Seminar Report On

BLOCKCHAIN

Submitted by

SHASHI PRAKASH SHAH

Semester: 6th
Department: Computer Science & Engineering
Roll No.: 16900116046

In partial fulfillment for the award of the degree of Bachelor of Technology in

the department of

Computer Science and Engineering,

Maulana Abul Kalam Azad University of Technology,

West Bengal, India

Academy of Technology
Adeconagar, Hooghly – 712121
2019

Page | i
 ACKNOWLEDGEMENT

With a deep sense of gratitude, I would like to express my sincere thanks to my

professors for giving me this wonderful opportunities to make a report on an enthralling topic
like Blockchain, which immensely helped me gain knowledge and boost my confidence.
I want to thank all of my professors specially Prof. Prosenjit Das, Head of Department
of Computer Science and Engineering Department for providing such a solid background for
my studies. He has been great source of inspiration to me and I thank him from the bottom of
my heart.
I also want to thank my parents, who taught me the value of hard work by their own
example. I would like to thank my department for giving me the opportunity and platform to
make my effort a successful one.

Last but not the least I want to thank all of my friends who helped me directly or
indirectly in this successful completion of the work.

.
Shashi Prakash Shah
CSE dept, 3rd year

16900116046

Page | ii
 ABSTRACT
This seminar report is centered on Blockchain, its architecture and its use cases. Blockchain
is a distributed database of records or public ledger of all transactions or events that have
been executed and shared among participating parties, where each transaction in the public
ledger is verified by consensus of a majority of the participants in the system.

Blockchain is considered to be both alluring and critical for ensuring enhanced security and
(in some implementations, non-traceable) privacy for diverse applications in many other
domains. The immutable nature of Blockchain makes it suitable for many industries. Today
apart from acting as backbone for cryptocurrencies, it is being implemented in different
industries to bring out more security, traceability, transparency, automation, efficiency and
provenance

Structurally, Blockchain is a group of records which are stored in a block, and each block is
connected to its previous block cryptography (Hashing). Every block in a blockchain stores
information like timestamps, its hash value, hash of previous block, block number, along with
a set of records (transactions).

The nature of blockchain helped it makes its way into financial sectors as well as not
financial sectors. In this report I have discussed about the architecture and design aspects of
Blockchain and its use cases in the different fields like supply Chain.

Page | iii
 TABLE OF CONTENTS

CHAPTER NO. TITLE PAGE NO.

ABSTRACT iii
LIST OF TABLE v
LIST OF FIGURES vi
1. INTRODUCTION TO BLOCKCHAIN 1-5
1.1 Introduction 1
1.2 Definition 2
1.3 Structure 3
1.3.1 Block Header 4
1.3.2 Transaction 4
2. BLOCKCHAIN 2.0 6-9
2.1 Introduction 6
2.2 Domain of Blockchain 2.0 6
2.3 Difference Between v1.0 and v2.0 7
2.4 Actors 7
2.5 Components 8
2.6 Smart Contracts 8
2.6.1 Introduction 8
2.6.2 Characteristics 8
3. USE CASES 10

REFERENCES 11

Page | iv
 LIST OF FIGURES

FIGURE NO. DESCRIPTION PAGE NO.

1. Block Diagram of Blockchain Network 1

2. Structure of Block 3

3. Transactions in Blockchain 5

4. Merkle tree 5

5. Comparison of two types of Blockchain 7

LIST OF TABLES

TABLE NO. DESCRIPTION PAGE NO.

1. Data Structure of a Block 3

2. Structure of Block Header 4

Page | v
 CHAPTER 1: INTRODUCTION TO BLOCKCHAIN

1.1. INTRODUCTION

Current digital economy is based on the reliance on a certain trusted authority.

Our all online transactions rely on trusting someone to tell us the truth—it can be
an email service provider telling us that our email has been delivered; it can be a
certification authority telling us that a certain digital certificate is trustworthy; or it
can be a bank telling us that our money has been delivered reliably to our dear
ones in a remote country. The fact is that we live our life precariously in the
digital world by relying on a third entity for the security and privacy of our digital
assets. The fact remains that these third party sources can be hacked, manipulated
or compromised.

This is where the blockchain technology comes handy. It has the potential to
revolutionize the digital world by enabling a distributed consensus where each and
every online transaction, past and present, involving digital assets can be verified
at any time in the future. It does this without compromising the privacy of the
digital assets and parties involved. The distributed consensus and anonymity are
two important characteristics of blockchain technology.

Figure 1: Block Diagram of Blockchain Network

Page | 1
 1.2. DEFINITION

There have been rapid developments within blockchain and this is still ongoing.
There are already many different types of blockchain that surfaced, each slightly
different from one another in many different respects carrying their own way to
define blockchain. Since the cryptocurrencies are the first real application of the
blockchain technology, it is often referred as Blockchain 1.0 or which provides
definition for blockchain as follows:

 A Blockchain is an open, distributed ledger that can record transactions

between two parties efficiently and in a verifiable and permanent way.

Apart from cryptocurrencies, the blockchain is also starts appearing in the

development of a wide range of different applications that are decentralized in
nature.

In literature two main categories of blockchain are distinguished:

• Permissionless Blockchain
• Permissioned Blockchain

Permissionless Blockchain: Permissionless blockchains are the ones where

anybody can join the network to be a verifier without obtaining any prior
permission to perform such network tasks. Since anybody can join, special types
of incentive mechanisms are necessary in order for verifiers to participate. It has
advantage that it can accommodate both anonymous and pseudoanonymous
actors. Bitcoin and Ehtereuma re examples of permissionless blockchains

Permissioned Blockchain: The other type is the so-called permissioned blockchain

where special permission is needed from an authority to become a verifier in the
system. Permissioned blockchains are intended to be purpose-built, and can thus
be created to maintain compatibility with existing applications (financial or
otherwise).An advantage of a permissioned blockchain is scalability. In a
permissionless blockchain, the data is stored on every computer in the network,
and all nodes verify all transactions. In a permissioned blockchain, only a smaller

Page | 2
number of preselected participants will need to operate. However, because of the
smaller number of participants, it is much easier for a group of users to collaborate
and alter the rules, or revert transactions and that is why only trusted parties
should be given a permission to act as verifiers. Examples of permissioned
blockchains include Eris, Hyperledger, and Ripple.

1.3. STRUCTURE

A blockchain is a growing list of records, called blocks, which are linked using
cryptography (Hashing). Since bitcoin is the real application of blockchain 1.0.
We will see the structure of Bitcoin Blockchain.

Figure 2: Structure of Block

Bitcoin Blockchain is a linked- list like data structure consisting of blocks which
are linked using the hash of block before it (except genesis block). The “Genesis
block“,first block in any blockchain is a special block, as it does not have any
block before it. It is created during the creation of blockchain.

The each block of a blockchain contains, among other things, a record of some or
all recent transactions, and a reference to the block that came immediately before
it. It also contains an answer to a difficult-to-solve mathematical puzzle - the
answer to which is unique to each block.

Page | 3
 Table 1: Data Structure of a Block

Field Description / Purpose Size

Magic no Value always 4 bytes
0xD9B4BEF9
Blocksize Number of bytes 4 bytes
following up to end of
block
Block Header Consist of 6 items 80 bytes
Transaction Counter Positive integer 1-9
Transactions The (non-empty) list of <Transaction counter>-
transactions many transactions.
It comprises of two components:

 Block Header

 List of Transactions

1.3.1. Block Header: Block Header of each block is a data structure, and
includes a version field, the hash of the previous block, the root hash
of the merkle tree of all transactions in the block, the current time,
and the difficulty. Bitcoin stores the nonce in the extraNonce field
which is part of the coinbase transaction, which is stored as the left
most leaf node in the merkle tree (the coinbase is the special first
transaction in the block). The counter parameter is small at 32-bits so
each time it wraps the extraNonce field must be incremented (or
otherwise changed) to avoid repeating work.

Page | 4
 Table 2: Structure of Block Header

Field Description / Purpose Size (in bytes)

Version Block version number 4
Hash Prev Block 256-bit hash of previous 32
block header
Hash Merkle Root 256-bit hash based on all 32
of the transactions in the
block
Time Current timestamp as sec. 4
since 1970-01-01T00:00
UTC
Bits Current target in compact 4
format
Nonce 32-bit number 4

1.3.2. Transaction: The body of the block contains the transactions.

These are hashed only indirectly through the Merkle root. Because
transactions aren't hashed directly, hashing a block with 1 transaction
takes exactly the same amount of effort as hashing a block with
10,000 transactions. Most of these fields will be the same for all
users. There might be some minor variation in the timestamps. The
nonce will usually be different, but it increases in a strictly linear
way. "Nonce" starts at 0 and is incremented for each hash. Whenever
Nonce overflows (which it does frequently), the extraNonce portion
of the generation transaction is incremented, which changes the
Merkle root.A block may contain more than 500 transactions on
average, the average size of a block is around 1 MB (an upper bound
proposed by Satoshi Nakamoto in 2010).

Page | 5
 Figure 3: Transaction in Blockchain

The size of block may grow up to 8 MB or sometime higher (as of March 2018).

Transactions are organized as a

Merkle Tree. The Merkle Root is used
to construct the block hash. If anyone
change a transaction the block hash. If
anyone change a transaction, he/she
need to change all the subsequent

block hash. This property of merkle Figure 4: Merkle Tree

tree make blockchain tamper-proof.

The older the block is, it will be difficult to tamper it.

In a nutshell we can say that the technology behind Blockchain structure is

 The Data Structure

 Cryptography and Digital Signatures

 The Consensus

 The Economy of the Revenue Model

Page | 6
 CHAPTER 2: BLOCKCHAIN 2.0

2.1. INTRODUCTION

After the rise of the Bitcoin protocol people started to think about the blockchain
application domains other than cryptocurrency. The nature of the blockchain
network has the potential to enable the development of a wide range of different
applications that are decentralized and in permissioned environment. This new
concept of permissioned blockchain in the field of Business, industries, banking
sector, medical institutions is regarded as Blockchain 2.0.

Decentralized applications are becoming more and more important in recent

years. In this context not only the architectural decentralization is important but
the politcal one as well. Blockchain based applications can not be stopped,
censored or controlled and they ensure transparency and trust between all parties
involved in the interaction. Because every information on the blockchain is public,
one will not find many people thrilled to use a medical blockchain application and
feed it with their personal medical history. For example. the focus of a new
generation of the blockchain applications is not on the transfer of money via
transactions on the blockchain but on carrying out serious computation on a
decentralized network of computers.

Blocking 2.0 is sought in the field where users base range from few hundred to
thousands and know each other beforehand, but cannot trust each other. This trust
issue can be solved with the consensus protocols like PAXOS, RAFT , Byzantine
Fault Tolerance and practical Byzantine Fault Tolerance.

2.2. DOMAIN OF BLOCKCHAIN 2.0

Despite the fact that the use of the blockchain as a ledger for decentralized
applications offers a seemingly unlimited amount of potential, many concerns
regarding the use of the blockchain exist. Blockchain shows potential to be used in
many different fields and some of them are:

Page | 7
•Domain registration (Namecoin)

•Voting

•Crowdfunding

2.3. DIFFERENCE BETWEEN BLOCKCHAIN 1.0 AND

BLOCKCHIAN 2.0

Blockchain 2.0 deals with permissioned environment where user need to verify
their identity using a Membership service provider. The points which separates the
permissioned blockchain from permission-less blockchain (Blockchain 1.0) are
summarized in table below:

Figure 5: Comparison between Two types of Blockchains

2.3. ACTORS:

In blockchain architecture (as per Hyperledger fabric), there are number of actors
who creates, manages the blockchain. The actors in the blockchain are:

 Architect: Responsible for the architecture and design of the blockchain

solution

Page | 8
  User: The business user, operating In a business network. This role
interacts with the Blockchain using an application. They are not aware of
the blockchain.
 Regulator: The overall authority in a business network. Specifically,
regulators may require broad access to the ledger’s content.
 Developer: The developer of applications and smart contracts that interact
with the blockchain and are used by blockchain Users.
 Operator: Manages and monitor the Blockchain network. Each business
in the network has a Blockchain Network operator.
 Membership Service: Manages the different types of certificates required
to run a permissioned blockchain.
 Traditional Processing Platform: An existing computer system which
may be used by the Blockchain to augment processing.
 Traditional data sources: An existing data system which may provide
data to influence the behavior of smart contracts.

2.4. COMPONENTS:

In the Business model, Blockchain Solution comprises of many components to

rectify the current solution which are ineffective, expensive and vulnerable. Apart
from the components present in Bitcoin Blockchain like ledger, peer network,
wallet, the others components are:

 Smart Contracts: Software running on a ledger, to encode assets and the

transaction instructions (business logic) for modifying the assets.
 Membership: Membership Services authenticates, authorizes, and
manages identities on a permissioned blockchain network
 Events: Creates notifications of significant operations on the blockchain
as well as notifications related to smart contracts.
 Systems Management: It provides the ability to create, change and
monitor blockchain components.

Page | 9
 2.5. SMART CONTRACTS:

2.5.1. Introduction

Smart contracts were first proposed by Nick Szabo, who coined the term. With the
present implementations, based on blockchain "smart contract" is mostly used
more specifically in the sense of general purpose computation that takes place on
a blockchain or distributed ledger. In this interpretation, A smart contract is
a computer code running on top of a blockchain containing a set of rules under
which the parties to that smart contract agree to interact with each other. If and
when the pre-defined rules are met, the agreement is automatically enforced. The
smart contract code facilitates, verifies, and enforces the negotiation or
performance of an agreement or transaction. It is the simplest form of
decentralized automation.

Smart contracts permit trusted transactions and agreements to be carried out

among disparate, anonymous parties without the need for a central authority, legal
system, or external enforcement mechanism. They render transactions traceable,
transparent, and irreversible.

It is a mechanism involving digital assets and two or more parties, where some or
all of the parties deposit assets into the smart contract and the assets automatically
get redistributed among those parties according to a formula based on certain data,
which is not known at the time of contract initiation.

2.6.2. Characteristics of a Smart Contract

Smart contracts are capable of tracking performance in real time and can bring
tremendous cost savings.

Smart Contracts are

 Self-verifying
 Self-executing
 Tamper resistant

Page | 10
Smart Contracts can

 Turn legal obligations into automated processes.

 Guarantee a greater degree of security.
 Reduce reliance on trusted intermediaries.
 Lower transaction costs.

2.6.3. Advantages of smart contracts

Fast Settlement

The fact that smart contracts are automated by computer code and connected to a
global blockchain means digital tasks can be performed much faster and more
frequently. For example, if a smart contract is used to pay a contractor for work,
the payment could be executed almost immediately once the work is complete.

High Accuracy

Provided that smart contracts are written properly, actions performed using them
will be very accurate because they adhere strictly to a computer code, which
almost entirely eliminates the possibility of mistakes.

Less Risk

Using a blockchain to execute smart contracts makes them more secure than
regular contracts that require centralized counterparties. In addition, they would be
virtually unhackable, immutable and not prone to manipulation.

Trustless

There are no intermediaries involved in smart contract settlements, which

removes the need for trust in any individual or company.

Page | 11
Lower Costs

Since smart contracts do not rely on third party intermediaries, the associated
costs are reduced or even removed. Legal costs, especially related to dispute
resolution, frequently impact on traditional contracts but these can be significantly
reduced if different scenarios or contingencies are written into smart contracts as
code.

Also, as repetitive tasks could be automated, this means that the main costs
associated with using smart contracts for this purpose would just be the actual
creation of the contracts themselves

Page | 12
 CHAPTER 3: USE CASES

In many ways, Blockchain today is comparable to where the Internet was in early
1990s, While we have witnessed how the Internet has changed our societies over
the past two decades, we are now entering a phase where Blockchain is likely to
do the same by ushering in new paradigm comprising ‘Internet of Trust’ and ‘
Internet of Value’.

Retail supply Chain

An immutable digital ledger could radically improve supply chain management by

improving co-ordination, integration and logistics. It could provide a secure record
of transactions for accounting, production and even research and development,
potentially reducing the need for intermediaries and lowering costs. luxury goods
manufacturers can use this technology to build system for verifying the
authenticity of luxury goods providing a win-win situation for consumers and
manufacturers of the luxury goods alike.

Medicine Supply chain

Blockchain based anti-counterfeit solutions that introduce transparency to supply

chains, finds its applications in pharmaceutical industries. For example,
pharmaceutical industry can use anti-counterfeit solutions to prevent fake
pharmaceuticals from entering the market. This addresses a big problem that
affects both the economy and people who need medicine.

Food Safety

We know surprisingly little about most of the products we use every day. Even
before reaching the end consumer, goods travel through an often vast network of
retailers, distributors, transporters, storage facilities, and suppliers that participate

Page | 13
in design, production, delivery, and sales, yet in almost every case these journeys
remain an unseen dimension of our possessions.

Recording the journey of food items on Blockchain will enable us to verify the
chain of custody of a product, proving when and where it was handled by the
network of intermediaries and when it entered and left their facilities, with
corresponding benefits for transparency and efficiency.

Page | 14
 REFERENCES

1. Christian Muller and Dalmir Hasic, (2016), Blockchain: Technology and

Applications, Department of Computer Sciences, University of Salzburg
2. Michael Crosby and Nachiappan, (2015), BlockChain Technology: Beyond
Bitcoin, Sutardja Center for Entrepreneurship & Technology.
3. Prof. Sandip Chakraborty, Dr. Praveen Jayachandran, (2018), Blockchain
Architecture Design and Use Cases, National Programme on Technology Enhanced
Learning
4. Bitcoin Wiki: https://en.bitcoin.it/wiki/Block
5. Blockchain Explorer: https://www.blockchain.com/explorer
6. Google Images: https://www.google.co.in/imghp?
7. BlockchainHub: https://blockchainhub.net/smart-contracts/

Page | 15