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1-Introduction To Blockchain Analytics

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26 views

1-Introduction To Blockchain Analytics

Uploaded by

Tejasruti Geridipudi
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Introduction to Blockchain:

Concepts and Origin


By Dr Afzalur Rahman
Definition and Basic Concept
• A blockchain is a distributed database or ledger that records transactions
or digital events in a secure, transparent, and tamper-resistant way.
• The blockchain is distributed and decentralised ledger that store data
such as transactions or digital events and is publicly shared across all
the nodes of its network.
• This technology facilitates peer-to-peer transactions without the need for
a centralized authority.
• Each ‘block’ in a blockchain contains a number of transactions, and every
time a new transaction occurs on the blockchain, a record of that
transaction is added to every participant’s ledger.
An Example image of blockchain technology
Decentralised Ledger Vs Centralised
ledger
Advantage of Blockchain
The Advent of Bitcoin and the
First Blockchain

• Blockchain technology first came to


prominence with the invention of Bitcoin, a
digital cryptocurrency, in 2008.
• The anonymous entity known as Satoshi
Nakamoto published the Bitcoin whitepaper,
which described a novel use of a blockchain
to create a decentralized digital currency free
from central oversight.
• Bitcoin’s blockchain was the first to solve
the double-spending problem without the
need for a trusted third party, representing a
major breakthrough in digital currency.
Fundamental Principles
of Blockchain

• Decentralization
• Transparency and Immutability
• Consensus Mechanisms
• What is blockchain? Write the
fundamental principle of Blockchain.
Role of Cryptography in Security
• Cryptography is integral to the security of blockchain technology. It
ensures the confidentiality and integrity of transactions. Each
transaction is signed using the sender's private key and can be verified
with the corresponding public key, ensuring that only the rightful
owner can initiate transactions. Additionally, the use of cryptographic
hashing in each block header secures the chain of blocks. Any attempt
to alter a transaction in a previous block would require re-mining all
subsequent blocks, which is computationally impractical, thereby
securing the blockchain against tampering.
Network Nodes and Blockchain Distribution
• A node in a blockchain network is a computer that holds a copy of the
blockchain and, depending on its capabilities, can participate in
validating and relaying transactions. Nodes are essential for the
decentralization and resilience of the blockchain. They ensure that the
same ledger is distributed across a wide area, reducing the risk of data
loss or manipulation. In a decentralized network, every node follows
the consensus rules, and any update or addition to the blockchain must
be validated and agreed upon by the network, reflecting the
democratic and decentralized ethos of blockchain technology.
Cryptocurrencies
Smart Contracts
Early Supply Chain Management
Application Voting Systems
s of
Identity Verification
Blockchain
Healthcare Records Management
Financial Services
Define Bitcoin and understand its popularity
as a currency
• Bitcoin is a digital currency -- also called cryptocurrency -- that can be traded
for goods or services with vendors that accept Bitcoin as payment. With
Bitcoin, holders can buy, sell and exchange goods or services without a
central authority or bank as an intermediary.
• Bitcoin is one of the most well-known virtual currencies today, with its value
rising dramatically since its launch in 2009. Satoshi Nakamoto, the
pseudonym of Bitcoin's creator, stated the purpose of Bitcoin is as an
electronic payment system that is based on cryptographic proof, instead of
trust. Some holders buy bitcoin as an investment, wanting it to increase in
value, while individuals and businesses use or accept payments as currency.
PayPal, for example, currently supports Bitcoin transactions, and many
countries are supporting Bitcoin transactions.
Define Bitcoin and understand its popularity
as a currency
• There are more than 21,030 cryptocurrency in the world market, with
a mixed market capitalisation of $926,615,212,224.816 as of 21
September 2022. The value of one bitcoin at this date is $19,000.44
and the market capitalisation is $364,074,940,423. That is 39.29%. As
per the https://coinmarketcap.com. There is 510 exchange market
from where one can purchase and sale cryptocurrency.
The methodology behind transacting with
Bitcoin
● Cryptography
● Distributed ledger Technology
● Blockchain
● Mining
● Bitcoin wallets
Q&A
● What is Bitcoin? Write the methodology
behind the transaction with bitcoin?
Process use in encryption and decryption
Process use in encryption and decryption
Distributed ledger Technology and blockchain

Distributed ledger technology (DLT) is a


digital system for recording the transaction
of assets in which the transactions and their
details are recorded in multiple places at the
same time. Unlike traditional databases,
distributed ledgers have no central
data store or administration functionality.

Blockchain organizes data into blocks, which


are chained together in an append only
mode.
Mining
Bitcoin mining is in fact an incentive system.
Miners validate new transactions and record them on the global ledger. A
new block,containing transactions that occurred since the last block, is
“mined” every 10 minutes on average, thereby adding those transactions to
the blockchain. Transactions that become part of a block and added to the
blockchain are considered “confirmed,” which allows the new owners of
bitcoin to spend the bitcoin they received in those transactions.
Mining
It started at 50 bitcoin per block in January of 2009 and halved to 25 bitcoin
per block in November of 2012. It halved again to 12.5 bitcoin in July 2016.
Based on this formula, bitcoin mining rewards decrease exponentially until
approximately the year 2140, when all bitcoin (20.99999998 million) will
have been issued. After 2140, no new bitcoin will be issued.
Wallet
At a high level, a wallet is an application
that serves as the primary user interface.
The wallet controls access to a user’s
money, managing keys and addresses,
tracking the balance, and creating and
signing transactions.
More narrowly, from a programmer’s
perspective, the word “wallet” refers to the
data structure used to store and manage a
user’s keys.
Q and A
What is cryptocurrency? What is the merit and
demerit of it. How it differ from the real /
traditional currency.
Gain a deep understanding of the definition of currency
● Durable: Physically stable, does not rot or
rust or melt
● Transferable: Easy to transfer ownership from
one person to another
● Divisible: Can be subdivided into smaller
units of money
● Scare: Limited quantity available for use
● Recognisable: Easy to recognise and verify
authenticity
● Fungible: one unit of money can be
substituted for another
What is cryptocurrency

A cryptocurrency is a digital asset designed to work as


medium of exchange using Cryptography to secure
the transaction and to control the creation of
additional unit of currency
Conventional vs digital currency
Flat or Cryptocurrency
conventional
currency

Type Real Virtual

Intermediate Yes No (peer-to-peer)

Portability Yes (except heavy Highly portable


cash)

Durable Moderate Highly durable

Acceptance National Global


Conventional vs digital currency
Flat or conventional Cryptocurrency
currency

Secure Moderate Heigh


(Cannot be
counterfeited)

Scare Low Heigh

Sovereign Yes No
(Government
issued)

Decentralized No (Central Bank Yes


Control)
Why use cryptocurrency
● Fast safe and cheap
● Ease to use and highly portable
● Untraceable pseudo anonymous
transactions
● Transparent and natural
● Active involvement of user
● Fewer risk for merchants
● Freedom to transact
● Low inflation and collapse risk
Risk
● Hackers: Cryptocurrencies are targets for highly sophisticated
hackers who have been able to breach advanced security systems
● Fewer protection: If you trust someone else to hold your
cryptocurrencies and something goes wrong that company may
not offer you that kind of help you expect from a bank or debit or
credit card provider
● Cost: Cryptocurrencies can cost consumer much more to use
then credit card or even regular Cash, often due to price volatility
● Scams: Fraudsters are taking advantage of hype surrounding
virtual currencies to cheat people with fake opportunities
● Lack of transparency: The anonymous nature of cryptocurrencies
make transparency and accountability difficult for consumer
checking to ensure the safety of their Investments
Risk
● Hackers: Cryptocurrencies are targets for highly sophisticated
hackers who have been able to breach advanced security systems
● Fewer protection: If you trust someone else to hold your
cryptocurrencies and something goes wrong that company may
not offer you that kind of help you expect from a bank or debit or
credit card provider
● Cost: Cryptocurrencies can cost consumer much more to use
then credit card or even regular Cash, often due to price volatility
● Scams: Fraudsters are taking advantage of hype surrounding
virtual currencies to cheat people with fake opportunities
● Lack of transparency: The anonymous nature of cryptocurrencies
make transparency and accountability difficult for consumer
checking to ensure the safety of their Investments
Position of Cryptocurrency in India
● The history of the Indian currency is as old as the history of Sher
Shah Suri (1486-1545) who first introduced rupee in India. Where
one rupee was equal to the 40 copper-coin pieces (paisa)
(Haraniya..., 2018).
● The entry of 36 and 46 of 7th schedule of the Constitution of India
empower the Central Government to legislate Indian currency
including foreign exchange legal tender etc.
Position of Cryptocurrency in India

In India, the legal framework governing


traditional currencies and financial
instruments does not explicitly include
cryptocurrencies. Despite their growing
popularity and use for a variety of
transactions, Indian law does not recognize
cryptocurrencies as legal tender or currency.
However, they may be considered as goods
under certain legislations.
Current Legal Status:

• Not Legal Tender: Unlike traditional currencies, cryptocurrencies like Bitcoin are not
recognized as legal tender in India. This implies their inapplicability for everyday
transactions like purchasing goods or settling bills.
• Not Expressly Banned: Despite their non-currency status, there exists no explicit
prohibition on possessing or trading cryptocurrencies in India. Individuals can buy,
sell, or hold them at their own discretion, acknowledging the inherent risks involved.
• Regulatory Landscape in Flux: The Reserve Bank of India (RBI) and other
governing bodies are actively formulating a regulatory framework for
cryptocurrencies. This signifies that the current legal landscape is fluid and susceptible
to forthcoming alterations or limitations.
Implications Aspect
• Cautious Approach: Cryptocurrencies are inherently volatile and
susceptible to market fluctuations. Consequently, investing
necessitates cautious prudence and an acknowledgement of the
potential legal uncertainties.
• Staying Informed: Keeping abreast of government pronouncements
and RBI pronouncements regarding cryptocurrencies is paramount to
navigating this dynamic domain.
• Seeking Professional Guidance: Before engaging in substantial
investments, consulting with financial advisors proficient in the
cryptocurrency ecosystem is highly recommended.
Cryptocurrency as a "Good": An
Alternate Perspective
• Commodity with Value: Although not officially recognized as
currency, cryptocurrencies might be categorized as "goods" under the
Sale of Goods Act. This empowers their buying, selling, and trading
akin to other commodities.
• FEMA Applicability: It's imperative to remember that the Foreign
Exchange Management Act (FEMA) regulates cross-border
transactions. While acquiring crypto from an overseas source might
not raise concerns, selling it to them could violate FEMA regulations.
Q and A

● Discuss the legal status of the cryptocurrency in


India.
Thank You

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