UNIT-3

1st QUESTION:

Decentralized

Digital

Limited Supply

Fast and Global

Security

Anonymous

Privacy

4th question

51% Attacks: When a single entity or a group of miners control more than 50% of the network's hash
rate, they can potentially manipulate the blockchain. This could allow them to double-spend coins,
censor transactions, or even reverse transactions.

Censorship: Centralized mining pools have the power to censor transactions by choosing not to
include them in the blocks they mine. This goes against Bitcoin's ethos of censorship resistance and
could lead to a lack of trust in the network.

Protocol Changes: Centralized miners could exert disproportionate influence over decisions regarding
Bitcoin's protocol updates or changes. This could skew development in favor of their interests rather
than the broader community.

Security Vulnerabilities: Concentrated power in the hands of a few large entities can introduce
security vulnerabilities. For example, if a major mining pool is compromised, it could affect a
significant portion of the network.

Economic Pressure on Small Miners: As mining becomes more centralized, smaller miners are pushed
out of the market due to increased competition and higher operational costs. This reduces the
overall decentralization of the network.
Hardware Centralization: The manufacturing of Application-Specific Integrated Circuits (ASICs) used
for mining is also becoming centralized. This could lead to involuntary bugs, government pressure, or
low incentives to improve ASIC quality

6th QUESTION

UNIT-4
1st question

Byzantine Generals Problem Overview

The Byzantine Generals Problem is a metaphor for the challenge of reaching consensus in a
distributed system, where some components may fail or act maliciously. Each general (node) must
agree on a common plan, but some generals may be traitors (faulty nodes) who try to confuse the
others. The goal is to ensure that:

All loyal generals agree on the same plan.

A small number of traitors cannot cause the loyal generals to adopt a bad plan.

Consensus Algorithms

To solve this problem, consensus algorithms are used. These algorithms ensure that a group of nodes
in a distributed system can agree on a single value, even if some of the nodes fail or act maliciously.
Let's focus on a few key algorithms:

1. Practical Byzantine Fault Tolerance (PBFT)

PBFT is designed for asynchronous systems where nodes may not have a synchronized clock. It works
as follows:

Pre-prepare Phase: The leader node proposes a value.

Prepare Phase: All nodes broadcast the proposed value to others.

Commit Phase: Nodes commit to the value if they receive enough matching responses.

Execution: Once a value is committed, all nodes execute the same command.

2. Raft

Raft is simpler and easier to understand than PBFT and is designed for synchronous systems:

Leader Election: One node is elected as the leader.

Commitment: Entries are committed once they have been replicated to a majority of nodes.

Consistency: All nodes apply the committed entries to their state machines in the same order.

3. Paxos

Paxos is a protocol for achieving consensus in a network of unreliable processors:

Proposal: A proposer suggests a value.

Acceptance: Acceptors agree to the value if it satisfies certain conditions.

Learning: Once a value is accepted by a majority, learners update their state.

Handling Faulty Nodes

When handling faulty nodes, consensus algorithms use redundancy and majority voting to ensure
consistency:

Redundancy: Multiple nodes replicate the same data or task to provide fault tolerance.

Majority Voting: Decisions are based on the majority of nodes, reducing the impact of a few faulty
ones.

Example: Faulty Lieutenants Scenario

In a scenario where two lieutenants are faulty:

The algorithm needs to ensure that the loyal generals can still reach a consensus despite the
misleading information from the two faulty lieutenants.
Using redundancy and majority voting, the loyal generals can ignore the conflicting messages and
agree on the correct value proposed by the majority.

Real-World Applications

Consensus algorithms are crucial in various real-world applications:

Blockchain: Ensuring that all nodes in a blockchain network agree on the state of the ledger.

Distributed Databases: Maintaining consistency across multiple database replicas.

Cloud Computing: Ensuring consistency and fault tolerance in distributed cloud services.

2nd QUESTION
7th QUESTION

Hyperledger Fabric is a modular and extensible blockchain framework designed for enterprise use. It
consists of several key components, each serving a specific purpose within the network. Here are the
main components:

Peer Nodes: These nodes maintain the ledger and execute chaincode (smart contracts). They are
responsible for transaction processing and data storage.

Ordering Service: This service is responsible for maintaining the global order of transactions and
creating blocks of transactions. It ensures that all peers in the network agree on the order of
transactions.

Membership Service Provider (MSP): The MSP manages the identities of participants in the network.
It handles authentication and authorization, ensuring that only authorized participants can access
the network.

Chaincode: Also known as smart contracts, chaincode is the business logic that runs on the network.
It defines the rules and processes for transactions and data manipulation.

Private Channels: These are sub-networks within the main blockchain network. They allow a subset
of network participants to transact privately and securely, without exposing data to the entire
network.

Certificate Authority (CA): The CA issues digital certificates to participants, enabling secure
communication and identity verification within the network.

Clients: These are the applications or services that interact with the blockchain network. They submit
transactions, query the ledger, and invoke chaincode.

Ledger: The ledger is a distributed ledger that contains the transaction history and current state of
the network. It is maintained by the peer nodes.

UNIT-5

1st QUESTION
2nd QUESTION
6th QUESTION