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Block chain Technologies JNTUK syllabus, Study notes of Information Technology

Jawaharlal Nehru Technological University, KakinadaInformation Technology

All the syllabus of block chain technologies of JNTUK

Typology: Study notes

2023/2024

Available from 02/13/2025

paladugu-venkateswarlu
paladugu-venkateswarlu 🇮🇳

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BLOCK CHAIN TECHCNOLOGIES
UNIT-1
INTRODUCTION:
Blockchain is a distributed ledger technology that allows multiple parties to maintain a
shared database without relying on a central authority. It is the underlying technology
behind cryptocurrencies like Bitcoin, but its applications go far beyond digital currencies.
"Blockchain is a revolutionary technology that serves as a secure and decentralized digital
ledger. Unlike traditional systems controlled by central authorities, blockchain operates
on a network of computers distributed worldwide. It's best known for powering
cryptocurrencies like Bitcoin, but its applications extend far beyond digital money. At its
core, blockchain ensures trust, transparency, and immutability in transactions, making it a
promising solution for a wide range of industries, from finance and supply chain
management to healthcare and voting systems."
BASIC IDEAS BEHIND BLOCK CHAIN:
Blockchain is a method of recording information that makes it impossible or difficult for the
system to be changed, hacked, or manipulated. A blockchain is a distributed ledger that
duplicates and distributes transactions across the network of computers participating in the
blockchain.
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BLOCK CHAIN TECHCNOLOGIES

UNIT- 1

INTRODUCTION:

Blockchain is a distributed ledger technology that allows multiple parties to maintain a shared database without relying on a central authority. It is the underlying technology behind cryptocurrencies like Bitcoin, but its applications go far beyond digital currencies. "Blockchain is a revolutionary technology that serves as a secure and decentralized digital ledger. Unlike traditional systems controlled by central authorities, blockchain operates on a network of computers distributed worldwide. It's best known for powering cryptocurrencies like Bitcoin, but its applications extend far beyond digital money. At its core, blockchain ensures trust, transparency, and immutability in transactions, making it a promising solution for a wide range of industries, from finance and supply chain management to healthcare and voting systems." BASIC IDEAS BEHIND BLOCK CHAIN: Blockchain is a method of recording information that makes it impossible or difficult for the system to be changed, hacked, or manipulated. A blockchain is a distributed ledger that duplicates and distributes transactions across the network of computers participating in the blockchain.

  1. Decentralization : Unlike traditional centralized systems (like banks or governments), blockchain operates on a decentralized network of computers (nodes). Each node stores a copy of the entire blockchain, ensuring that there is no single point of control or failure.
  2. Immutable Ledger : Once data is recorded on the blockchain, it is extremely difficult to alter or delete. This immutability is achieved through cryptographic techniques, making the blockchain a secure and tamper-resistant ledger.
  3. Transparency : The data on a blockchain is transparent and can be viewed by anyone with access to the network. This transparency can foster trust among participants.
  4. Security : Blockchain relies on cryptographic techniques to secure transactions and data. Transactions are bundled into blocks, and each block is linked to the previous one, forming a chain. This makes it very difficult for unauthorized parties to alter the data.
  5. Consensus Mechanisms : To add new transactions to the blockchain, the network must reach a consensus. Various consensus mechanisms, such as Proof of Work (PoW) and Proof of Stake (PoS), are used to validate and agree on transactions, ensuring the integrity of the ledger.
  6. Smart Contracts : Blockchain can execute self-executing contracts called smart contracts. These are programmable agreements with predefined rules and conditions. They automatically execute when the specified conditions are met.
  7. Use Cases : While cryptocurrencies remain the most well-known application, blockchain has applications in a wide range of industries, including finance, supply chain management, healthcare, voting systems, and more. It can streamline processes, reduce fraud, and increase transparency in various domains.
  8. Public vs. Private Blockchains : There are public blockchains (accessible to anyone, like Bitcoin and Ethereum) and private blockchains (restricted to a specific group or organization). Public blockchains are more decentralized and open, while private blockchains offer more control and privacy.
  9. Scalability and Energy Consumption : Blockchain faces challenges related to scalability and energy consumption, especially in the case of PoW-based systems like Bitcoin. Various projects are working on solutions to address these issues.
  1. Global Accessibility : Blockchain networks are accessible from anywhere with an internet connection, making them particularly valuable in cross-border transactions and international trade. This accessibility can improve financial inclusion for individuals in underserved regions.
  2. Tokenization of Assets : Blockchain enables the tokenization of physical and digital assets. This means that real estate, art, stocks, and other assets can be represented as digital tokens on the blockchain, making them more divisible and transferable.
  3. Data Privacy : While blockchain is transparent, it also allows for fine-grained control over data privacy. Private blockchains and permissioned networks enable organizations to share data selectively, maintaining confidentiality while benefiting from blockchain's other advantages.
  4. Innovation Ecosystem : The open nature of many blockchain platforms has led to a thriving ecosystem of developers and entrepreneurs creating new applications and services. This innovation has the potential to disrupt traditional industries and drive economic growth.
  5. Sustainability : Some blockchain networks are exploring more environmentally friendly consensus mechanisms, such as Proof of Stake (PoS), to address concerns about the energy consumption associated with mining in Proof of Work (PoW) systems like Bitcoin. INTRODUCTION TO CRYPTOGRAPHIC CONCEPTS REQUIRED: The art and science of concealing the messages to introduce secrecy in information security is recognized as cryptography. A message is plaintext (sometimes called cleartext). The process of disguising a message in such a way as to hide its substance is encryption. An encrypted message is ciphertext. Cryptographic concepts play a crucial role in blockchain technology, ensuring security, immutability, and trust in the decentralized ledger system.
  6. Hash Functions : ➢ Hash functions are a fundamental cryptographic concept in blockchain. ➢ They take an input (message) and produce a fixed-size string of characters, known as a hash value or digest. ➢ Hash functions in blockchain ensure data integrity and create a unique identifier for each block in the chain.
  1. Public Key Cryptography : ➢ Public key cryptography, also known as asymmetric cryptography, uses a pair of keys: a public key and a private key. ➢ The public key is used for encryption, while the private key is kept secret and used for decryption and digital signatures. ➢ In blockchain, public key cryptography provides secure and transparent transactions and wallet addresses.
  2. Digital Signatures : ➢ Digital signatures are created using the private key and are used to verify the authenticity and integrity of transactions. ➢ A sender signs a transaction with their private key, and the recipient can verify it using the sender's public key. ➢ This ensures that transactions are tamper-resistant and that they come from the rightful owner of the private key. **Two main concepts behind cryptography:
  3. Encryption:** Encryption is coding information in such a way that you and I cannot understand what is mean by just looking at it. 2. Decryption: The Krishna is the reviews of encryption i.e. Decoding of the coded information. ENCRYPTION: ➢ Converting plaintext to your random sequence of bits. ➢ He set an amount of info needed to obtain the information of the cryptographic algorithm. DECRYPTION: ➢ The invest process of encryption converting a random sequence of bits into a plaintext. ➢ A mathematical function that is a cryptographic algorithm which converts plain text into a normal text from a random sequence of bits.

BLOCK CHAIN or DISTRIBUTED TRUST: Blockchain --->is a complex technology, but its value proposition is very simple. Distributed trust --->this means you can trust the network, without trusting anyone - or anything on the network. Blockchain and distributed trust are closely related concepts, with blockchain technology being a key enabler of distributed trust. Let's explore both terms: Blockchain : ➢ Blockchain is a decentralized and distributed ledger technology that records transactions across multiple computers or nodes in a network. ➢ It uses cryptographic techniques to secure data and ensure its immutability, transparency, and integrity. ➢ Transactions are grouped into blocks, and each block is linked to the previous one, forming a chain. ➢ Blockchain technology is often associated with cryptocurrencies like Bitcoin, but it has broader applications in various industries, such as finance, supply chain, healthcare, and more. ➢ It eliminates the need for centralized intermediaries by allowing trust to be established among participants in a peer-to-peer network. Distributed Trust : ➢ Distributed trust refers to the establishment of trust and confidence in a decentralized network without relying on a single central authority or intermediary.

➢ In a distributed trust system, trust is distributed across multiple nodes or participants who collectively validate and verify transactions. ➢ Trust is established through consensus mechanisms, cryptographic techniques, and the transparency of the ledger. ➢ Distributed trust is a fundamental concept in blockchain technology, as it enables transactions to be verified and accepted by the network without the need for a central entity. CURRENCY: Currency in the context of blockchain typically refers to digital or cryptocurrencies that are native to a particular blockchain network. These digital currencies are used as a medium of exchange within the blockchain ecosystem and have unique characteristics due to the underlying technology. Here's an explanation of currency in blockchain:

  1. Digital Currencies : ➢ Cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and many others are examples of digital currencies that exist within blockchain networks. ➢ These digital currencies are represented as tokens or coins on the blockchain and can be used for various purposes, including online transactions, investments, and as a store of value.
  2. Native Tokens : ➢ Each blockchain network typically has its own native cryptocurrency. For example, Bitcoin is the native cryptocurrency of the Bitcoin blockchain, while Ether (ETH) is the native cryptocurrency of the Ethereum blockchain. ➢ These native tokens serve as incentives for network participants, such as miners or validators, who help secure and maintain the blockchain.
  3. Decentralization : ➢ One of the defining features of blockchain-based currencies is decentralization. They are not controlled by any central authority, such as a government or central bank. ➢ Instead, they operate on a peer-to-peer network of computers (nodes) that collectively validate and record transactions. This decentralization contributes to the trust and security of the currency.

Cryptocurrency is a type of digital or virtual currency that operates on blockchain technology. It is one of the most well-known and widely adopted use cases for blockchain.

  1. Digital Tokens : Cryptocurrencies are represented as digital tokens or coins on a blockchain. Each cryptocurrency has its own unique characteristics, use cases, and underlying technology. Examples include Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and many others.
  2. Blockchain Technology : Cryptocurrencies leverage blockchain technology for their creation, management, and transactions. The blockchain is a distributed and decentralized ledger that records all cryptocurrency transactions in a transparent and immutable manner.
  3. Decentralization : Cryptocurrencies are typically decentralized, meaning they are not controlled by a central authority like a government or a central bank. Instead, they rely on a network of nodes (computers) that validate and record transactions through a consensus mechanism.
  4. Security : Cryptocurrencies use cryptographic techniques to secure transactions and control the creation of new units. Public and private keys are used for ownership and transaction verification. This security makes it extremely difficult for unauthorized parties to alter transactions or steal funds.
  5. Ownership : To own and use cryptocurrencies, individuals need a digital wallet. A wallet is a software application or hardware device that stores the private keys required to access and manage the digital currency.
  6. Peer-to-Peer Transactions : Cryptocurrencies enable peer-to-peer (P2P) transactions without the need for intermediaries like banks. Users can send and receive funds directly to and from one another, increasing the speed and reducing the cost of transactions, especially for cross-border transfers.
  1. Mining and Validation : Many cryptocurrencies, like Bitcoin, use a process called mining to validate and add new transactions to the blockchain. Miners solve complex mathematical puzzles, and the first one to solve it gets the right to add a new block of transactions to the blockchain. This process also helps secure the network.
  2. Volatility : Cryptocurrencies are known for their price volatility. Their values can fluctuate significantly over short periods due to factors like market sentiment, adoption, regulatory developments, and external events.
  3. Use Cases : Cryptocurrencies have various use cases, including digital payments, investments, remittances, and as a means of transferring value across borders. Some cryptocurrencies also enable programmable money through smart contracts, allowing for more complex financial transactions.
  4. Regulatory Landscape : The regulatory environment for cryptocurrencies varies by country and is evolving. Some countries have embraced cryptocurrencies, while others have imposed restrictions or bans. HOW A CRYPTOCURRENCY WORKS: Cryptocurrencies (which are completely digital) are generated through a process called “mining”. This is a complex process. Basically, miners are required to solve certain mathematical puzzles over specially equipped computer systems to be rewarded with bitcoins in exchange.
  5. Digital Wallets : ➢ Users begin by creating digital wallets, which are software applications or hardware devices that store cryptographic keys. These keys consist of a public key (used as an address for receiving funds) and a private key (used to access the funds).
  6. Transactions : ➢ When a user wants to send cryptocurrency to another user, they create a transaction. This transaction includes the recipient's public key (wallet address), the amount of cryptocurrency to be sent, and a digital signature created using the sender's private key.
  7. Broadcasting the Transaction : ➢ The sender broadcasts the signed transaction to the cryptocurrency network. This transaction is then propagated to all nodes (computers) participating in the network.
  1. Peer-to-Peer Transactions : ➢ Users can transact directly with one another without relying on intermediaries, such as banks. This makes cryptocurrency ideal for cross-border transfers and enables faster and more cost-effective transactions. FINANCIAL SERVICES: Blockchain can streamline banking and lending services , reducing counterparty risk, and decreasing issuance and settlement times. It allows: Authenticated documentation and KYC/AML data, reducing operational risks and enabling real-time verification of financial documents. Blockchain technology has the potential to revolutionize financial services in various ways by enhancing security, transparency, efficiency, and reducing costs.
  1. Digital Currencies and Payments : ➢ Cryptocurrencies like Bitcoin and stablecoins provide an alternative to traditional fiat currencies for digital transactions. They offer faster and cheaper cross-border payments. ➢ Central banks are exploring the use of blockchain for central bank digital currencies (CBDCs) to modernize monetary systems.
  2. Smart Contracts : ➢ Smart contracts are self-executing agreements with the terms of the contract directly written into code. They automate financial processes, reducing the need for intermediaries. ➢ They can be used for various financial services, including lending, insurance, and derivatives trading.
  3. Tokenization of Assets : ➢ Blockchain enables the creation of digital tokens that represent ownership of physical or financial assets, such as real estate, stocks, bonds, or commodities. ➢ These tokens can be traded on blockchain-based marketplaces, increasing liquidity and reducing the complexity of asset ownership.
  4. Identity Verification : ➢ Blockchain can improve identity verification and Know Your Customer (KYC) processes, reducing fraud and streamlining onboarding for financial institutions. ➢ Users can have control over their identity data and share it securely when needed.
  5. Cross-Border Transactions : ➢ Blockchain simplifies cross-border transactions by providing a transparent and immutable ledger that can be accessed by all parties involved. ➢ It reduces settlement times and minimizes foreign exchange and transaction costs.
  6. Supply Chain Finance : ➢ Blockchain can enhance transparency and traceability in supply chains, making supply chain finance more efficient. ➢ Financial institutions can provide financing to suppliers based on real-time data from the blockchain.
  1. Market Creation : Users can create prediction markets for specific events or outcomes related to Bitcoin. These events could include Bitcoin's price at a specific date, whether it will reach a certain price level, or other related events like the approval of a Bitcoin ETF.
  2. Betting : Participants can place bets by purchasing tokens that represent their predictions. For example, if someone believes Bitcoin will exceed $50,000 by a certain date, they can buy tokens that represent this outcome.
  3. Trading : Participants can also trade these prediction tokens with other users on the platform. Prices for these tokens fluctuate based on market sentiment and other factors. Traders can profit by buying low and selling high.
  4. Outcome Resolution : When the specified event or date arrives, the prediction market determines the outcome. This is usually done through an oracle or some trusted source of information, such as a reputable cryptocurrency exchange.
  5. Profit or Loss : Participants either profit or incur losses based on the accuracy of their predictions. Those who correctly predicted the outcome receive a payout in accordance with the odds at which they made their bets.

THE END