Blockchain Technology Application - PDF

Blockchain Technology

Contents
Introduction................................................................................................................................2
Part 1..........................................................................................................................................2
Part 2..........................................................................................................................................2
Part 3..........................................................................................................................................2
Conclusion..................................................................................................................................2
Reference list..............................................................................................................................2

Introduction
Blockchain is referred to a sort of distributed ledger that uses independent computer devices
also known as 'nodes' to type, record, and store, synchronize and share transactions. The main
difference is that the data in a traditional ledger is kept centralized. The application on which
block chain technology works is popularly known as Bitcoin. Block chain technologies can
be implemented and used in many sections, not only in areas of finance but also in other
industries [2].
Part 1
Bitcoin is the first decentralized digital crypto currency that helps the block chain system to
work without the help of any centralized, public or private bank or even without any
administrator and now it has become a mode of payment system throughout the world [1].
Features:
• A shared ledger – in which all the business transactions are recorded as final entries.
• A fixed database system- that holds the collection of information of all the business
transactions that can be accessed managed and shared within the system at any
point of time.
•Data transfer – Block chain has the ability to move around data and thus transferring or
moving data that has been converted into a form is conveniently moved or processed. (eg-bits)
•Security system- The block chain system is highly secured that prevents unauthorized access,
illegal usage, and disclosure of personal information, modification by unknown users, recording
or misusing or sharing of private information [4] .

Thus both the shared ledger and the fixed database system put together are used for
transferring data in a highly secure manner.
Architecture of Blockchain
Block chain can be mainly classified into two categories, namely
•Public block chains
•Permission block chains
•Public block chains: run on Bitcoin, Ethereum, which are all crypto currencies and every
transaction that is made through these mediums are recoded and publicly visible enabling
anybody and everybody to participate in the same network.

•Permission block chains: can be built with the help of Hyper ledger Fabric hosted by the
permission-based Linux Foundation, which is being commonly used by enterprises internally
in their applications.
The basic difference between the private and the public block chains lies in the mechanism of
consensus. But other members of the public block chain cannot be trusted so also the amount
of hard work that is involved in calculating and verifying each transaction one by one is
highly time taking. But since the private block chains are permission based, the other
members and participants can be trusted and hence one can use simple and faster methods of
consensus algorithm involving multiple nodes [3] . Hence the transactions recorded in private
block chains can be encrypted and made visible only to authorized and reliable participants of
this particular network, in a way that too satisfies the requirements of the members who want
to keep their transactions private.
The three types of block chain networks are as follows:
•Centralized
•Decentralized
•Distributed
Challenges faced in blockchain
Though blockchain has gained a lot of appreciation and popularity there are also some
problems and challenges that are being faced in this process,
•Increasing scale of Blockchain: Since the scale of the block chain is growing every minute,
the data involved is also growing on a large scale and hence it is also becoming harder to
constantly re-load and update new data by synchronizing every addition data on the system
that is arising every now and then [5]. This is creating a huge problem for the clients who run
the system to control the increasing volume of data evolution.
•Fork problems: Another issue on the rise is the fork problem that is related to the
decentralized node versions while the software is upgraded. When the new version of the
software of the block chain is upgraded, the new rules and agreements of the consensus rules
also change in regard with the new nodes. Problems occur when the new nodes do not agree
with the old notes in the transaction of the block chain. In this case apart from comparing new
nodes with old nodes the comparing power to compare the old nodes with the new nodes, is

of utmost importance assuming that the power of new nodes is greater than the old notes.
•Current regulation problems: The usage of digital assets in the form of bitcoin is the main
characteristic of the decentralized system, which can weaken the abilities of the central bank
systems to have control over the major economic policies and also the amount of money and
assets involved in the block chain system [7]. Hence the governments have to be careful
about the latest technologies of this system, have an eye on their policies, do some research
on their latest trends and issues or else it might have a major impact on the business market
and economy as a whole that can get risky in time.
•Integrated cost problems: To bring about a change in the block chain system, money and
time both need to be invested to create a new infrastructure for the existing system. Latest
innovative trends and technologies need to be implemented, not only to create economic
benefits but it should also have the abilities to bridge the gap between the traditional
organizations and non-traditional business entities, while addressing the internal issues that
exist within the system [6].
Part 2
Applications of Block chain:
Some of the applications supported by the block chain system are explained below.
•Smart contracts: A piece of code that is stored on most of the computers of the block chain
system is known as the 'smart contract' or a digital contract which is basically a set of rules,
regulations and conditions to which all the participants and members using the contracts
agree upon with mutual agreement. Once the mentioned conditions are met, then some
actions are implemented and executed and after that all the concerned members of the
network, achieve the same result by performing the actions. This contract basically controls
the digital assets of the user by formulating the participants; rights and helps in executing the
contractual obligations without the intervention of any other individual in between. By using
the digital currency called ETH or Ethereum, participants can create and use different
services on this platform. The traditional lending system can be revolutionized with the help
of smart contracts. In case of any loss of records, this system of decentralized ledger also acts
as a powerful tool that not only helps in managing the rights of the property but also helps in
duplication of the smart contracts[11]. According to the terms of the code, the contract
automatically executes itself if any triggering event like expiration of date of strike of price is

hit.
•Unconventional money lending System: A lot of people who borrow, fall into the trap of
bankruptcy and eventually lose all their assets like houses and cars to their respective banks.
But a blockchain allows a person to lend or borrow digital assets from a complete stranger
without the need of producing valid documents, identification proof or any proof of work
history.
•Internet of Things: IoT or Internet of things refers to the interconnected network of smart
devices that are capable of sending and receiving data. It is a concept of actually connecting
any device that has an 'on' or 'off' switch to the internet [8]. That may be a mobile phone, a
coffee machine or even a watch. The 'thing' in this context is referred to an entity or any
physical object that has an inbuilt rooted system with the capability of transferring data with
the help of a network.
Part 3: Socio – Technical aspects
•Smart contracts: The social implications and impact of the blockchain technology are
massive. Smart contracts play a vital role to govern the distribution and circulation of digital
assets. A large section of people from all over the world have recently been provided with a
number of financial services, who do not have the regular access to virtual or manual banking
through debit or credit cards only with the help of Bitcoin [9]. A completely new form of
advantage in favour of the world economy has unravelled, after the blockchain system
allowed microloans and micropayments to and for the people living in disadvantaged socio-
economic circumstances. Social contracts thus on the other hand has a significant advantage
especially for the single entrepreneurs operating in remote places where trustworthy investors
are hard to find by completely demolishing the geographical barrier.
• Internet of Things: With too many devices, exchanging too much data will have an impact
on the privacy of human lives. Display of data can be misused by unknown people. Storage
of excess data may lead to hacking or even crashing of system devices [12]. Data should be
adequate, relevant and not unnecessarily excessive. Unnecessary data needs to be erased with
time or it may lead to technical hazards
Conclusion

The concept of block chain technology has been discussed. The various features of this
technology is elaborated along with architectural description. Application and challenges of
Blockchain technology are being analysed.

Reference list
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