UNIT-I:INTRODUCTION TO BLOCKCHAIN

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What is Blockchain?

Blockchain is a decentralized, distributed ledger technology (DLT) that records transactions in a secure, immutable, and transparent way. Instead of being stored in a single centralized database, data is stored across multiple nodes (computers), ensuring security and trust without the need for intermediaries.

Basic Ideas Behind Blockchain:

  1. Decentralization: No central authority controls the data.

  2. Transparency: Transactions are visible to participants in the network.

  3. Immutability: Once recorded, data cannot be altered.

  4. Consensus Mechanism: Transactions are validated by multiple participants.

  5. Cryptographic Security: Uses encryption to ensure secure transactions.

How Blockchain is Changing Digitalization

  • Financial Industry: Cryptocurrencies like Bitcoin, Ethereum, and decentralized finance (DeFi) solutions eliminate intermediaries.

  • Supply Chain: Provides real-time tracking of products and eliminates fraud.

  • Healthcare: Securely stores patient records and ensures privacy.

  • Voting Systems: Enables transparent and tamper-proof elections.

  • Intellectual Property: Protects copyrights through NFTs (Non-Fungible Tokens).

Uses of Blockchain

  1. Cryptocurrency Transactions (e.g., Bitcoin, Ethereum)

  2. Smart Contracts (self-executing agreements)

  3. Supply Chain Transparency (tracking goods from production to delivery)

  4. Identity Management (secure and verifiable digital identities)

  5. Healthcare (secure storage of patient records)

  6. Voting Systems (fraud-proof elections)

  7. Real Estate (efficient property transfer and ownership verification)

Abstract Models for Blockchain

Blockchain models help in understanding how transactions are processed and secured.

1. GARAY Model

  • A cryptographic model that provides a formal proof of the security of blockchain protocols.

  • Ensures resilience against attacks such as double-spending and selfish mining.

  • Describes blockchain as a chain of blocks secured by cryptographic techniques.

2. RLA (Randomized Logarithmic Agreement) Model

  • Used for understanding consensus mechanisms in blockchain.

  • Ensures fast and scalable agreement among distributed nodes.

  • Reduces time complexity in achieving consensus, improving efficiency.

What is Multichain?

Multichain is an open-source blockchain platform that allows organizations to create private blockchains for financial transactions and data sharing.

Objective of Multichain:

  • Improve privacy and scalability for blockchain applications.

  • Provide controlled access to participants.

  • Optimize blockchain networks for enterprise use cases.

Features of Multichain:

✔ Permissioned Access: Only authorized participants can join.
✔ Customizable Parameters: Control block size, mining permissions, etc.
✔ Data Streams: Allows storing structured and unstructured data.
✔ Native Multi-Asset Support: Issue multiple tokens in one blockchain.

Uses of Multichain:

  • Banking and Financial Services: Secure transactions between financial institutions.

  • Supply Chain: Track products and prevent counterfeiting.

  • Government Services: Secure record management for land titles, voting, etc.

Mining Process in Multichain Technology:

  1. Nodes validate transactions and create blocks.

  2. A predefined set of validators (miners) confirm the transactions.

  3. Transactions are stored in the ledger after consensus is achieved.

Why Multichain is Better Than Other Open Platforms?

  • More Control: Allows private blockchain networks.

  • Better Scalability: Designed for enterprise-level applications.

  • Customizable Security: Organizations can define permissions.

Blockchain Architecture & Design

Basic Cryptographic Primitives:

  1. Hashing (SHA-256, Keccak): Converts data into fixed-length unique values.

  2. Digital Signatures: Ensures authenticity and integrity using public and private keys.

Hash Chain to Blockchain:

  • A hash chain is a sequence of hash values that ensures data integrity.

  • When combined with cryptographic security and consensus mechanisms, it forms a blockchain.

Basic Consensus Mechanisms:

  1. Proof of Work (PoW) – Used in Bitcoin; requires solving complex puzzles.

  2. Proof of Stake (PoS) – Requires users to stake tokens to validate transactions.

  3. Practical Byzantine Fault Tolerance (PBFT) – Used in enterprise blockchains like Hyperledger.

  4. Delegated Proof of Stake (DPoS) – Involves elected validators for block confirmation.

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