PART – A ( MANDATORY 5 QUESTIONS )(10*5 = 50)
01. Describe the fields of block in blockchain with a neat diagram.
- Diagram of blockchain and block
- Define the components
- Explain and brief out on the components
- Overall gist of block
Slide 8, 12, 13, 53, 55 for diagram
Slide 60 - 64
Slide 52 – 55
Pdf ( Technologies borrowed in block chain)
02. (a) What is double-spending problem ? Briefly discuss how the double
spending problem occurs.
Double spending is a problem in digital currency systems where a user can spend
the same digital coin twice. This is possible because digital currency is not physical,
and so it can be easily copied.
In a traditional currency system, double spending is prevented by a central authority,
such as a bank, which keeps track of who owns what money. If someone tries to
spend the same dollar twice, the bank will know and will refuse to process the
second transaction.
In a decentralized digital currency system, there is no central authority to keep track
of who owns what coins. This means that anyone can try to spend the same coin
twice.
There are a few ways to prevent double spending in a decentralized digital currency
system. One way is to use a blockchain. A blockchain is a public ledger of all
cryptocurrency transactions. When a user makes a transaction, it is added to the
blockchain. The blockchain is secured by cryptography, so it is very difficult to alter
or counterfeit.
Another way to prevent double spending is to use a proof-of-work system. A proofof-work system requires users to solve a computationally difficult problem in order to
add a block to the blockchain. This makes it very expensive and time-consuming to
try to double spend coins.
Double spending is a serious problem that could undermine the trust in a digital
currency system. However, there are a number of ways to prevent double spending,
and these methods are becoming increasingly effective.
Here are some of the ways double spending can occur:
•
Broadcasting conflicting transactions. A user could broadcast two different
transactions that spend the same coin. If one of these transactions is included
in the blockchain, the other transaction will be rejected.
•
Modifying a blockchain. A user could modify a blockchain to remove a
transaction that spent a coin that they still want to spend. This is a more
difficult attack to carry out, but it is possible if a user has control of more than
50% of the mining power on the network.
Using a stolen private key. If a user steals the private key for a wallet, they
can spend the coins in that wallet without the owner's permission. This is not
technically double spending, but it has the same effect.
•
Double spending attacks can be prevented by using a number of techniques,
including:
•
•
•
Using a blockchain. A blockchain makes it very difficult to modify transactions
or the blockchain itself.
Requiring confirmations. Most digital currency systems require a certain
number of confirmations before a transaction is considered to be final. This
helps to reduce the risk of double spending attacks.
Using a digital signature. A digital signature makes it possible to verify that a
transaction was authorized by the owner of the coins being spent.
Double spending is a serious problem, but it is not insurmountable. By using a
combination of techniques, it is possible to make digital currency systems very
secure.
(b) Explain the hyper ledger fabric and hyper ledger composer.
01. Pdf ( Technologies borrowed in block chain)
02. Hyperledger Fabric is an open source, permissioned blockchain framework for
developing enterprise applications. It is one of the most popular blockchain platforms
in the world, and is used by a wide range of organizations, including banks,
insurance companies, and governments.
Hyperledger Composer is a tool that makes it easier to develop applications on top
of Hyperledger Fabric. It provides a graphical user interface (GUI) that allows you to
create a business network model, which is a high-level description of your
application. Composer then generates the code that you need to deploy your
application to a Hyperledger Fabric network.
Hyperledger Fabric
Hyperledger Fabric is a modular blockchain framework that can be used to build a
wide variety of applications. It is based on the concept of a channel, which is a
private blockchain network that is owned and managed by a group of organizations.
Channels can be used to share data and transactions between organizations, while
keeping the data private from other organizations.
Hyperledger Fabric uses a smart contract language called Chaincode to implement
the business logic of your application. Chaincode is written in Golang, and can be
deployed to the blockchain network as a set of modules.
Hyperledger Composer
Hyperledger Composer is a tool that makes it easier to develop applications on top
of Hyperledger Fabric. It provides a graphical user interface (GUI) that allows you to
create a business network model, which is a high-level description of your
application. Composer then generates the code that you need to deploy your
application to a Hyperledger Fabric network.
The business network model is a collection of assets, participants, and transactions.
Assets are the data that is stored on the blockchain. Participants are the
organizations that own and use the blockchain network. Transactions are the
operations that are performed on the blockchain.
Composer generates the code for your application in two parts:
•
•
The business network definition is a JSON file that describes the business
network model.
The business network code is a set of TypeScript files that implement the
business logic of your application.
The business network definition and the business network code are then deployed to
a Hyperledger Fabric network.
Benefits of using Hyperledger Fabric and Hyperledger Composer
• Security: Hyperledger Fabric is a permissioned blockchain, which means that
only authorized organizations can join the network. This makes it ideal for
applications that require data privacy and security.
• Scalability: Hyperledger Fabric is designed to scale to a large number of
nodes and transactions. This makes it ideal for applications that need to
handle a high volume of data.
•
Flexibility: Hyperledger Fabric is a modular framework that can be customized
to meet the specific needs of your application.
• Community: Hyperledger Fabric is a community-driven project with a large
and active community of developers. This means that there is a lot of support
available if you need help with your application.
Drawbacks of using Hyperledger Fabric and Hyperledger Composer
• Complexity: Hyperledger Fabric is a complex framework, and it can be difficult
to learn and use.
• Cost: Hyperledger Fabric is an open source project, but there are costs
associated with developing and deploying applications on top of it.
•
Lack of interoperability: Hyperledger Fabric is not interoperable with other
blockchain platforms. This means that you cannot easily transfer data and
transactions between Hyperledger Fabric and other blockchain networks.
Overall, Hyperledger Fabric and Hyperledger Composer are a powerful combination
that can be used to develop secure, scalable, and flexible blockchain applications.
However, it is important to be aware of the complexity and cost associated with using
this platform.
03. Explain Proof of work model.
Sure. Proof of work (PoW) is a consensus mechanism used by many blockchain
networks to validate transactions and add new blocks to the chain. In a PoW system,
miners compete to solve a computationally difficult puzzle. The first miner to solve
the puzzle is rewarded with a block reward, which is typically a cryptocurrency. The
solved puzzle is then added to the blockchain, which secures the network and
prevents double-spend attacks.
Here is how PoW works in more detail:
1. Miners receive a list of transactions that need to be added to the blockchain.
2. Miners use their computers to solve a computationally difficult puzzle.
3. The first miner to solve the puzzle broadcasts their solution to the rest of the
network.
4. The rest of the network verifies the solution and adds the block to the
blockchain.
5. The miner who solved the puzzle is rewarded with a block reward.
PoW is a very secure consensus mechanism, but it is also very energy-intensive.
This is because miners need to use a lot of computing power to solve the puzzles.
As a result, PoW networks can consume a lot of energy.
There are a number of alternative consensus mechanisms, such as proof of stake
(PoS), that are less energy-intensive. However, PoW remains the most widely used
consensus mechanism for blockchain networks.
Here are some of the benefits of PoW:
•
Security: PoW is a very secure consensus mechanism. It is very difficult for an
attacker to control more than 50% of the network's mining power, which is
required to launch a successful attack.
•
•
Decentralization: PoW networks are decentralized. There is no central
authority that controls the network. This makes it very difficult for anyone to
censor or manipulate the network.
Transparency: PoW networks are transparent. All transactions on the network
are public and can be verified by anyone.
Here are some of the drawbacks of PoW:
•
Energy consumption: PoW networks can consume a lot of energy. This is
because miners need to use a lot of computing power to solve the puzzles.
•
Environmental impact: The energy consumption of PoW networks has a
negative environmental impact. This is because the energy used to power the
miners is often generated from fossil fuels.
Centralization: As PoW networks become more popular, the mining industry is
becoming increasingly centralized. This is because it is becoming more
expensive to compete as a miner. This centralization could make the
networks more vulnerable to attacks.
•
Overall, PoW is a secure and decentralized consensus mechanism. However, it is
also energy-intensive and has a negative environmental impact. As a result, there is
a growing interest in alternative consensus mechanisms, such as PoS, that are less
energy-intensive.
03. What is forking ? Types of forking
• Forking is a term that refers to a situation where a cryptocurrency or
token project needs to make technical updates to its own code.
• These updates will either be applied to the backend of a project with no
major changes in service, or they will fundamentally change the scope of
the original project.
• Forking implies any divergence(divison) in Blockchain- temporary or
permanent. Very simply, forking is said to happen when a Blockchain
splits into two branches.
• It can happen as a result of a change in consensus algorithm or other
software changes.
• Depending on the nature of change, the fork can be categorized into
Hard Fork and Soft Fork
• Hard Fork
• A hard fork is a permanent divergence from the previous version of the
Blockchain, and nodes running previous versions will no longer be
accepted by the newest version.
• A hard fork is a radical change to the protocol that makes previously valid
blocks or transactions invalid.
• Any transaction on the forked (newer) chain will not be valid on the
older chain.
• All nodes and miners will have to upgrade to the latest version of the
protocol software if they wish to be on the new forked chain.
• This essentially creates a fork in the Blockchain, one path which follows
the new, upgraded Blockchain, and one path which continues along the
old path.
• Hard Fork is usually done only when there is enough support from the
mining community. Only when the majority of miners give positive signal
towards the upgrade or fork, the developers of the chain starts work on
the upgraded code.
• Typically, the support should come from 90 to 95 percent of the miners
Fork can occur because of
• Block Size
• Proof of Work
Bitcoin Reward per block and many more
A good example of a Hard Fork was when Bitcoin Cash came into
existence. Previously Bitcoin was the dominant player in the cryptocurrency
game. But as transaction times slowed and fees started to rise, the future of
Bitcoin came into question.
Generally, there are two different ways which a hard fork can occur. It can
either be: Contentious or planned
A planned hard fork means that the creators/developers were all in agreement
as to how the coin would be forked. When this occurs, there is no split in the
chain. This is because all of the nodes have agreed to upgrade to the latest
version of the coin’s client that possesses the rule change.
• There will be a split in the chain if all nodes do not adhere to the new
rules set by the hard fork implementation. This chain will more than
likely die off without enough economic support. Therefore, planned hard
forks are usually under little to no threat unless there is an invisible
negative sentiment.
• If there was disagreement in the community about the path of a coin,
like Bitcoin, for example, then a contentious hard fork would occur. The
most notable example of this is the creation of Bitcoin Cash.
Hard forks pose a systemic risk to Bitcoin:
When there are two running versions of the blockchain. This is something that
any coin would want to prevent at any costs for the following reasons:
• Blockchain reorganization
• TX being confirmed by the wrong chains
• Political/Social Turmoil Within the Community Regarding the
“real” and the “fake”
• And many others…
Soft Fork:
• A soft fork is said to happen when a change to the software protocol
keeps it backward compatible.
• What this means is that the new forked chain will follow the new rules
and will also honor the old rules.
• The original chain will continue to follow the old rules.
• This kind of fork requires only a majority of the miners upgrading to
enforce the new rules, as opposed to a hard fork which requires (almost)
all nodes to upgrade and agree on the new version.
• New transaction types can often be added as soft forks, requiring only
that the participants for e.g. sender and receiver and miners understand
the new transaction type.
• This is done by having the new transaction appear to older clients as a
“pay-to-anybody” transaction (of a special form) and getting the miners
to agree to reject blocks including this transaction unless the transaction
validates under the new rules.
• A soft fork can also occur at times due to a temporary divergence in the
Blockchain when miners using non-upgraded nodes violate a new
consensus rule their nodes don’t know about.
____________________________
In blockchain, a fork is a change to the blockchain protocol that results in two
separate blockchains. This can happen for a variety of reasons, such as a
disagreement about the direction of the project, a security vulnerability, or a bug in
the code.
There are two main types of forks: hard forks and soft forks.
A hard fork is a permanent split in the blockchain. This happens when the majority of
miners on the network decide to adopt a new version of the protocol, while a minority
of miners continue to use the old version. The two blockchains will then diverge, and
transactions on one blockchain will not be valid on the other.
A soft fork is a temporary split in the blockchain. This happens when the majority of
miners on the network agree to implement a change to the protocol, but the change
is not backward-compatible with the old version. This means that blocks mined on
the new version of the protocol will not be valid on the old version. However, miners
on the old version of the protocol will still be able to mine blocks and participate in
the network.
Hard forks are more disruptive than soft forks, as they can result in the loss of funds
if users do not upgrade their software in time. However, hard forks can also be a way
to improve the security and scalability of a blockchain network.
Soft forks are less disruptive than hard forks, as they do not require users to upgrade
their software. However, soft forks can also be less effective at improving the
security and scalability of a blockchain network.
Here are some examples of hard forks in blockchain:
•
Bitcoin Cash hard fork: In 2017, the Bitcoin community was divided over the
issue of block size. Some miners wanted to increase the block size to allow
for more transactions, while others wanted to keep the block size small to
preserve the network's decentralization. The disagreement led to a hard fork,
resulting in the creation of two separate blockchains: Bitcoin and Bitcoin
Cash.
•
Ethereum Classic hard fork: In 2016, a hacker exploited a vulnerability in the
Ethereum network to steal millions of dollars worth of Ether. The Ethereum
community was divided over how to address the issue. Some members
wanted to roll back the blockchain to before the hack, while others wanted to
move forward and learn from the mistake. The disagreement led to a hard
fork, resulting in the creation of two separate blockchains: Ethereum and
Ethereum Classic.
Here are some examples of soft forks in blockchain:
•
Segregated Witness (SegWit): SegWit is a soft fork that was implemented on
the Bitcoin network in 2017. SegWit changes the way that transactions are
stored on the blockchain, which makes them smaller and more efficient. This
can improve the scalability of the Bitcoin network.
•
Lightning Network: The Lightning Network is a second-layer solution that is
built on top of the Bitcoin blockchain. The Lightning Network allows users to
make payments to each other off-chain, which can improve the speed and
efficiency of payments.
Forks can be a valuable tool for improving the security, scalability, and functionality
of blockchain networks. However, forks can also be disruptive and can lead to
confusion and fragmentation in the community. It is important to use forks
responsibly and to carefully consider the potential benefits and risks before
implementing a fork.
04. Lifecycle of smart contract.
Slide 144 for diagram.
The life cycle of a smart contract in blockchain can be divided into four stages:
creation, deployment, execution, and termination.
•
•
•
•
Creation: The first stage is the creation of the smart contract. This is done by
a developer who writes the code for the smart contract and then deploys it to
the blockchain network.
Deployment: The second stage is the deployment of the smart contract. This
is done by the network nodes, who verify the code of the smart contract and
then add it to the blockchain ledger.
Execution: The third stage is the execution of the smart contract. This is done
when a transaction is submitted to the blockchain network that invokes the
smart contract. The smart contract then executes its code and updates the
blockchain ledger accordingly.
Termination: The fourth and final stage is the termination of the smart
contract. This can happen when the smart contract is no longer needed or
when it expires. The network nodes then remove the smart contract from the
blockchain ledger.
The life cycle of a smart contract is an important part of blockchain technology. It
ensures that smart contracts are created, deployed, executed, and terminated in a
secure and transparent manner.
Here are some of the benefits of using smart contracts:
•
•
•
Security: Smart contracts are stored on a blockchain, which is a distributed
ledger that is secured by cryptography. This makes it very difficult to tamper
with or hack smart contracts.
Transparency: All transactions that are executed by smart contracts are
recorded on the blockchain. This makes it possible for anyone to verify the
authenticity and integrity of the transactions.
Efficiency: Smart contracts can automate the execution of contracts, which
can save time and money.
•
Immutability: Once a smart contract is deployed to the blockchain, it cannot be
changed. This ensures that the terms of the contract are always met.
However, there are also some risks associated with using smart contracts:
•
•
•
•
Complexity: Smart contracts are complex pieces of code, and it can be
difficult to understand how they work. This can lead to errors and
vulnerabilities.
Security: Smart contracts are stored on a blockchain, which is a public ledger.
This means that anyone can see the code of the smart contract. This can
make it easier for hackers to find and exploit vulnerabilities in the code.
Cost: Developing and deploying smart contracts can be expensive.
Regulation: The legal status of smart contracts is still unclear in many
jurisdictions. This can make it difficult to use smart contracts for commercial
purposes.
Overall, smart contracts offer a number of potential benefits for businesses and
individuals. However, it is important to be aware of the risks associated with using
smart contracts before deploying them.
PART – B (Answer any 5) (10*5 = 50 )
05. Explain different categories of block chain with examples
- Pdf ( categories of block chain )
Sure. There are four main categories of blockchains: public, private, consortium, and
hybrid.
•
Public blockchains are open to anyone who wants to participate. They are
typically used for applications that require decentralization and trustless
transactions, such as cryptocurrencies. Bitcoin and Ethereum are examples of
public blockchains.
•
•
•
Private blockchains are owned and operated by a single organization or group
of organizations. They are typically used for applications that require security
and privacy, such as supply chain management and healthcare. Hyperledger
Fabric and Corda are examples of private blockchains.
Consortium blockchains are owned and operated by a group of organizations
that have a common interest. They are typically used for applications that
require collaboration and trust between multiple organizations, such as trade
finance and insurance. R3 Corda and Hyperledger Fabric are examples of
consortium blockchains.
Hybrid blockchains combine features of public, private, and consortium
blockchains. They are typically used for applications that require a
combination of decentralization, security, privacy, and collaboration. Quorum
and Hyperledger Besu are examples of hybrid blockchains.
The following table summarizes the key differences between the four categories of
blockchains:
Category
Access
Ownership
Security
Privacy
Public
Open
Anyone
Decentralized
Low
Private
Closed
Single organization or
group of organizations
Centralized
High
Consortium
Closed
Group of organizations
Decentralized
Medium
Hybrid
Closed or
open
Single organization or
group of organizations or
public
Varies
Varies
The best type of blockchain for a particular application will depend on the specific
requirements of the application. For example, if the application requires
decentralization and trustless transactions, then a public blockchain may be the best
option. If the application requires security and privacy, then a private blockchain may
be the best option. If the application requires collaboration and trust between multiple
organizations, then a consortium blockchain may be the best option. If the
application requires a combination of decentralization, security, privacy, and
collaboration, then a hybrid blockchain may be the best option.
Private block chain:
A private blockchain is a blockchain that is controlled by a single organization or
group of organizations. This means that only authorized users can participate in the
network, and the data stored on the blockchain is not publicly visible. Private
blockchains are often used for applications that require a high degree of security and
privacy, such as supply chain management, healthcare, and financial services.
One example of a private blockchain is Hyperledger Fabric, which is an open-source
platform for developing private blockchain applications. Hyperledger Fabric is
designed to be scalable and secure, and it can be used to create a variety of
different blockchain applications.
Here are some of the benefits of using a private blockchain:
•
•
•
Security: Private blockchains are more secure than public blockchains
because they are not open to the public. This makes them a good choice for
applications that require a high degree of security, such as supply chain
management and healthcare.
Privacy: Private blockchains can be used to store sensitive data that should
not be publicly visible. This makes them a good choice for applications that
require a high degree of privacy, such as financial services.
Control: The organization that controls a private blockchain has full control
over the network. This means that they can decide who can participate in the
network, and they can also decide what data can be stored on the blockchain.
Here are some of the drawbacks of using a private blockchain:
•
•
Lack of transparency: Since private blockchains are not open to the public,
there is a lack of transparency. This can make it difficult for users to audit the
network and ensure that it is being used correctly.
Cost: Private blockchains can be more expensive to set up and maintain than
public blockchains. This is because the organization that controls the network
has to bear the costs of running the network.
•
Scalability: Private blockchains can be less scalable than public blockchains.
This is because the network is limited by the number of nodes that are
controlled by the organization that owns the network.
Overall, private blockchains can be a good choice for applications that require a high
degree of security and privacy. However, it is important to weigh the benefits and
drawbacks of using a private blockchain before making a decision.
Public Block Chain :
A public blockchain is a type of blockchain that is open to anyone who wants to join.
This means that anyone can participate in the network, including reading, writing,
and verifying transactions. Public blockchains are often used for applications that
require transparency and immutability, such as cryptocurrency and supply chain
management.
Here are some of the key features of public blockchains:
•
•
•
•
Open and transparent: Anyone can join a public blockchain, and all
transactions are visible to all participants. This makes public blockchains ideal
for applications that require transparency, such as supply chain management.
Immutability: Once a transaction is added to a public blockchain, it cannot be
changed or deleted. This makes public blockchains ideal for applications that
require security, such as cryptocurrency.
Decentralized: Public blockchains are not controlled by any single entity. This
makes them resistant to censorship and manipulation.
Secure: Public blockchains use cryptography to secure transactions and
prevent fraud.
Here are some examples of public blockchains:
•
•
•
Bitcoin: Bitcoin is the most well-known public blockchain. It is used for
cryptocurrency transactions.
Ethereum: Ethereum is a public blockchain that is used for a variety of
applications, including decentralized finance (DeFi) and smart contracts.
Tendermint: Tendermint is a public blockchain that is used for decentralized
applications (dApps).
These are just a few examples of the many public blockchain platforms that are
available.
Public blockchains offer a number of benefits, including:
•
•
•
•
Transparency: All transactions on a public blockchain are visible to all
participants. This can help to build trust and transparency in a network.
Immutability: Once a transaction is added to a public blockchain, it cannot be
changed or deleted. This can help to ensure the accuracy and integrity of
data.
Decentralization: Public blockchains are not controlled by any single entity.
This can help to reduce the risk of fraud and censorship.
Security: Public blockchains use cryptography to secure transactions and
prevent fraud.
However, public blockchains also have some drawbacks, including:
•
•
Slow transaction speed: Public blockchains can be slow to process
transactions, especially when there is a high volume of activity.
High energy consumption: Public blockchains can consume a lot of energy,
•
which can be a concern for environmental sustainability.
High cost: Public blockchains can be expensive to set up and maintain.
Overall, public blockchains are a powerful technology that can be used to create
secure, transparent, and decentralized networks. However, it is important to weigh
the benefits and drawbacks of public blockchains before deciding whether to use
them.
Consortium Block Chain :
A consortium blockchain is a type of blockchain that is permissioned, meaning that
only authorized participants can join and participate in the network. This is in contrast
to a public blockchain, which is open to anyone who wants to join.
Consortium blockchains are often used by businesses and organizations to improve
efficiency and transparency. For example, a supply chain company could use a
consortium blockchain to track the movement of goods from suppliers to customers.
This would allow the company to improve visibility into its supply chain and identify
areas where efficiency could be improved.
Another example of a consortium blockchain is a healthcare network. A healthcare
network could use a consortium blockchain to store and share patient data. This
would allow doctors and other healthcare providers to access patient data quickly
and easily, which could improve patient care.
Here are some of the key benefits of using a consortium blockchain:
•
•
•
Security: Consortium blockchains are more secure than public blockchains
because they are not open to the public. This makes them ideal for
applications where security is critical, such as financial services and
healthcare.
Scalability: Consortium blockchains can be scaled to meet the needs of any
organization. This makes them ideal for large enterprises that need to process
a high volume of transactions.
Customization: Consortium blockchains can be customized to meet the
specific needs of any organization. This makes them ideal for applications
where flexibility is required.
Here are some of the key drawbacks of using a consortium blockchain:
•
•
•
Cost: Consortium blockchains can be more expensive to set up and maintain
than public blockchains.
Complexity: Consortium blockchains can be more complex to set up and use
than public blockchains.
Governance: Consortium blockchains require a governance model to
determine who has access to the network and how it is managed. This can be
a challenge to establish and maintain.
Overall, consortium blockchains are a powerful tool that can be used to improve
efficiency and transparency in a variety of industries. However, it is important to
weigh the benefits and drawbacks of using a consortium blockchain before making a
decision.
Here are some examples of consortium blockchains:
•
•
•
R3 Corda: R3 Corda is a consortium blockchain platform that is used by
financial institutions.
Hyperledger Fabric: Hyperledger Fabric is a consortium blockchain platform
that is used by a variety of organizations, including banks, healthcare
providers, and supply chain companies.
Quorum: Quorum is a consortium blockchain platform that is developed by
J.P. Morgan.
These are just a few examples of the many consortium blockchain platforms that are
available.
Hybrid Block Chain :
A hybrid blockchain is a type of blockchain that combines the features of both public
and private blockchains. This means that it is open to anyone who wants to join, but
only authorized participants can add blocks to the chain.
Hybrid blockchains are often used for applications that require a balance of security,
transparency, and scalability. For example, a supply chain company could use a
hybrid blockchain to track the movement of goods from suppliers to customers. This
would allow the company to improve visibility into its supply chain and identify areas
where efficiency could be improved, while still maintaining security and preventing
unauthorized access to sensitive data.
Here are some of the key benefits of using a hybrid blockchain:
•
Security: Hybrid blockchains offer a higher level of security than public
blockchains because only authorized participants can add blocks to the chain.
This makes them ideal for applications where security is critical, such as
financial services and healthcare.
•
Transparency: Hybrid blockchains offer a higher level of transparency than
private blockchains because all transactions are visible to all participants. This
can help to build trust and transparency in a network.
Scalability: Hybrid blockchains can be scaled to meet the needs of any
organization. This makes them ideal for large enterprises that need to process
a high volume of transactions.
•
Here are some of the key drawbacks of using a hybrid blockchain:
•
•
•
Cost: Hybrid blockchains can be more expensive to set up and maintain than
public or private blockchains.
Complexity: Hybrid blockchains can be more complex to set up and use than
public or private blockchains.
Governance: Hybrid blockchains require a governance model to determine
who has access to the network and how it is managed. This can be a
challenge to establish and maintain.
Overall, hybrid blockchains are a powerful tool that can be used to improve efficiency
and transparency in a variety of industries. However, it is important to weigh the
benefits and drawbacks of using a hybrid blockchain before making a decision.
Here are some examples of hybrid blockchains:
•
•
•
IBM Food Trust: IBM Food Trust is a hybrid blockchain network that is used to
track the movement of food products from farms to consumers.
Walmart's blockchain initiative: Walmart is working with IBM to develop a
hybrid blockchain network that will be used to track the movement of food
products from farms to stores.
Everledger: Everledger is a hybrid blockchain platform that is used to track the
authenticity of diamonds.
These are just a few examples of the many hybrid blockchain platforms that are
available.
Or
06. (a) Define hashing and hash pointer.
- Pdf ( technologies borrowed in block chain )
- Slide 17, 18 , 60
Pre- Image Resistance
A pre-image attack occurs when a hash’s output is known and the task is to find
some input. A pre-image attack on a cryptographic hash function seeks a message
with a particular hash value. A cryptographic hash function should be resistant to
pre-image attacks (set of possible inputs).
You would not want to use the pre-image (i.e. plaintext) as a password in our
example “Hello World.” As the plaintext “Hello World” is extremely simple and easy
to ascertain. There are databases that keep records of known inputs to even secure
hash functions, like SHA-256.
Second Pre-Image Resistance
An expected property of a cryptographic hash function in which finding a second
preimage of a known message digest is computationally impossible.
Collision Resistance
It must be extremely difficult, or impossible to find two inputs that produce the same
output. Since the input value can be of any length, and any characters, the
possibilities for this value are infinite. Outputs have a fixed length and —for that
reason— a fixed number of possibilities.
It’s therefore possible for more than one input value to produce the same output. If
the collision resistance isn’t strong enough, collisions could be found via a “birthday
attack”. You may have noticed that second pre-image resistance and collision
resistance are very similar. Rest assured that they are separate, and rather simple.
With second pre-image resistance, an input is known and the attacker is able to find
a second input that hashes to the same value. With Collision resistance, both inputs
are unknown, and the attacker is able to find both inputs that hash to the same
value. Collision resistance implies pre-image resistance.
Hashing In Blockchain:
In simple words, hashing refers to the process of having an input of any length but
showing an output item of a fixed length. If we take the example of blockchain use in
online transactions(using bitcoins), transactions of different lengths are run through a
given hashing algorithm, and all give an output that is of a fixed length. This output is
independent of the length of the input transaction.
•
Secure Hashing Algorithm 256 (SHA-256): This hashing algorithm always
gives an output of fixed length 256-bits or 32 bytes, no matter whatever is the size of
the input transaction. It means if we hash two different input using SHA-256, let’s say
one is a movie of 1 gigabyte and another is an image of 5 kilobytes, then in both
cases, the output hash will be 256-bits in length. The only difference between the
two will be the hash pattern. Currently, this algorithm is used in the Bitcoin network.
What Is Hashing? [Step-by-Step Guide-Under Hood Of Blockchain]
(blockgeeks.com)
SHA-256 is a cryptographic hash function that is used in blockchain technology to
verify the authenticity of data and to create a secure and tamper-proof record of
transactions.
SHA-256 is a one-way function, which means that it is very difficult to reverse the
hash function to find the original data. This makes it very difficult to tamper with data
stored on a blockchain, as any changes to the data will result in a different hash.
SHA-256 is a very secure hash function, and it is considered to be one of the most
secure hash functions available. It is used by a variety of organizations, including
banks, government agencies, and military organizations.
In blockchain, SHA-256 is used to create a secure and tamper-proof record of
transactions. Each block in a blockchain contains a hash of the previous block. This
means that if any block in the chain is changed, it will invalidate all subsequent
blocks. This makes it very difficult to tamper with data stored on a blockchain.
Here are some of the benefits of using SHA-256 in blockchain:
•
•
Data integrity: SHA-256 ensures that data cannot be tampered with without
being detected.
Security: SHA-256 makes it very difficult to hack or counterfeit blockchainbased systems.
•
•
Transparency: SHA-256 allows all participants in a blockchain network to
verify the authenticity of data.
Efficiency: SHA-256 can be used to quickly and easily verify the authenticity
of large amounts of data.
Overall, SHA-256 is a powerful tool that can be used to improve the security,
transparency, and efficiency of blockchain-based systems.
Here are some of the steps involved in hashing data using SHA-256 in blockchain:
1. The data to be hashed is first converted into a binary format.
2. The binary data is then fed into the SHA-256 algorithm.
3. The SHA-256 algorithm then performs a series of mathematical operations on
the data.
4. The SHA-256 algorithm then outputs a 256-bit hash value.
5. The hash value is then stored in the blockchain.
The hash value is used to verify the authenticity of data stored on the blockchain. If
any changes are made to the data, the hash value will change. This will alert the
network that the data has been tampered with.
Hash Pointer
A hash pointer is a data structure that contains a cryptographic hash of a block of
data, along with a pointer to the next block in a blockchain. Hash pointers are used
to create a chain of blocks, which is what gives blockchains their name.
Each block in a blockchain contains a hash pointer to the previous block in the chain.
This means that if any block in the chain is modified, the hash pointer for that block
will no longer match the hash of the previous block. This makes it very difficult to
tamper with data in a blockchain, as any changes will be immediately detectable.
Hash pointers are also used to verify the authenticity of data in a blockchain. When a
new block is added to the chain, its hash pointer is calculated and compared to the
hash of the previous block. If the hashes do not match, then the new block is
rejected. This ensures that only valid data is added to the blockchain.
Hash pointers are a critical part of blockchain technology. They provide a way to
create a secure and tamper-proof chain of blocks, as well as a way to verify the
authenticity of data in the blockchain.
Here are some of the benefits of using hash pointers in blockchain:
•
•
•
Security: Hash pointers make it very difficult to tamper with data in a
blockchain. Any changes to the data will be immediately detectable, as the
hash pointer for the affected block will no longer match the hash of the
previous block.
Verifiability: Hash pointers allow for the verification of the authenticity of data
in a blockchain. When a new block is added to the chain, its hash pointer is
calculated and compared to the hash of the previous block. If the hashes do
not match, then the new block is rejected. This ensures that only valid data is
added to the blockchain.
Efficiency: Hash pointers are a very efficient way to store data in a blockchain.
The hash of a block is much smaller than the block itself, so storing hash
pointers instead of blocks can save a significant amount of space.
Overall, hash pointers are a critical part of blockchain technology. They provide a
way to create a secure, verifiable, and efficient way to store data.
(b) Difference between centrally owned ledger and block chain
Here are 12 differences between a centrally owned ledger and a blockchain:
1. Centralized vs. decentralized: A centrally owned ledger is controlled by a
single entity, while a blockchain is decentralized and maintained by a network
of nodes.
2. Security: Centralized ledgers are more vulnerable to attack than blockchains,
as they are a single point of failure. Blockchains are more secure because
they are distributed across multiple nodes, making them more difficult to
attack.
3. Transparency: Centralized ledgers are not transparent, as only the central
authority has access to the data. Blockchains are transparent, as all nodes
have access to the data.
4. Cost: Centralized ledgers are more expensive to maintain than blockchains,
as they require a central authority to manage and secure the data.
Blockchains are more cost-effective, as they do not require a central authority.
5. Scalability: Centralized ledgers are not as scalable as blockchains, as they
can only handle a limited number of transactions per second. Blockchains are
more scalable, as they can handle a large number of transactions per second.
6. Latency: Centralized ledgers have higher latency than blockchains, as it takes
time for the central authority to process and approve transactions.
Blockchains have lower latency, as transactions are processed and approved
by the network of nodes in real time.
7. Finality: Transactions on a centralized ledger are not final until they are
approved by the central authority. Transactions on a blockchain are final once
they are added to the blockchain, as they are then secured by the network of
nodes.
8. Immutability: Once data is added to a centralized ledger, it can be changed or
deleted by the central authority. Data on a blockchain is immutable, as it
cannot be changed or deleted once it is added to the blockchain.
9. Auditability: Centralized ledgers are not as auditable as blockchains, as the
central authority has control over the data. Blockchains are more auditable, as
all nodes have access to the data.
10. Privacy: Centralized ledgers can be less private than blockchains, as the
central authority has access to all of the data. Blockchains can be more
private, as users can choose to encrypt their data.
11. Control: Centralized ledgers give the central authority a lot of control over the
data. Blockchains give users more control over their data, as they can choose
to participate in the network or not.
12. Future: Centralized ledgers may be replaced by blockchains in the future, as
blockchains offer a number of advantages over centralized ledgers.
Overall, blockchains offer a number of advantages over centralized ledgers,
including security, transparency, cost-effectiveness, scalability, latency, finality,
immutability, auditability, privacy, control, and future potential.
08. With an example explain the process of bitcoin network
0r
09. Discuss briefly the challenges faced in distributed ledger technology /
blockchain technology.
Pdf ( Technologies borrowed in block chain)
10. Difference between Proof of work and Proof of stake
Sure, here are 10 differences between proof of work and proof of stake:
1. Security. Both proof of work and proof of stake are secure consensus
mechanisms, but they achieve security in different ways. Proof of work is
secured by a massive amount of computing power, which makes it very
difficult and expensive to attack. Proof of stake is secured by a network of
validators who stake their own cryptocurrency, which creates a disincentive to
attack the network because they would lose their stake.
2. Energy consumption. Proof of work is a very energy-intensive consensus
mechanism, as it requires miners to solve complex mathematical problems in
order to add blocks to the blockchain. Proof of stake, on the other hand, is
much more energy-efficient, as it does not require any mining.
3. Scalability. Proof of work is a relatively slow and inefficient consensus
mechanism, as it can only process a limited number of transactions per
second. Proof of stake, on the other hand, is much more scalable, as it can
process a much higher number of transactions per second.
4. Centralization. Proof of work is prone to centralization, as it favors those with
access to the most powerful computing hardware. Proof of stake, on the other
hand, is less prone to centralization, as it does not require any specialized
hardware.
5. Cost. The cost of participating in proof of work is relatively high, as it requires
miners to purchase and maintain expensive hardware. The cost of
participating in proof of stake is much lower, as it only requires validators to
stake their own cryptocurrency.
6. Accessibility. Proof of work is relatively inaccessible, as it requires specialized
hardware and knowledge. Proof of stake, on the other hand, is much more
accessible, as it can be done with any computer and a small amount of
cryptocurrency.
7. Transaction fees. Proof of work networks typically have higher transaction
fees than proof of stake networks. This is because miners need to be
compensated for their work in order to maintain the network. Proof of stake
networks, on the other hand, do not require miners, so transaction fees can
be much lower.
8. Environmental impact. Proof of work networks have a significant
environmental impact, as they consume a massive amount of energy. Proof of
stake networks have a much lower environmental impact, as they do not
require any mining.
9. Community support. Proof of work networks have a strong community of
supporters, as they believe that it is the most secure consensus mechanism.
Proof of stake networks are also gaining support, as they offer a more efficient
and accessible alternative to proof of work.
10. Future adoption. It is still too early to say which consensus mechanism will
ultimately be more successful. However, both proof of work and proof of stake
have their own advantages and disadvantages, and it is likely that both will
continue to be used in the future.
Or
11. Explain the process of Proof of Elapsed time and Proof of Authority.
12. Discuss the limitations and misconceptions of blockchain and also
explain 51% attack .
Limitations –
Blockchain technology has many advantages, but it also has some limitations. Some
of the most common limitations of blockchain include:
•
•
•
•
•
Scalability: Blockchain networks can be slow and expensive to scale. This is
because every node in the network must verify every transaction, which can
become time-consuming and resource-intensive as the network grows.
Energy consumption: The mining process used to secure some blockchain
networks, such as Bitcoin, consumes a significant amount of energy. This is a
major environmental concern, and it is one of the biggest barriers to the
widespread adoption of blockchain technology.
Security: Blockchain networks are typically very secure, but they are not
immune to attack. In particular, 51% attacks, where an attacker gains control
of more than half of the network's hash power, can be used to censor
transactions or double-spend coins.
Privacy: Blockchain networks are transparent, which means that all
transactions are public and can be viewed by anyone. This can be a privacy
concern for some users, particularly those who are using blockchain for
sensitive applications, such as healthcare or finance.
Complexity: Blockchain technology is complex and difficult to understand.
This can make it difficult for businesses and individuals to adopt blockchain,
and it can also make it difficult to develop new applications on top of
blockchain.
Despite these limitations, blockchain technology is still a promising technology with
the potential to revolutionize many industries. As the technology continues to
develop, these limitations are likely to be addressed.
Here are some additional limitations of blockchain technology:
•
Lack of regulation: Blockchain is a relatively new technology, and there is
currently no clear regulatory framework governing its use. This can make it
difficult for businesses to adopt blockchain, and it can also create uncertainty
about the legal implications of using blockchain technology.
•
Limited use cases: While blockchain has the potential to be used in a wide
variety of applications, it is still in its early stages of development, and there
are only a limited number of use cases where it has been successfully
deployed.
High cost: The cost of developing and maintaining a blockchain network can
be high. This is due to the need for specialized hardware and software, as
well as the need to hire experienced developers.
•
Overall, blockchain technology is a promising technology with the potential to
revolutionize many industries. However, it is important to be aware of the limitations
of blockchain before adopting it.
Misconceptions –
Many people now have misconceptions about blockchain and use the
technology inefficiently. This is understandable, considering that
technology is still a buzzword, and there have been hypes widely spread
on blogs and social media over the years.
#1. Blockchain is all about bitcoins
Misunderstanding:
It was the popularity of the bitcoin cryptocurrency in 2020 that brought
blockchain to the limelight. Since then, many people have considered
blockchain and bitcoin as interchangeable concepts or blockchain is
equal to cryptocurrencies.
The fact:
Blockchain is the technology behind the creation and facilitation of
bitcoin and other cryptocurrencies. Yet, it is far more helpful than such
an application.
In the financial industry alone, blockchain can also be used for money
transfers, financial security, smart contracts automation, the storage of
customer data, etc.
Enterprises have also used the technology across other sectors such as
real estate, supply chain, healthcare, digital transformation, insurance,
government, ecommerce, telecommunications, and more.
#2. Blockchain Is a Cloud-based Database
Misunderstanding:
Blockchain is a cloud used to store and distribute data among specific
parties.
The fact:
Cloud-based solutions and blockchain are different.
The earlier requires the internet to deliver services, whereas the latter
uses different encryption methods and hash to store distributed ledger
blocks.
Data in the cloud platforms are mutable for those having the “edit”
permission. In contrast, blockchain information is immutable, meaning
no one can edit or delete transactions in the chain. The entire history of
transactions is transparently public to its members.
#3. Blockchain is Efficient for Everything
Misunderstanding:
Blockchain is a silver bullet for everything on earth.
The fact:
This is among the most common misconceptions about blockchain.
Blockchain technology is interesting and promising to make some
businesses more efficient, immutable, and transparent, as mentioned in
point #1. That is why technology is under the spotlight.
Nonetheless, it is neither the one-for-all solution nor the complete
alternative to traditional centralized approaches. There are limitations
that prevent blockchain applications, such as difficult and costly
development, scaling issues, and immutability challenges.
We would not suggest using the technology if your project needs to
scale quickly to store a large amount of non-transactional information; or
if your team changes transitional rules, update or delete data at some
points.
#4. Data in a Blockchain Is Public
Misunderstanding:
Blockchain is always publicly accessible to everyone.
The fact:
Many misconceptions about blockchain come from the idea of bitcoin,
which is public to the worldwide community.
In fact, cryptocurrency is merely a way blockchain can work. Besides
being public, blockchain can be private or hybrid.
What type of blockchain to use is based on its purposes.
A public chain is suitable for a truly democratized and authority-free
organization that encourages as many participants as possible. In
reverse, a private blockchain is preferred by businesses in logistics,
finances, healthcare, etc., to enhance efficiency and immutability.
Members can only join the network through an invitation.
Hybrid lies in between public and private blockchains. Anyone cannot
participate in the network unless they meet a strict identity verification
process. Among those members, only some give designated
permissions.
#5. Blockchain Can Return High Interest
Misunderstanding:
Blockchain always makes a significant profit for individuals and
businesses.
The fact:
Bitcoin – the most famous blockchain application, reached its all-time
high price in 2021 – over 65,000 USD. Since then, many people have
believed blockchain and its cryptocurrencies, like Bitcoin are significantly
profitable.
Unfortunately, the prices of many cryptocurrencies have witnessed a
significant violation this year. Industrial experts imply such a collapse of
the war in Ukraine, the potential recession of the worldwide economy,
stubbornly increasing inflation, high-interest rates, etc.
As a result, many investors in the blockchain end up losing their money
rather than making profits.
#6. Blockchain Is Unhackable
Misunderstanding:
Blockchain cannot be hacked thanks to its securely encrypted
mechanism.
The fact:
At heart, blockchain works on a hashing algorithm. A new transaction in
the network is signed with a unique and random 32-bit nonce and
tightened with a 256-bit encrypted hash. Those numbers are almost
unguessable, which prevents hacking opportunities.
Such an ideal concept is not secure enough against hackers.
Because blockchain technology still has many limitations, criminals find
certain ways to sneak into the network, such as attacking the verification
process, exploiting coding errors and flaws, or taking advantage of weak
security practices.
#7. Blockchain is Not Prepared for Business Adoption
Misunderstanding:
Many businesses fear a blockchain has security, privacy, and
performance flaws. Thus, the technology is not ready for business
adoption.
The fact:
Although there is room for blockchain to improve, it has been adopted by
many businesses.
In 2018 alone, 29% of businesses joining the Global Blockchain Survey
of Deloitte revealed that they had adopted at least one blockchain
consortium, and 45% confirmed to continue using the technology the
next year.
This year, the usage percentage has grown for sure.
Here are some takeaways from the above:
• Blockchain
• The
is a decentralized ledger, not a cloud-based solution.
technology can be public, private, or hybrid, depending on the
data storage and distribution.
• Bitcoin
is only an application of blockchain. Besides that,
blockchain is also helpful for different industries and business
adoption.
• Blockchain
is not 100% secure, efficient, and profitable. Thus,
individuals and businesses must be extremely careful while
investing in technology.
51% Attack –
A 51% attack is a type of attack on a blockchain network in which a malicious actor
or group of actors gains control of more than 50% of the network's mining hash rate.
This gives the attacker the ability to control the network and perform malicious
actions such as:
•
•
•
Double-spend attacks: A double-spend attack is when the attacker spends the
same cryptocurrency twice. This is possible because the attacker has control
of more than half of the network's hash rate, which allows them to create a
longer chain of blocks that includes their double-spend transaction.
Preventing transactions from confirming: The attacker can prevent
transactions from confirming by refusing to mine blocks that include those
transactions. This can effectively halt all payments on the network.
Rewriting the blockchain: The attacker can rewrite the blockchain by creating
a longer chain of blocks that includes their preferred version of history. This
can be used to undo transactions, steal funds, or censor information.
51% attacks are a serious threat to blockchain networks. However, they are
relatively difficult to execute, as they require a significant amount of computing
power. Additionally, many blockchain networks have implemented measures to
make 51% attacks more difficult, such as proof-of-stake consensus mechanisms.
Here are some of the ways to mitigate the risk of a 51% attack:
•
•
•
Use a proof-of-stake consensus mechanism: Proof-of-stake consensus
mechanisms require users to stake their cryptocurrency in order to participate
in mining. This makes it more expensive for an attacker to acquire a majority
of the network's mining power.
Use a decentralized network: Decentralized networks are less vulnerable to
51% attacks because there is no single point of failure. If one node is
attacked, the network can continue to function.
Use a distributed hash table (DHT): DHTs are a type of distributed database
that can be used to store information about the network. This information can
be used to prevent attackers from launching a 51% attack.
By taking these precautions, blockchain networks can make it more difficult for
attackers to launch a 51% attack. However, it is important to remember that no
blockchain network is completely immune to attack.
51% Attack
• A 51% attack is used to describe the unfortunate event that a
group or single person gains more than 50% of the total mining
power.
• If that happened in a Proof of Work blockchain like Bitcoin, it
would allow the person to make changes to a particular block. If
this person was a criminal, they could alter the block for their gain.
• A recent example of a 51% attack happened against the Verge
blockchain, which allowed the hacker to walk away with 35 million
XVG coins. At the time of the attack, this amounted to a real-world
value of $1.75 million!
• When using a Proof of Stake consensus mechanism, it would
not make financial sense to attempt to perform a 51% attack. For
this to be achieved, the bad actor would need to stake at least
51% of the total amount of cryptocurrency in circulation. The only
way they could do this is to purchase the coins on the open
market.
• If they decided to buy an amount this substantial, then the realworld value of the coin would increase along the way. As a result,
they would end up spending significantly more than they could
gain from the attack.
Or
13. Explain briefly the datatypes used in solidity language.
14. Explain the pseudo-anonymity and anonymity and also discuss Z Cash
and Zk- snarks for anonymity preservation
Or
15. Justify how the user plays an important role in blockchain governance.
From slide 164