Introduction and Fundamentals
of Blockchain Technology
Dr. Ishan Bhardwaj
Course Outcome
What is Blockchain?
• A distributed, decentralized, public ledger that records transactions
across many computers. It's a chain of blocks, where each block
contains a set of transactions.
Key Features:
• Decentralized: No single entity controls the network.
• Distributed: Data is replicated across multiple nodes.
• Immutable: Once a transaction is recorded, it cannot be altered or
deleted.
• Transparent: All participants can view the ledger (depending on
permissions).
How Blockchain Works
•Transaction Request: A user initiates a transaction.
•Transaction Grouping: The transaction is grouped with other transactions
into a block.
•Block Creation: A cryptographic "hash" is generated for the block, linking it
to the previous block.
•Network Validation: The block is broadcast to the network, and nodes
validate the transactions.
•Block Addition: Once validated, the block is added to the chain.
•Transaction Confirmation: The transaction is confirmed and recorded on
the blockchain.
Key Concepts - Hashing
A cryptographic hash function takes an input (data) and produces a fixed-size
output (hash). Even a small change in the input results in a drastically different
hash.
•Importance:
•Data Integrity: Ensures that data has not been tampered with.
•Block Linking: Connects blocks together, creating the chain.
Consensus Mechanisms
How the network agrees on the validity of transactions and the order of
blocks.
Examples:
•Proof-of-Work (PoW): Miners compete to solve complex mathematical
problems to validate transactions and add blocks (e.g., Bitcoin).
•Proof-of-Stake (PoS): Validators are chosen based on the amount of
cryptocurrency they hold (e.g., Ethereum 2.0).
Types of Blockchain
•Public Blockchains: Open to everyone, anyone can participate (e.g.,
Bitcoin, Ethereum).
•Private Blockchains: Controlled by a single organization, restricted access.
•Permissioned Blockchains: A hybrid approach, controlled by a group of
organizations, with selective access.
Use Cases of Blockchain
•Finance: Cryptocurrency, payments, remittances, decentralized finance
(DeFi).
•Supply Chain: Tracking goods, ensuring authenticity.
•Healthcare: Securely storing and sharing medical records.
•Voting: Transparent and tamper-proof voting systems.
•Digital Identity: Managing and verifying identities.
•Other: NFTs, intellectual property management, etc.
Benefits of Blockchain
•Security: Immutability makes it difficult to tamper with data.
•Transparency: All participants can view the ledger (depending on
permissions).
•Efficiency: Streamlined processes, reduced intermediaries.
•Decentralization: No single point of failure or control.
•Cost Reduction: Lower transaction fees, reduced administrative overhead.
Challenges of Blockchain
•Scalability: Handling a large number of transactions efficiently.
•Regulation: Lack of clear regulatory frameworks.
•Security Concerns: Smart contract vulnerabilities, 51% attacks (for PoW).
•Energy Consumption: High energy usage for PoW blockchains.
•Complexity: Understanding and implementing blockchain technology can
be challenging.
