Unit 4: Block chain
Blockchain Technology
Blockchain is a distributed, digital ledger technology used to store data securely, transparently, and in a way that cannot be easily changed or hacked.
In simple words: A blockchain is like a chain of digital blocks, where each block contains information (like transactions), and these blocks are linked together using cryptography.
Once data is added, it cannot be altered, which makes blockchain trustworthy.
Overview of Blockchain
Blockchain is a peer-to-peer (P2P) network where data is stored across many computers instead of a central server.
This makes the system:
- Decentralized
- Transparent
- Secure
How Blockchain Works
- A user requests a transaction.
- The transaction is broadcast to a P2P network of computers (nodes).
- Nodes validate the transaction using algorithms.
- Once verified, the transaction is added to a block.
- The block is linked to the previous block using a hash (a unique digital fingerprint).
- The complete chain of blocks becomes a blockchain.
Features of Blockchain
Blockchain has several strong features:
1. Decentralization - No single central authority controls the data. All nodes share the database.
2. Transparency - All transactions are visible to network participants. Anyone can verify data.
3. Security
Blockchain uses:
- Cryptography
- Hashing
- Digital signatures to protect data from tampering.
4. Immutability - Once data is added to the blockchain, it cannot be modified. This prevents fraud and unauthorized changes.
5. Distributed Ledger - Data is stored on multiple computers instead of one server, reducing the risk of data loss.
6. Consensus Mechanisms
Blockchain uses methods like:
- Proof of Work (PoW)
- Proof of Stake (PoS) to validate transactions.
7. Anonymity - Users are identified by cryptographic addresses, not personal information.
Limitations of Blockchain
Despite its benefits, blockchain has challenges:
1. Scalability Issues - Blockchains like Bitcoin can handle only limited transactions per second.
2. High Energy Consumption - Proof of Work-based blockchains use a lot of computational power and electricity.
3. Storage Requirement - The blockchain grows continuously, requiring large storage.
4. Slow Transaction Speed - Verification takes time due to complex cryptographic processes.
5. Legal & Regulatory Issues - There is no universal law for blockchain use across countries.
6. Privacy Concerns - Although anonymous, blockchain is transparent—anyone can view transactions.
7. Complexity - Understanding and implementing blockchain requires advanced programming and cryptography knowledge.
Application Areas of Blockchain
Blockchain is widely used in many industries:
1. Cryptocurrency
Bitcoin, Ethereum, and other digital currencies operate on blockchain.
2. Banking & Finance
- Secure payments
- International money transfer
- Fraud prevention
- Smart contracts
3. Supply Chain Management
Tracking goods from manufacturer to consumer.
4. Healthcare
- Medical record management
- Secure patient data sharing
5. Voting Systems
Transparent and tamper-proof digital voting.
6. Real Estate
- Smart contracts
- Property record management
7. Insurance
Automated claim processing.
8. Government Services
Digital identity, certificates, and record-keeping.
9. IoT (Internet of Things)
Secure communication among connected devices.
10. Education
- Student certificate verification
- Secure academic records
Fundamentals of Blockchain
The basic building blocks of blockchain technology include:
1. Block
Each block contains:
- Data (transactions)
- Hash of the block
- Hash of the previous block
- Timestamp
2. Chain
Blocks are linked together in sequential order, forming a chain.
3. Hashing
A hash is a unique digital fingerprint of a block.
Any change in data changes the hash, making tampering detectable.
4. Distributed Ledger Technology (DLT)
All nodes in the network have a copy of the blockchain.
5. Nodes
Computers participating in the blockchain network.
6. Consensus Mechanism
Algorithm used to validate blocks.
Examples: PoW, PoS, PBFT.
7. Smart Contracts
Self-executing contracts with rules written in code (mainly used in Ethereum).
8. Public vs Private Blockchain
| Type | Meaning | Example |
|---|---|---|
| Public | Open for everyone | Bitcoin, Ethereum |
| Private | Restricted access | Hyperledger |
Summary Table
| Topic | Explanation |
|---|---|
| Blockchain | Decentralized digital ledger technology |
| Features | Secure, transparent, immutable, decentralized |
| Limitations | Slow, expensive, scalability & legal issues |
| Applications | Cryptocurrency, banking, supply chain, healthcare, voting |
| Fundamentals | Blocks, hashing, nodes, consensus, smart contracts |
CRYPTOCURRENCIES
A cryptocurrency is a digital or virtual currency that uses cryptography for secure transactions.
It operates on blockchain technology, which ensures transparency, decentralisation, and immutability.
Key Characteristics
- Exists only in digital form
- No physical coins or notes
- Uses public and private keys for transactions
- Not controlled by any central bank
- Based on peer-to-peer networks
- Secured through blockchain
Examples
- Bitcoin
- Ethereum
- Ripple (XRP)
- Litecoin
- Binance Coin (BNB)
B. Applications of Cryptocurrencies
1. Digital Payments
- Faster, borderless transactions
- Lower fees than banks
2. Investment & Trading
- Many people buy cryptocurrencies as an investment
- Highly volatile, high-risk, high-return
3. Smart Contracts
-
Ethereum enables automatic execution of agreements without intermediaries
4. Decentralized Finance (DeFi)
-
Lending, borrowing, insurance, trading without banks
5. NFTs (Non-Fungible Tokens)
-
Digital art, gaming items, music files stored using blockchain
6. Cross-Border Remittances
-
Quick international money transfers
7. Online Shopping
-
Some e-commerce platforms accept crypto payments
8. Metaverse & Gaming
-
Used for virtual currencies inside games and VR worlds
C. Use Cases of Cryptocurrencies
1. Bitcoin – Digital Gold
Used for:
- Value storage
- Safe-haven asset
- Online transactions
2. Ethereum – Smart Contract Platform
Used in:
- Decentralized apps (DApps)
- DeFi platforms
- NFT marketplaces
3. Ripple (XRP) – Banking Transactions
Used by banks for:
- International payments
- Quick settlement
4. Stablecoins (USDT, USDC)
Used for:
- Eliminating volatility
- Safe trading pairs
- Stable payment systems
5. Blockchain for Governance
- Blockchain voting
- Transparent public systems
CLOUD COMPUTING
A. Nature of Cloud Computing
Cloud computing delivers computing resources over the internet, including:
- Servers
- Storage
- Databases
- Networking
- software
Instead of owning hardware/software, users rent services on-demand.
Key Characteristics
- On-demand self-service
- Scalability (scale up/down anytime)
- Pay-as-you-go billing
- Resource pooling
- Broad network access (access from anywhere)
- Managed services (security, patching, monitoring handled by cloud provider)
B. Benefits of Cloud Computing
| Benefit | Explanation |
|---|---|
| Cost efficiency | No need to buy servers; pay only for usage |
| Scalability | Automatically increase or decrease resources |
| Flexibility | Work from anywhere |
| Automatic updates | Provider handles OS/software updates |
| Disaster recovery | Automated backups, data redundancy |
| High performance | Uses powerful servers & global data centers |
| Security | Advanced encryption, compliance, monitoring |
C. Cloud Service Models
- 1. IaaS – Infrastructure as a Service - Virtual machines, storage, networks. Example: AWS EC2, Google Compute Engine.
- 2. PaaS – Platform as a Service- Provides development environment, runtime, and tools. -Example: Google App Engine, AWS Elastic Beanstalk.
- 3. SaaS – Software as a Service - Complete applications over the internet. Example: Gmail, Google Docs, Office 365.
D. Cloud Deployment Models
- Public Cloud – shared environment (AWS, Azure)
- Private Cloud – for one organization only
- Hybrid Cloud – mix of public + private
E. Major Cloud Service Providers
1. Amazon Web Services (AWS)
AWS is the largest cloud provider globally.
Popular AWS Services
| Service | Purpose |
|---|---|
| EC2 | Virtual servers |
| S3 | Cloud storage |
| RDS | Managed databases |
| Lambda | Serverless computing |
| CloudFront | Content delivery (CDN) |
| IAM | Security access control |
2. Google Cloud Platform (GCP)
Known for AI, ML, analytics and scalability.
Popular GCP Services
| Service | Purpose |
|---|---|
| Compute Engine | Virtual machines |
| Cloud Storage | Object storage |
| BigQuery | Data analytics |
| App Engine | Platform for apps |
| Kubernetes Engine | Container management |
3. Microsoft Azure
Azure integrates deeply with Windows, Office, and enterprise systems.
Popular Azure Services
| Service | Purpose |
|---|---|
| VMs | Virtual machines |
| Azure Blob Storage | Cloud storage |
| SQL Database | Managed SQL |
| Azure Functions | Serverless |
| Azure AD | Identity management |
4. IBM Cloud
IBM is known for enterprise-level cloud services and AI integration with Watson.
Popular IBM Cloud Services
| Service | Purpose |
|---|---|
| IBM Cloud Virtual Servers | IaaS compute |
| IBM Watson | AI and ML tools |
| IBM Cloud Object Storage | Storage |
| Kubernetes Service | Container orchestration |
Summary Table
| Topic | Key Points |
|---|---|
| Cryptocurrencies | Digital currencies using blockchain (Bitcoin, Ethereum, etc.) |
| Applications | Payments, DeFi, NFTs, trading, smart contracts |
| Use Cases | Banking, gaming, metaverse, investments |
| Cloud Computing | Internet-based computing services |
| Benefits | Cost-effective, scalable, flexible, secure |
| AWS/GCP/Azure/IBM | Provide compute, storage, database, serverless, AI services |