INSTITUTO SUPERIOR POLITÉCNICO DE TECNOLOGIAS

E CIÊNCIAS
(Higher

ENGLISH IV

BLOCKCHAIN AND CRYPTOCURRENCY

2024
Luanda
 Blockchain and Cryptocurrency

MEMBERS:

1) ADRIANA SAMPAIO Nº20220518

2) ÂNGELA AMARO Nº20220145
3) JOEL DOS SANTOS CAMUENHO Nº 20210092
4) BATÍLCIA GONÇALVES Nº20220330
5) EDUARDA DO BOM JESUS Nº20221210
6) MARIA UYANGO Nº20222545
7) PAULA JÚNIOR Nº20222394
8) EUCLIDES VALERIANO Nº20220378
9) FERNANDA FLORIANO Nº 20221659

GROUP No. 2

COURSE: COMPUTER ENGENEERING

CLASS: EINF4_T1

TEACHER: AVANDIA AILINE CRUZ PINTO MENDES

2024
LUANDA
 TOPICS
INTRODUCTION....................................................................................................................... 1
What is Blockchain? ............................................................................................................... 1
Emergence of Blockchain ....................................................................................................... 1
Overall Objective .................................................................................................................... 2
Specific Objective .................................................................................................................... 2
OPERATION OF THE BLOCKCHAIN .................................................................................. 2
Motivation behind creation .................................................................................................... 2
The Blockchain Structure ...................................................................................................... 3
Consensus Process................................................................................................................... 4
Decentralization and Immutability ....................................................................................... 4
ADVANTAGES AND DISADVANTAGES ............................................................................. 6
Advantages of Blockchain ...................................................................................................... 6
Disadvantages of Blockchain.................................................................................................. 7
APPLICATIONS AND EXAMPLES........................................................................................ 8
Finance ..................................................................................................................................... 8
Healthcare................................................................................................................................ 8
Logistics and Supply Chain.................................................................................................... 8
Governance .............................................................................................................................. 9
Cloud Storage .......................................................................................................................... 9
Smart Contracts ...................................................................................................................... 9
Examples of Blockchain Usage .............................................................................................. 9
Smart Contracts ...................................................................................................................... 9
Non-Fungible Tokens (NFTs) .............................................................................................. 10
Supply Chain Solutions ........................................................................................................ 10
Digital Identity ...................................................................................................................... 10
Decentralized Finance (DeFi)............................................................................................... 10
CONCLUSION ......................................................................................................................... 11
REFERENCES ........................................................................................................................... 12
 INTRODUCTION

What is Blockchain?
Blockchain is a revolutionary technology defined as a decentralized and immutable ledger
of transactions. It operates as a distributed digital ledger maintained by a network of
independent computers, known as nodes, with each node holding a complete copy of the
ledger. Transactions are grouped into blocks, which are then chronologically linked to
form a chain of blocks - hence the name "blockchain." Each block contains a set of
transactions and a cryptographic hash of the previous block, creating a continuous and
secure sequence.
One of the key features of blockchain is the immutability of data. Once a block is added
to the chain, it cannot be altered without modifying all subsequent blocks, which requires
the consensus of the majority of the network. This ensures the integrity and
trustworthiness of the recorded information. Additionally, blockchain operates in a
decentralized manner, eliminating the need for a central authority to validate or verify
transactions, thereby reducing reliance on intermediaries and enhancing transparency and
security.
Blockchains can be categorized as public or private. Public blockchains, such as Bitcoin
and Ethereum, are open and allow anyone to participate and verify transactions. In
contrast, private blockchains restrict participation to authorized entities, making them
more suitable for enterprise applications where privacy and control are crucial.

Emergence of Blockchain
The origin of blockchain technology is closely tied to the emergence of Bitcoin. In 2008,
an individual or group under the pseudonym Satoshi Nakamoto published a whitepaper
titled "Bitcoin: A Peer-to-Peer Electronic Cash System." This document proposed an
innovative solution for enabling secure and direct financial transactions between two
parties without the need for a trusted intermediary, such as a bank.
Nakamoto's proposal was a response to the flaws and vulnerabilities of traditional
financial systems, exacerbated by the global financial crisis of 2008. The whitepaper
detailed how a decentralized system could be used to validate and record transactions
securely and transparently. The key to this security was the use of cryptographic proofs
and a consensus mechanism known as Proof of Work (PoW), which required network
participants (miners) to solve complex mathematical problems to validate transactions
and add new blocks to the chain.
In January 2009, Satoshi Nakamoto released the Bitcoin software, initiating the first
functional blockchain network. The first block of the Bitcoin blockchain, known as the
"genesis block," contained a hidden message referencing the 2008 banking crisis: "The
Times 03/Jan/2009 Chancellor on brink of second bailout for banks." This message not
only marked the beginning of a new technological era but also underscored a critique of
the traditional financial system.

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Bitcoin quickly gained attention as a form of decentralized digital currency, but the
underlying technology - blockchain - began to be recognized for its potential in a wide
variety of applications beyond cryptocurrencies. Developers and companies started
exploring how the immutability, transparency, and security of blockchain could be
applied in sectors such as finance, healthcare, logistics, governance, and more.
Since then, numerous other implementations and variations of blockchain technology
have emerged. Ethereum, launched in 2015, introduced the concept of smart contracts,
significantly expanding the capabilities of blockchain by allowing the automated
execution of coded agreements. This advancement paved the way for the development of
decentralized applications (dApps) and the exploration of new use cases, further
solidifying the importance and versatility of blockchain technology.

Overall Objective
• To provide a comprehensive overview of blockchain technology and its
significance in the digital era.
Specific Objective
• To highlight the disruptive potential of blockchain technology and encourage
further exploration and engagement among the audience.

OPERATION OF THE BLOCKCHAIN

Motivation behind creation

The primary motivation behind the creation of blockchain was to provide a financial
transaction system that was decentralized, secure, and transparent, eliminating the need
for a central authority. Prior to blockchain, digital transactions relied on trusted
intermediaries like banks to verify and record transactions. This centralized model had
several disadvantages, including high transaction fees, lengthy processing times, and
vulnerabilities to fraud and security breaches.
Satoshi Nakamoto proposed blockchain as a solution to these problems. By decentralizing
the transaction ledger and using cryptographic mechanisms to ensure data security and
integrity, blockchain allows transactions to be verified and recorded reliably without
intermediaries. This not only reduces costs and increases efficiency but also makes the
system more resistant to attacks and manipulations, promoting transparency and trust
among network participants.
Every new innovation is the result of an attempt to solve a problem, and blockchain
technology is no exception. The evolution of blockchain technology arose from a need to
address the inherent uncertainties in the existing economic system. Historically,
institutions like banks acted as third-party guarantors to lower uncertainty and facilitate
trust in transactions. For instance, buying an item on eBay involves trust in eBay as the

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intermediary ensuring the trade is legitimate. However, reliance on such institutions
required significant trust and research.
Blockchain promised to overcome these issues by implementing applications in a
decentralized and secure manner, providing a degree of certainty without the need for
trusted intermediaries. This decentralization, achieved through distributing computational
tasks across a peer-to-peer (P2P) network and maintaining a publicly distributed ledger,
ensures transparency and reduces the risk of single points of failure.
In a centralized system like a bank, 100% uptime cannot be guaranteed due to the
possibility of server failures. In contrast, a decentralized blockchain network distributes
transaction data across all nodes, allowing each node to act as a backup in case of failures,
thereby maintaining data integrity. This decentralized ledger, accessible to all nodes,
enhances the system's resilience and trustworthiness.

The Blockchain Structure

The blockchain comprises three main components: blocks, the chain of blocks, and the
decentralized network.
Blocks: Each block in the blockchain contains a list of transactions that have been verified
and cryptographically hashed. Additionally, a block typically includes a reference to the
previous block in the chain, creating a chronological sequence of transactions.
Chain of Blocks: The blocks in the blockchain are linked together in a sequential order,
forming a chain. This linking mechanism ensures the integrity and immutability of the
recorded transactions. Any attempt to alter data in a block would require the modification
of all subsequent blocks, making tampering virtually impossible without the consensus of
the majority of the network.
Decentralized Network: The blockchain operates on a decentralized network of nodes,
where each node stores a copy of the entire blockchain. This decentralization ensures that
no single entity or authority has control over the network, making it resistant to
censorship, single points of failure, and unauthorized alterations.
The transaction process in a blockchain can be summarized as follows:
1. Facilitating a Transaction: A new transaction enters the blockchain network. All
the information that needs to be transmitted is doubly encrypted using public and
private keys.
2. Verification of Transaction: The transaction is then transmitted to the network
of peer-to-peer computers distributed across the world. All the nodes on the
network will check for the validity of the transaction, such as verifying sufficient
balance for the transaction.
3. Formation of a New Block: In a typical blockchain network, many nodes verify
multiple transactions simultaneously. Once a transaction is verified and deemed
legitimate, it is added to a mempool. Verified transactions in a particular node
form a mempool, and multiple mempools create a block.

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 4. Consensus Algorithm: Nodes that form a block try to add it to the blockchain
network to make it permanent. However, to ensure the blockchain's integrity, a
consensus mechanism is used. This mechanism ensures that every new block
added is the only version of the truth agreed upon by all nodes. The selected node,
or "miner," that successfully adds a block receives a reward. The consensus
algorithm generates a hash code for the block, which is necessary to attach it to
the blockchain.
5. Addition of the New Block: After the new block receives its hash value and
authentication, it is ready to be added to the blockchain. Each block contains the
hash value of the previous block, linking them cryptographically to form the
blockchain. A new block is added to the open end of the chain.
6. Transaction Completion: Once the block is added to the blockchain, the
transaction is complete, and the details are permanently stored on the blockchain.
Anyone can fetch and confirm the transaction details.

Consensus Process
The consensus mechanism is a crucial aspect of blockchain technology, responsible for
ensuring agreement among network participants on the validity of transactions and the
addition of new blocks to the chain. Two widely used consensus algorithms are Proof of
Work (PoW) and Proof of Stake (PoS).
Proof of Work (PoW): In a PoW-based blockchain, miners compete to solve complex
mathematical puzzles in a process known as mining. The first miner to solve the puzzle
and validate a block of transactions is rewarded with newly minted cryptocurrency and
transaction fees. This process requires significant computational power and energy
consumption but is highly secure and resistant to attacks.
Proof of Stake (PoS): PoS is an alternative consensus mechanism where validators are
chosen to create new blocks based on the amount of cryptocurrency they hold and are
willing to "stake" as collateral. Validators are selected randomly, with higher stakes
increasing the probability of selection. PoS is considered more energy-efficient than PoW
and allows for faster transaction processing, but it requires participants to have a stake in
the network, which may introduce centralization risks.
Decentralization and Immutability
Decentralization and immutability are fundamental principles of blockchain technology
that contribute to its security and resilience.
Decentralization: by distributing the blockchain ledger across a network of independent
nodes, blockchain achieves decentralization, ensuring that no single entity or authority
has control over the network. Decentralization promotes transparency, censorship
resistance, and fault tolerance, making the blockchain more resilient to attacks and
manipulations. For example, in a decentralized network like Bitcoin, transactions are
broadcasted to all nodes, which then independently verify the transactions before reaching
a consensus. This process ensures that even if some nodes are compromised or fail, the

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network as a whole remains operational and trustworthy. Decentralization also means that
blockchain can operate without a central point of failure, making it difficult for malicious
actors to disrupt the network.
Immutability: the immutability of blockchain refers to the inability to alter or delete
recorded transactions once they have been confirmed and added to the chain. Each block
contains a cryptographic hash of the previous block, creating a chain of blocks where any
change to a single block would invalidate the entire chain. Immutability ensures the
integrity and trustworthiness of the data stored on the blockchain, making it an ideal
solution for applications requiring secure and tamper-proof record-keeping. For instance,
in supply chain management, blockchain can be used to track the provenance of goods,
ensuring that records of each step in the supply chain are immutable and transparent. This
capability is also critical for applications in healthcare, where patient records must be
accurate and tamper-proof, and in finance, where transaction histories need to be reliably
preserved.

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 ADVANTAGES AND DISADVANTAGES

Advantages of Blockchain
Blockchain technology offers several compelling advantages, making it a revolutionary
innovation across various industries. Here are some key benefits:

1. Transparency: the transparent nature of blockchain allows all participants in the

network to view transactional data, promoting trust and accountability. Each node
in the network holds a copy of the blockchain, ensuring that any changes are
visible to all participants. This transparency is particularly beneficial in supply
chain management, where it enables tracking of goods from production to
delivery, ensuring authenticity and reducing fraud.
2. Security: Blockchain employs cryptographic techniques to secure transactions
and data, making it resistant to tampering and fraud. Each transaction is encrypted
and linked to the previous transaction using a cryptographic hash, forming an
immutable chain. This security feature is crucial in financial services, where
secure transaction records are essential to prevent fraud and unauthorized access.
3. Efficiency: By eliminating intermediaries and automating processes through
smart contracts, blockchain streamlines transactions, reducing costs and
processing times. Smart contracts are self-executing contracts with the terms of
the agreement directly written into code. This automation reduces human error
and speeds up transaction processing. For instance, in the real estate industry,
smart contracts can automate property transfers, reducing the time and cost
associated with traditional methods.
4. Decentralization: Decentralized blockchain networks are resilient to single
points of failure, censorship, and unauthorized control, enhancing reliability and
trust. In a decentralized network, no single entity controls the data or the network,
making it more resistant to attacks and failures. This is particularly important in
sectors like healthcare, where decentralized data storage ensures continuous
access to patient records, even if some nodes are compromised.
5. Openness: Blockchain technology is accessible to all, meaning anyone can
become a participant in the network without requiring permission from a central
authority. This open nature encourages inclusivity and innovation, as developers
can create new applications and services on the blockchain without facing entry
barriers.
6. Verifiability: Blockchain technology stores information in a decentralized
manner, allowing anyone to verify the correctness of the data using
zeroknowledge proofs. This cryptographic method enables one party to prove the
validity of information to another party without revealing the actual data,
enhancing privacy and trust.

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 7. Permanence: Records stored using blockchain technology are permanent,
meaning that data cannot be lost. Duplicate copies are stored at each node in the
decentralized network, ensuring data durability and reliability. This feature is vital
for archival systems, where the integrity and permanence of records are crucial.
8. Censorship Resistance: Blockchain technology is free from censorship because
it operates without central control. Trustworthy nodes validate transactions using
consensus protocols, ensuring that no single party can manipulate or censor the
data. This characteristic is particularly valuable in regions with restrictive
governments, providing a platform for free and uncensored communication and
transactions.
9. Tighter Security: Blockchain uses advanced hashing techniques, such as
SHA256, to secure each transaction. This method ensures that any alteration in
transaction data would be detected immediately, maintaining the integrity and
security of the blockchain. This robust security framework is essential for
protecting sensitive information in various applications, from financial
transactions to personal data.
10. Immutability: Once data is recorded on the blockchain, it cannot be altered or
deleted. This immutability is achieved through the decentralized structure, where
changes to one block would require altering all subsequent blocks across the entire
network. This feature makes blockchain ideal for applications requiring
tamperproof records, such as legal documentation and voting systems.
11. Cost Reduction: By eliminating the need for intermediaries, blockchain reduces
transaction costs for businesses. This cost efficiency is particularly beneficial for
cross-border payments and remittances, where traditional systems involve high
fees and long processing times. Blockchain offers a faster, cheaper alternative,
enhancing business operations and financial inclusion.
In summary, blockchain technology's advantages in transparency, security, efficiency,
decentralization, and cost reduction make it a transformative solution for a wide range of
applications. From financial services and supply chain management to healthcare and real
estate, blockchain's potential to streamline processes, enhance security, and reduce costs
is driving its adoption across industries.

Disadvantages of Blockchain
Despite its numerous benefits, blockchain technology also presents several challenges,
including:
Scalability: As blockchain networks grow in size and usage, scalability becomes a
significant concern, as traditional blockchains may struggle to handle increasing
transaction volumes efficiently.

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Transaction Costs: While blockchain eliminates the need for intermediaries, transaction
costs associated with mining, validation, and network fees can be substantial, especially
for high-frequency transactions.
Regulation: The regulatory landscape surrounding blockchain and cryptocurrencies is
still evolving, with varying degrees of acceptance and scrutiny from governments and
regulatory bodies worldwide. Uncertain or restrictive regulations can hinder the
widespread adoption of blockchain technology.

APPLICATIONS AND EXAMPLES

Blockchain technology is transforming numerous industries by enhancing security,

transparency, and efficiency. Here are detailed applications of how blockchain is being
applied across different sectors:
Finance
Blockchain technology is revolutionizing the financial sector by providing faster and
more secure solutions for various financial transactions.
• Cryptocurrencies: Facilitate decentralized and secure transactions, preventing
double-spending and fraud through transparent and auditable transaction records.
• Decentralized Finance (DeFi): Enables financial services such as lending,
borrowing, and trading without traditional intermediaries like banks.
• Banking and Payments: Enhances security and efficiency in international
transactions, contract negotiations, and various banking processes, reducing the
risk of fraud.

Healthcare
In healthcare, blockchain technology is used to securely manage patient records, ensuring
data interoperability and enhancing the efficiency of various healthcare processes.
• Patient Records: Securely store and manage patient records, allowing seamless
data sharing among healthcare providers.
• Drug Traceability: Ensure the authenticity and traceability of drugs throughout
the pharmaceutical supply chain, combating counterfeit drugs and ensuring
correct dosages and safety.
Logistics and Supply Chain
Blockchain enhances transparency and traceability in supply chain management,
optimizing logistics operations and reducing fraud.
• Supply Chain Transparency: Real-time tracking of goods, providing visibility
into each stage of production, transport, and sale.
• Product Authenticity: Verify the authenticity of products, preventing
counterfeiting and ensuring customers receive genuine products.

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Governance
Blockchain technology can improve governance by enabling transparent and tamperproof
voting systems and secure record-keeping.
• Voting Systems: Create transparent and secure voting systems, ensuring accurate
and tamper-proof vote recording.
• Land Titles and Property Rights: Securely record land titles and property rights,
making it easier to verify ownership and transfer property.
Cloud Storage
Blockchain's decentralized nature enhances the security and privacy of cloud storage
solutions.
Decentralized Cloud Storage: Distributes data across a network of nodes, reducing the
risk of data breaches and cyberattacks, ensuring better privacy and security for users.
Smart Contracts
Smart contracts are self-executing contracts with the terms directly written into code,
eliminating the need for intermediaries.
• Automated Agreements: Automatically enforce agreements in various
applications, such as real estate transactions, copyright management, and
commercial agreements.
• Financial Processes: Automate financial processes, such as releasing funds when
certain conditions are met, streamlining operations and reducing the need for
intermediaries.
Examples of Blockchain Usage
Blockchain technology has transcended its origins in cryptocurrency to offer innovative
solutions across various industries. Below are some real-world examples of projects and
initiatives leveraging blockchain technology:
Smart Contracts
Smart contracts are self-executing contracts where the terms of the agreement are directly
written into code. These contracts automatically enforce and execute the terms without
the need for intermediaries.

• Ethereum: Ethereum is the leading platform for smart contracts. It hosts

numerous decentralized applications (DApps) like Uniswap, a decentralized
exchange allowing users to trade cryptocurrencies without intermediaries, and
Compound, a platform for decentralized lending and borrowing.
• Cardano: Cardano is developing a smart contract platform aiming to be more
scalable and sustainable than Ethereum. It uses a proof-of-stake consensus
mechanism to improve efficiency and reduce environmental impact.

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Non-Fungible Tokens (NFTs)
NFTs represent unique digital assets, such as artworks, collectibles, and virtual real estate,
and are stored on blockchain platforms, ensuring secure ownership and provenance.
• CryptoKitties: One of the earliest and most popular examples of NFTs,
CryptoKitties allows users to buy, sell, and breed unique digital kittens. Each
kitten is a one-of-a-kind digital asset stored on the Ethereum blockchain.
• NBA Top Shot: NBA Top Shot sells exclusive NBA moments in NFT format,
allowing fans to own and trade iconic sports moments. This platform has gained
significant popularity, merging sports fandom with digital collectibles.
Supply Chain Solutions
Blockchain's transparency and immutability make it ideal for supply chain management,
ensuring product authenticity and traceability.
• IBM Food Trust: IBM Food Trust uses blockchain to track food products from
farm to consumer. This ensures transparency, enhances food safety, and helps in
tracing the origin of food products in case of contamination or recall.
• VeChain: this one provides blockchain solutions for product tracking and
authenticity verification across various sectors, including fashion, automotive,
and agriculture. It enables businesses to enhance transparency and trust in their
supply chains.

Digital Identity
Blockchain can provide secure and verifiable digital identities, allowing users to control
and share their personal information safely.

• Civic: civic is a platform that uses blockchain to offer secure digital identities. Users
can control their personal information and share it with trusted entities without
risking data breaches or unauthorized access.
Decentralized Finance (DeFi)
DeFi platforms leverage blockchain to offer financial services such as lending, borrowing,
and trading in a decentralized manner, eliminating the need for traditional financial
intermediaries.
• Aave: this is a DeFi protocol that allows users to lend and borrow
cryptocurrencies without intermediaries. It offers features like flash loans, where
users can borrow funds without collateral, provided the loan is repaid within the
same transaction.
• MakerDAO: this is a project that offers the DAI stablecoin, pegged to a basket
of digital assets. DAI provides stability in the volatile cryptocurrency market and
is used in various DeFi applications for lending, borrowing, and trading.

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 CONCLUSION

In conclusion, the blockchain emerges as a revolutionary technology, offering

decentralized and immutable solutions to various challenges across industries. From its
inception as the underlying technology of Bitcoin to its widespread applications beyond
cryptocurrencies, the blockchain has proven its potential to transform finance, healthcare,
logistics, governance, and more. Its core principles of transparency, security, and
efficiency underscore its significance in the digital age.
As we conclude, we challenge the audience to delve deeper into the potential of
blockchain and cryptocurrencies. Embrace the opportunity to learn and engage with these
innovative technologies, whether through further research, exploration of real-world
applications, or even active participation in blockchain communities. By understanding
and embracing the disruptive power of blockchain, we can contribute to shaping a more
transparent, secure, and decentralized future.

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 REFERENCES
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II. ANTONOPOULOS, Andreas M. Mastering Bitcoin: Unlocking Digital
Cryptocurrencies. Sebastopol: O'Reilly Media, 2014.
III. PILKINGTON, Marc. Blockchain technology: principles and applications. In:
OLNES, Sjur; URSIN, Ragnvald (Ed.). Research Handbook on Digital
Transformations. Cheltenham: Edward Elgar Publishing, 2016. p. 225-253.
IV. TAPSCOTT, Don; TAPSCOTT, Alex. Blockchain Revolution: How the
Technology Behind Bitcoin Is Changing Money, Business, and the World. New
York: Penguin, 2016.
V. SWAN, Melanie. Blockchain: Blueprint for a New Economy. Sebastopol:
O'Reilly Media, 2015.
VI. VUKOLIC, Marko. The Quest for Scalable Blockchain Fabric: Proof-of-Work
vs. BFT Replication. In: International Workshop on Open Problems in Network
Security. Zurich: Springer, 2015. p. 112-125.
VII.

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