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🧱 What is Blockchain?

A blockchain is a distributed and decentralized digital ledger that stores data (like transactions) in
blocks, which are linked together in a chain using cryptographic hashes.

✅ Key Features:

 Decentralized – No central authority (like a bank or company)

 Immutable – Once data is added, it can't be altered

 Transparent – All participants can verify the data

 Secure – Protected using cryptography (hashing, digital signatures)

🔗 Structure of a Blockchain Block

Each block contains:

 Block number

 Timestamp

 List of transactions

 Hash of the previous block → links the chain

 Nonce → used for mining (Proof of Work)

 Block hash → fingerprint of the block’s content

This structure helps detect tampering. If even one value changes, the hash changes.

💰 What is Bitcoin?

Bitcoin is the first and most famous cryptocurrency, introduced by Satoshi Nakamoto in 2008. It’s a
digital currency that:

 Runs on a blockchain

 Is peer-to-peer (no banks)

 Is limited in supply (21 million)

 Uses Proof of Work for validation

🔍 Think of Bitcoin as a use-case or application built on blockchain.

🤝 How Blockchain Powers Bitcoin:

1. Alice wants to send 1 BTC to Bob.

2. Her transaction is broadcast to the network.

3. Miners validate the transaction using Proof of Work.

4. Once validated, it’s added to a block.

5. The block is chained to previous blocks.

6. The transaction is now permanent and visible to all.

📝 Real-World Analogy:

Imagine a Google Doc shared with a group:

 Everyone can see it (transparency)

 No one person owns it (decentralized)

 You can add to it, but not delete old content (immutable)

 Everyone has the same copy (distributed)

That's how a blockchain works.

🧠 Why This Matters in Case Studies:

You're often asked to analyze systems that:

 Need trust between multiple parties

 Can benefit from tamperproof records

 Involve financial or supply chain transactions

Blockchain helps remove intermediaries, ensures security, and creates audit trails — which is why
Bitcoin and other apps rely on it.
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📌 Use-Cases of Blockchain Technology

1. Supply Chain Management

 Problem: Lack of transparency, fake goods, delays in shipment tracking.

 Blockchain Benefit: Every step (production → shipping → delivery) is recorded, time-stamped,

 Example: IBM Food Trust used by Walmart to track food from farm to shelf.

2. Healthcare

 Problem: Patients' medical records are scattered across hospitals, often duplicated or outdated.

 Blockchain Benefit: Single, tamper-proof record for each patient. Doctors can access real-time
data with the patient’s permission.

 Example: MediBloc, a blockchain-based patient health information system.

3. Voting Systems

 Problem: Fraud, fake votes, and lack of trust in election processes.

 Blockchain Benefit: Each vote is verifiable, immutable, and anonymized. Voters can track their
vote without revealing identity.

 Example: Estonia has tested blockchain in its digital voting system.

4. Finance & Banking (DeFi)

 Problem: Centralized banks cause delays, high transaction fees.

 Blockchain Benefit: Peer-to-peer transfers, 24/7 access, and no intermediaries. Faster cross-
border payments and loan systems.

 Example: Uniswap, Compound – blockchain-based lending/trading apps.

5. Identity Management

 Problem: Passwords are insecure, and people often lose access to accounts.

 Blockchain Benefit: Decentralized digital identity (DID) where users control their data, and it's
never stored in one place.

 Example: Microsoft’s ION project on Bitcoin’s blockchain.

6. Land or Property Records

 Problem: Tampering with property documents and long manual verification.

 Blockchain Benefit: Land ownership can be recorded on blockchain as permanent, tamper-proof

 Example: Andhra Pradesh and Sweden piloted blockchain for land registry.

7. Education

 Problem: Fake degrees, lost certificates.

 Blockchain Benefit: Degrees and certificates are stored as verifiable credentials on blockchain.

 Example: MIT issues diplomas via blockchain.

8. Digital Art / NFTs

 Problem: Difficult to prove ownership of digital content.

 Blockchain Benefit: Non-Fungible Tokens (NFTs) assign unique ownership to digital assets.

 Example: OpenSea, Ethereum-based NFT marketplaces.

🔄 What is Decentralization in Blockchain?

Decentralization means removing central control from a system. Instead of one entity (like a bank,
company, or government) being in charge, control is distributed across a network of participants
(nodes).

In blockchain:

 Every node keeps a copy of the ledger

 No single node can control or modify the system on its own

 All nodes must agree (consensus) before any data is updated

📋 Traditional vs Decentralized System

Feature Centralized System Decentralized (Blockchain)

Control One central authority Multiple independent nodes

Single point of failure Yes No

Trust Needed in central party Achieved through consensus

Speed Usually faster Can be slower, but more secure

Transparency Limited Public or shared among peers

🧠 Why is Decentralization Useful?

✅ 1. No Single Point of Failure

If one server crashes or gets hacked, the system still runs smoothly because data is replicated across all
nodes.

✅ 2. Trustless Environment

You don’t need to trust a person or organization — you trust the system's rules and code (smart
contracts, consensus mechanisms).

✅ 3. Tamper-Resistance

Once data is agreed upon by the network and added to the blockchain, it cannot be changed by one
party.

🔗 Example: Centralized vs Decentralized in Payments

Centralized:
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 PayPal processes payments. You trust PayPal to record transactions, protect your data, and
allow/refuse payments.

Decentralized (Bitcoin):

 You send BTC from your wallet to someone else.

 Miners validate it.

 It’s added to the blockchain.

 No one can stop, reverse, or modify it.

🛠️Applied in Case Studies Like:

 Supply Chain: No one party controls product information → shared trust.

 Voting: No central election authority needed to count or store votes.

 Healthcare: Patients control access to their medical history.

🔐 Core Properties of Blockchain

🧱 1. Immutability

 Once data is written on the blockchain, it cannot be altered or deleted.

 This is achieved using cryptographic hashing and the linking of blocks.

 Any attempt to change data would break the hash chain and be instantly noticeable.

📌 Use-case relevance: Useful in audit trails, financial records, land registries, where tamper-proof data
is critical.

🌍 2. Decentralization

 There is no central authority; all nodes have equal power in decision-making and validation.

 Data is stored across many nodes globally, increasing resilience.

📌 Use-case relevance: Prevents censorship or manipulation in systems like voting or journalism

🧾 3. Transparency

 All transactions are visible to the network participants (fully or partially, depending on whether
it's public or permissioned).

 Anyone can verify the state of the blockchain.

📌 Use-case relevance: Enhances trust in public services, donation tracking, and supply chain
traceability.

🔐 4. Security

 Uses cryptographic techniques like:

o Hash functions for data integrity

o Digital signatures for authentication

 Attacks are nearly impossible unless one gains control over the majority of the network (e.g.,
51% attack in PoW).

📌 Use-case relevance: Ideal for digital identity, banking, and document verification.

🛡️5. Consensus

 All nodes agree on a single version of truth through a consensus mechanism like PoW, PoS,
PBFT, etc.
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 Ensures data is validated before being added to the chain.

📌 Use-case relevance: Ensures accuracy and reliability of shared ledgers (e.g., in finance, health,
logistics).

🧮 6. Programmability (in Smart Contract Platforms)

 Blockchains like Ethereum support programmable logic (smart contracts).

 You can automate agreements and complex workflows without needing intermediaries.

📌 Use-case relevance: Essential for insurance claims, DeFi protocols, and automated supply chains.

🔁 7. Distributed Ledger

 Every participant maintains a copy of the ledger.

 Even if one or several nodes fail, the ledger continues to exist on others.

📌 Use-case relevance: Useful in multi-organization ecosystems like consortiums, inter-bank systems, etc.

🔐 What are Cryptographic Primitives?

Cryptographic primitives are the basic building blocks of cryptography — like Lego bricks — used to
design secure systems. In blockchain, they help with:
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 Data integrity

 Authentication

 Proof of ownership

 Consensus validation

✅ Main Cryptographic Primitives Used in Blockchain:

1. Hash Functions

A hash function takes any input and produces a fixed-length output (hash). It's:

 One-way: You can’t go back from the hash to the input.

 Deterministic: Same input gives same output.

 Collision-resistant: No two different inputs produce the same hash.

📌 Use in Blockchain:

 Block headers, transaction IDs, digital fingerprints

 Ensures data hasn’t been tampered with

Example: SHA-256 in Bitcoin

2. Public Key Cryptography (Asymmetric Encryption)

Involves a public key (shared with others) and a private key (kept secret).

📌 Use in Blockchain:

 Users sign transactions with their private key

 Others verify it with their public key

 Ensures authentication and non-repudiation

Example: RSA, ECDSA (Elliptic Curve Digital Signature Algorithm)

3. Digital Signatures

A mathematical scheme to prove that a message came from a specific user and was not changed.

📌 Use in Blockchain:

 Used to sign transactions

 Ensures the transaction is genuine and unchanged

 Protects against fraud

4. Merkle Trees

A hash-based data structure that organizes transactions in a block. Only the root hash (Merkle root) is
stored in the block header.

📌 Use in Blockchain:

 Efficient verification of transactions

 Saves space

 Validates data integrity quickly

5. Hash Pointers

A combination of:

 Data

 Hash of previous data

📌 Use in Blockchain:

 Links blocks in a chain

 If someone tries to change any block, the hash breaks

6. Random Number Generators (for Consensus)

Used in some consensus models (like PoET) to introduce randomness and fairness in block selection.

🧠 Why They Matter in Case Studies:

If a case involves data sharing, identity verification, or consensus, cryptographic primitives are the core
of how the system stays secure and trustless.

🔐 What is a Hash Function?

A hash function is a mathematical function that takes an input of any size and returns a fixed-size string
of characters (called a hash or digest).

It's like a digital fingerprint of your data.

In blockchain, hash functions ensure data integrity, detect tampering, and link blocks together.

✅ Properties of a Good Hash Function

1. Deterministic

o Same input always gives the same output.

2. Fast Computation

o Should generate the hash quickly.

3. Pre-image Resistance

o Impossible to reverse the process (you can't find the input from the hash).

4. Collision Resistance

o Two different inputs should not produce the same hash.

5. Avalanche Effect

o A small change in input drastically changes the output hash.

🔁 How It’s Used in Blockchain

🔗 1. Linking Blocks

Each block contains:

 Hash of the previous block

 Its own transactions

 Its own hash (based on all the above)

If any data in the block changes, the hash changes → breaking the chain.

🧾 2. Mining (Proof of Work)

In Bitcoin, miners try to find a nonce (random number) so that the hash of the block starts with a specific
number of zeros.

This is like playing a guessing game until you find a “winning” hash.

🧬 3. Merkle Tree Construction

All transaction hashes are combined into a Merkle root. This allows quick verification of transactions
without storing all of them.

🔐 4. Data Integrity

Any change to data changes its hash. So, you can check whether data has been tampered with just by
comparing the stored hash.

🧮 Example: SHA-256

SHA-256 (Secure Hash Algorithm 256-bit) is widely used in Bitcoin.

 Input: Any data (text, file, etc.)

 Output: A 256-bit (64-character) hexadecimal string

 Example:

o Input: hello

o Output: 2cf24dba5fb0a... (truncated)

🧠 Why It’s Important in Case Studies:

If you're asked how blockchain ensures security, immutability, or tamper detection, hash functions are
the answer.

🔐 What is SHA-256?

SHA-256 stands for Secure Hash Algorithm 256-bit.

 Takes any input (text, file, transaction data)

 Outputs a fixed 256-bit (64-character) hash

 Used extensively in Bitcoin mining, block headers, and transaction IDs

It is one-way, collision-resistant, and incredibly hard to reverse.

✅ Why is SHA-256 Important in Blockchain?

🔗 1. Block Hashing

Every block in Bitcoin has a header that is hashed using SHA-256.

⛏️2. Proof of Work (Mining)

Bitcoin uses double SHA-256 hashing to secure blocks:

 Miners must find a nonce such that the SHA-256 hash of the block starts with a certain number
of leading zeros.

 This is how Bitcoin ensures security and fairness in adding blocks.

💸 3. Transaction Integrity

Each Bitcoin transaction is hashed with SHA-256 to create a transaction ID.

⚙️How SHA-256 Works (Conceptually):

1. The input message is preprocessed (padded, broken into blocks).

2. Each block goes through 64 rounds of processing using bitwise operations (AND, OR, XOR,
ROTATE).

3. After all rounds, you get a fixed 256-bit output hash.

You don’t need to memorize the math — just know it’s fast, secure, and used for data verification.

🔒 Properties That Make SHA-256 Secure:

Property Explanation

Deterministic Same input always produces the same output.

Avalanche Effect Tiny input change = completely different hash.

Pre-image Resistance Can’t guess the input from the hash.

Property Explanation

Collision Resistance Two inputs won’t produce the same hash.

💡 Example:

Input: "blockchain"

Output: 625da44e...18e856ee (SHA-256 hash – 64 hex characters)

Change "blockchain" to "Blockchain" → completely different hash.

🧠 Where You’ll See SHA-256 in Case Studies:

 Securing transactions

 Preventing tampering in blocks

 Validating data integrity in supply chains

 Mining (Proof of Work)

🔁 What Do We Mean by “Types of Hashing”?

Hashing can be used in various structures and patterns based on the need. In blockchain, it's used not
just to generate hashes, but to secure structures, verify data quickly, and maintain integrity.
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So instead of "types" meaning different algorithms (like MD5, SHA-1, SHA-256), here we focus on how
hashing is applied in different formats.

✅ 1. Simple Hashing (One-time Hash)

You apply a hash function (like SHA-256) to some input once.

🔹 Use:

 Generating transaction IDs

 Verifying file or data integrity

📌 Example:
Hash of "Bitcoin" → Unique 256-bit value

✅ 2. Repeated Hashing

Apply the hash function multiple times to the same data.

🔹 Use:

 Adds extra security

 Used in some wallet key generations or password protection

📌 Example:
Hash(Hash("data"))

✅ 3. Combined Hashing

Hashing multiple pieces of data together as one input.

🔹 Use:

 When you want to group transactions or data points into a single hash

📌 Example:
Hash("Tx1" + "Tx2") = Combined hash of two transactions

✅ 4. Sequential Hashing (Hash Chains)

Each piece of data is hashed and linked to the hash of the previous one.

🔹 Use:

 Core to blockchain itself: blocks form a chain via hashes

📌 Example:
Block B → Hash includes Block A’s hash
Block C → Hash includes Block B’s hash

✅ 5. Hierarchical Hashing (Merkle Trees)

Hashes are built in a tree structure, combining hashes of data at each level until a single Merkle Root is
formed.

🔹 Use:

 Verifying whether a transaction exists in a block

 Reducing memory and processing cost

📌 Example:

 Bottom layer: Hashes of transactions

 Next layer: Hash(Hash1 + Hash2), etc.

 Top: Merkle Root

🎯 Summary of Application in Blockchain

Type Where It’s Used

Simple Hashing Data verification, transaction IDs

Repeated Hashing Wallet security, password hashing

Combined Hashing Transaction groups, lightweight proofs

Sequential Hashing Block linking, blockchain security

Hierarchical Hashing Merkle Trees, fast transaction checks

🔗 Hash Chain: What Is It?

A hash chain is a sequence where each data element includes the hash of the previous one. This
creates a linked structure — like a chain of locks. If one link is broken (i.e., changed), the entire chain
becomes invalid.

📦 In Blockchain:
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Each block contains the hash of the previous block, forming a hash chain.

🔄 Why Use Hash Chains in Blockchain?

 To ensure immutability

 To detect any tampering

 To maintain a verifiable history of transactions

If someone tries to change data in Block 17, they must also change the hash in Block 18, 19, 20… all the
way to the end. That’s practically impossible.

🧱 Construction of Chain of Blocks

Let’s walk through how a blockchain is built block-by-block using hashing.

🔹 Step 1: Genesis Block

 The first block in a blockchain.

 Has no previous block, so the “previous hash” is usually all zeros or predefined.

 Contains:

o Timestamp

o Data (e.g., initial transaction)

o Nonce (for mining)

o Its own hash

🔹 Step 2: New Block Creation

When a new block is created:

1. It takes the hash of the previous block

2. Adds its own transaction data

3. Includes a timestamp

4. Adds a nonce (used in mining)

5. Computes its own hash using all of the above

That new hash will then be referenced by the next block — and so on.
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🧠 Key Elements of Each Block:

Field Description

Previous Hash Links to the last block (hash of its contents)

Transactions List of operations/data being recorded

Timestamp When the block was created

Nonce Random number for mining (Proof of Work)

Merkle Root Single hash representing all transactions

Current Hash Hash of all the block data (computed after mining)

🔐 How This Makes Blockchain Secure:

 Tampering a block changes its hash

 The next block's previous Hash won't match

 This breaks the chain

 So, changing one block means re-mining every following block, which is computationally
infeasible

🔁 Real-World Analogy:

Imagine each block is a page in a notebook. At the bottom of each page, you write the summary of the
previous page. If someone tries to change an earlier page, all future pages will have incorrect
summaries — making the tampering obvious.

🔐 Basic Concepts of Cryptography

Cryptography is the science of protecting information using mathematical techniques. It ensures:

 Confidentiality – Only intended recipients can read the message

 Integrity – Data hasn’t been changed

 Authentication – The sender is who they say they are

 Non-repudiation – The sender can’t deny sending the message

Blockchain uses cryptography to:

 Secure transactions

 Authenticate users

 Prevent tampering

🔑 Public Key Cryptography (Asymmetric Cryptography)

This uses two keys:

 Public Key – Shared with everyone

 Private Key – Kept secret by the owner

🔁 They are mathematically linked, but you can’t reverse-engineer the private key from the public key.

🔐 Uses:

 Encryption & Decryption

 Digital Signatures

📥 Encryption & Decryption using Public Key Cryptography

Let’s say Alice wants to send a secret message to Bob.

🔒 Encryption:

 Alice uses Bob’s public key to encrypt the message.

 Only Bob’s private key can decrypt it.

🔓 Decryption:

 Bob receives the message.

 He uses his private key to decrypt it and read the content.

✅ Ensures confidentiality — even if someone intercepts the message, they can't read it.

✍️Digital Signature

A digital signature is like an electronic seal that proves:

 The message came from the correct person

 The message wasn’t altered

🔑 How It Works:

1. Sender (Alice) creates a hash of the message

2. She encrypts the hash using her private key

3. This becomes the digital signature

4. The receiver (Bob) can:

o Decrypt the signature using Alice’s public key

o Hash the original message himself

o If both hashes match → signature is valid

✅ Provides authentication, integrity, and non-repudiation

🔐 RSA Encryption & Decryption (Example of Public Key Crypto)

RSA is one of the most famous public-key algorithms (used in digital signatures, encryption).

🧠 Key Concepts:

 Based on mathematics of large prime numbers

 Involves generation of:

o Public Key (e, n)

o Private Key (d, n)

🔄 Process:

 To encrypt:
Cipher = Message^e mod n

 To decrypt:
Message = Cipher^d mod n

Don’t worry about the math — just remember:

 Public key is used to encrypt

 Private key is used to decrypt

 Security comes from the difficulty of factoring large numbers

🧠 Where These Appear in Blockchain:

Concept Blockchain Use

Public Key Cryptography Wallet addresses & transactions

Digital Signatures Signing transactions

RSA / ECDSA Bitcoin uses ECDSA (a faster alternative to RSA)

Hash + Sign + Verify Used in verifying transaction authenticity

🌐 What is a Distributed System?

A distributed system is a network of multiple independent computers (nodes) that work together to
appear as a single system to the user.

Each node:

 Has its own memory and processing power

 Can communicate with other nodes over a network

 Shares data or tasks with other nodes

⚙️Example: Google Drive, cloud storage, multiplayer games, and blockchain are all distributed systems.

🔧 Key Characteristics of Distributed Systems

Property Description

Decentralized Control No single master node; decisions are made collectively

Fault Tolerance The system keeps working even if some nodes fail

Scalability Can grow by adding more nodes

Concurrency Multiple tasks run at the same time on different machines

Transparency Users don’t see or care which node does the work

🧱 Blockchain as a Distributed System

Blockchain is a distributed ledger maintained by multiple nodes that:

 Store a copy of the blockchain

 Validate transactions

 Use consensus mechanisms (like PoW or PoS) to agree on the next block

🔐 Why Blockchain Uses a Distributed System:

 Ensures no single point of failure

 Increases resilience against attacks

 Maintains trust without a central authority

🧠 Real-World Examples

System Type of Distributed System Use Case

Blockchain Decentralized ledger Cryptocurrency, smart contracts

Google Docs Cloud-based collaboration Real-time document editing

Airbnb, Uber P2P distributed platforms Renting, ridesharing

DNS (Internet) Distributed name resolution Web navigation

✅ Advantages

 High availability

 Fault tolerance

 No need for central authority

 Can work globally

❌ Challenges

 Synchronization between nodes

 Handling faulty or malicious nodes (Byzantine problems)

 Network delays and partitioning

 Reaching consensus

💰 What is a Cryptocurrency?

A cryptocurrency is a type of digital or virtual currency that uses cryptography for security and operates
on a blockchain network.

Unlike traditional currencies (like INR, USD, or EUR), cryptocurrencies:

 Are decentralized

 Are not issued by central banks

 Exist only digitally

 Operate on peer-to-peer networks

The first and most popular cryptocurrency is Bitcoin, created by Satoshi Nakamoto in 2009.

🔑 Key Features of Cryptocurrency

Feature Description

Decentralization No central authority (like RBI or banks)

Cryptographic Security Transactions secured by digital signatures and hashing

Blockchain-Based All transactions are recorded on a public ledger

Limited Supply Many cryptocurrencies have a cap (e.g., Bitcoin has a 21 million limit)

Peer-to-Peer Direct transactions without banks or intermediaries

🔐 How Cryptocurrency Works (Simplified):

1. User A wants to send 1 BTC to User B

2. The transaction is signed using User A’s private key

3. The transaction is broadcasted to the network

4. Miners (in PoW) or Validators (in PoS) verify the transaction

5. Once verified, the transaction is added to a block

6. The block is added to the blockchain, and User B receives BTC

🧠 Why Is It “Crypto”?

 Uses Public Key Cryptography for secure transactions

 Uses Hash Functions (SHA-256) for creating unique transaction IDs and blocks

 Uses Digital Signatures to authenticate users and prevent tampering

📊 Popular Cryptocurrencies

Name Use Case Consensus

Bitcoin (BTC) Digital money, store of value Proof of Work

Ethereum (ETH) Smart contracts, DApps Proof of Stake

Name Use Case Consensus

Ripple (XRP) Fast cross-border payments Consensus Protocol

Litecoin (LTC) Faster transactions than Bitcoin Proof of Work

✅ Advantages

 Fast, borderless transactions

 Transparent and verifiable

 Lower transaction fees (compared to banks)

 Privacy and user control

 Decentralized (no single point of control)

❌ Challenges

 Volatility – Prices can rise/fall dramatically

 Regulatory uncertainty – Governments still figuring out how to manage it

 Security risks – Wallets and exchanges can be hacked

 Scalability – Some networks are slow under high traffic

🔄 What is Open Consensus?

Open consensus is a process where anyone can participate in verifying and agreeing on the state of a
blockchain — no invitation or permission required.

It’s a key feature of public blockchains, like Bitcoin and Ethereum.

✅ It’s open, decentralized, and trustless.

🧠 Why Consensus Is Needed in Blockchain

Since there’s no central authority, all nodes must agree on:

 Which transactions are valid

 Which block is the “truth”

 What the current state of the ledger is

This is where consensus algorithms come in.

🪙 Bitcoin and Open Consensus

Bitcoin uses a permissionless consensus mechanism based on Proof of Work (PoW).

⚙️How Bitcoin’s Open Consensus Works:

1. Anyone can become a miner (no permission needed)

2. Miners compete to solve a cryptographic puzzle (using SHA-256)

3. The first to solve it proposes a block

4. Other nodes verify the block

5. If valid, the block is added to the blockchain

6. The miner gets a reward in BTC

This is called Nakamoto Consensus, and it’s an example of open consensus.

🔍 Core Principles Behind Bitcoin’s Open Consensus

Principle Role in Bitcoin

Openness Anyone can mine or run a node

Incentives Miners earn BTC rewards

Validation Nodes check if blocks follow the rules

Longest Chain Rule Network accepts the chain with most accumulated PoW

Finality (Probabilistic) More confirmations = higher trust

🛡️Benefits of Open Consensus

 Truly decentralized – anyone can join

 No central point of failure

 High security – attackers need majority hash power

 Censorship-resistant – no one can block participation

❗ Challenges

 Energy-intensive (in PoW)

 Slower transactions

 Risk of 51% attack (if someone controls majority hash power)

 Less control over governance (since anyone can participate)

🧠 Case Study Clues:

If your case involves:

 A global public network

 A trustless, borderless system

 Anyone being allowed to participate

Then open consensus (like in Bitcoin) is likely the best fit.