BLOCKCHAIN TECHNOLOGIES

Lecture 1
Sayed Faheem Qadry

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Origin of the Blockchain

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 Electronic Systems and Trust
• Before Blockchain, the idea of cryptocurrency and the systems reliable to
operate that currency was just a dream.
• The internet was required to be distributed, reliable and it was needed to be
used by almost all of the population as it connects the world together digitally.
• When value takes a digital form that is when it is moved from physical items like
coins, notes, metals like gold, silver, platinum etc., to digital, there is a need for
the trust among the people involved in the transactions.
• Trust is never stable in the financial world.
• This is one of the main reasons in the pile of events that lead to the creation of
the mighty digital currency BITCOIN. The Blockchain technology is an effort that
was made to re-establish the long lost trust in digital transactions.
• It is made up of technology to build trust, specifically cryptography which is
used to deal with critical data, to automate and enforce the trust into the
system. 20/03/2022 3
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• Bitcoin was the first working cryptocurrency system that was built using the
Blockchain technology.
 Distributed vs Centralized vs Decentralized
Centralized architecture
In the centralized architecture, there are two types of nodes that
participate in the system. The first one is the server or super node and
the second one is the client or user node. The super node is the heart of
the network which stores the data and provides services to the clients
connected to it.
Decentralized architecture
It is distributed to multiple super nodes or servers. Every super node in
the network is connected with at least one another super node. Each
super node contains the same copy of data available and must provide
the same services as other nodes.
Distributed architecture
A distributed system is the same as a decentralized system 20/03/2022
with no 4
central owners. In distributed systems, users have the same level
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of
data access, though user privileges can be restricted if needed.
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What is Blockchain?

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 What is Blockchain?
• Blockchain is a transaction record database that is distributed, validated and
maintained around the world by a network of computers. Instead of a single
central authority such as a bank, a large community oversees the records in
Blockchain, and no individual person has control over these records.
• Blockchain is based on decentralized technologies. This functions as a peer-
to-peer (P2P) network.
• Blockchain can be defined as “A peer-to-peer, decentralized, distributed
ledger that records transactions efficiently, and in a verifiable and robust
fashion.”
• Some real-life examples:
Records of sale and purchase of raw material
Bank account statements
Excel sheets tracking hospital equipment 20/03/2022
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A simple record-keeping book

 • Consider Blockchain as a traditional book based ledger, where:
• Each page refers to a block connected to the previous page
through a page number.
• It is easy to detect if a page/block has been removed or
deleted.
• It is easy to arrange the pages/blocks and identify
suspicious activity, because of the page number.
Understandi • It is impossible to tamper a previous entry in the ledger
without someone noticing it, as the pages/blocks are built
ng the Book tightly on top of each other.
Analogy • “Book = Blockchain, Page = Block, An entry in page =
Blockchain Transaction”

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Components of blockchain

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How does Blockchain work?

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 Block
Overview

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How blockchain looks like?
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 What
makes
Blockchain
different?

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Why is Blockchain a
Distributed, P2P
Network?
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• In a P2P network, there is no central governing authority.
• All nodes in a P2P distributed network are equal to each other.
• Anyone connected to the network is free to share and download
any file shared by other users in the network.
• Peer-to-Peer systems are classified as:
Unstructured - No specific organization of the nodes. Participants
communicate randomly with one another.
Structured - Allows nodes to precisely search for files, even if the content
is not available.
Hybrid - Combines the conventional client-server model with some facets
of the peer-to-peer architecture.

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 Types of P2P networks
• 1. Unstructured P2P Networks:
• An unstructured P2P network facilitates the users with an easy connection with other
devices. In this kind of P2P network, all systems play their role, but clients suffer to find
the rare content as there is a lack of structure. The churn rate of such networking is too
high; however, users are still joining and releasing this type of network.
• 2. Structured P2P Network:
• Unlike an unstructured P2P network, the structured network is difficult to set up.
However, this network facilitates the users with efficient access to search the rare
content residing on the network. The churn rate of such kind of networking is minimal.
• 3. Hybrid P2P Network:
• The functionality of a hybrid P2P network is like a client-server network. In this type of
networking, a centralized peer is defined that accomplishes various activities as
servers perform. It retains all information on the connected system and replies to the
requests asking for that specific information. The centralized system has20/03/2022
optimum
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knowledge of which resources can be shared and which resources are free.
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 Distributed P2P network
• The traditional client-server network keeps all the required information in
one place, which makes it easy to update. But the network is controlled by
a number of administrators with permissions.
• In a distributed P2P network of blockchain architecture, each participant
within the network maintains, approves, and updates new entries.
• The system is controlled by everyone within the blockchain network and
not just by a single authority.
• Each member ensures that all records and procedures are in order, which
results in data validity and security.
• The P2P architecture of blockchains provides benefits of greater security
than traditional client-server based networks as distribution of large
numbers of nodes creates an immune system to the Denial-of-Service
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attack.
 Blockchain • A blockchain is a decentralized ledger of all
Vs transactions across a peer-to-peer network,
Cryptocurren whereas cryptocurrency is a medium of
cy exchange, created and stored
electronically in the blockchain.

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Types of Blockchain

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 Public Blockchain
• A public blockchain is permissionless. In a public blockchain, anybody
can access the network and read, write or participate without an
explicit authorization and permission.
• A public blockchain is decentralized and has no single network-
controlled entity.
• Data on a public blockchain is protected because data cannot be
changed or manipulated until it has been checked on the blockchain.
• Public blockchain has more complex rules and consensus algorithm
for better security. It is computationally expensive to mine and add a
Block. Here, the computational power is also distributed globally.
• Well-known examples of a public blockchain are Bitcoin and 20/03/2022
Ethereum. 22:37
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 Federated/Consortium Blockchain
• A Consortium or Federated Blockchain is a private, permissioned
blockchain - as opposed to public blockchain – where entities can only
become members of the network by prior approval or voting.
• This kind of blockchain is group-owned system where sole autonomy
is removed. Permissions are vested in a group of companies or
individuals.
• Here, more than one central node is in-charge, that provide access to
pre-selected nodes to read, write, and audit the blockchain. Only
consortium members can make, validate, and review transactions.
• This sort of blockchain is suitable for use between companies that
often have dealings with each other. While these are more secure,
they come at the cost of decentralization. However, this suits
enterprise use cases and business processes.
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• Example: R3’s Corda Blockchain 22:37

 Public Vs Private Vs
Federated/Consortium

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Blockchain Architecture

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 Blockchain Architecture
• Enterprise and Legacy Applications: Applications that are
developing or already implemented in the blockchain
solution, and have some extensive features.
• Integration Platforms: Layer with different kinds of
protocols like the SOAP and REST, governance, and API
management.
• Blockchain Access layer: It provides the basic features to
fetch and write data to the blockchain.
• Analytics Layer: It consists of reporting, dashboard or
analytics-based system that provides the analytical result of
the final data.
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Understanding
Tokens

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 What are Tokens?

• A token is a thing that serves as a tangible representation of

a fact, quality and can be anything of value.
• Tokens are not limited and restricted to one specific role;
rather, they can fulfill several roles in their native ecosystem.
• Tokens can serve various purposes; for example, they can act
as a gateway to decentralized applications (DApps).
• Moreover, they can also qualify the holders to have certain
voting rights.

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 Significance of Tokens
Tokens are not confined to a particular role; hence they could
address multiple functions within their native ecosystem such as:
• Tokens can be used as entry points for Blockchain applications, and
users will require tokens to use the decentralized applications.
• Individuals' qualifications for possessing specific voting rights
could potentially be represented via tokens.
• Tokens also act as suitable entities for enhancing the holders' user
experience.
• Tokens can be used as a store of value for internal and external
transactions in a certain ecosystem, as well as provide a different
type of monetary system, such as digital assets.
• The exchange of value is another important use of tokens.
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 Crypto Tokens

• Crypto Tokens are special kind of virtual currency tokens that

reside on their own Blockchains and represent an asset or utility.
• These tokens may be used for trading, storing value, and
making transactions.
• Crypto tokens, which are created by an initial coin offering, are
often used to raise funds for crowd purchases.
• Benefits:
Usability
Transparency
Cost and Speed of Exchange 20/03/2022 31
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How Crypto
Token
Works?

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 Fungible Tokens
• These are those types of cryptographic
tokens that are basically identical or
Fungible uniform and can be interchanged with
other fungible tokens of the same type
without any issues. Such tokens relate to
and Non- the things we use every day, and it
applies to real-world assets as well as
Fungible Non-Fungible
digital assets. Tokens
Tokens • Non-fungible tokens are special tokens
that represent unique, collectible items.
They are unique in the sense that they
cannot be split or exactly changed for
other non-fungible tokens of the same
type.
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Fungible Vs. Non-Fungible Tokens

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Ethereum Token Standards

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Merkle Tree and Hashing

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 Merkle Tree
• A Merkle tree is a hash-based data structure wherein each leaf
node is a hash of a data block, and each non-leaf node is a hash
of its offspring. Merkle trees usually have a factor of branching 2,
which means that each node has up to 2 children.
• The Merkle trees are used for effective data validation in
distributed systems. They are secure because instead of using
complete files, they use hashes. Hashes are ways to encrypt files
that are slightly smaller than the real file.
• The verification of integrity is substantially reduced despite of
larger data size.
• It requires little disk space or memory as the proofs are
computationally fast and easy.
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 Why Merkle Tree is vital in
Blockchain?
• For confirming a past transaction, a node would need
to reach out to the network in order to get copies of
the ledger from its peers.
• The node would need to compare each entry line by
line.
• Any discrepancy between the ledgers, compromise
the security of the network.
• Every verification request would require large packets
of information to be sent over the network.
• A lot of processing power is consumed to compare the
ledgers, to ensure that there had been no changes.
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 Hashing
• Hashing is the process of having an input item of any length,
converting it into an output item of a fixed length.
• Transactions of different lengths are run through a given hashing
algorithm, and all give an output of a fixed length, called as hash.
• Hash size will depend on the hash function used, but the output
using a particular hashing algorithm will be of a specific size.
• Cryptographic hash functions are one of the most important
techniques in the field of cryptography and are used to
accomplish many safety goals such as authentication, digital
signatures, generation of pseudo numbers, digital steganography,
digital time-stamping, etc.
• Commonly used hashing algorithms is Bitcoin’s Secure
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Hashing Algorithm 256, often known as SHA-256. 22:37
Blocks, Wallets
and Addresses

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Blocks

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 Version Number
• This a 4-byte field which provides the version number used in the block. There a
different block versions that form a part of the history in the development of Bitcoin.
• Version 1 was introduced in the genesis block (January 2009), the very first block
generated on the Bitcoin network’s blockchain.
• Version 2 was introduced in Bitcoin Core 0.7.0 (September 2012) as a User Activated
Soft Fork (UASF). As described in BIP34, valid version 2 blocks require a block height
parameter in the coinbase. BIP34 also describes rules for rejecting certain blocks.
Bitcoin Core 0.7.0 and later versions began to reject version 2 blocks without the block
height in coinbase starting at block height 224,412 (March 2013) and began to reject
new version 1 blocks three weeks later at block height 227,930.
• Version 3 blocks were introduced in Bitcoin Core 0.10.0 (February 2015) as a UASF.
When the fork reached full enforcement (July 2015), it required strict DER encoding of
ECDSA signatures in new blocks as described in BIP66. Transactions that don’t use
strict DER encoding had previously been non-standard since Bitcoin Core 0.8.0
(February 2012).
• Version 4 blocks specified in BIP65 and introduced in Bitcoin Core 0.11.2 (November
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2015) as a UASF became active in December 2015. These blocks now support 22:37 the new
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OP_CHECKLOCKTIMEVERIFY opcode described in that BIP.

 Previous Block Hash
• The previous block hash is a 32-byte field that contains the hash of
the previous block header. This contains a pointer to the previous
block, a very important feature in a blockchain. This information
cannot be modified without requiring modifying the previous blocks.
Thus if you had 200,000 blocks and you attempt to change the hash
value of the previous block, the avalanche effect will occur which
means it requires changing the other previous hash values.
• This will require plenty of computing power hash rate that will be too
difficult. This feature of linking hashes is what provides the block’s
security and tamper resistance. It can still be changed, but it would
affect the entire blockchain and this would, in theory, require what is
called a 51% attack. Reversing all transactions is thus difficult to do
on a blockchain due to the hashing of the block header.
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• The block header uses the SHA256 hashing algorithm. 22:37

 Merkle Root
• The Merkle Root field is also 32 bytes in length and contains the
hash of the blockchain’s Merkle Root. It uses the same function
as the previous block header hash.
• The Merkle Root is derived from the hashes of all transactions
included in this block. Hashing makes sure that that none of
those transactions can be modified without modifying the entire
header.
• Once again this is a tamper resistance measure that provides
security for the block, an important feature of a public,
decentralized and trustless system.
• The Merkle Root consists of all the TXIDs (transaction ID) of
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transactions in the block. 22:37
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 Nbits (Difficulty Target)
• The difficulty target is a 4-byte file also referred to as the Bits. The encoded
version of the target is a threshold that the block’s header hash must be less
than or equal to.
• The Bits specify a value or target threshold that contains leading zeroes. This is
the basis of the difficulty target, which is not the same as the Bits.
• The difficulty target is adjusted every 2,016 blocks on the Bitcoin network. This
information is important for miners in particular.
• The difficulty target is coded as a Bitcoin protocol. This determines how difficult
the hash value should be based on the network’s total hash rate.
• When there are too many miners, the hash difficulty increases in order to control
the supply of Bitcoin. If the difficulty is too easy, the block propagation time falls
below 10 minutes on average.
• This could exhaust the supply of BTC given very quickly, and hash rates do
increases as more powerful mining devices are added to the network.
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• When the block propagation time is more than 10 minutes, the difficulty is too
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high, so the protocol code ensures that the difficulty must be decreased.
 Nonce
• The nonce is a 4-byte field that is an arbitrary number of miners
change to modify the header hash in order to produce a hash less
than or equal to the target threshold.
• The nonce is like the “magic number” because whoever discovers it
first will become the block validator. The reward is then put into the
coinbase field and it is given to the miner who discovered the nonce
first. The nonce must be equal or less than the difficulty target.
• Discovering the nonce is the main activity miners engage in during
the consensus mechanism of validating blocks.
• The miners are competing with one another by trying to solve a
cryptographic puzzle that must be below the difficulty target. It was
coded in a protocol to be rather difficult so that not just anyone in a
permissionless system can discover the nonce.
•
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Thus, a difficulty target was specified that adjusts the value based on
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the network’s total hash rate.

Data Types
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 Block Header Example

• The “bits” is the difficulty target which has been encoded into a numeric value. The lower the
value of the difficulty target, the harder it is to generate a block. The difficulty value has a
hexadecimal form that was converted to 419486617.
• The “mrkl_root” is the hash of all the transactions inside the block. This has been hashed using
the SHA256 algorithm.
• The “nonce” is the discovered value that the miner who validated the block has used. This is the
number used to generate the block that was added to the blockchain.
• The “prev_block” is the hash of the previous block header. This is what links a block to the rest
of the blockchain.
• The “time” is indicated when the miners started hashing on the block. The example uses a
different format for the time, but it is originally the number of seconds based on the Unix epoch
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time.
• The “ver” field is the version number of the block which follows the consensus rules of that
 Target
• The target adjusts every 2016 blocks (roughly two weeks) to try and ensure
that blocks are mined once every 10 minutes on average.
• Current (17th Mar 2022) BT target is
0000000000000000000a40c0000000000000000000000000000000000000000
0
• BT target history https://learnmeabitcoin.com/technical/target
• If blocks during this period were being mined faster than every 10 minutes, the
target will adjust downwards to make it more difficult to get below the target
for the next period of blocks.
• If blocks were being mined slower than every 10 minutes, the target will adjust
upwards to make is easier to get below the target for the next period of blocks.
• The target gets stored in the bits field in the block header of every block.
• Each node on the network operates independently, so there is no “single target
value” being sent around the network. However, because all nodes adopt the
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longest chain of blocks as their blockchain, they will each end up calculating
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the same target as everyone else, so effectively all nodes end up sharing the
same current target.
 Why does bitcoin use a target?

• The target regulates the speed at which new blocks are

added on to the blockchain.
• This has two benefits:
1. It gives blocks time to propagate across the network.
2. A consistent issuance of new bitcoins.

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 Blocks
• Every block contains a hash of all the previous block.
• This has the effect of generating a series of blocks from the
genesis block to the present block.

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 Wallets
• A blockchain wallet is a software program that enables users to
buy, sell, and monitor balance for their digital currency or assets.
• A wallet stores private and public keys for a user.
• A blockchain wallet allows anyone to quickly share assets.
Transactions, as they are signed cryptographically, are safe.
• The wallet can be accessed from web browsers, even from the
mobile phones, and the user's privacy and identities are
protected.
• A blockchain wallet offers all the features available for safe and
secure transactions and exchanges of funds between various
parties. 20/03/2022 53
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 Blockchain Wallet Features

• Simple to use - It's almost like the other app or a wallet that
you use for your everyday purchases.
• Completely secure - Wallet is said to be secure as it keeps
your private key secure.
• Enables instantaneous transfers across geographies -
Transfer of funds do not have any geographical barrier.
• Low Transaction fees - There is a significantly smaller cost of
exchanging funds than the conventional banks.
• Enable multi-cryptocurrency transfers - It makes you do
basic currency conversions.
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 Wallet Types
There are two types of wallet used in Blockchain:
• Hot Wallet: Hot wallets are online wallets through which it is easy to
quickly transfer cryptocurrencies. Private keys in the hot wallet are
stored in the cloud for quicker transfer. Hot wallets can be easily
accessible 24/7 online and can be accessed from a laptop or mobile
computer, but if compromised, there is a chance of unrecoverable theft.
• Examples: Coinbase and Blockchain.info
• Cold Wallet: Cold wallets are offline digital wallets where the transfers
are digitally signed and then electronically disclosed. Private keys are
kept in independent hardware that is not connected to internet or the
cloud, but stored on a paper document. The cold wallet transaction
approach helps to shield the wallet from unauthorized entry.
• Examples: Trezor and Ledger 20/03/2022
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 Hot

Which is more secure?

Col
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 Address

• A blockchain address is pretty much like an email address

which is a special sequence of numbers and letters and
functions.
• It applies to a particular network destination where it is
possible to transfer the cryptocurrency. The idea is to send a
person a unique address every time he or she receives
crypto.
• Address is a placeholder to accept and send blockchain
transactions.

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 Bitcoin addresses
• P2PKH (Pay to Pubic Key Hash) Legacy Address Format
• P2PKH is one of the oldest bitcoin addresses in the crypto world and is still a legacy bitcoin
address format that has been used in the crypto world. Though it is not segwit compatible, users
can still send bitcoins to other segwit addresses. Transactions with P2PKH is slightly costlier than
other segwit addresses because these addresses are longer and take bigger space. P2PKH
addresses always start with 1 and maybe 26 to 36 characters long.
1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2 is an example of P2PKH address.
• P2SH (Pay to Script Hash) Address Format
• P2SH is newer than P2PKH and starts with 3 unlike 1 in P2PKH. P2SH is slightly complicated than
its older counterpart P2PKH and has several functionalities. Transactions with P2SH are more
elaborate and has high-security features including a multi-signature facility. The 34-character long
address allows multiple digital transactions with multiple addresses and that too at lower fees
compared to P2PKH. For those who want to do non-native segwit transactions, they can use a
feature called P2WPKH-in-P2SH which is quite simple. The 34-character address reduces the risk
of human errors and allows easy transfer of funds.
• Bech32 Segwit Address
• Bech32 is a new bitcoin address and is the most advanced one compared to the other two
addresses. It starts with “bc1” and is longer than P2PKH and P2SH. Bech32 is a segwit address
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and supports multiple wallets and several other addresses and is the most popular address
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that
58 is
used today. Transactions with Bech32 are faster and fees are lower and also reduces the chance
of human error.
 How to Get a Bitcoin Address
• To get a Bitcoin address, you first need to download a Bitcoin
wallet, which is software that allows you to securely send,
receive, and store Bitcoin funds in the Bitcoin network.
• Bitcoin wallets also store your private key, which is essentially
your Bitcoin password. The software will generate a brand new
Bitcoin address for you every time you create an invoice or
receive a payment request for Bitcoins too.
• There are four types of Bitcoin wallets that you can use:
mobile, web, desktop, and hardware.
• Most blockchain experts recommend generating a new Bitcoin
address each time you send or receive a payment, though. This
personal security measure makes it harder for people to trace
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where your Bitcoin funds come from and where they go. 22:37
 What is Cryptography?
• Cryptography is a technique to secure data by writing or
generating codes that make the information unreadable for
the unauthorized individual.
• It is derived from mathematical concepts and a set of rule-
based calculations.
• Cryptographic Algorithms usually involves three things:
Cryptographic Key Generation
Digital Signing
Verification to Protect Privacy
• Modern Cryptography includes Confidentiality, Integrity, Non
Repudiation and Authentication.
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 Types of Cryptography
• There are various types of Cryptography:
• Symmetric Key Cryptography: It is an encryption scheme
where a single common key is used by the sender and recipient
of messages to encrypt and decrypt messages. Symmetric Key
Schemes are quicker and easier, but the issue is that in a
secure manner, sender and recipient have to swap key
somehow. The Data Encryption System (DES) is the most
common symmetric key cryptography system.
• Asymmetric Key Cryptography: Under this scheme,
information is encrypted and decrypted using a pair of keys. For
encryption, a public key is used and a private key is used for
decryption. The private key and the public key are unique. Even
if the public key is known by everyone the intended receiver
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can only decode it because he/she alone knows the private key.
 Public Key

• A public key functions on the basis of asymmetric encryption. In

this type of encryption, two keys are used - one key is used for
encryption and another key is used for decryption.
• Security is ensured because only the person with the relevant
private key can decode the message. Public key is made
available through the public accessible directory.
• Public key is derived from Private key using known algorithm.
• A shorter representative version of the public key is the address
that is used for receiving funds.
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 Private Key
• A private key allows users to access his or her cryptocurrency.
Same secret key is used for encryption and decryption.
• Private key can take few different forms, depicted as a series of
alphanumeric characters, which makes it hard for a hacker to
crack.
• If a user loses its private key, they can no longer access the
wallet to spend, withdraw, or to transfer coins.
• The Blockchain wallet dynamically creates private keys for you
and stores them. The app signatures the transaction with your
private key as you send from a Blockchain wallet (without
explicitly revealing it), which signals to the whole network that
you have the ability to transfer the funds to the address from
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which you are sending. 22:37
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Public Vs Private Key

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 SHA-256
• Secure Hash Algorithms (SHA) are a family of cryptographic
functions designed to keep data secure. It operates by using a
hash function to transform the data: an algorithm consisting of
bitwise operations, modular additions, and compression functions.
• A fixed-size string that looks nothing like the original is then
generated by the hash function. These algorithms are designed to
be one-way functions, ensuring that it is nearly difficult to convert
them back into the original data until they are converted into their
respective hash values.
• SHA-1, SHA-2, and SHA-3 are a few algorithms of this type, each of
which was successively built in reaction to hacker assaults with
progressively stronger encryption. Because of the commonly
revealed bugs, SHA-0, for example, is now redundant. 20/03/2022
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Transaction Execution
and
Distribution

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 Transaction
• A transaction is a new record of exchange of some value or data between
two public addresses of the blockchain .
• Transactions can happen in new node and takes time to get verified when
a new block is created containing that transactions.
• Transactions are data structures that encode the transfer of value between
participants in the bitcoin System.
• The process of transaction verification and recording is immediate and
permanent.
• Transaction is approved through a process known as consensus.
• Although most transactions are organized as address payments (based on
a script called Pay-to-Public-Key-Hash, or P2PKH),
• bitcoin transactions may also use other forms of scripts, besides addresses
and amounts, and contain additional details.
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 How Transaction is Committed?
• Stage 1: Initiation of transaction proposal
User signs the transaction.
• Stage 2: Transaction is broadcasted
Transaction is broadcasted in to the network.
• Stage 3: Transaction is verified
Peers receive the transaction and verify it against their records. If
verified, it is added to a block.
• Stage 4: Transaction Commitment.
Block is added to the blockchain.
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Benefits of using
Blockchain
Technology
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 No Third-Party Intermediaries

• Blockchain can help to make the process of intermediation

more efficient.
• There are a set of rules and cryptographic algorithms that
eliminate the need to trust the third party.
• Blockchain minimizes the trust required of ecosystem
participants of these intermediaries in any number of ways.

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 Greater Transparency

• Blockchain can go for a complete decentralized network where

there is no need for a centralized authority, which improved the
transparency.
• As it is a distributed ledger, all network participants share the
same documentation as opposed to individual copies.
• Once the data has been written on a blockchain, no one, not
even a system administrator, can change it.
• As a data provider and recipient, user can prove that the data
hasn’t been altered.
• Explore it https://www.blockchain.com/explorer 20/03/2022 71
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 High Availability

• Highly available due to decentralisation.

• Any number of nodes can go down without affecting the
Blockchain.
• Protects institutes from DOS attacks.

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 High Security

• All transactions on a blockchain are cryptographically secured

and provide integrity.
• Each block is connected to all the blocks before and after it.
• It is difficult to tamper a single record because a hacker would
need to alter all of the preceding blocks because of the
interdependency of the blocks.
• Network participants have their private keys that are
assigned to the transactions they make and act as a personal
digital signature.

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 Faster Dealings and Cost Savings

• Blockchain removes third-party intermediaries and overhead

costs for exchanging assets, that reduce transaction fees
significantly.
• Blockchain allows quicker settlement of trades as it does not
require a lengthy process of verification, reconciliation, and
clearance.

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 Improved Traceability

• Blockchain enables every party to trace the goods and ensure

that it is not being replaced or misused during the process.
• Blockchain helps to easily locate any problem and correct if
there is any, and creates an irreversible audit trail.
• Historical transaction data can help to verify the authenticity
of assets and prevent fraud.

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20/03/2022 76
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 What are different
Blockchain Technologies?
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 Bitcoin
• Bitcoin is a globally known cryptocurrency and digital payment
system. It was the first decentralized digital currency whose
ledger is maintained by blockchain openly.
• Bitcoin is an implementation of blockchain distributed ledger
technology and the transactions in bitcoin blockchain takes
place directly between users, without an intermediary.
• Bitcoin is an open-source which means nobody owns or regulate
bitcoin but everybody can participates.
• There are no physical Bitcoins, just balances stored on a public
database that everyone has open access to, which is checked by
a vast amount of processing power along with all Bitcoin
transactions.
• Bitcoins are not distributed or funded as an asset by any banks or
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govts.
 Ethereum
• Ethereum is also an open source software platform, based on
Blockchain technology that enables developers to build and deploy
decentralized applications. It was initiated by Vitalik Buterin in late
2013.
• It offers Decentralized Virtual Machine aka Ethereum Virtual Machine
(EVM) which can execute scripts using an international network of
public nodes.
• Development for Ethereum was funded by an online public crowdsale
during July-August 2014, by buying the Ethereum value token (Ether).
• It allows us to create and run Smart Contracts and Distributed
Applications (DApps) without any downtime, fraud, control, or
intervention by a third party.
• Ethereum is not just a framework but also a programming language
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running on a blockchain that lets developers create and publish
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distributed applications.
 Hyperledger
• Hyperledger is a multi-project open source blockchain platform
created to advance cross-industry blockchain technologies.
• It is a global collaboration, hosted by The Linux Foundation,
including leaders in Finance, Banking, Internet of Things, Supply
chains, Manufacturing, and Technology.
• Hyperledger acts as an operating system for marketplaces, data-
sharing networks, micro-currencies, and decentralized digital
communities.
• It has the potential to vastly lessen the expense and complications
in getting things done in the real world.
• It serves as a neutral home for various distributed ledger
frameworks including Hyperledger Fabric, Sawtooth, Indy, as well
as tools like Hyperledger Caliper and libraries like Hyperledger
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Ursa.
 Other technologies

• NEO
• EOS
• Corda
• Quorum
• Stellar
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Summary

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How to identify if we need Blockchain