BLOCK-CHAIN TECHNOLOGIES

UNIT-2
HASHING IN BLOCK CHAIN
Hashing refers to the transformation and generation of input data of any length into a string of a
fixed size, which is performed by a specific algorithm. In particular, the Bit coin hash algorithm
is SHA-256 or Secure Hashing Algorithm 256 bits.

SHA-256

A Bitcoin's blockchain uses SHA-256 (Secure Hash Algorithm) hashing algorithm. In 2001,
SHA-256 Hashing algorithm was developed by the National Security Agency (NSA) in the
USA.

How Hashing Works in Blockchain

A hashing algorithm takes an infinite number of bits, performs calculations on them, and outputs
a fixed number of bits. Regardless of the input data’s length, the output will always be rectified.
As a result, the original data is called input, and the final transformation is called a hash.

To fully comprehend what hashing is about, it’s essential first to understand the data structure. A
data structure is a specific way of storing data that consists of two key elements: pointers and
linked lists. Pointers are variables referring to other variables, so they act as indicators that show
the way to the right location. Besides, it provides the address of the next block in the chain.
Linked lists, on the other hand, make up a sequence of the nodes that are connected with the help
of pointers.

The block is identified by information included in the header of the block. It consists of such
details as:

 the version number of the blockchain

 UNIX timestamp
 hash pointers
 nonce, which is the value the miners need to create a block
 a hash of a Merkle root

The Relationship of Proof of Work in Hashing

Proof of Work (PoW) algorithm is correlated to the blockchain hash as this algorithm is useful to
confirm transactions and produce new blocks to the chain.
History is everything on the web, where you need to know who spends the money and who
receives it. It was impossible to reach full consensus in a decentralized network without control
by the third party in the past. The hash function made it possible as it provides a unique digital
fingerprint of a piece of data.

Blockchain Hash Function

A hash function takes an input string (numbers, alphabets, media files) of any length and
transforms it into a fixed length. The fixed bit length can vary (like 32-bit or 64-bit or 128-bit or
256-bit) depending on the hash function which is being used. The fixed-length output is called a
hash. This hash is also the cryptographic byproduct of a hash algorithm. We can understand it
from the following diagram.

The hash algorithm has certain unique properties:

 It produces a unique output (or hash).

 It is a one-way function.

In the context of cryptocurrencies like Bitcoin, the blockchain uses this cryptographic hash
function's properties in its consensus mechanism. A cryptographic hash is a digest or digital
fingerprints of a certain amount of data. In cryptographic hash functions, the transactions are
taken as an input and run through a hashing algorithm which gives an output of a fixed size.
Merkle Root

A blockchain is comprised of various blocks that are linked with one another (hence the
name blockchain). A hash tree, or the Merkle tree, encodes the blockchain data in an
efficient and secure manner. It enables the quick verification of blockchain data, as well
as quick movement of large amounts of data from one computer node to the other on the
peer-to-peer blockchain network.

Every transaction occurring on the blockchain network has a hash associated with it.
However, these hashes are not stored in a sequential order on the block, rather in the
form of a tree-like structure such that each hash is linked to its parent following a
parent-child tree-like relation.

Since there are numerous transactions stored on a particular block, all the transaction
hashes in the block are also hashed, which results in a Merkle root.
The hashing starts at the lowest level (leaf-level) nodes, and all four hashes are included
in the hash of nodes that are linked to it at level one. Similarly, hashing continues at
level one, which leads to hashes of hashes reaching to higher levels, until it reaches the
single top root hash.

This root hash is called the Merkle root, and due to the tree-like linkage of hashes, it
contains all the information about every single transaction hash that exists on the block.
It offers a single-point hash value that enables validating everything present on that
block

For example, if one has to verify a transaction that claims to have come from block #137, they
only needs to check the block's Merkle tree, without worrying about verifying anything on any other
blocks on the blockchain, like block #136 or block #138.
How does the hashing process works?

For this hash function, we are going to use a program developed by Anders Brownworth. This
program can be found in the below link.

Anders Brownworth Hash Program: https://andersbrownworth.com/blockchain/hash

If we type any character in the data section, we will observe its corresponding cryptographic
hash in the hash section.

For example: We have type in data section: This is a great tutorial.

It will generate the corresponding Hash:

759831720aa978c890b11f62ae49d2417f600f26aaa51b3291a8d21a4216582a
Now if we change the text: "This is a great tutorial." To "this is a great tutorial."

You will find the corresponding Hash:

 4bc35380792eb7884df411ade1fa5fc3e82ab2da76f76dc83e1baecf48d60018

In the above, you can see that we have changed only the first character case sentence from
capital "T" to small "t" and it will change the whole Hash value.

PUBLIC KEY CRYPTOSYSTEMS IN BLOCKCHAIN

Public key cryptography is a security protocol that ensures the safety of data that we exchange
through a transaction in a blockchain network. The aspect of security is crucial in a point-to-
point network like blockchain. Because, in such a network, nodes do not personally know and
trust each other. There is a need for a robust security system in place. One which secures the
information they are sending or receiving without worrying about security breaches. Also, this
eliminates the need for all the nodes to know and trust each other personally.

Public key cryptography is an asymmetric type of cryptography where we use a pair of keys
(public key and private key). It uses them to encrypt/decrypt the information and verify the
users. The process of public-key cryptography ensures two things i.e,

1. Encryption of the information at the sender’s end using the public key (of the receiver). This
ensures that no third party can access or understand the encrypted information in or out of the
network. Only the intended receiver can decrypt and read the message using its own private key.

2. Signing the message or information for verification using the sender’s private key. This
authenticates the identity of the sender and states that he is a legitimate node in the blockchain
network. The receiver verifies this by using the public key of the sender. This verification
process of users in a network is done through digital signatures.

Public-key cryptography is a way of providing a digital identity to the user.

There are three key elements in public-key cryptography i.e.

(i) Pair of keys; Private and public key,

(ii) Cryptography wallet and wallet address, and
(iii) Digital signature.

Each of these three elements contributes significantly to creating an authentic digital identity just
like our bank account, account number, and password. The only difference here is that it is to
exchange information or cryptocurrency within a blockchain network.

Public key cryptography uses special algorithms to create these keys. These algorithms work in a
unidirectional manner, i.e. the algorithm will first create a private key from it, a public key, and
from it, a public address. We cannot reverse the order of generation i.e. we cannot compute the
private key from a public key or wallet address from the public key.

This ensures the security of the public key cryptography system even more. It is because the
public key and public address are made public to carry out transaction and verification
processes.
Therefore, public-key cryptography ensures the integrity of the information, the authenticity of
the user, and the legitimacy of the transaction. A private key is like an account password for a
user. One can decrypt a coded message sent to them and make a digital signature from it for
verification.

1. Private Key

A private key is a long series of alphanumeric characters that is unique for every individual user
or node in the blockchain network. A private key is like a password which if shared can give
away our confidential information. So, we must keep our private key confidential from the
network.

The digital wallets (software or hardware) essentially store the private key as its security is very
important. The usual format for storing the key is a wallet import format which has a 51
character long key. This length may vary depending upon the storage formats.

The two main functions of a private key in providing security in a blockchain network are:

a. The private key is used to decrypt a message that the sender encrypts using the public key (of
the receiver). This ensures that the intended receiver gets the encrypted message and is safe from
other users on the way. Once the message reaches the receiver intact, he decrypts it into a
readable format using his private key.

b. Another important function of the private key is securing the message or information by
digital signature. A digital signature is used to verify a blockchain transaction. In the digital
signature, the message is signed using the sender’s private key. In this way, the receiver can
verify that the message (using the sender’s public key) is actually sent by the sender and not
someone else.

2. Public Key

A public key is the counterpart of a private key as it is cryptographically derived from it. A
public key is available for all the nodes in the network. This helps in the verification of a
transaction by all the nodes in a blockchain network. Let’s suppose that you are a node in the
network and you want to send a message or information to another node.

To carry out a secure transaction you will sign the message from your private key and send it for
verification from the entire network. Each node can access your public key and so they will
verify the transaction as authentic and pass it. When all the nodes verify your transaction using
your public key the transaction can take place. Generally, a public address is used for
transactions rather than the public key because of its length. The public key is long and not
easily shareable. So, a shorter version of it is created by hashing which is the public address.

The two main functions of a public key in providing security in a blockchain network are:

a. To encrypt a message or information using the public key of the receiver. This ensures that
only the receiver who has its corresponding private key can decrypt and read the message.
b. To verify if the sender is authentic by confirming the digital signature. A digital signature is
done by the sender’s private key. A public key verifies the sender’s identity by matching
(complementing) with his private key.

Digital signatures in blockchain

After the private key and public key, another important aspect of public-key cryptography is the
digital signature. No transaction in a blockchain network is secure if it is not digitally signed by
the sender’s private key. The cryptography i.e. the encryption done using the public and private
keys ensures that the information we are sending to other nodes is safe and no one in the middle
can read or change it.

Whereas, the purpose of doing a digital signature before sending the information is to state
authority over the information and tokens (cryptocurrency). It is like signing a cheque where you
state that it is your money that you are giving from your authorized bank account.

Before we start understanding the entire process of digital signatures, we must know which
algorithm is used to create digital signatures. Similar to the private and public key, digital
signature is created by the Elliptic Curve Digital Signature Algorithm (ECDSA). An important
thing to note here is that ECDSA is not based on encryption. This means that the keys are not
encrypted, only the message or information that we are sending is encrypted.

This algorithm applies itself in two parts;

1. In the first part, it takes the private key and Merkel root (hash) of the transaction and creates
the signature by mathematical computations. Then this signed transaction is sent out to other
users on the blockchain network. They will all verify the signature of the sending node using the
second part of the algorithm.

2. In the second part, other nodes compute a binary result using the digital signature of the
sender, the transaction information, and the public key of the sender. If the mathematical
algorithm gives the result as True, then it is verified that the sender has sent the message from an
authentic node.

All the validating nodes or computers in the network will verify the digital signature by using the
sender’s public key.
Benefits of Public Key Cryptography
Public key cryptography promises a lot of security benefits in an open network like blockchain.
Three most important aspects, as well as benefits of using public-key cryptography as the
security method, are; Confidentiality, Integrity, and Authenticity.

1. Confidentiality: Blockchain assures confidentiality of the data that we are sharing by using a
pair of keys. The public and private keys that are linked to each other make sure that the data or
information that we are sending is kept secret from others. It maintains confidentiality by
encrypting the data using a public key and decrypting it on the other end using its corresponding
private key.
2. Integrity: Public-key cryptography also maintains the integrity of the data by encrypting the
data. Due to end encryption, no one except for the sender and the receiver has access to the
information. So, one can be sure that the data is intact and no one has changed it in the middle.

3. Authenticity: Another important aspect and a major benefit of public-key encryption is the
authenticity of the user. Because it uses digital signatures in every transaction, it is impossible
for some to fake their identity. That is why every node on the blockchain network can be sure
that the sender is an authentic part of the network. This is how blockchain builds trust amongst
its users.

PRIVATE VS PUBLIC BLOCK CHAIN WITH USE CASES

Public blockchains are open networks that allow anyone to participate in the network i.e. public
blockchain is permission less. In this type of blockchain anyone can join the network and read,
write, or participate within the blockchain. A public blockchain is decentralized and does not
have a single entity which controls the network. Data on a public blockchain are secure as it is
not possible to modify or alter data once they have been validated on the blockchain.

A private blockchain is managed by a network administrator and participants need consent to

join the network i.e., a private blockchain is a permissioned blockchain. There are one or more
entities which control the network and this leads to reliance on third-parties to transact. In this
type of blockchain only entity participating in the transaction have knowledge about the
transaction performed whereas others will not able to access it i.e. transactions are private.

Basis of Public BlockChain

S.no Comparison Private BlockChain
In this type of blockchain anyone can In this type of blockchain
read, write and participate in a read and write is done
blockchain. Hence, it is permission upon invitation, hence it is
less blockchain. It is public to a permissioned
1. Access – everyone. blockchain.
Network
2. Actors – Don’t know each other Know each other
Decentralized
Vs Centralized A private blockchain is
3. – A public blockchain is decentralized. more centralized.
The order of magnitude of a public
blockchain is lesser than that of a The order of magnitude is
Order Of private blockchain as it is lighter and more as compared to the
4. Magnitude – provides transactional throughput. public blockchain.
5. Native Token – Yes Not necessary
6. Speed – Slow Fast
7. Transactions Transactions per second are lesser in Transaction per second is
 pre second – a public blockchain. more as compared to
public blockchain.
A public network is more secure due A private blockchain is
to decentralization and active more prone to hacks,
participation. Due to the higher risks, and data breaches/
number of nodes in the network, it is manipulation. It is easy for
nearly impossible for ‘bad actors’ to bad actors to endanger the
attack the system and gain control entire network. Hence, it is
8. Security – over the consensus network. less secure.
A public blockchain consumes more
energy than a private blockchain as it
requires a significant amount of Private blockchains
Energy electrical resources to function and consume a lot less energy
9. Consumption – achieve network consensus. and power.
Proof of Elapsed Time
(PoET), Raft, and Istanbul
Some are proof of work, proof of BFT can be used only in
Consensus stake, proof of burn, proof of space case of private
10. algorithms – etc. blockchains.
In a private blockchain,
In a public blockchain, no one knows there is no chance of
who each validator is and this minor collision. Each
increases the risk of potential validator is known and
collision or a 51% attack (a group of they have the suitable
miners which control more than 50% credentials to be a part of
11. Attacks – of the network’s computing power.). the network.
Potential to disrupt current business Reduces transaction cost
models through disintermediation. and data redundancies
There is lower infrastructure cost. No and replace legacy
need to maintain servers or system systems, simplifying
admins radically. Hence reducing the documents handling and
cost of creating and running getting rid of semi manual
12. Effects – decentralized application (dApps). compliance mechanisms.
R3 (Banks), EWF
Bitcoin, Ethereum, Monero, Zcash, (Energy), B3i (Insurance),
13. Examples – Dash, Litecoin, Stellar, Steemit etc. Corda

Smart Contracts, Internet of Things (IoT)

Propy (real estate) Supply chain management,

Finance, Healthcare,
14 Use Cases Government, Gaming
HASH PUZZALE
Recall that in the Bitcoin system the miners are in constant competition: Whoever solves the
puzzle first will earn the honor of adding a new block to the block-chain and make some money
as well. Hence, the miners try feverishly to be the first to solve the puzzle. In the following
section we are going to address the following questions:

 What exactly is this puzzle?

 How is it integrated in the Bitcoin system?

The Puzzle - A Cryptographic Hash Puzzle

Don’t be scared of the word ‘cryptography’, in our context it simply means that the ‘hash’
puzzle is related to the world of cryptography, i.e. building unbreakable systems.

Maybe the best real world analogy to a hash puzzle is a fingerprint

Imagine that you are given a fingerprint sample and you are asked to discover the height, weight
and overall look of the person to whom this fingerprint belongs. What would you do?

To make it a bit harder, assume that there is no correlation between fingerprints and other human
features (like hair color) so the only way to test if this fingerprint came from your best friend is
to take his fingerprint and compare it with the other one.

Your best choice, then, would be taking fingerprints from every person on Earth and then
comparing it to the fingerprint in question, until you find a match and stop. In case you are
unlucky, the right person would be the last one that you checked, which means that you’ll keep
looking for him for the next 13,555 years, assuming you check one person per minute (and the
Earth’s population is about 7.125 billion people). If you are lucky, though, you are expected to
look for that person for only half of that time, hooray! Bad news ah?

Let’s go back to our hash puzzle. In a hash puzzle, the fingerprint that you are given is a list of
characters (let’s call it a word), like “dog”, after which your task is to find the right person (in
our case this is a word as well) that produced the fingerprint. To this end the only thing you can
do is to try all possible combinations of digits (of some length), one by one.
Conceptually speaking, you have a machine that whenever you put some digits in it, it produces
an output of some other combination of digits. You know completely nothing about this machine
and it works like magic - you don’t see any correlation between the characters that you put in
and the characters that it produces. The only rule that you have observed is that no matter how
many characters you put in the machine, the produced output always has the same length.

One little technicality: The characters that are used by the machine (both your input and its
output) are only composed by the ten digits 0-9 and the six letters a-f. This means that every
character of the input or output could be one out of 16 characters.

That in every short time (usually 10 minutes) a single ‘block’ is appended to the ‘block-chain’
by a single ‘miner’ (the winer of the round). That miner, who appends that block, is the first one
who found a solution to the hash puzzle. In order to understand this puzzle we need to know how
does a block looks like. Details follow.

Briefly, a block in the block-chain is some data structure containing:

A nonce, this is the nucleus of the solution, the part of the block that entitles the miner the
transaction fee.

A reference to the previous block - this is required in order to be able to track the history of all
transaction, each block refers its predecessor, this way one can go back in history till the first
block (You can track the transactions history at blockchain.info)

A list of all transactions to be processed if this block is appended to the block-chain.

In the figure below you can see these 3 properties: the nonce (in the last yellowed row), the
reference (‘previous block hash’), and the list of transactions in greyed rows (the highlighted
right hand side of the figure is explained soon).
As mentioned, the miners are looking for the correct nonce that would solve the puzzle. The
hash puzzle described in the previous question was a specific list of characters that the machine
has produced as an output, in order to solve it one needs to find an input that produces this
specific output.

In the bitcoin system, however, the hash puzzle is somewhat easier: Instead of chasing after a
specific output, the miner needs to find an input that produces an output from a big set of
allowed outputs. That is, a puzzle could be a list of characters such that its first 16 characters are
‘0’ while there is no limitation on the rest of the characters, they could be anything. Although
this makes the puzzle a lot easier, it is a time and energy consuming problem to solve. In the
figure above, the miner performs many trials in order to solve the puzzle, the only field that is
permitted to be changed in each trial is the nonce. In every trial, the miner combines the nonce
that it just chose, the list of transaction that it wished to add to the block-chain and the reference
to the previous block all together, it then input it to the SHA1 machine. If the output of the
SHA1 machine begins with 16 ‘0’ characters then it solved the puzzle and won the game.

EXTENSIBILITY OF BLOCK CHAIN CONCEPTS

Blockchain technology was introduced to disrupt the financial sector. Many financial institutes
and banks have leveraged blockchain to make transactions secure and remove intermediaries.

But blockchain technology is not only restricted to the finance sector. From automobile to retail,
healthcare, manufacturing, and travel, every industry is investing in blockchain to avail its
benefits.

The technical concept behind the blockchain is similar to that of a database, but the interaction
with that database is entirely different.

For developers willing to learn blockchain development, it is essential to understand how they
will write software applications in the future and how different blockchain concepts like
consensus, trusted computing, smart contracts, and file storage systems interact with one another
in a decentralized environment.

Accuracy of the Chain

Transactions on the blockchain network are approved by thousands of computers and devices.
This removes almost all people from the verification process, resulting in less human error and
an accurate record of information. Even if a computer on the network were to make a
computational mistake, the error would only be made to one copy of the blockchain and not be
accepted by the rest of the network.

Cost Reductions

Typically, consumers pay a bank to verify a transaction or a notary to sign a document.

Blockchain eliminates the need for third-party verification—and, with it, their associated costs.
For example, business owners incur a small fee when they accept credit card payments because
banks and payment-processing companies have to process those transactions. Bitcoin, on the
other hand, does not have a central authority and has limited transaction fees.

Decentralization

Blockchain does not store any of its information in a central location. Instead, the blockchain is
copied and spread across a network of computers. Whenever a new block is added to the
blockchain, every computer on the network updates its blockchain to reflect the change.

By spreading that information across a network, rather than storing it in one central database,
blockchain becomes more difficult to tamper with.

Efficient Transactions

Transactions placed through a central authority can take up to a few days to settle. If you attempt
to deposit a check on Friday evening, for example, you may not actually see funds in your
account until Monday morning. Financial institutions operate during business hours, usually five
days a week—but a blockchain works 24 hours a day, seven days a week, and 365 days a year.

On some blockchains, transactions can be completed in minutes and considered secure after just
a few. This is particularly useful for cross-border trades, which usually take much longer
because of time zone issues and the fact that all parties must confirm payment processing.

Private Transactions

Many blockchain networks operate as public databases, meaning anyone with an internet
connection can view a list of the network’s transaction history. Although users can access
transaction details, they cannot access identifying information about the users making those
transactions. It is a common misperception that blockchain networks like Bitcoin are fully
anonymous; they are actually pseudonymous because there is a viewable address that can be
associated with a user if the information gets out.

Secure Transactions

Once a transaction is recorded, its authenticity must be verified by the blockchain network. After
the transaction is validated, it is added to the blockchain block. Each block on the blockchain
contains its unique hash and the unique hash of the block before it. Therefore, the blocks cannot
be altered once the network confirms them.

Transparency

Most blockchains are entirely open-source software. This means that everyone can view its code.
This gives auditors the ability to review cryptocurrencies like Bitcoin for security. However, it
also means there is no real authority on who controls Bitcoin’s code or how it is edited. Because
of this, anyone can suggest changes or upgrades to the system. If a majority of the network users
agree that the new version of the code with the upgrade is sound and worthwhile, then Bitcoin
can be updated.
DIGITAL IDENTITY VERIFICATION
Technological advancements in the digital space has revolutionized every aspect of our
lives, from shopping to collaborating with colleagues to keeping in touch with friends to
entertainment to managing our finances.

Since the dawn of the Internet, identity management has been a key concern, with billions of
dollars being spent on usability, security and privacy.

The identity and access management market is expected to grow from $8.09 billion in 2016 to
$14.82 billion by 2021, representing a 12.9% CAGR.

Despite this huge investment, managing digital identities continues to be plagued by three Cs –
Cumbersome, Costly and Challenging.

With data driving the world today, digital identity is critical to most business and social
transactions.

This governs the interaction of users in the digital world.

But traditional identity systems continue to be highly vulnerable, with single points of failure,
attracting continuous attempts to gain access to the complete repository of high value data.

And, with companies prioritizing cybersecurity, identity protection and compliance

management, while customer experience is significantly compromised.

As individuals, we shoulder the burden of managing multiple online IDs and passwords, while
also handling a host of documents, including passports, driver’s licenses, Social Security cards
and medical insurance cards.
Blockchain has facilitated the so-called self-sovereign identity, which is inherently unalterable
and more secure than traditional identity systems.

This has the potential to completely change the way we use identities to connect to different
online services.

Individuals would use their self-sovereign ID to verify their identity, removing the need for
passwords.

As with every lifechanging innovation, there’s been an extended period of evolution, with
experts exchanging ideas and little consensus on what self-sovereign ID means!

It’s a concept that stems from the belief that an individual must have control over the
administration of his identity.

The ID cannot be locked into one site and there needs to be interoperability of the ID across
multiple platforms, with user consent.

Experts have been contemplating the summation of various identifying information like
demographic and employment related data and even information about the individual revealed
by other people.

In principle, self-sovereign identity would allow users to :

 Control their identities

 Access and update information (though third-party verification may be required with
some claims)
 Choose the information that they prefer to keep private
 Transport the data (to another organization or even another jurisdiction if they relocate)
 Delete the identity if that’s what is wanted

More Power to the Individual

Backed by blockchain innovation, the solution gives individuals total privacy and control of their
personal information, while making data shareable on a trusted network, and ensuring security of
identity transactions.

Managing Multiple Identities

An individual may have one identity across multiple platforms or may want different identities
supporting different ‘personas’ for the workplace, for friends, for family, etc.

Blockchain can support this flexibility and offer a key for each of these identities, giving the user
the power to decide which persona to use in a particular situation.

Anonymous Authentication

The solution deploys anonymous authentication to ensure maximum security. If a public key is
needed to access one’s digital identity, this key is prone to hacker attacks.
Anonymous authentication allows individuals to use unique attributes that identify them,
eliminating the need for a public key.

Orchestrating a Brighter World

 Puts control of your personal data back into your hands rather than being in the hands of
industry giants.
 Addresses issues faced by refugees. They have to no country they belong to. They don’t
have proper documentation. They cannot borrow money, open an account, buy a house or
start a business. They remain as non-entities and cannot participate in society.
 Removes the need to deal with bureaucratic processes for passport creation.
 Enhances security and privacy of medical records and intellectual property, while
facilitating compliance with regulations protecting patient data.
 Simplifies KYC processes. Currently every bank and financial institution individually
performs the KYC process, validates the information and documents and stores a
digitized version. With digital identity being maintained on a shared ledger, banks can
access relevant parts of the stored data (with customer consent) and perform due
diligence.

NEUTRALITY OF BLOCKCHAIN
The technology of blockchain is neutral in the system of artificial intelligence. This technology
provides transparency in every sector where it has been used. Blockchain is used in many
different sectors either in finance, Border control systems or in hospitals. Nowadays mostly
people aren’t aware of this tech due to lack of understanding and skill and also because of
different perceptions regarding the technology.

Blockchain technology is transforming how markets work. Blockchains eliminate the need for
trusted gatekeepers like banks to execute, verify, and record transactions. In the financial
markets, their disruptive potential threatens both Wall Street banks and Silicon Valley venture
capitalists. How blockchain technology is regulated will determine whether it encourages or
inhibits competition. Some blockchain applications present serious fraud and systemic risks,
complicating regulation.

The major problem of this technology is the permanent data which cant be deleted or modified.
If any individual wants to clean its digital footwear it becomes a very difficult task. The
information or data stored in a block after verification is closed and creates another block for
storing the data.However it is the major benefit as well as the major problem of technology.
as per study conducted in the University of Cambridge study, bitcoins consumes much more
electricity then the whole nation.Each and every node of bitcoin requires approx 200 Gb
storage.It create major problems if the there more blockchains in the world,it’s not the problem
of one nation but the whole world.

The technology of blockchain can be fair and make the AI system neutral by establishing any
programme which can remove the data which can create bias. Blockchain tech helps in
providing the history of information as well as transparency to AI.

DIGITAL ART
Digital art itself is not a new medium, artists have been creating art digitally for years. Since
Apple released the Lisa in 1984, users have been able to “paint” works digitally with far less
material and money than many traditional mediums had allowed. Over the past couple of
decades, the art world has seen a proliferation of projects, exhibitions, institutions and sales arise
around digital art.

How does blockchain add value to digital art?

The thing that makes blockchain revolutionary for digital art is the ability to prove authenticity
and scarcity for digital artworks. Before blockchain, a digital artwork could be copied
identically, making it difficult to build a market around digital art. If one could very easily make
an identical copy of a digital artwork, how was the artist expected to prove his or her work was
the original and sell it as a unique piece?

Authenticity

Blockchain’s ledger technology, which acts as a public record tracking system, makes it possible
for anyone to track the history of an artwork. This allows you (the artist) to show the entirety of
the artwork’s life on this publicly trackable database, therefore proving the authenticity of a
digital artwork in a way that was impossible to do before. An artwork has value when it is
unique or authentic, and now digital art can be measured within the same parameters as physical
or traditional art.

Scarcity

Not only does tracking a digital artwork via blockchain allow you to prove a work is authentic,
but it also allows you to prove its scarcity. Provable scarcity are buzzwords around digital art
and blockchain, but what do they really mean? Through blockchain capability, you can create a
work on a token called a non-fungible token (NFT). Only works that are tracked on the
blockchain as unique tokens are the originals, meaning you can prove which works are original
and therefore create scarcity for your digital pieces.

What is an NFT?

Non-fungible tokens, or ERC-721s, are tokens that represent a unique asset and therefore are not
interchangeable. In the case of Codex, every Codex Record is a unique NFT. Which means
every artwork you create and register on a Codex Record is provably unique, creating a much
more valuable digital asset.

Creating rare, digital art on Codex

As we’ve established, a Codex Record is a unique token on the blockchain that can be used to
prove authenticity of a digital asset. You can register your digital artworks onto Codex Records
and then sell the Codex Record as it holds the artwork’s image and the entire history of the
work. Just as one would buy a painting in a gallery and receive a receipt and any provenance
documentation the gallery has, the same is all aggregated directly on the Codex Record.

BLOCKCHAIN ENVIRONMENT
Investments that involve large, international sustainable development projects have become
highly complicated, causing delays and backlogs. Blockchain-enabled processes and platforms
can manage transactions highly effective and efficient. Due to this reason, sustainable
development and other climate-related initiatives are desirable for investors. Blockchain-enabled
processes and platforms can help manage stakeholders that work in different capacities. This will
help increase efficiency, reduce transactions and make climate-related sustainable development
highly beneficial for private investments.

CASE STUDY-1:

According to a report by the United Nations Environment Programme (UNEP), blockchain's

distributed ledger technology can provide significant improvements by allowing investors,
renewable energy project developers, and purchasers to collaborate on a common platform with
established global standards for compliance due diligence.

South Africa-based renewable energy startup Sun Exchange allows anyone with an internet
connection to purchase solar panels online and rent them to hospitals, schools, businesses and
other companies in Africa. Sun Exchange uses the Bitcoin blockchain for making cross-border
payments. This eliminates any potential intermediaries between investors and beneficiaries.
Through Sun Exchange's solar panels, companies in South Africa have reduced their energy
costs by nearly 30%.

CASE STUDY-2:

Power Ledger, a technology company in Australia, has started to explore the impact of
blockchain. The organization established a pilot project in India's Uttar Pradesh. They allowed
homeowners with solar panels on their rooftops to sell power to others on the grid. This involves
setting up prices in real-time and implementing transactions over the blockchain. These systems
can help increase the deployment of renewable energy.

CASE STUDY-3:

Foodtrax is a Blockchain-based dApp that plans to track food from its origin to the shelf to
eradicate food waste due to storage and improper handling. Through their Blockchain-based
dApp, Foodtrax has interlinked data temperature loggers and equipment measuring and
monitoring, focusing on developing a flexible solution that covers all steps related to the supply
chain with transparency.