Module 1 Introduction

1. Explain uses of Blockchain. Blockchain is a technology that allows for the creation of a
shared, immutable ledger that records transactions and tracks assets in a distributed network.
Blockchain can be used for various purposes, such as: Cryptocurrencies: Blockchain is the
underlying technology behind digital currencies, such as Bitcoin, Ethereum, Dogecoin, and
others. Cryptocurrencies use blockchain to enable peer-to-peer transactions without the need
for intermediaries or central authorities. Blockchain ensures the security, transparency, and
validity of each transaction, as well as the supply and ownership of each coin. Supply Chain
Management: Blockchain can be used to improve the efficiency, traceability, and
accountability of supply chains across different industries, such as food, pharmaceuticals,
logistics, and manufacturing. Blockchain can enable the tracking of products from their origin
to their destination, as well as the verification of their quality, condition, and authenticity.
Blockchain can also facilitate the coordination and collaboration among different stakeholders,
such as suppliers, manufacturers, distributors, retailers, and consumers. Digital Identity:
Blockchain can be used to create and manage digital identities that are secure, decentralized,
and self-sovereign. Blockchain can store personal information, such as biometrics, credentials,
certificates, and preferences, in a way that is encrypted, tamper-proof, and controlled by the
user. Voting Systems: Blockchain can be used to enhance the security, transparency, and
efficiency of voting systems, both online and offline. Blockchain can enable the registration,
verification, and authentication of voters and candidates, as well as the recording, counting,
and auditing of votes. Blockchain can also prevent fraud, manipulation, and coercion, as well
as ensure the privacy and anonymity of voters. Smart Contracts: Blockchain can be used to
execute smart contracts, which are self-enforcing agreements that are written in code and stored
on the blockchain. Smart contracts can define the terms and conditions of transactions, as well
as the actions and outcomes that are triggered by certain events or conditions.
2. Explain types of Block chain Blockchain is a technology that allows for the creation of a
shared, immutable ledger that records transactions and tracks assets in a distributed network.
There are different types of blockchain, depending on the level of decentralization, access, and
governance. The four main types of blockchain are: Public Blockchain: A public blockchain
is a type of blockchain that is open to anyone to participate in the network, validate transactions,
and access the data. Public blockchains are decentralized and trustless, meaning that no central
authority or intermediary is required to maintain the network or verify the transactions.
Examples of public blockchains are Bitcoin, Ethereum, Dogecoin, and others. Private
Blockchain: A private blockchain is a type of blockchain that is restricted to a specific group
or organization that has the permission to join the network, validate transactions, and access
the data. Private blockchains are centralized and trustful, meaning that there is a central
authority or intermediary that controls the network and verifies the transactions. Examples of
private blockchains are Hyperledger Fabric, Corda, Quorum, and others. Hybrid Blockchain:
A hybrid blockchain is a type of blockchain that combines the features of both public and
private blockchains. A hybrid blockchain is partially decentralized and trustful, meaning that
some aspects of the network are open to anyone, while some aspects are restricted to a specific
group or organization. Consortium Blockchain: A consortium blockchain is a type of
blockchain that is governed by a group of organizations that have the permission to join the
network, validate transactions, and access the data.
3. Structure of a block Blockchain is a database, or broadly distributed database, used mainly
for concurrent transactions. Blockchain has several blocks, also called nodes, and all the blocks
are managed with the help of the block header.

Timestamp: Timestamp in the blockchain is used as proof that the particular block is used at
what instance of a time, also this timestamp is used as a parameter to verify the authenticity of
any block. Version: It states the version that the particular block is using, there are three types
of Blockchain version. Blockchain Version 1.0(cryptocurrency)-It used a public ledger to store
the data, for example, Bitcoin. Blockchain Version 2.0(smart Contract)- It is called smart
contracts which is self-executing programs, for example, Ethereum. Blockchain Version
3.0(DAPPS)- It is used to create a decentralized structure, for example, tor Browser.
Blockchain Version 4.0(Blockchain for Industry)- It is used to create a scalable, affordable
blockchain network such that more people could use it. Merkle Root: A Merkle root uses
mathematical formulas to check if the data is not corrupted, hacked, or manipulated. For
example, suppose one block has 10 transactions, then to identify that block we need 10
transactions to combine and form one Hash Value. Difficulty Target: It specifies the
complexity and the computation power required to mine the network, if we are having a high
difficulty target then it implies that we need more a computationally expensive machine to
mine it. Nonce: It is abbreviated as ‘number only used once’ and it is a number which
blockchain miners are finding and on average, it takes almost 10 times to find out the correct
nonce. A nonce is a 32-bit number, having the maximum value as 2^ (32) total possible value,
so the job of the bitcoins miners is to find out the correct integer value which is a random
integer between 0 and 2^ (32), so it becomes computationally expensive. Previous Hash: As
Blockchain is a collection of several interconnected nodes also called a block, so previous hash
stores the hashed value of the previous node’s address, first block in the blockchain is called
the Genesis Block and has no previous block hash value.
Module 2 Cryptographic Primitives
1. What is importance of hash functions and digital signatures in Blockchain? Hash
functions and digital signatures are two essential components of blockchain technology that
provide security and integrity for the data stored in the distributed ledger. Here is a brief
explanation of how they work and why they are important: 1. Hash functions are
mathematical functions that take any input data and produce a fixed-length output, called a
hash or a digest. The hash function has some desirable properties, such as being deterministic,
collision-resistant, preimage-resistant, and second preimage-resistant. This means that the
same input will always produce the same hash, different inputs will have a very low probability
of producing the same hash, and it is very hard to find an input that produces a given hash or
another input that produces the same hash as a given input. These properties make hash
functions useful for verifying the authenticity and integrity of data, as any change in the data
will result in a different hash. 2. Digital signatures are cryptographic schemes that allow the
sender of a message to sign the message with their private key, and the receiver to verify the
signature with the sender's public key. The signature proves that the message was sent by the
owner of the private key, and that the message was not tampered with in transit. Digital
signatures rely on hash functions to create a digest of the message, which is then encrypted
with the private key. The receiver can decrypt the signature with the public key and compare
the resulting hash with the hash of the message. 3. In blockchain, hash functions and digital
signatures are used to achieve the following goals: i. Hash functions are used to create unique
identifiers for blocks and transactions, as well as to link them together in a chain. Each block
contains the hash of the previous block, which creates a secure and immutable history of
transactions. ii. Digital signatures are used to ensure that only the authorized parties can create
and send transactions, and that the transactions are not altered or replayed by malicious actors.
Each transaction contains the signature of the sender, which can be verified by anyone using
the sender’s public key.
2. What are three important properties of cryptographic hash function? A cryptographic
hash function is a special kind of hash function that has some additional properties that make
it suitable for security applications. These properties are: Preimage resistance: This means
that given a hash value h, it is computationally hard to find any input x such that h = H(x),
where H is the hash function. In other words, it is difficult to invert the hash function or find a
preimage for a given hash. This property ensures that the hash function cannot be used to reveal
the original data or message that was hashed. Second preimage resistance: This means that
given an input x and its hash value h = H(x), it is computationally hard to find any other input
y such that h = H(y). In other words, it is difficult to find a different input that produces the
same hash as a given input. This property ensures that the hash function cannot be used to forge
or tamper with the original data or message that was hashed. Collision resistance: This means
that it is computationally hard to find any two distinct inputs x and y such that H(x) = H(y),
where H is the hash function. In other words, it is difficult to find a pair of inputs that produce
the same hash. This property ensures that the hash function can be used to generate unique
identifiers or fingerprints for the data or message that was hashed. These properties of
cryptographic hash function are important for various applications, such as: Digital
signatures: A digital signature is a way of authenticating and verifying the integrity of a
message or document. It involves hashing the message or document with a hash function, and
then encrypting the hash with the sender's private key. The receiver can then decrypt the hash
with the sender's public key, and compare it with the hash of the message or document. If they
match, it means that the message or document was not altered and that it came from the sender.
To achieve this, the hash function must be preimage resistant, second preimage resistant, and
collision resistant. Password hashing: A password hashing is a way of storing and verifying
passwords in a secure manner. It involves hashing the password with a hash function, and then
storing the hash instead of the password. When a user enters their password, it is hashed again
and compared with the stored hash. If they match, it means that the password is correct. To
achieve this, the hash function must be preimage resistant, so that the password cannot be
recovered from the hash. Blockchain: A blockchain is a distributed ledger that records
transactions in a secure and verifiable way. It involves hashing each block of transactions with
a hash function, and then linking them together in a chain by including the hash of the previous
block in the current block. This creates a secure and immutable history of transactions. To
achieve this, the hash function must be preimage resistant, second preimage resistant, and
collision resistant.
3.Explain Merkle Tree in detail. A Merkle tree, also known as a hash tree, is a data structure
that is used for efficiently verifying and synchronizing large sets of data. It is a tree where each
leaf node contains the hash of a data block, and each non-leaf node contains the hash of its
child nodes. A hash is a fixed-length output of a cryptographic function that uniquely identifies
the input data. The main advantage of a Merkle tree is that it allows for fast and secure
verification of any subset of data within the tree, by using only a small fraction of the tree
nodes. For example, to verify that a data block belongs to the tree, one only needs to check the
hash of the block and the hashes along the path from the block to the root of the tree. The root
hash, which represents the entire tree, can be used as a fingerprint or a summary of the
data. Merkle trees are widely used in distributed systems, such as peer-to-peer networks and
blockchains, where data consistency and integrity are crucial. Some examples of applications
that use Merkle trees are: Bitcoin and Ethereum: Merkle trees are used to store the
transactions in each block of the blockchain. This allows for efficient verification of
transactions and proofs of work, as well as for compact representation of the blockchain
state. IPFS and Dat: Merkle trees are used to store and distribute files and directories in a
decentralized way. This allows for deduplication, versioning, and integrity checking of the
data. Git and Mercurial: Merkle trees are used to store and track the changes in the source
code repositories. This allows for fast and secure synchronization, branching, and merging of
the code. Certificate Transparency: Merkle trees are used to store and audit the certificates
issued by certificate authorities. This allows for detection and prevention of fraudulent or
misissued certificates.
4. Explain the concept of Hash chain. A hash chain is a sequence of hash values that are
generated by applying a cryptographic hash function repeatedly to an initial input. A hash
function is a mathematical function that takes any input data and produces a fixed-length
output, called a hash or a digest, that uniquely identifies the input data. A hash chain can be
represented as: h0 = H(x) h1 = H(h0) h2 = H(h1) ... hn = H(hn-1) where H is the hash
function, x is the initial input, and h0, h1, h2, ..., hn are the hash values in the chain. Hash
chains have various applications in computer security and cryptography, such as: One-
time passwords: A hash chain can be used to generate a series of one-time passwords that are
hard to guess or forge. The user and the server share a secret initial input x and a hash function
H. The user generates the hash chain by applying H to x repeatedly, and uses the last hash value
hn as the first password. The server stores the first hash value h0 as the verification value.
When the user wants to authenticate, they send hn to the server, and the server computes H(hn)
and compares it with h0. If they match, the authentication is successful, and the server updates
h0 to hn. Lamport signatures: A hash chain can be used to create a digital signature scheme
that is resistant to quantum attacks. The user generates a pair of hash chains, one for the public
key and one for the private key. The public key consists of the last hash values of each chain,
and the private key consists of the initial inputs of each chain. To sign a message, the user
hashes the message and splits the hash into two parts. Then, the user reveals the corresponding
inputs from the private key chains that produce the same hash values as the message parts.
Blockchain: A hash chain can be used to create a secure and immutable record of transactions
in a distributed ledger. Each block in the blockchain contains a hash of the previous block,
along with a set of transactions and a nonce. The nonce is a random number that is used to
make the block hash satisfy a certain difficulty criterion, such as having a certain number of
leading zeros.
Module 3 Bitcoin
1. Explain bitcoin scripting language. Bitcoin scripting language, also known as Script, is
a simple, stack-based programming language used for processing transactions on the Bitcoin
blockchain. It determines how funds can be spent and by whom, making it an essential
component of the blockchain network. Script is not Turing complete, meaning it lacks several
logical functions, including loops. This is done to ensure that no Bitcoin script can consume
inordinate computing power and harm nodes on the network. Script operates by manipulating
items on a stack, with various opcodes representing operations that can be performed. A typical
Bitcoin transaction consists of two scripts: a locking script and an unlocking script. The
locking script, also known as scriptPubKey, defines the conditions that must be met to spend
the output. The unlocking script, also known as scriptSig, provides the data that satisfies the
conditions of the locking script. The unlocking script is usually a digital signature that proves
the ownership of the private key corresponding to the public key or address in the locking
script. For example, a simple locking script for a pay-to-public-key-hash (P2PKH) transaction
can be written as: OP_DUP OP_HASH160 <pubKeyHash> OP_EQUALVERIFY
OP_CHECKSIG This script means that the output can only be spent by the owner of the public
key hash (pubKeyHash), which is a 20-byte hash of the public key. The script duplicates the
top item on the stack, hashes it, compares it with the pubKeyHash, verifies the equality, and
checks the signature of the transaction. A corresponding unlocking script for this
transaction can be written as: <sig><pubKey> This script provides the signature (sig) and
the public key (pubKey) of the spender. The public key is hashed and compared with the
pubKeyHash in the locking script. If they match, the signature is verified using the public key
and the transaction hash. The execution of the scripts is done by concatenating the unlocking
script and the locking script, and then evaluating the result from left to right. The transaction is
valid if the final result is true. For example, the execution of the scripts for the P2PKH
transaction can be illustrated as: <sig> <pubKey> OP_DUP OP_HASH160 <pubKeyHash>
OP_EQUALVERIFY OP_CHECKSIG The stack initially contains the sig and the pubKey.
The OP_DUP opcode duplicates the pubKey, resulting in a stack of [sig, pubKey, pubKey].
The OP_HASH160 opcode hashes the top item on the stack, resulting in a stack of [sig,
pubKey, pubKeyHash']. The is pushed onto the stack, resulting in a stack of [sig, pubKey,
pubKeyHash', pubKeyHash]. The OP_EQUALVERIFY opcode pops the top two items and
compares them. If they are equal, the execution continues. Otherwise, the execution fails.
2. Differentiate between Proof of Work and Proof of Stake Proof of Work (PoW) and
Proof of Stake (PoS) are two different methods to validate cryptocurrency transactions and
achieve consensus on the blockchain network [2]. They both have their own advantages and
disadvantages. In PoW, miners compete to solve complex mathematical puzzles using their
computing power and earn block rewards for creating new blocks [2]. This process ensures that
the network is secure and decentralized, as no one can easily control more than 50% of the
computing power. However, PoW also consumes a lot of energy and resources, which makes
it costly and environmentally unfriendly. Moreover, PoW can lead to centralization of mining
power in the hands of a few large pools or entities. In PoS, validators are chosen randomly or
proportionally to their stake, which is the amount of cryptocurrency they lock up as a deposit
[2]. Validators then verify transactions and create new blocks, and receive network fees as their
reward. PoS does not require intensive computation, which makes it more energy-efficient and
scalable. However, PoS also has some drawbacks, such as the risk of losing stake if validators
act maliciously or go offline, and the possibility of low network security if the stake is
concentrated among a few wealthy participants. To summarize, PoW and PoS are two
different ways of achieving consensus and validating transactions on the blockchain. PoW
relies on computation, while PoS relies on stake. PoW is more secure and decentralized, but
also more costly and wasteful. PoS is more efficient and scalable, but also more vulnerable and
unequal. There is no definitive answer to which one is better, as different projects may have
different goals and trade-offs.
3. What is Double Spending problem? Explain in detail Double spending is a problem that
occurs when a digital currency is spent more than once. Unlike physical currencies, digital
currencies are not tangible and can be copied or duplicated easily. This means that a malicious
user could potentially spend the same digital currency multiple times, either by sending it to
different recipients or by reversing a transaction after it has been confirmed. This would
undermine the trust and security of the digital currency system and cause inflation or
deflation. To prevent double spending, most digital currency systems use a consensus
mechanism to verify and record transactions in a distributed ledger, such as a blockchain. A
consensus mechanism is a set of rules and protocols that ensure that all the nodes in the network
agree on the state of the ledger and the validity of the transactions. For example, Bitcoin uses
a proof-of-work (PoW) consensus mechanism, which requires miners to solve complex
mathematical puzzles and compete for the right to create new blocks and earn rewards. Each
block contains a hash of the previous block, forming a chain of blocks that is difficult to alter
or tamper with. Transactions are only considered final and irreversible when they are included
in a block and have a sufficient number of confirmations from other blocks. However, even
with a consensus mechanism, double spending is still possible in some scenarios, such
as: A 51% attack: This is a type of attack where a single entity or a group of colluding entities
control more than 50% of the network's computing power and can manipulate the blockchain
by creating a longer chain of blocks that overrides the original chain. This way, they can reverse
or modify transactions that have already been confirmed and spend the same digital currency
twice or more. A race attack: This is a type of attack where a malicious user sends the same
digital currency to two different recipients in a short time span, hoping that both transactions
will be confirmed before the network detects the conflict. This can happen when the recipient
does not wait for enough confirmations before accepting the payment or when the network is
congested and has a low transaction fee. A Finney attack: This is a type of attack where a
malicious miner pre-mines a block that contains a double-spending transaction and then
broadcasts it to the network after spending the same digital currency on another transaction.
This can happen when the recipient accepts a payment with zero confirmations or when the
network has a low difficulty and a high hash rate. To avoid double spending, users and
merchants should follow some best practices, such as: 1. Waiting for enough confirmations
before accepting a payment, depending on the value and risk of the transaction. The higher the
value and risk, the more confirmations are needed. For example, Bitcoin recommends six
confirmations for high-value transactions and one confirmation for low-value transactions. 2.
Using a reputable and secure digital wallet that can detect and reject double-spending
transactions. 3. Using a trusted third-party service or an escrow system that can mediate and
verify transactions between parties.

4. Short note on Proof of Elapsed Time Proof of Elapsed Time (PoET) is a consensus
algorithm that replaces the computational puzzle of Proof of Work (PoW) with a random timer.
PoET aims to reduce the energy consumption and resource utilization of the network by
allowing nodes to sleep or perform other tasks during their waiting time. PoET also ensures
fairness and security by using a trusted execution environment (TEE) to generate and verify
the random timers. The basic idea of PoET is as follows: 1. Each node in the network requests
a timer from a TEE, which is a secure and isolated environment that can run trusted code. 2.
The TEE generates a random wait time for each node and attests that the timer was created
correctly. 3. The node sleeps or does other work for the duration of the timer. 4. The node that
wakes up first (i.e., has the shortest timer) broadcasts its timer certificate to the network and
creates a new block. 5. The other nodes verify the validity of the timer certificate using the
TEE and accept the block if it is valid. 6. The process repeats for the next block. PoET has
several advantages over PoW, such as: 1. It is more energy-efficient and environmentally
friendly, as it does not require intensive computation and power consumption. 2. It is more
scalable and inclusive, as it does not favor nodes with more computing power or resources. 3.
It is more secure and transparent, as it uses a TEE to prevent cheating and manipulation of the
timers.

5. What is Sybil attack? How is it prevented in Bitcoin? A Sybil attack is a type of attack
on a peer-to-peer network in which an attacker creates multiple fake identities or nodes to gain
more influence or control over the network. For example, an attacker could create many nodes
and use them to spread false or malicious information, disrupt the network's operation, or
manipulate the outcome of a consensus process. A Sybil attack is named after the subject of the
book Sybil, a case study of a woman diagnosed with dissociative identity disorder. Bitcoin
prevents Sybil attacks by using a proof-of-work (PoW) consensus mechanism, which requires
nodes to perform a computationally intensive task to create new blocks and earn rewards. This
makes it costly and difficult for an attacker to create and maintain a large number of fake nodes,
as they would need to invest a lot of resources and energy to compete with the honest nodes.
Moreover, Bitcoin nodes do not rely on the identity or reputation of other nodes, but rather on
the validity and proof of their work. Therefore, even if an attacker manages to create many
nodes, they cannot influence the network unless they have more than 50% of the total
computing power, which is very unlikely.
6. Explain Proof of Elapsed Time with suitable example Proof of Elapsed Time (PoET) is
a consensus algorithm that replaces the computational puzzle of Proof of Work (PoW) with a
random timer. PoET aims to reduce the energy consumption and resource utilization of the
network by allowing nodes to sleep or perform other tasks during their waiting time. PoET also
ensures fairness and security by using a trusted execution environment (TEE) to generate and
verify the random timers. To understand the working of the PoET mechanism, let’s use an
example involving 10 validator nodes in a network that wants to add a new block. Each node
requests the PoET for a wait time from a trusted execution environment (TEE) to determine
which node adds the next block. The TEE generates a random wait time for each node and
attests that the timer was created correctly. The node sleeps or does other work for the duration
of the timer. The node that wakes up first (i.e., has the shortest timer) broadcasts its timer
certificate to the network and creates a new block.
7. What are the objectives of consensus mechanism A consensus mechanism is a set of rules
and protocols that ensure that all the nodes in a distributed network agree on the state of the
ledger and the validity of the transactions. A consensus mechanism is essential for the security,
reliability, and performance of any blockchain or distributed ledger system. The objectives of
a consensus mechanism are: 1. To achieve agreement among the nodes on the current and
past state of the ledger, and to prevent any conflicting or contradictory versions of the ledger
from existing. 2. To ensure collaboration and cooperation among the nodes, and to incentivize
them to act honestly and contribute to the network's operation and maintenance. 3. To provide
equal rights and opportunities to every node, and to prevent any node from dominating or
manipulating the network or the ledger. 4. To enforce mandatory participation and
verification of every node in the consensus process, and to prevent any node from skipping or
ignoring the consensus rules. 5. To maintain network security and resilience against various
types of attacks, such as double-spending, Sybil, 51%, or denial-of-service attacks. Different
consensus mechanisms may have different ways of achieving these objectives, depending
on their design and implementation. For example, some consensus mechanisms may use
cryptographic techniques, such as hashing, digital signatures, or encryption, to secure and
verify the transactions and the blocks. Some consensus mechanisms may use economic
incentives, such as rewards, fees, or penalties, to motivate and regulate the nodes'
behavior.. Some of the most common consensus mechanisms used in blockchain and
distributed ledger systems are: Proof-of-Work (PoW): This consensus mechanism requires
nodes to solve complex mathematical puzzles using their computing power and compete for
the right to create new blocks and earn rewards. This mechanism is used by Bitcoin, Ethereum,
and many other cryptocurrencies. Proof-of-Stake (PoS): This consensus mechanism requires
nodes to lock up some of their coins as a stake and participate in the consensus process
proportionally to their stake. This mechanism is used by Ethereum 2.0, Cardano, and many
other cryptocurrencies. Proof-of-Authority (PoA): This consensus mechanism requires nodes
to have a verified identity and reputation and to be authorized by a central entity or a group of
entities to create new blocks and validate transactions. This mechanism is used by VeChain,
POA Network, and some private or permissioned blockchains. Proof-of-Elapsed Time
(PoET): This consensus mechanism requires nodes to wait for a random amount of time and
to prove that they have waited for that time using a trusted execution environment. This
mechanism is used by Hyperledger Sawtooth, Chia Network, and some other
blockchains. Practical Byzantine Fault Tolerance (PBFT): This consensus mechanism
requires nodes to exchange messages and vote on the validity of transactions and blocks
Module 4 Permissioned Blockchain
1. differences between Permissioned Blockchain and Permissionless Blockchain?A
permissioned blockchain is a type of blockchain that requires users to have permissions to
access, read, write, and validate information on the network. A permissioned blockchain is
usually controlled by a central authority or a group of administrators who can grant or revoke
access to users. A permissioned blockchain is also known as a private blockchain or a
consortium blockchain. A permissionless blockchain is a type of blockchain that allows
anyone to join and participate in the network without any restrictions or identification. A
permissionless blockchain is usually decentralized and distributed across a large number of
nodes that operate independently. A permissionless blockchain is also known as a public
blockchain or an open blockchain. Some of the key differences between permissioned and
permissionless blockchains are: Enterprise vs. Public use: Permissioned blockchains are
often used by enterprises or organizations that need to maintain security, privacy, and
compliance within their network. Permissionless blockchains are often used by the public or
communities that want to promote transparency, openness, and innovation within their
network. Decentralization: Permissioned blockchains are more centralized than
permissionless blockchains, as they have a predefined set of participants who can access and
govern the network. Permissionless blockchains are more decentralized than permissioned
blockchains, as they have no barriers to entry and rely on consensus mechanisms to ensure the
validity and integrity of the network. Development: Permissioned blockchains are more
customizable than permissionless blockchains, as they can be tailored to suit the specific needs
and requirements of the network owners. Permissionless blockchains are more standardized
than permissioned blockchains, as they follow a common protocol and framework that is shared
by all the network participants. Transparency: Permissioned blockchains are less transparent
than permissionless blockchains, as they can restrict the visibility and accessibility of the data
and transactions on the network. Permissionless blockchains are more transparent than
permissioned blockchains, as they allow anyone to view and verify the data and transactions
on the network. Some examples of permissioned blockchains are Ripple, Hyperledger
Fabric, and Corda. Some examples of permissionless blockchains are Bitcoin, Ethereum,
and Cardano.
2. Explain Smart Contracts with suitable example. A smart contract is a computer program
that executes automatically and transparently according to predefined rules and conditions. A
smart contract can facilitate, verify, and enforce the exchange of digital assets, such as
cryptocurrencies, tokens, or data, between parties on a decentralized network, such as a
blockchain. A smart contract can also perform complex functions, such as calculations, logic,
or interactions with other smart contracts. Some of the benefits of smart contracts are: 1.
They eliminate the need for intermediaries, such as brokers, lawyers, or escrow agents, thus
reducing costs and risks of fraud or manipulation. 2. They ensure trust, security, and privacy,
as the transactions are recorded and verified by the network, and the code is visible and
immutable. 3. They enhance efficiency, speed, and accuracy, as the transactions are executed
automatically and instantly, without human errors or delays. Some of the challenges of smart
contracts are: 1. They require technical expertise and knowledge to create, deploy, and
interact with them, as they involve complex programming languages and protocols. 2. They
may face legal and regulatory uncertainties, as they operate in a new and evolving domain that
may not be recognized or supported by existing laws and institutions.
3. They may have unintended consequences or vulnerabilities, as they may contain bugs, errors,
or loopholes that could compromise their functionality or security. Some examples of smart
contract applications are: Financial services: Smart contracts can be used for various
financial purposes, such as trading, investing, lending, borrowing, insurance, or
derivatives. Gaming: Smart contracts can be used for creating and managing digital assets,
such as tokens, collectibles, or in-game items, that can be owned, transferred, or traded by
players on a blockchain. Healthcare: Smart contracts can be used for storing and sharing
medical records, prescriptions, or test results, that can be accessed and verified by authorized
parties on a blockchain. Real estate: Smart contracts can be used for facilitating and
streamlining property transactions, such as buying, selling, renting, or leasing, that can be done
directly and securely on a blockchain.
3. Explain Byzantine Fault Tolerance in detail. 1. Byzantine Fault Tolerance (BFT) is a
property of a distributed system that allows it to function correctly even if some of its
components fail or behave maliciously. The term comes from a thought experiment called the
Byzantine Generals Problem, which illustrates the challenges of achieving consensus in the
presence of unreliable or dishonest participants. 2. The Byzantine Generals Problem can be
described as follows: Imagine a group of generals who are planning to attack a city. They are
located in different places and can only communicate by sending messages through
messengers. They need to agree on a common strategy, either to attack or to retreat, but some
of the generals may be traitors who want to sabotage the plan. How can the loyal generals reach
an agreement and execute the plan successfully, without being misled by the traitors? 3. One
possible solution to this problem is to use a majority voting scheme, where each general sends
his vote to every other general, and then follows the majority decision. However, this scheme
is not reliable, because the traitors can send different votes to different generals, or the
messengers can fail to deliver the messages, or the messages can be tampered with. 4. One
such protocol is the Paxos algorithm, which is a family of protocols for solving consensus in
a network of unreliable or fallible processors. Paxos uses a leader-based approach, where one
of the processors is elected as the leader, and is responsible for proposing a value and
coordinating the agreement among the other processors.. 5. Another protocol is the Raft
algorithm, which is a consensus algorithm designed as an alternative to Paxos, with the goal of
being more understandable and easier to implement. Raft also uses a leader-based approach,
where one of the servers is elected as the leader, and is responsible for replicating a log of
commands to the other servers. 6. Both Paxos and Raft are examples of Byzantine Fault
Tolerant protocols, because they can tolerate up to one-third of the processors or servers failing
or acting maliciously, and still achieve consensus among the remaining processors or servers.
However, they are not Byzantine Fault Tolerant in the general sense, because they assume that
the processors or servers trust the leader, and that the messages are not corrupted or forged.
4. Explain Paxos algorithm in detail 1. Paxos is a family of protocols for solving consensus
in a network of unreliable or fallible processors. Consensus is the process of agreeing on one
result among a group of participants. This problem becomes difficult when the participants or
their communications may experience failures. 2. Paxos ensures that the proposed value is
accepted by a majority of the processors, and that the processors learn the same value. Paxos
also handles the cases where the leader fails or is replaced by a new leader. 3. Paxos uses a
leader-based approach, where one of the processors is elected as the leader, and is responsible
for proposing a value and coordinating the agreement among the other processors. 4. Paxos
achieves many of its properties through the concept of a ballot. A ballot is a proposal for a
value, identified by a unique number. The leader generates ballots and sends them to the other
processors, called acceptors. The acceptors can either accept or reject a ballot, depending on
whether they have seen a higher-numbered ballot before. Paxos consists of three main phases:
prepare, accept, and learn. Prepare: The leader selects a ballot number and sends a prepare
request to the acceptors. The acceptors respond with a promise not to accept any lower-
numbered ballots, and the highest-numbered ballot they have accepted, if any. The leader waits
for responses from a majority of acceptors. Accept: If the leader receives a majority of
promises, it selects a value for the ballot. If any acceptor reported a previously accepted ballot,
the leader must use the value of the highest-numbered ballot. Otherwise, the leader may choose
any value. The leader sends an accept request to the acceptors with the ballot number and the
chosen value. The acceptors accept the ballot, unless they have already promised a higher-
numbered ballot. Learn: If the leader receives a majority of acknowledgments, it commits the
ballot. The leader sends a learn message to the learners with the ballot number and the value.
The learners learn the value and update their state accordingly. Paxos guarantees that if a
value is chosen, then it is the only value that can be chosen, and that every learner will
eventually learn the same value. Paxos also guarantees that if a leader has chosen a value, then
it will eventually be learned. Paxos is a simple and elegant protocol, but it has some
drawbacks. For example, it requires a lot of messages to reach consensus, it depends on the
availability and performance of the leader, and it does not handle reconfiguration of the
processors easily.
5. Explain RAFT algorithm in detail 1. RAFT is a consensus algorithm designed as an
alternative to the Paxos family of algorithms. It was meant to be more understandable and
easier to implement than Paxos. It solves the problem of getting multiple servers to agree on a
shared state, such as a replicated log or a distributed database, even in the face of failures and
network delays. 2. RAFT achieves consensus by a leader-based approach. The cluster has one
and only one elected leader, which is responsible for replicating the log entries to the other
servers, called followers. The leader regularly sends heartbeat messages to the followers to
maintain its authority and prevent timeouts. The followers are passive and only respond to the
leader or other servers. If a follower receives no communication from the leader over a period
of time, called the election timeout, it assumes that the leader has failed and starts a new
election. RAFT consists of three main subproblems: leader election, log replication, and
safety. Leader election: A server becomes a candidate if it receives no heartbeat from the
leader within the election timeout. It increments its term number, votes for itself, and requests
votes from other servers. A candidate wins the election if it receives votes from a majority of
servers. A candidate or a follower may receive a message from another server with a higher
term number, in which case it updates its term and reverts to follower state. Log replication:
The leader is the only server that can accept new log entries from clients. It appends the entries
to its own log and sends them to the followers in append entries messages. The followers
append the entries to their logs and send acknowledgments to the leader. The leader keeps track
of the highest index that each follower has acknowledged, called the match index. A log entry
is considered committed if it is stored on a majority of servers, including the leader. Safety:
RAFT ensures that the committed log entries are consistent and durable across the servers, and
that the servers execute the same commands in the same order. RAFT enforces two safety
properties: the election safety property and the log matching property. The election safety
property guarantees that at most one leader can be elected in a given term. RAFT is a simple
and elegant protocol, but it also has some optimizations and extensions. For example, it uses
a randomized election timeout to avoid split votes, it uses a snapshotting mechanism to compact
the log and save disk space, and it supports cluster membership changes and log compaction.
6. Explain Distributed Consensus. Distributed Consensus is the process of achieving
agreement among a group of nodes or processes in a distributed system, especially in the
presence of failures, delays, or malicious behavior. Distributed Consensus is a fundamental
problem in distributed computing, as it enables the nodes to coordinate their actions, maintain
consistency, and provide fault tolerance. Some of the applications of Distributed Consensus
are: Blockchain technology: Distributed Consensus is a core concept in blockchain
technology, which allows multiple nodes to agree on a shared ledger of transactions without
relying on a central authority. Different blockchain networks use different consensus
algorithms, such as Proof of Work, Proof of Stake, or Delegated Proof of Stake, to validate
transactions and prevent double-spending or tampering. Distributed databases: Distributed
Consensus protocols can be used to maintain consistency across multiple replicas of a
distributed database, such as Cassandra, MongoDB, or CouchDB. These protocols ensure that
the replicas can handle concurrent updates, resolve conflicts, and recover from failures. Some
of the popular protocols for distributed databases are Paxos, Raft, and Zab. Distributed
systems: Distributed Consensus protocols can be used for various purposes in distributed
systems, such as leader election, state machine replication, clock synchronization, or atomic
broadcast. These protocols help the nodes to agree on a common leader, state, time, or message,
and to cope with network partitions, crashes, or attacks.
Some of the challenges of Distributed Consensus are: Communication: Distributed
Consensus protocols rely on communication between the nodes, which can be unreliable, slow,
or limited. The protocols have to deal with message loss, duplication, reordering, or delay, and
to optimize the number and size of messages to reduce the network overhead. Fault tolerance:
Distributed Consensus protocols have to tolerate different types of faults or failures, such as
node crashes, network partitions, or Byzantine behavior. Scalability: Distributed Consensus
protocols have to scale to a large number of nodes or processes, which can increase the
complexity, latency, and resource consumption of the system. The protocols have to balance
the trade-offs between consistency, availability, and partition tolerance, and to adapt to dynamic
changes in the system.

Module 5 Ethereum
1. What are various types of account in Ethereum? Ethereum has two types of accounts:
externally owned accounts (EOAs) and contract accounts. EOAs are controlled by anyone with
the private keys, while contract accounts are smart contracts deployed to the network and
controlled by code. Both types of accounts can hold, send, and receive ether (ETH) and tokens,
as well as interact with other smart contracts. However, there are some key differences
between them:1. Externally owned accounts (EOAs):1. Creating an EOA is free and easy.
You just need to generate a cryptographic pair of keys: a public key and a private key. The
public key is used to derive the Ethereum address of the account, while the private key is used
to sign transactions and control the account activities.2. EOAs can initiate transactions on the
network. Transactions from EOAs can only be ETH/token transfers or contract creations.3.
EOAs cannot execute code or store data on the network. They can only interact with contract
accounts by sending transactions to them.4. EOAs do not have a codeHash field in their account
state. The codeHash is a hash of the code of a contract account that runs on the Ethereum virtual
machine (EVM). For EOAs, the codeHash field is the hash of an empty string.2. Contract
accounts:1. Creating a contract account has a cost, because it uses the network’s storage and
computational resources. You need to deploy a smart contract code to the network, which will
generate a unique address for the contract account. The contract code defines the logic and
rules of the contract account, and it cannot be changed once deployed.2. Contract accounts can
only send transactions in response to receiving a transaction from an EOA or another contract
account. Transactions from contract accounts can trigger code execution, which can perform
various actions, such as transferring ETH/tokens, creating new contracts, or calling other
contracts.3. Contract accounts can store data on the network, using a data structure called a
Merkle Patricia trie. The trie encodes the storage contents of the contract account, which can
be a mapping between 256-bit integer values. The root hash of the trie is stored in the
storageRoot field of the account state.4. Contract accounts have a codeHash field in their
account state, which is the hash of the contract code that runs on the EVM.
2. Explain Ethereum Virtual Machine in detail. 1. Ethereum Virtual Machine (EVM) is the
core component of Ethereum that enables the execution of smart contracts. Smart contracts are
self-executing programs that can encode any kind of logic, rules, or agreements. EVM is a
Turing-complete virtual machine that can run code of arbitrary complexity and perform
computations that are mathematically possible. 2. EVM operates on the Ethereum network,
which is a distributed ledger that stores the state of all accounts and contracts. EVM is isolated
from the network and the operating system, meaning that it has no access to the filesystem,
network, or other processes. 3. Transactions are signed instructions from externally owned
accounts (EOAs) that can transfer value, create contracts, or call existing contracts.
Transactions are validated and ordered by the network through a consensus mechanism called
proof-of-work (PoW). Transactions are grouped into blocks, which are linked together to form
a blockchain. 4. Messages are similar to transactions, but they are not signed or broadcasted to
the network. Messages are internal calls between contracts that can transfer value, execute
code, or create new contracts. Messages can be nested, meaning that a contract can call another
contract, which can call another contract, and so on. 5. EVM executes the code of smart
contracts using a stack-based bytecode language. The code consists of a series of opcodes,
which are instructions that manipulate data on the stack, access memory and storage, control
the flow, or perform arithmetic and logical operations. The code is immutable, meaning that it
cannot be changed once deployed. 6. EVM is designed to be deterministic, meaning that the
execution of the same transaction will always produce the same result. This is essential for
achieving consensus among all nodes on the network. EVM is also designed to be secure,
meaning that it prevents unauthorized access, malicious behavior, or denial-of-service attacks.
One of the security mechanisms of EVM is gas, which is a unit of measure that represents the
computational cost of each operation. Each transaction specifies a gas limit and a gas price,
which determine how much gas the transaction can consume and how much ether the sender is
willing to pay for each unit of gas.. 7. EVM is the engine that powers the Ethereum platform,
enabling the creation and deployment of decentralized applications (DApps) that can run on a
global, open, and secure network. EVM is a flexible and adaptable system that can support
various types of smart contracts, such as ERC-20 tokens, decentralized exchanges, lending
platforms, gaming, and more.
3. Explain Hyperledger Fabric in detail Hyperledger Fabric is a permissioned blockchain
platform that supports the development and deployment of distributed ledger applications for
various industries and use cases. Hyperledger Fabric is an open-source project hosted by the
Linux Foundation, and it is part of the Hyperledger umbrella of projects that aim to advance
cross-industry blockchain technologies. Hyperledger Fabric has a modular and flexible
architecture that allows for customization and innovation. Some of the key features of
Hyperledger Fabric are: Permissioned network: Hyperledger Fabric requires that all
participants in the network are identified and authenticated by a trusted authority, such as a
certificate authority (CA). This ensures that the network is secure, private, and compliant with
the relevant regulations and policies. Pluggable consensus: Hyperledger Fabric supports
different consensus mechanisms that can be configured according to the network requirements
and preferences. Consensus is the process of validating and ordering transactions on the ledger,
and it can vary in terms of performance, finality, fault tolerance, and resource consumption.
Hyperledger Fabric currently supports two types of consensuses: Solo (for development and
testing) and Raft (for production and scalability).
Chaincode: Hyperledger Fabric uses the term chaincode to refer to the smart contracts that run
on the network. Chaincode is the business logic that defines the rules and operations of the
ledger, and it can be written in various programming languages, such as Go, Node.js, or
Java.. Channels: Hyperledger Fabric allows for the creation of multiple channels, which are
private subnets of the network that enable data isolation and confidentiality. Channels can be
used to partition the network into different groups of participants that have their own ledger
and chaincode. Endorsement policy: Hyperledger Fabric enables the specification of
endorsement policies, which define the criteria for validating and committing transactions on
the ledger. Endorsement policies can be set at the chaincode level or the channel level, and they
can require the approval of a certain number of peers from different organizations before a
transaction is considered valid. CouchDB: Hyperledger Fabric supports the use of CouchDB
as the state database for the ledger. CouchDB is a document-oriented database that provides
rich query capabilities and indexing features.
4. Short note on Gossip Protocol 1. Gossip protocol is a peer-to-peer communication
mechanism in which nodes periodically exchange state information about themselves and
other nodes they know about. The idea is inspired by how rumors spread among people in
social networks. Gossip protocol can be used to solve various problems in distributed
systems, such as data dissemination, data repair, data aggregation, membership management,
failure detection, and consensus. 2. Gossip protocol works by having each node initiate a
gossip round every fixed interval, such as one second. In each round, the node randomly
selects one or more other nodes to communicate with, and sends them a message containing
some state information. The message can be a piece of data, a summary of the data, a digest
of the data, or a query about the data. 3. Gossip protocol has several advantages over other
communication methods, such as multicast or broadcast. Gossip protocol is scalable, as it
does not depend on the size or topology of the network. Gossip protocol is robust, as it can
tolerate node failures, network partitions, and message losses. Gossip protocol is simple, as it
does not require complex coordination or synchronization among nodes. There are three
main types of gossip algorithms, depending on the purpose and the style of the gossip
protocol: Dissemination algorithms: These algorithms use gossip to spread information
throughout the network, such as new data, updates, or events. They work by flooding the
network with messages, but in a way that produces bounded worst-case loads. An example of
a dissemination algorithm is the rumor-mongering algorithm, which randomly selects a
subset of nodes to send the message to, and stops when the message becomes old or
common. Anti-entropy algorithms: These algorithms use gossip to repair the replicated data
by comparing and reconciling them. They work by exchanging messages that contain the full
data, a summary of the data, or a digest of the data, and resolving any discrepancies or
conflicts. An example of an anti-entropy algorithm is the Merkle tree algorithm, which uses a
hash tree to represent the data and to detect any differences efficiently. Aggregation
algorithms: These algorithms use gossip to compute an aggregate of the network by
sampling and combining information at the nodes. They work by exchanging messages that
contain partial aggregates, such as sums, averages, counts, or minima, and applying some
aggregation function to merge them. An example of an aggregation algorithm is the push-sum
algorithm, which uses a weighted average to estimate the global sum and the global average
of the network.
5. State the difference between Bitcoin block chain and Ethereum block chain

Bitcoin Ethereum
Basis

Ethereum is a decentralized
Bitcoin (abbreviation: BTC; global software platform
sign: ₿) is a decentralized powered by blockchain
digital currency that can be technology. It is most
transferred on the peer-to-peer commonly known for its
bitcoin network. native cryptocurrency, ether
Definition (ETH).

The word bitcoin was defined in Ethereum was conceived in

a white paper published on 31 2013 by programmer Vitalik
October 2008. The currency Buterin, and then went live on
History began use in 2009. 30 July 2015.

The purpose of Ethereum was

The purpose of bitcoin was to to utilize blockchain
replace national currencies technology for maintaining a
during the financial crisis of decentralized payment
2008. network and storing computer
Purpose code.

Although bitcoin do have smart

Ethereum allows us to create
contracts, they are not as
smart contracts. Smart
flexible or complete as
contracts are computer codes
Ethereum smart contracts. Smart
that is stored on a blockchain
contracts in Bitcoin does not
and executed when the
have all the functionality that a
predetermined terms and
Smart programming language would
conditions are met.
Contracts give them.

Smart contracts on Ethereum

Smart Contract Smart contracts on Bitcoin are
are written in programming
written in programming
Programming languages like Solidity, Vyper,
languages like Script, Clarity.
Language etc.

Generally, bitcoin transactions Ethereum transactions may

Transactions are only for keeping notes. contain some executable code.

Bitcoin runs on the SHA- Ethereum runs on the Keccak-

Hash Algorithm 256 hash algorithm. 256 hash algorithm.
 Bitcoin Ethereum
Basis

The Proof-of-Work (PoW) is the The Proof-of-Stake is the

Consensus consensus mechanism used by consensus mechanism used by
Mechanism the Bitcoin network. Ethereum.

The block time of bitcoin is 10 The block time of Ethereum is

Block Time minutes. 14 to 15 seconds.

The bitcoin blockchain has a The Ethereum blockchain

Block Limit block limit of 1 MB. does not have a block limit.

Ether, native currency of

Bitcoin is the most popular
Ethereum is the second-largest
digital currency in the market to
cryptocurrency after bitcoin to
date.
Popularity date.

Energy Energy consumption is very Energy consumption is very

Consumption high. low as compared to bitcoin

Energy Energy consumption rate of Energy consumption rate of

Consumption bitcoin mining system 3.2 bitcoin mining system 1.2
rate Million household. Million household.

Structure of bitcoin is simple Structure of Ethereum is

Structure and robust. complex and feature rich

Miner got nearly 5 BTC along

Miner got nearly 6.25 BTC on
with same additional rewards
successfully adding new block
on successfully adding new
in network.
Rewards block in network.

Assets Assets of Bitcoin is BTC. Assets of Ethereum is Ether.

7. Explain Solidity in detail Solidity is a high-level programming language designed for
implementing smart contracts on the Ethereum blockchain. Smart contracts are self-executing
programs that can encode any kind of logic, rules, or agreements. Solidity is a statically typed,
object-oriented (contract-oriented), and Turing-complete language that supports complex user-
defined types, inheritance, libraries, and interfaces. Solidity has the following
features: Syntax: Solidity has a curly-bracket syntax that is influenced by C++, Python, and
JavaScript. Solidity uses semicolons to end statements and requires explicit type declarations
for variables and functions. Solidity also supports comments, literals, operators, control
structures, and exceptions. Contracts: Solidity uses the keyword contract to define a smart
contract, which is a collection of state variables, functions, events, modifiers, and other
elements. A contract can inherit from other contracts, implement interfaces, and create new
contracts. A contract can also have a constructor, which is a special function that is executed
only once when the contract is deployed, and a fallback function, which is a default function
that is executed when no other function matches the call. Variables: Solidity has two kinds of
variables: state variables and local variables. State variables are declared outside of functions
and are stored permanently on the blockchain. They represent the state of the contract and can
be accessed by all functions within the contract. Local variables are declared inside functions
and are stored temporarily in memory. They are only visible within the scope of the function
and are deleted when the function exits. Types: Solidity has various types of data, such as
integers, fixed-point numbers, booleans, addresses, bytes, strings, arrays, enums, structs, and
mappings. Solidity also has special types, such as function types, which represent the signature
of a function, and modifier types, which represent the conditions of a function. Functions:
Solidity uses the keyword function to define a function, which is a block of code that can
perform some actions and return some values. Functions can have parameters, return values,
modifiers, visibility specifiers, and state mutability specifiers. Functions can also be external,
internal, public, or private, depending on how they can be accessed by other contracts or users.
Events: Solidity uses the keyword event to define an event, which is a way of logging
information on the blockchain that can be accessed by external applications. Events can have
parameters and can be emitted by using the emit keyword. Events can be used to notify users
or applications about the occurrence of some actions or changes in the contract. Modifiers:
Solidity uses the keyword modifier to define a modifier, which is a way of modifying the
behavior or the conditions of a function. Modifiers can have parameters and can use the _;
symbol to mark the point where the function body is inserted. Modifiers can be used to check
some preconditions or postconditions of a function, such as the sender's address, the amount of
ether, or the state of the contract. Libraries: Solidity uses the keyword library to define a
library, which is a collection of functions and types that can be reused by other contracts.
Libraries can be deployed as standalone contracts or linked to other contracts.Interfaces:
Solidity uses the keyword interface to define an interface, which is an abstract contract that
only specifies the signatures of the functions, but not their implementations.
8. Explain Ethereum Mining process Ethereum mining is the process of creating new blocks
of transactions on the Ethereum blockchain, using a proof-of-work (PoW) consensus
mechanism. Ethereum mining involves solving complex mathematical problems, called proof-
of-work puzzles, that require a lot of computational power and energy. The miners who solve
these puzzles are rewarded with ether (ETH), the native currency of Ethereum, and transaction
fees. Ethereum mining works as follows: 1. A miner runs a software that connects to the
Ethereum network and listens for new transactions and blocks. 2. The miner collects a set of
valid transactions from the network and forms a candidate block, which contains the
transactions, a reference to the previous block (called the parent hash), and a nonce (a random
number). 3. The miner computes the hash of the candidate block, which is a fixed-length string
that uniquely identifies the block. The hash must satisfy a certain difficulty criterion, which is
determined by the network and adjusts dynamically to maintain a constant block time of about
12 seconds. The difficulty criterion requires that the hash starts with a certain number of leading
zeros, which makes it hard to find. 4. The miner tries different values of the nonce until it finds
a hash that meets the difficulty criterion. This is the proof-of-work puzzle that the miner has to
solve. The process of trying different nonces is called hashing or mining. 5. Once the miner
finds a valid hash, it broadcasts the candidate block to the network, along with the proof-of-
work. This is called proposing a block. 6. The other nodes on the network verify the validity of
the block and the proof-of-work, and add the block to their local copy of the blockchain. This
is called accepting a block. 7. The miner who proposed the block receives a block reward of 2
ETH, plus the transaction fees from the transactions included in the block. This is the incentive
for miners to participate in the network and secure it. 8. The process repeats with the next block,
which references the previous block as its parent. This creates a chain of blocks, which is the
blockchain. Ethereum mining is a competitive and probabilistic process, which means that
there is no guarantee that a miner will find a valid block or receive a reward. The probability
of finding a block depends on the hash rate of the miner, which is the number of hashes per
second that the miner can perform, and the difficulty of the network, which is the number of
leading zeros required for the hash. The higher the hash rate and the lower the difficulty, the
higher the chance of finding a block.
Ethereum mining also faces some challenges and limitations, such as: High energy
consumption and environmental impact: Ethereum mining requires a lot of electricity and
generates a lot of heat and carbon emissions, which can have negative effects on the
environment and the climate. Centralization and security risks: Ethereum mining is
dominated by large mining pools and farms, which have access to cheap and abundant energy
and hardware. This can create a concentration of power and influence in the network, which
can compromise its decentralization and security. For example, if a single entity controls more
than 51% of the network's hash rate, it can launch a 51% attack, which can allow it to
manipulate the blockchain and double-spend transactions. Scalability and performance
issues: Ethereum mining limits the throughput and speed of the network, as it can only process
a finite number of transactions per block and per second. This can create congestion and high
fees on the network, which can affect the user experience and the adoption of Ethereum.
6. Ethereum Vs Hyper Ledger.Ethereum and Hyperledger are two of the most popular and
widely used blockchain platforms in the world. They both use a distributed ledger technology
that records and verifies transactions without the need for a central authority. However, they
have some significant differences in terms of their purpose, design, and functionality. Some of
the main differences between Ethereum and Hyperledger are: Purpose: Ethereum is the
platform for creating B2C businesses and decentralized applications. It is created for the
purpose of running smart contracts on the Ethereum Virtual Machine (EVM) and creating
decentralized apps for mass consumption with the help of this. Hyperledger is designed to
create B2B businesses and cross-industry applications. It helps businesses or industries to
collaborate with the developers, who are working with Distributed Ledger Technology (DLT).
Customized blockchain apps with limited access can be created with this. Operation mode:
Ethereum is a public network, which means anyone can access the blockchain network, and no
permission is needed to access the network. Hyperledger is a private and permissioned network,
which means only the authorized participants can access the network. In other words, the
network is limited to a predefined community of participants with permission. Consensus:
Ethereum uses a proof-of-work (PoW) consensus mechanism, which requires miners to solve
cryptographic puzzles to validate transactions and create new blocks. PoW is a secure and
robust mechanism, but it is also energy-intensive and slow. Ethereum is planning to transition
to a proof-of-stake (PoS) consensus mechanism, which requires validators to stake their ether
(ETH) to validate transactions and create new blocks. PoS is a more efficient and scalable
mechanism, but it also introduces new challenges and trade-offs. Hyperledger supports
different consensus mechanisms that can be configured according to the network requirements
and preferences. Hyperledger currently supports two types of consensuses: Solo (for
development and testing) and Raft (for production and scalability). Programming language:
Ethereum uses a high-level and Turing-complete programming language called Solidity, which
allows for complex and expressive operations. Solidity is designed to be flexible and powerful,
but it is also prone to errors and vulnerabilities. Hyperledger uses various programming
languages, such as Go, Node.js, or Java, depending on the framework and the chaincode.
Hyperledger also supports different frameworks, such as Fabric, Sawtooth, Besu, or Indy, each
with its own features and use cases. Smart contracts: Ethereum supports a full-fledged form
of smart contracts, which are self-executing programs that can encode any kind of logic, rules,
or agreements. Ethereum smart contracts can perform complex functions, such as token
creation, decentralized exchange, lending platform, gaming, and more. Hyperledger uses the
term chaincode to refer to the smart contracts that run on the network. Chaincode is the business
logic that defines the rules and operations of the ledger, and it can be written in various
programming languages. Chaincode can be deployed and invoked by the network participants,
and it can access the ledger state, perform computations, and emit events. Scalability:
Ethereum has a scalability problem, which means that it can only process a limited number of
transactions per second (TPS). Ethereum has a variable block size, which depends on the gas
limit, which is the maximum amount of gas that can be consumed by a block. Gas is a unit of
measure that represents the computational cost of each operation. Ethereum can process about
15 TPS on average, which is far below the demand of the network. Hyperledger has a higher
scalability, as it can process thousands of transactions per second (TPS), depending on the
configuration and the hardware.
Module 6 Case Study
1. Short note on Blockchain in Supply Chain Management Blockchain is a technology that
allows for the creation of a shared, immutable ledger that records transactions and tracks assets
in a distributed network. Blockchain can be used to improve the efficiency, traceability, and
accountability of supply chains across different industries, such as food, pharmaceuticals,
logistics, and manufacturing. Blockchain can enable the tracking of products from their origin
to their destination, as well as the verification of their quality, condition, and authenticity. Some
of the benefits of blockchain for supply chain management are: Increased efficiency:
Blockchain can reduce the time, cost, and errors involved in supply chain processes, by
automating workflows, eliminating intermediaries, and streamlining documentation.
Blockchain can also enhance the scalability and performance of supply chain systems, by
enabling real-time data sharing and synchronization among network participants. Reduced
risk: Blockchain can mitigate the risk of fraud, theft, counterfeiting, and tampering, by
providing a secure and transparent environment for transactions. Blockchain can also improve
the compliance and governance of supply chains, by providing an immutable and auditable
record of the provenance, ownership, and movement of goods. Blockchain can also help with
dispute resolution and conflict management, by enabling smart contracts and consensus
mechanisms. Enhanced trust: Blockchain can foster trust and loyalty among supply chain
partners and customers, by increasing the visibility and accountability of the supply chain
operations. Blockchain can also enable the creation of new business models and value
propositions, by allowing for the tokenization, monetization, and incentivization of supply
chain assets and services. Blockchain can also support the social and environmental
responsibility of supply chains, by enabling the tracking and reporting of sustainability and
ethical standards. Some of the use cases of blockchain for supply chain management
are: Food and agriculture: Blockchain can be used to ensure the safety, quality, and
traceability of food products, from farm to fork. Blockchain can also help with the management
of food waste, recalls, and certifications. For example, IBM Food Trust is a blockchain-based
platform that connects food growers, processors, distributors, and retailers, to create a more
transparent and efficient food system. Healthcare: Blockchain can be used to improve the
security, accuracy, and accessibility of medical records, prescriptions, and test results.
Blockchain can also help with the management of drug supply chains, ensuring the authenticity,
integrity, and availability of medicines. For example, MediLedger is a blockchain-based
network that connects pharmaceutical manufacturers, wholesalers, and distributors, to prevent
counterfeit drugs and comply with regulatory requirements.Retail: Blockchain can be used to
enhance the customer experience, loyalty, and satisfaction, by providing more information,
choice, and convenience. Blockchain can also help with the management of inventory,
logistics, and payments, reducing costs, delays, and errors. Automotive: Blockchain can be
used to improve the safety, performance, and maintenance of vehicles, by providing a secure
and reliable record of the vehicle history, ownership, and usage. Blockchain can also help with
the management of supply chain networks, ensuring the quality, traceability, and compliance
of automotive parts and components. For example, MOBI is a blockchain-based consortium
that aims to create a more efficient and sustainable mobility ecosystem.
2. Short note Blockchain in Government Blockchain is a technology that allows for the
creation of a shared, immutable ledger that records transactions and tracks assets in a
distributed network. Blockchain can be used to improve the efficiency, transparency, and
accountability of government services, as well as to enhance the security, privacy, and trust of
citizens and stakeholders. Blockchain can enable the secure sharing of data between citizens
and agencies, the streamlining of processes and workflows, and the reduction of fraud, waste,
and abuse. Some of the benefits of blockchain for government are: Increased efficiency:
Blockchain can reduce the time, cost, and errors involved in government operations, by
automating tasks, eliminating intermediaries, and simplifying documentation. Blockchain can
also improve the performance and scalability of government systems, by enabling real-time
data sharing and synchronization among network participants. Enhanced transparency:
Blockchain can increase the visibility and accountability of government actions, by providing
a tamper-proof and auditable record of transactions and events. Blockchain can also improve
the access and availability of public information, by providing a decentralized and distributed
platform for data storage and dissemination. Improved trust: Blockchain can foster trust and
confidence among citizens and stakeholders, by increasing the security and reliability of
government services. Blockchain can also enable the verification and authentication of
identities, credentials, and assets, by providing a cryptographically secure and self-sovereign
environment. Some of the use cases of blockchain for government are: Digital identity:
Blockchain can be used to create and manage digital identities that are secure, decentralized,
and self-sovereign. Blockchain can store personal information, such as biometrics, credentials,
certificates, and preferences, in a way that is encrypted, tamper-proof, and controlled by the
user. Blockchain can also enable the verification and authentication of digital identities across
various platforms and services, without the need for third-party intermediaries or centralized
databases. Voting systems: Blockchain can be used to enhance the security, transparency, and
efficiency of voting systems, both online and offline. Blockchain can enable the registration,
verification, and authentication of voters and candidates, as well as the recording, counting,
and auditing of votes. Blockchain can also prevent fraud, manipulation, and coercion, as well
as ensure the privacy and anonymity of voters.Land registry: Blockchain can be used to
improve the management and administration of land records, by providing a secure and
immutable record of the ownership, transfer, and valuation of land and property. Blockchain
can also facilitate the registration and verification of land titles, deeds, and contracts, as well
as the payment of taxes and fees. Blockchain can also help with the resolution of land disputes
and conflicts, by enabling a transparent and consensus-based mechanism. Taxation:
Blockchain can be used to simplify and automate the collection and distribution of taxes, by
providing a traceable and verifiable record of transactions and revenues. Blockchain can also
enable the compliance and enforcement of tax rules and regulations, by providing an immutable
and auditable record of tax obligations and payments. Blockchain can also help with the
prevention and detection of tax evasion and fraud, by enabling cross-border and cross-agency
data sharing and analysis.
3. Short note on Financial Services Blockchain is a technology that allows for the creation of
a shared, immutable ledger that records transactions and tracks assets in a distributed network.
Blockchain can be used to improve the efficiency, security, and innovation of financial services,
as well as to enhance the customer experience, trust, and inclusion. Blockchain can enable the
secure and transparent exchange of value and information between financial institutions,
customers, and regulators. Some of the benefits of blockchain for financial services
are: Reduced costs: Blockchain can reduce the operational and transactional costs involved in
financial services, by eliminating intermediaries, streamlining processes, and simplifying
documentation. Blockchain can also reduce the capital and regulatory costs involved in
financial services, by enabling faster settlement, lower risk, and improved
compliance. Increased security: Blockchain can increase the security and reliability of
financial services, by providing a tamper-proof and resilient environment for transactions.
Blockchain can also prevent fraud, cyberattacks, and identity theft, by providing a
cryptographically secure and decentralized platform for verification and
authentication. Enhanced innovation: Blockchain can foster innovation and differentiation in
financial services, by enabling new products, services, and business models. Blockchain can
also enable the creation and adoption of digital assets, such as cryptocurrencies, stablecoins,
tokens, and CBDCs, which can offer new opportunities and challenges for the financial
industry. Some of the use cases of blockchain for financial services are: Payments:
Blockchain can be used to facilitate faster, cheaper, and more inclusive payments, both
domestically and internationally. Blockchain can enable the peer-to-peer transfer of funds
between individuals, businesses, and institutions, without the need for intermediaries or central
authorities. Blockchain can also enable the interoperability and integration of different payment
systems and platforms, as well as the use of digital currencies and assets. Trade finance:
Blockchain can be used to improve the efficiency, transparency, and security of trade finance,
by digitizing trade documents, streamlining processes, and providing a tamper-proof
environment for transactions. Blockchain can also facilitate the coordination and collaboration
among different trade partners, such as exporters, importers, banks, and insurers. Blockchain
can also enable the use of smart contracts and tokens to automate and optimize trade finance
operations. Lending: Blockchain can be used to enhance the access, affordability, and quality
of lending services, by providing a decentralized and trustless platform for borrowing and
lending. Blockchain can enable the creation and management of peer-to-peer lending networks,
where borrowers and lenders can interact directly, without the need for intermediaries or
intermediaries. Blockchain can also enable the use of digital assets and tokens as collateral, as
well as the use of smart contracts and oracles to enforce and monitor lending
agreements. Insurance: Blockchain can be used to improve the efficiency, transparency, and
trust of insurance services, by providing a secure and immutable record of policies, claims, and
events. Blockchain can also enable the automation and optimization of insurance processes,
such as underwriting, pricing, and claims management. Blockchain can also enable the creation
and distribution of new insurance products and services, such as parametric insurance,
microinsurance, and peer-to-peer insurance.