block has its own unique nonce and hash, but also references the hash of the previous block in the chain, so mining a block isn't easy, especially on large chains.Miners use special software to solve the incredibly complex math problem of finding a nonce that generates an accepted hash. Because the nonce is only 32 bits and the hash is 256, there are roughly four billion possible noncehash combinations that must be mined before the right one is found. When that happens miners are said to have found the "golden nonce" and their block is added to the chain. Making a change to any block earlier in the chain requires re-mining not just the block with the change, but all of the blocks that come after. This is why it's extremely difficult to manipulate blockchain technology. Think of it is as "safety in math" since finding golden nonces requires an enormous amount of time and computing power. When a block is successfully mined, the change is accepted by all of the nodes on the network and the miner is rewarded financially.

2.2.3 Nodes: One of the most important concepts in blockchain technology is decentralization. No one computer or organization can own the chain. Instead, it is a distributed ledger via the nodes connected to the chain. Nodes can be any kind of electronic device that maintains copies of the blockchain and keeps the network functioning. Every node has its own copy of the blockchain and the network must algorithmically approve any newly mined block for the chain to be updated, trusted and verified. Since blockchains are transparent, every action in the ledger can be easily checked and viewed. Each participant is given a unique alphanumeric identification number that shows their transactions.

5

Combining public information with a system of checks-and-balances helps the blockchain maintain integrity and creates trust among users. Essentially, blockchains can be thought of as the scalability of trust via technology. Another major advantage of the Blockchain technology is that it is decentralized. It is decentralized in the sense that: • There is no single device that stores the data (transactions and associated blocks), rather they are distributed among the participants throughout the network supporting the Blockchain. • The transactions are not subject to approval of any single authority or have to abide by a set of specific rules, thus involving substantial trust as to reach a consensus. • The overall security of a Blockchain eco-system is another advantage. The system only allows new blocks to be appended. Since the previous blocks are public and distributed, they cannot be altered or revised.

Fig 2.2 operation of blockchain For a new transaction to be added to the existing chain, it has to be validated by all the participants of the relevant Blockchain eco-system. For such a validation and verification process, 6

the participants must apply a specific algorithm. The relevant Blockchain eco-system defines what is perceived as “valid”, which may vary from one eco-system to another. A number of transactions, thus approved by the validation and verification process, are bundled together in a block. The newly prepared block is then communicated to all other participating nodes to be appended to the existing chain of blocks. Each succeeding block comprises a hash, a unique digital fingerprint, of the preceding one. Figure 2.2 demonstrates how Blockchain transactions takes place, using a stepby-step example. Bob is going to transfer some money to Alice. Once the monetary transaction is initiated and hence triggered by Bob, it is represented as a “transaction” and broadcast to all the involved parties in the networks. The transaction now has to get “approval” as being indeed “valid” by the Blockchain eco-system. Transaction(s) once approved as valid along with the hash of the succeeding block are then fed into a new “block” and communicated to all the participating nodes to be subsequently appended to the existing chain of blocks in the Blockchain digital ledger.

7

3. TYPES OF BLOCKCHAINS At a glance, there are four different major types of blockchain technologies. They include the following. •

Public

•

Private

•

Hybrid

•

Federated

3.1 PUBLIC BLOCKCHAIN A public blockchain is one of the different types of blockchain technology. A public blockchain is the permission-less distributed ledger technology where anyone can join and do transactions. It is a non-restrictive version where each peer has a copy of the ledger. This also means that anyone can access the public blockchain if they have an internet connection. One of the first public blockchains that were released to the public was the bitcoin public blockchain. It enabled anyone connected to the internet to do transactions in a decentralized manner. The verification of the transactions is done through consensus methods such as Proof-ofWork(PoW), Proof-of-Stake(PoS), and so on. At the cores, the participating nodes require to do the heavy-lifting, including validating transactions to make the public blockchain work. If a public blockchain doesn’t have the required peers participating in solving transactions, then it will become non-functional. There are also different types of blockchain platforms that use these various types of blockchain as the base of their project. However, each platform introduces more features in its platform aside from the usual ones. Examples of public blockchain: Bitcoin, Ethereum, Litecoin, NEO Advantages: Public blockchains are good at what they do. Its advantages include the following. •

Anyone can join the public blockchain.

•

It brings trust among the whole community of users

•

Everyone feels incentivized to work towards the betterment of the public network

8

•

Public blockchain requires no intermediaries to work.

•

Public blockchains are also secure depending on the number of participating nodes

•

It brings transparency to the whole network as the available data is available for verification purposes.

Disadvantages: Public blockchain does suffer from disadvantages. They are as follows: They suffer from a lack of transaction speed. It can take a few minutes to hours before a

•

transaction is completed. For instance, bitcoin can only manage seven transactions per second compared to 24,000 transactions per second done by VISA. This is because it takes time to solve the mathematical problems and then complete the transaction. Another problem with public blockchain is scalability. They simply cannot scale due to

•

how they work. The more nodes join, the clumsier, and slow the network becomes. There are steps taken to solve the problem. For example, Bitcoin is working on lighting the network, which takes transactions off-chain to make the main bitcoin network faster and more scalable. The last disadvantage of a public blockchain is the consensus method choice. Bitcoin, for

•

example, uses Proof-of-Work (PoW)...