Blockchain Introduction:​

Blockchain Technology Mechanisms & Networks, Blockchain Origins,

Blockchain Objectives, Blockchain Users & Adoption, Blockchain
Challenges, P2P Systems, Hash Pointers and Data Structures,
Blockchain Transactions

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1. Blockchain Technology Mechanisms & Networks

Distributed Ledger:

○​ A decentralized database shared across nodes in the network.

○​ Each participant has access to the entire ledger in real-time.
How does blockchain differs from Distributed Ledger
How do we compare centralized system vs
decentralized system vs distributed system
Types of Blockchains:

1.​ Public: Open to everyone (e.g., Bitcoin, Ethereum).

2.​ Private: Restricted access, managed by a single entity.
3.​ Consortium: Semi-decentralized, governed by a group.
4.​ Hybrid: Combines public and private blockchain features.​ ​ ​

1. Public Blockchain Networks

Bitcoin and other cryptocurrencies originated from public blockchains, which also played
a role in popularizing distributed ledger technology (DLT). Public blockchains also help
to eliminate certain challenges and issues, such as security flaws and centralization.

DLT distributes data across a peer-to-peer network rather than stored in a single
location. A consensus algorithm verifies information authenticity; proof of stake (PoS)
and proof of work (PoW) are two frequently used consensus methods.

2. Private Blockchain Networks

Private blockchains operate on closed networks and tend to work well for private
businesses and organizations. Companies can use private blockchains to customize
their accessibility and authorization preferences, network parameters, and other
important security options. Only one authority manages a private blockchain network.

3. Consortium Blockchains

Like permissioned blockchains, consortium blockchains have public and private

components, except multiple organizations will manage a single consortium blockchain
network. Although these blockchains can initially be more complex to set up, once they
are running, they can offer better security. Additionally, consortium blockchains are
optimal for collaboration with multiple organizations.

4. Hybrid Blockchains

Hybrid blockchains combine public and private blockchains. Some parts are public and
transparent, while others are private and accessible only to authorized and specific
participants. This makes hybrid blockchains ideal for use in cases where a balance
between transparency and privacy is required. For example, in supply chain
management, multiple parties can access certain information, but sensitive data can be
kept private.
Sidechains

Sidechains are different blockchains that run parallel to the main blockchain, allowing
for additional functionality and scalability. They enable developers to experiment with
new features and applications without affecting the main blockchain's integrity. For
example, sidechains can be used to create decentralized applications and implement
specific consensus mechanisms. They can also be used to handle transactions on the
main blockchain to reduce congestion and increase scalability.

Blockchain Layers

Blockchain layers refer to the concept of building multiple layers of blockchains on top of
each other. Each layer can have its own consensus mechanism, rules, and functionality
which can interact with other layers. This ensures greater scalability, as transactions
can be processed in parallel across different layers. For example, the Lightning
Network, built on top of the Bitcoin blockchain, is a second layer solution that enables
faster and cheaper transactions by creating payment channels between users.

Blockchain Origins
Key Milestones:

1.​ 1980s-1990s:
○​ David Chaum introduces concepts of cryptographic systems.
○​ Merkle Trees developed for efficient and secure data structures.
2.​ 2008:
○​ Satoshi Nakamoto’s Bitcoin whitepaper published.
○​ Introduces decentralized digital currency.
3.​ 2009:
○​ Bitcoin Genesis Block mined.
4.​ 2013:
○​ Vitalik Buterin proposes Ethereum for decentralized applications.

Philosophical Roots:

●​ Trustless systems: Eliminate reliance on centralized authorities.

●​ Decentralization: Empower participants directly.
●​ Transparency: Ensure visible and immutable records.
Blockchain Objectives
1.​ Transparency:
○​ Open ledgers enable public verification of transactions.
2.​ Security:
○​ Cryptographic methods ensure data integrity and prevent tampering.
3.​ Efficiency:
○​ Automate processes using smart contracts.
○​ Reduce intermediaries and associated costs.
4.​ Decentralization:
○​ Distribute control across participants.
5.​ Immutability:
○​ Data on the blockchain cannot be modified once written.

Blockchain Challenges
1.​ Scalability:
○​ Current blockchains struggle with high transaction volumes.
2.​ Energy Consumption:
○​ PoW mechanisms consume vast energy.
3.​ Regulation:
○​ Unclear and evolving legal frameworks.
4.​ Interoperability:
○​ Difficulties in communication between different blockchains.
5.​ User Experience:
○​ Complex interfaces hinder adoption.
6.​ Security Risks:
○​ 51% attacks, smart contract vulnerabilities.
1.​ Header: It is used to identify the particular block in the entire blockchain. It
handles all blocks in the blockchain. A block header is hashed periodically by
miners by changing the nonce value as part of normal mining activity, also
Three sets of block metadata are contained in the block header.
2.​ Previous Block Address/ Hash: It is used to connect the i+1th block to the
ith block using the hash. In short, it is a reference to the hash of the previous
(parent) block in the chain.
3.​ Timestamp: It is a system that verifies the data into the block and assigns a
time or date of creation for digital documents. The timestamp is a string of
characters that uniquely identifies the document or event and indicates when
it was created.
4.​ Nonce: A nonce number which is used only once. It is a central part of the
proof of work in the block. It is compared to the live target if it is smaller or
equal to the current target. People who mine, test, and eliminate many Nonce
per second until they find that Valuable Nonce is valid.
5.​ Merkel Root: It is a type of data structure frame of different blocks of data. A
Merkle Tree stores all the transactions in a block by producing a digital
fingerprint of the entire transaction. It allows the users to verify whether a
transaction can be included in a block or not.