Unit 1: Introduction to Blockchain

1. wat is distributed ledger?

A distributed ledger is a database that is spread across multiple sites, regions, or participants in a
network. Unlike traditional centralized databases, where data is stored in a single location or
controlled by a single entity, distributed ledgers distribute data across multiple nodes in a network.
Each node has a copy of the entire ledger, and updates to the ledger are propagated to all nodes in the
network in real-time.
2. Wat is blockchain?
A blockchain decentralized and distributed digital ledger that is structured into a linked list of blocks.
Each block contains an ordered set of transactions.
It was originally introduced as the underlying technology behind the cryptocurrency Bitcoin, but its
applications have since expanded to various industries beyond finance.
3. Cryptographic Hashing:
Each block is linked to the previous block through a cryptographic hash function. This creates a chain
of blocks, hence the term "blockchain." The hash of a block is a unique identifier derived from its
content. If the content of a block is altered, its hash changes, breaking the chain.
4.

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 5. History of Blockchain:
• 2008: Satoshi Nakamoto introduced Bitcoin through a paper, suggesting a new kind of digital
money.
• 2009: Bitcoin was officially launched, marking the beginning of blockchain technology.
• 2009-2013: Bitcoin gained attention from cryptography and technology enthusiasts.
• 2015: Vitalik Buterin proposed Ethereum, a new blockchain platform with added capabilities
like smart contracts.
• 2017: The popularity of blockchain projects and cryptocurrencies surged, with the beginning
of the Initial Coin Offerings (ICOs) boom.
• 2016-Present: Big companies started exploring blockchain for uses beyond cryptocurrencies,
such as supply chain management and data security.
• 2018-Present: Governments began issuing rules and regulations regarding cryptocurrencies
and blockchain technology to ensure consumer protection and proper functioning.
• 2020-Present: There has been a rise in decentralized finance (DeFi) projects, offering
financial services without traditional banks.

6. Distributed DBMS:
A Distributed Database Management System (DDBMS) is a software system that manages databases
across multiple computers or nodes in a network. Unlike a traditional centralized database system,
where all data is stored on a single server, a distributed DBMS distributes data across multiple nodes,
often located in different geographical locations.

7. Limitations of Distributed DBMS:

• Complexity: Managing distributed systems adds administrative complexity.
• Network Dependency: Performance relies heavily on network reliability.
• Data Consistency: Ensuring consistent data across nodes is challenging.
• Security Risks: Increased vulnerability due to distributed data transmission.
• Cost: Implementation and maintenance can be expensive.
• Scalability Limits: Practical limits exist despite scalability features.
• Data Fragmentation: Fragmented data can lead to query inefficiencies.
• Synchronization Overhead: Maintaining consistency adds processing overhead.
• Dependency on Distributed Transactions: More complex and potentially slower than
single-node transactions.
• Data Ownership and Access Control: Ensuring compliance with regulations requires robust
mechanisms.

8. what are blockchain categories?

Blockchain technology can be categorized into different types based on various criteria such as
consensus mechanism, permissioning, and functionality. Here are some common blockchain
categories:

• Public Blockchains: These are permissionless blockchains where anyone can participate,
read, or write data to the blockchain. Examples include Bitcoin and Ethereum.

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 • Private Blockchains: These are permissioned blockchains where access to read or write data
is restricted to a specific group of participants. They are often used by enterprises for internal
applications.
• Consortium Blockchains: Consortium blockchains are semi-decentralized, where a group of
organizations collaboratively controls the network. Membership is restricted to pre-approved
entities.

9. what is blockchain network and nodes?

A blockchain network is a decentralized system composed of multiple interconnected computers,
called nodes, that work together to maintain a shared ledger of transactions. Each node in the network
has a copy of the entire blockchain ledger and participates in the process of validating and adding new
transactions to the blockchain.
Nodes: Nodes are individual computers or devices connected to the blockchain network.

10. what is Peer-to-Peer Network?

• A peer-to-peer network is a decentralized network where each participant (peer) has the same
privileges and responsibilities.
• In a P2P network, nodes communicate directly with each other without the need for a central
server.
• P2P networks are often used in blockchain technology, where nodes collaborate to maintain a
distributed ledger.

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11. what is Mining Mechanism?
• Mining is the process by which new transactions are validated and added to the blockchain
ledger in a Proof of Work (PoW) consensus mechanism.
• Miners compete to solve complex mathematical puzzles, with the first one to find the solution
being rewarded with newly minted cryptocurrency and transaction fees.
• Mining ensures the security and immutability of the blockchain by making it computationally
expensive to alter transaction history.

12. what are the Generic elements of Blockchain?

• Transactions: Records of data exchanges or actions performed on the blockchain.
• Blocks: Containers that store batches of transactions.
• Blockchain: A decentralized and immutable ledger that records transactions in a chronological
chain of blocks.
• Consensus Mechanism: Rules and protocols used to agree on the validity of transactions and
add them to the blockchain.
• Cryptography: Techniques used to secure transactions and ensure data integrity on the
blockchain.
• Distributed Network: A network of interconnected nodes that collectively maintain and update
the blockchain ledger.

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13. what are the Features of Blockchain?
• Decentralization: No central authority controls the blockchain network.
• Transparency: All transactions are recorded on a public ledger, visible to all participants.
• Immutability: Once recorded, transactions cannot be altered or deleted.
• Security: Cryptography and consensus mechanisms ensure the integrity and security of
transactions.
• Efficiency: Automated processes and elimination of intermediaries streamline
transactions.
• Traceability: Every transaction can be traced back to its origin, enhancing accountability
and auditability.

14. what are the Types of Blockchain?

• Public Blockchain: Open to anyone, permissionless, and decentralized (e.g., Bitcoin,
Ethereum).
• Private Blockchain: Permissioned and centralized, accessible only to authorized
participants (e.g., Hyperledger Fabric, Corda).
• Consortium Blockchain: Semi-decentralized, operated by a group of trusted
organizations (e.g., Quorum).
• Hybrid Blockchain: Combines elements of public and private blockchains for
specific use cases (e.g., Dragonchain).
• Permissioned Blockchain: Similar to private blockchains, with controlled access and
centralized governance.

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 UNIT 2 Cryptography and Cryptocurrency

1. what is cryptography?
Cryptography is the practice and study of techniques for secure communication in the
presence of third parties, often referred to as adversaries. It encompasses various methods for
ensuring the confidentiality, integrity, and authenticity of information. The primary goal of
cryptography is to make data unreadable or unintelligible to unauthorized individuals while
allowing authorized parties to access it.
Cryptography is like a secret code language that helps keep information safe when it's being
sent or stored. Imagine you have a message you want to send to a friend, but you don't want
anyone else to read it except your friend. Cryptography helps you do that.

2. Algorithms & Techniques Public-Key Cryptography:

Public-key cryptography is a type of cryptography that uses pairs of keys to encrypt and
decrypt data. Here's a simplified explanation of how it works:

• Key Pairs: In public-key cryptography, each user has a pair of keys: a public key and
a private key. These keys are mathematically related but are different from each other.
The public key can be freely shared with anyone, while the private key is kept secret.
• Encryption: When someone wants to send a secure message to another person, they
use the recipient's public key to encrypt the message. This means that only the
recipient, who has the corresponding private key, can decrypt and read the message.
Even if someone intercepts the encrypted message, they won't be able to decipher it
without the private key.
• Decryption: The recipient uses their private key to decrypt the encrypted message
and retrieve the original plaintext. Since the private key is kept secret, only the
intended recipient can decrypt the message.
• Digital Signatures: Public-key cryptography can also be used for digital signatures.
In this case, a user signs a message with their private key, and anyone with access to
the corresponding public key can verify the signature. This provides a way to
authenticate the sender and ensure that the message hasn't been tampered with.
• Security: Public-key cryptography relies on the mathematical complexity of certain
algorithms, such as RSA or Elliptic Curve Cryptography (ECC), to ensure security.
Breaking these algorithms would require immense computational power and is
currently considered infeasible with existing technology.

3.
• RSA: Rivest-Shamir-Adleman uses large prime numbers to encrypt and decrypt
data.
• ECC: Elliptic Curve Cryptography uses elliptic curves for creating keys and
ensuring security.
• Diffie-Hellman: Named after Whitfield Diffie and Martin Hellman. Diffie-Hellman
is a method for securely exchanging secret keys over insecure channels.
• DSA: Digital Signature Algorithm is an algorithm for generating digital signatures
based on discrete logarithms.
• ECDSA: Elliptic Curve Digital Signature Algorithm is a variant of DSA that uses
elliptic curves for enhanced security.
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4. Combination in blockchain security: typically refers to the use of multiple security
measures and techniques to ensure the integrity, confidentiality, and availability of the
blockchain network and its data.
Some common elements of combination in blockchain security:
• Cryptographic Hash Functions
• Consensus Mechanisms
• Digital Signatures
• Encryption
• Multi-factor Authentication (MFA)
• Role-Based Access Control (RBAC)
• Network Security Measures
• Regular Auditing and Monitoring

5. Blockchain Security Essentials:

• Hashing:
o Ensures data integrity and provides unique identifiers for transactions and
blocks.
o Fixed-size output, one-way function, and cryptographic security prevent
tampering.
• Transaction Integrity:
o Guarantees reliability, trustworthiness, and immutability of recorded
transactions.
o Consensus among network participants ensures accuracy and prevents
tampering.
• Securing Blockchain:
o Encryption safeguards data, while decentralization prevents single points of
failure.
o Robust authentication mechanisms verify users and transactions securely.
o Continuous monitoring updates security protocols to mitigate risks and
ensure integrity.

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Unit 3

➢ Proof of Work (PoW): PoW involves solving computational puzzles to add new blocks to
the blockchain. Miners compete to solve these puzzles, and the first one to solve it gets to add
the next block and receive a reward.

➢ Proof of Stake (PoS): PoS selects the creator of the next block based on the number of
cryptocurrency tokens (not specifically Bitcoin) they hold and are willing to "stake" as
collateral. Those with more tokens have a higher chance of being chosen to validate and add
the next block.

➢ Proof of Authority (PoA): PoA grants a predefined set of trusted nodes (validators or
authorities) the power to create new blocks and validate transactions based on their authority.
These nodes are typically known and trusted entities within the network.

➢ Proof of Elapsed Time (PoET): In PoET, nodes in the network generate random waiting
times, and the node with the shortest waiting time becomes the leader and can create the next
block. However, the concept of updating the block is more about adding the next block to the
blockchain rather than updating an existing block.

➢ Byzantine Fault Tolerance (BFT) Consensus Algorithms: BFT consensus algorithms

ensure network security by monitoring nodes for failures or malicious behavior. They aim to
maintain consensus even in the presence of faulty or malicious nodes.

➢ Blockchain architecture:
refers to the design and structure of a blockchain network, including its components, layers, and
interactions. Here's an overview of the key elements of blockchain architecture:

• Network Layer:
o Nodes: These are individual computers or devices that participate in the blockchain
network. Nodes can be categorized as full nodes, which maintain a complete copy of the
blockchain ledger, or lightweight nodes, which only store a subset of the blockchain data.
o Peer-to-Peer (P2P) Communication: Nodes communicate with each other using a peer-
to-peer network protocol. This allows them to share information, propagate transactions,
and synchronize the blockchain ledger.
• Consensus Layer:
o Consensus Mechanism: This layer determines how consensus is reached among network
participants regarding the validity of transactions and the state of the blockchain ledger.
Common consensus mechanisms include Proof of Work (PoW), Proof of Stake (PoS), and
Practical Byzantine Fault Tolerance (PBFT).
o Block Validation: Consensus algorithms ensure that only valid transactions are included
in blocks and that blocks are added to the blockchain in a secure and decentralized
manner.

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• Data Layer:
o Blocks: Blocks are containers that store a batch of transactions. Each block typically
includes a header containing metadata (such as a timestamp and a reference to the
previous block) and a list of transactions.
o Transactions: Transactions represent the transfer of assets or information between
participants in the blockchain network. They are cryptographically signed and recorded in
blocks.
o Cryptographic Hashing: Hash functions are used to create unique identifiers for blocks
and transactions, ensuring data integrity and immutability.

• Smart Contract Layer:

o Smart Contracts: Smart contracts are self-executing programs that run on the blockchain
network. They automatically enforce the terms of agreements or execute predefined
actions when specific conditions are met. Smart contracts are typically written in high-
level programming languages like Solidity (for Ethereum).
o Decentralized Applications (dApps): Decentralized applications are built on top of
blockchain networks and interact with smart contracts to provide various functionalities,
such as decentralized finance (DeFi), supply chain management, and voting systems.

• User Interface Layer:

o Wallets: Wallets are software applications or hardware devices that allow users to store,
manage, and transact cryptocurrencies and tokens.
o User Interfaces (UI): UIs provide users with a graphical interface to interact with
blockchain networks, view transaction history, and access dApps.

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