TASK: DISCUSSING BLOCKCHAIN
LECTERER NAME: Ms. SALOME MWANGI
UNIT NAME: FOUNDATIONS OF IT
THE COOPERATIVE UNIVERISITY OF KENYA
GROUP MEMBERS
NAME REGISTRATION NUMBER
1) C023/404496/2024 RACHEAL GATHONI
2) C023/404523/2024 LEVIAN CHEPKORIR
3) C023/404507/2024 GRIFFINS MAJIWA
4) C023/405127/2024 JAMES NJENGA
5) C023/404528/2024 STEPHEN DERRICK
6) C023/404478/2024 DENNIS KIMANI
7) C023/404516/2024 JEMIMAH MUMO
8) C023/404488/2024 ANN NDUTA
9) C023/404548/2024 ELVIS WERE
Understanding Blockchain as a Computing Technology
Blockchain technology is like a digital ledger that records transactions across many computers in
a network. It records transactions across multiple computers so that the records are secure,
transparent, and immutable. Here’s a deeper dive into how blockchain works, its applications,
benefits, and implications for various industries.
Core Principles of Blockchain
1. Decentralization:
o Unlike traditional centralized databases managed by a single entity, blockchain
operates on a peer-to-peer network. Each participant (node) in the network
maintains a copy of the entire blockchain. This decentralization ensures that no
single point of failure exists, making the system robust and resistant to tampering.
2. Transparency and Immutability:
o Every transaction recorded on a blockchain is visible to all participants. Once
added, records cannot be altered or deleted without the consensus of the network.
This transparency builds trust among users and ensures that data integrity is
maintained.
3. Consensus Mechanisms:
o Blockchain networks use consensus algorithms like Proof of Work (PoW) or
Proof of Stake (PoS) to validate and agree on the order of transactions. These
mechanisms ensure that all nodes in the network agree on the state of the
blockchain, preventing double-spending and fraud.
Applications of Blockchain
1. Cryptocurrencies:
o The most well-known application of blockchain is cryptocurrencies like Bitcoin
and Ethereum. These digital currencies leverage blockchain to enable secure and
transparent peer-to-peer transactions without the need for intermediaries like
banks.
2. Smart Contracts:
o Smart contracts are self-executing contracts where the terms are directly written
into code. They automatically execute and enforce terms when predefined
conditions are met. Platforms like Ethereum have popularized smart contracts,
enabling applications in areas such as finance, supply chain, and real estate.
3. Supply Chain Management:
o Blockchain enhances transparency and traceability in supply chains. By recording
every step of the product journey on a blockchain, companies can ensure
authenticity, reduce fraud, and improve efficiency.
4. Healthcare:
o Blockchain can securely store and manage patient records, ensuring that data is
accurate, up-to-date, and accessible only to authorized parties. This can improve
patient care and streamline administrative processes.
5. Voting Systems:
o Blockchain-based voting systems offer a secure and transparent way to conduct
elections. By ensuring that votes are tamper-proof and verifiable, blockchain can
increase voter confidence and participation.
Benefits of Blockchain
1. Enhanced Security:
o The cryptographic nature of blockchain makes it highly secure. Each transaction
is encrypted and linked to the previous transaction, making it nearly impossible to
alter data without being detected.
2. Increased Efficiency:
o By removing the need for intermediaries, blockchain can streamline processes,
reduce costs, and speed up transactions. This is particularly beneficial in areas like
cross-border payments and supply chain management.
3. Greater Transparency:
o The open ledger nature of blockchain means that all participants can view and
verify transactions. This transparency can reduce fraud and build trust among
users.
4. Improved Traceability:
o Blockchain provides a permanent and auditable record of transactions, making it
easy to trace the history of an asset. This is valuable in industries like food
production and pharmaceuticals, where traceability is crucial.
Key Challenges Facing Blockchain Technology
1. Scalability:
o Blockchain networks, particularly those using Proof of Work (PoW), struggle
with processing high volumes of transactions efficiently. The process of
validating and adding transactions to the blockchain can be slow, limiting its
suitability for high-frequency applications.
2. Energy Consumption:
o The PoW consensus mechanism consumes significant amounts of computational
power, leading to high energy usage. This raises environmental concerns and
questions about the sustainability of blockchain technology.
3. Regulatory Issues:
o Different countries have varying regulations regarding blockchain and
cryptocurrencies. Navigating these regulatory landscapes is complex and can
hinder the adoption and implementation of blockchain solutions.
4. Security Vulnerabilities:
o While blockchain is secure by design, it is not immune to attacks. Threats like
51% attacks, where a single entity gains control of the majority of the network's
mining power, pose significant risks to blockchain integrity.
5. Interoperability:
o Numerous blockchain platforms exist, each with unique protocols and standards.
The lack of interoperability between different blockchains limits the seamless
transfer of assets and data across platforms, hindering broader adoption.
6. Adoption Hurdles:
o Integrating blockchain with existing systems involves high initial costs and
complexity. Many organizations are hesitant to adopt blockchain due to a lack of
understanding and uncertainty about its long-term benefits.
7. User Experience:
o Blockchain applications, particularly cryptocurrency wallets, can be complex and
intimidating for non-technical users. Improving the usability and accessibility of
blockchain platforms is essential for mainstream adoption.
8. Scalability Solutions:
o Efforts are being made to develop layer-2 solutions and other scaling techniques,
such as sharding and the Lightning Network, to enhance transaction throughput.
However, these solutions are still in development and face integration challenges.
Future directions of blockchain
1. Interoperability: Efforts to enable seamless interaction between different blockchain
networks will be crucial. This will allow for better collaboration and data exchange,
enhancing the functionality of decentralized applications (DApps)1.
2. Decentralized Finance (DeFi) 2.0: The next phase of DeFi aims to improve scalability
and reduce transaction costs, making financial services more accessible and cost-
effective.
3. Sustainability: Addressing environmental concerns, blockchain technology will likely
shift towards more energy-efficient consensus mechanisms like Proof of Stake (PoS),
reducing its carbon footprint.
4. Quantum-Resilient Blockchain: As quantum computing advances, developing
quantum-resistant encryption methods will be essential to maintain blockchain security.
5. Central Bank Digital Currencies (CBDCs): Many countries are exploring the creation
of digital currencies, which could revolutionize the financial landscape and enhance
cross-border transactions.
6. Enhanced Security: Continuous improvements in blockchain security will be necessary
to protect against evolving threats and ensure the integrity of transactions.
7. Widespread Adoption: Blockchain technology will continue to be integrated into
various industries, from supply chain management to healthcare, driving innovation and
efficiency.
8. Improved User Experience: Making blockchain platforms more user-friendly will be
key to attracting a broader audience and encouraging mainstream adoption.
