UNIT 1

INTRODUCTION TO
BLOCKCHAIN
 BLOCKCHIA
Nis a distributed database or ledger
• A blockchain
shared across a computer network's nodes.
They are best known for their crucial role in
cryptocurrency systems, maintaining a secure and
decentralized record of transactions, but they are
not limited to cryptocurrency uses. Blockchains can
be used to make data in any industry immutable—
meaning it cannot be altered.

• Since a block can’t be changed, the only trust

needed is at the point where a user or program
enters data. This reduces the need for trusted third
parties, such as auditors or other humans, who add
costs and can make mistakes.
 HISTORY OF
BLOCKCHAIN

• 1979: Merkle Tree introduced by Ralph Merkle.

• 1982: David Chaum develops digital cash concepts.
• 1991: Haber & Stornetta propose timestamping digital documents.
 HISTORY OF BLOCKCHAIN -
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• 1997: Hashcash and PoW algorithm introduced by Adam Back.

• 2008: Satoshi Nakamoto publishes Bitcoin whitepaper.

• 2009: Bitcoin launched, Genesis block mined.

• 2010: First real-world Bitcoin transaction (10,000 BTC for pizza).

• 2013: Bitcoin’s value exceeds $1 billion.

• 2014: Ethereum proposed by Vitalik Buterin.

• 2015: Ethereum Frontier launched.

• 2017: Bitcoin reaches $20,000; EOS blockchain introduced.

• 2020: Ethereum 2.0 launched; blockchain interest grows in AI and

stablecoins.

• 2021: Bitcoin hits $68,789; NFTs and DeFi explode.

• 2023: Blockchain adoption increases in industries like gaming, healthcare,

TYPES OF
BLOCKCHAIN
 TYPES OF BLOCKCHAIN -
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1. PUBLIC
BLOCKCHAIN:
• Fully Decentralized: No single entity controls the network.

• Open to All: Anyone can join the network and participate in transaction validation.

• Transparent: All transactions are visible to everyone on the network.

• Security: Highly secure due to consensus mechanisms like PoW (Proof of Work).

• Examples:

• Bitcoin: A decentralized digital currency.

• Ethereum: A platform for smart contracts and decentralized applications (DApps).

 TYPES OF BLOCKCHAIN -
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2. PRIVATE BLOCKCHAIN:

• Centralized Control: Only authorized participants can join the network.

• Access Restricted: Network participants must be invited and validated.

• Faster Transactions: Due to fewer nodes and consensus mechanisms, transactions are

quicker.

• Enhanced Privacy: Data is not publicly visible, only accessible to authorized parties.

• Examples:

• Hyperledger: A project from the Linux Foundation for enterprise-grade blockchain

solutions.

• Ripple: A network used by financial institutions for secure, real-time global payments.
 TYPES OF BLOCKCHAIN -
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3. CONSORTIUM BLOCKCHAIN

• Partially Decentralized: Controlled by a group of organizations rather than one entity.

• Limited Access: Only approved participants from a consortium can join the network.

• Faster and More Scalable: Less congestion with fewer participants.

• Used for Collaborative Projects: Often used for supply chains, finance, or joint ventures.

• Examples:

• R3 Corda: Designed for financial institutions to share data.

• Energy Web Foundation: A consortium focused on blockchain applications in energy

markets.
 TYPES OF BLOCKCHAIN -
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4. HYBRID BLOCKCHAIN

• Combination of Public and Private: Combines features of both public and private blockchains.

• Control Over Permissions: Organizations can control access while still benefiting from

decentralized features.

• Flexibility: Offers flexibility in managing public and private data.

• Transparency and Privacy: Can share certain data publicly while keeping sensitive data private.

• Examples:

• Dragonchain: Originally developed by Disney, it allows for private and public transactions.

• IBM Food Trust: A supply chain platform combining public transparency and private control.
CONSENSU
S
 CONSENSUS

• Consensus refers to the process by which all participants in a blockchain network

agree on the validity of transactions.

• It ensures that all nodes have the same version of the distributed ledger,

preventing conflicts and discrepancies.

• Blockchain networks rely on consensus mechanisms to maintain security, trust,

and decentralization.
• Consensus eliminates the need for central authorities, enabling peer-to-peer

(P2P) transactions.
• Example: The Bitcoin network uses consensus mechanisms to validate
transactions and add new blocks to the blockchain.
 CONSENSUS-
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TYPES OF CONSENSUS
MECHANISMS:
• Different consensus models ensure the accuracy, security, and decentralization of

the blockchain.
Common Consensus Types:
• Proof of Work (PoW): Miners compete to solve complex puzzles to validate

transactions.
• Proof of Stake (PoS): Validators are chosen based on the number of coins they

hold and are willing to "stake."

• Delegated Proof of Stake (DPoS): Stakeholders vote for delegates who

validate transactions on their behalf.

• Practical Byzantine Fault Tolerance (PBFT): Nodes work together to agree on

the validity of transactions through a series of rounds.

 CONSENSUS-
PROOF OF WORK CONTD
• Proof of(POW):
Work (PoW) is the first and most widely used consensus mechanism in
blockchain networks.
• Miners solve cryptographic puzzles to validate transactions and create new
blocks.
• PoW ensures security by making it computationally expensive to alter the
blockchain.
PROOF OF STAKE
• Example: Bitcoin uses PoW to secure its network and ensure transaction
• Proof of(POS):
Stake (PoS) is a consensus mechanism that selects validators based on
validation.
the amount of cryptocurrency they hold and are willing to "stake."
• PoS is more energy-efficient than PoW, as it doesn't require complex calculations
to secure the network.
• Validators are chosen randomly, and they verify transactions and add blocks to
the blockchain.
• Example: Ethereum 2.0 uses PoS to improve scalability and reduce energy
 CONSENSUS-
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DELEGATED PROOF OF STAKE
(DPOS):
• Delegated Proof of Stake (DPoS) allows token holders to vote for delegates or

validators to confirm transactions on their behalf.

• DPoS provides faster transaction processing and scalability by limiting the

number of validating nodes.

• The voting process ensures that delegates are incentivized to act in the network’s

best interest.
• DPoS can lead to centralization if a small group of delegates dominate the

network.
• Example: EOS and Steem use DPoS to achieve faster transaction speeds and

scalability.
 CONSENSUS-
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PRACTICAL BYZANTINE FAULT TOLERANCE
(PBFT):
• Practical Byzantine Fault Tolerance (PBFT) is a consensus mechanism designed for

permissioned blockchains, where participants are known and trusted.

• PBFT aims to tolerate faults and ensure agreement even when some nodes fail or

behave maliciously.
• It uses a series of communication rounds between nodes to reach consensus and

finalize transactions.
• PBFT is highly efficient and scalable for enterprise use cases.

• Example: Hyperledger Fabric uses PBFT to achieve consensus in permissioned

blockchain networks.
CAP THEOREM
 CAP
THEOREM
• CAP Theorem (Consistency, Availability, Partition Tolerance) is a concept

from distributed systems.

• Proposed by Eric Brewer in 2000, it asserts that a distributed system can

achieve only two of the three properties:

• Consistency: Every read returns the most recent write.
• Availability: Every request (read or write) will return a response, even if it's not

the most recent.

• Partition Tolerance: The system will continue to function even if there is a

network partition (communication break between nodes).

• Blockchain systems, especially decentralized ones, are impacted by CAP when

managing data across multiple nodes.

 CAP THEOREM -
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CONSISTENCY:
• Consistency in blockchain means that all nodes in the network have the same

data at any given time.

• Achieving consistency often requires delays or additional processing time to

ensure the entire network is updated.

• Blockchain uses consensus algorithms (like Proof of Work or Proof of Stake) to

maintain consistency.
• Example:
• Bitcoin: Ensures consistency by requiring miners to agree on the validity of

transactions through a consensus mechanism before adding them to the

blockchain.
 CAP THEOREM -
CONTD
AVAILABILITY:
• Availability ensures that the blockchain network remains functional and
responsive.
• Even if some nodes fail or disconnect, the network continues to process

transactions.
• However, availability may sometimes be compromised when prioritizing
consistency (e.g., fork or delays during high network congestion).
• Example:
• Ethereum: Even during network congestion or attacks, Ethereum remains

available to process transactions, though transaction speeds may vary.

 CAP THEOREM -
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PARTITION
TOLERANCE:
• Partition Tolerance is crucial for blockchain networks, especially decentralized
ones.
• Blockchains ensure that the system remains operational even during network

splits or failures, continuing to validate transactions independently.

• Blockchains are designed to tolerate partitions by allowing nodes to continue

working, even if they can't immediately communicate with others.

• Example:
• Bitcoin: Can still mine blocks and add transactions even during temporary

network partitions, as long as the network re-synchronizes later.

 DECENTRALIZATION USING
WHAT IS BLOCKCHAIN
DECENTRALIZATION?
• Decentralization is a fundamental principle of blockchain technology.
• In a decentralized system, no single entity or authority has control over the network.
• Blockchain enables decentralization by distributing data across a network of independent

nodes.
• It eliminates the need for intermediaries, empowering users with direct control over their

transactions.
• Decentralization ensures security, transparency, and trust within the blockchain network.
 DECENTRALIZATION USING BLOCKCHAIN -
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HOW BLOCKCHAIN ACHIEVES
DECENTRALIZATION?
• Distributed Ledger: Blockchain maintains a distributed ledger where copies of the data are

stored across multiple nodes, rather than a central server.

• Consensus Mechanisms: Blockchain uses consensus algorithms like Proof of Work (PoW)

and Proof of Stake (PoS) to ensure agreement across the network without a central authority.
• P2P Network: Blockchain operates on a peer-to-peer (P2P) network, where each participant

has equal rights to access, share, and validate data.

• Examples:

Bitcoin: The Bitcoin network is decentralized through miners and nodes distributed
worldwide.
Ethereum: Ethereum’s decentralized applications (DApps) run on its blockchain, ensuring
control is spread across the network.
 DECENTRALIZATION USING BLOCKCHAIN -
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BENEFITS OF DECENTRALIZATION IN
BLOCKCHAIN
• Security: Decentralization makes blockchain networks resistant to single points of failure

and hacking attempts.

• Transparency: All transactions on a blockchain are visible to all participants, ensuring

transparency without the need for third-party intermediaries.

• No Central Authority: Users retain control over their transactions, reducing the risk of

censorship or fraud.
• Resilience: The network continues to function even if a portion of nodes go down or are

compromised.
 BLOCKCHAIN AND FULL
ECOSYSTEM DECENTRALIZATION
• Blockchain's Role in Decentralization: Blockchain technology decentralizes various layers of the

ecosystem, including storage, communication, and processing.

• Challenge with Storing Data on Blockchain: Storing large data like images or files directly on

blockchain is inefficient due to size and performance limitations.

• Alternative Storage Solutions: Distributed Hash Tables (DHTs), IPFS, and Filecoin offer

decentralized storage solutions.

• Decentralized Communication: Mesh networks and blockchain-based systems like Firechat

provide decentralized alternatives to traditional communication services.

• Computing Power and Decentralization: Blockchain networks like Ethereum offer decentralized

platforms for smart contracts and processing power.

 BLOCKCHAIN AND FULL
ECOSYSTEM DECENTRALIZATION
- CONTD
 BLOCKCHAIN AND FULL
ECOSYSTEM DECENTRALIZATION
- CONTD
DECENTRALIZED DATA STORAGE AND COMMUNICATION

• Blockchain Storage Limitations: While blockchain is great for small data, it cannot handle large

files like images or videos efficiently.

• Distributed Hash Tables (DHT): Used in systems like BitTorrent to store and retrieve data across

distributed networks.
• IPFS: Decentralized file system that uses Kademlia DHT and Merkle DAGs for efficient data

storage and retrieval.

• Filecoin: Incentivizes users to store data using the Bitswap protocol to ensure data retention

and availability.
• Firechat and Mesh Networks: Firechat enables peer-to-peer communication without an internet

connection, a decentralized communication solution.

 BLOCKCHAIN AND FULL
ECOSYSTEM DECENTRALIZATION
- CONTD
BLOCKCHAIN IN DECENTRALIZED COMPUTING AND
STORAGE
• Ethereum and Decentralized Computing: Blockchain networks like Ethereum enable
decentralized smart contracts, facilitating autonomous operations.
• Decentralized Applications (dApps): Ethereum and other platforms offer decentralized

applications that run without relying on centralized servers.

• IPFS and BigChainDB: IPFS and BigChainDB provide decentralized storage solutions that

complement blockchain’s limited storage capacity.

• Swarm: A decentralized storage and communication system designed to support Ethereum’s

decentralized ecosystem.
 PLATFORMS FOR
1. DECENTRALIZATION
ETHEREUM
• Purpose: Decentralized computing platform and smart contract functionality.
• Supports decentralized applications (dApps).
• Enables smart contracts, allowing trustless execution of business logic.
• Ethereum Virtual Machine (EVM) for executing smart contracts.
• Use Cases: Decentralized finance (DeFi), tokenization, and decentralized autonomous

2. organizations
FILECOIN (DAOs).
• Purpose: Decentralized storage network.
• Built on top of IPFS, but with added incentives for file storage.

• Uses a proof-of-replication and proof-of-spacetime consensus mechanism.

• Users earn FIL tokens for storing data.
• Use Cases: Data storage, backup, and cloud storage solutions.
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3. IPFS (INTERPLANETARY FILE
SYSTEM)
• Purpose: Decentralized file storage system.
• Distributed file system using Merkle DAGs for efficient data retrieval.
• Decentralizes the storage and sharing of files across a network.
• Enables content addressing where files are identified by their hash.
• Use Cases: Decentralized web hosting, peer-to-peer file sharing, and archiving.

4. BIGCHAINDB
• Purpose: Scalable decentralized database.
• Provides decentralized distributed ledger technology (DLT) with database capabilities.

• Focuses on high throughput, low latency, and low-cost transactions.

• Supports smart contracts and asset tokenization.
• Use Cases: Supply chain management, asset tracking, and decentralized applications.
 PLATFORMS FOR DECENTRALIZATION -
5. SWARM
CONTD
(ETHEREUM)
• Purpose: Decentralized storage and communication platform.
• Part of the Ethereum ecosystem.
• Provides decentralized storage and a content distribution network.
• Can be used for data hosting, backup, and distribution of decentralized applications.
• Use Cases: Web hosting for dApps, decentralized content delivery networks (CDNs), and

6. solutions.
backup

•MAIDSAFE
Purpose: Decentralized internet platform.
• Aims to provide a completely decentralized version of the internet.

• Uses Self-Authenticating Data (SAD) for storage, ensuring users have control over their data.
• Decentralized cloud storage and communication.
• Use Cases: Decentralized social media, internet browsing, and file storage.
 PLATFORMS FOR DECENTRALIZATION -
5. SWARM
CONTD
(ETHEREUM)
• Purpose: Decentralized storage and communication platform.
• Part of the Ethereum ecosystem.
• Provides decentralized storage and a content distribution network.
• Can be used for data hosting, backup, and distribution of decentralized applications.
• Use Cases: Web hosting for dApps, decentralized content delivery networks (CDNs), and

6. solutions.
backup

•MAIDSAFE
Purpose: Decentralized internet platform.
• Aims to provide a completely decentralized version of the internet.

• Uses Self-Authenticating Data (SAD) for storage, ensuring users have control over their data.
• Decentralized cloud storage and communication.
• Use Cases: Decentralized social media, internet browsing, and file storage.
 PLATFORMS FOR DECENTRALIZATION -
7.
CONTD
POLKADOT
• Purpose: Multi-chain blockchain platform for interoperability.
• Allows different blockchains (parachains) to interoperate and share information.
• Supports decentralized governance through Nominated Proof of Stake (NPoS).
• Ensures scalability by connecting specialized blockchains to a single network.
• Use Cases: Cross-chain communication, decentralized finance (DeFi), and interoperability

between different blockchain ecosystems.

8.
COSMOS
• Purpose: Interoperability and scalability for decentralized blockchains.
• Allows the creation of independent blockchains (zones) that can communicate via the Cosmos

Hub.
• Uses the Tendermint BFT consensus for fast transaction finality.
• Focuses on creating an internet of blockchains.
 PLATFORMS FOR DECENTRALIZATION -
9.
CONTD
HYPERLEDGER
• Purpose: Open-source blockchain framework for enterprises.
• A suite of modular frameworks and tools for building decentralized, permissioned blockchain

solutions.
• Hyperledger Fabric supports private chains for enterprises with configurable consensus

mechanisms.
• Provides privacy, scalability, and security for business applications.
• Use10.
Cases: Supply chain, healthcare, financial services, and digital identity management.
•ARWEAVE
Purpose: Permanent and decentralized storage network.
• Uses blockweave to ensure data is stored permanently.
• Focuses on providing a permanent, immutable record of information.

• Data is stored in a decentralized manner, and users can pay a one-time fee for storage.
• Use Cases: Archiving data, preserving digital history, and decentralized web hosting.
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