Prof. SUSHANT E R
Overview:
Overview:
Block Chain could be a revolution in the way everyone- businesses, governments, organisations and individuals- work together.it provides a simple, secure way to establish trust for virtually any kind of transaction, helping simplify the movement of money, products or sensitive information worldwide. Block Chain technology was originally developed as part of digital currency Bitcoin. But the two are not the same. Block Chain can support a wide range of application, and it’s already being used for peer-to-peer payment services, supply chain tracking and more. It’s a transformation that’s already begun. And organisation-both the once that it can help, and the middleman at risk of disintermediation- will need to be prepared as technology matures. A new technology is redefining the way we transact. If that sounds incredibly far-reaching that’s because it is. Block Chain has the potential to change the way we buy and sell, interact with government and verify the authenticity of everything from property titles to organic vegetables. It combines the openness of the internet with the security of cryptography to give everyone a faster, safer way to verify key information and establish trust.
A block chain originally is a continuously growing list of records called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data. By design, a block chain is inherently resistant to modification of the data. It is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way for use as a distributed ledger, a block chain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority. Block chain are secure by design and exemplify a distributed computing system with high byzantine fault tolerance. Decentralized consensus has therefore been achieved with a block chain. This makes block chains potentially suitable for the recording of events, medical records and other records management activities, such as identity management, transaction processing, documenting provenance, food traceability or voting.
Block Chain Contribution in Digital Record
At its heart, a block chain is a record of transactions, like traditional ledger. These transactions can be any movement of money, goods or secure data-a purchase at a supermarket, for example, or the assignment of a government ID number. Secure: Block Chain is designed to store information in a way that makes it virtually impossible to add, remove or change data without being detected by other user. Decentralised: Today, transactions are verified by a central authorities-like government or a credit card clearing house, Block Chain applications could replace these centralised systems with decentralised once, where verification comes from the consensus of multiple users. How does it work? A Block Chain needs to do two things: gather and older in to blocks, and then chain them together securely using cryptography. Recording of Transactions. Example:Mr.Ram sells his car to Mr.Bill.The transaction information is recorded and shared with the other computers in the Block Chain network. Building Transactions in to Blocks. On the network, the record is combined with other transactions in to a block-like a traditional computer database. Each transaction is time stam
ped. When a block is complete, it is also gets its own time stamp.so all information is sequential, which helps avoid duplicate entries. Connecting Blocks in to Chain: In to the Network: The complete block is sent out across the network, where it’s appended to the chain. Forming a line: Other participants on the network may be sending out their own blocks at the same time. But the time stamps ensure the data is added in the right order, and all participants have the latest version.Securing the Chain: The key to a Block Chain security is something called a hash .it’s a bit of cryptographic math that makes the links between block virtually unbreakable. A Hash Function takes the information in each block and uses it to create the hash-a unique string of character. The key to a Block Chain security is something called a hash .it’s a bit of cryptographic math that makes the links between block virtually unbreakable. A Hash Function takes the information in each block and uses it to create the hash-a unique string of character. Locking it down: The hash from one block is added to the data in the next block.so when the next block goes through the hash function, a trance of it is woven in to the new hash. And so on throughout the chain. Raising the Alarm: So if there’s any attempt to alter a previously created block, the hash that’s encoded in the next block won’t match up anymore. The mismatch will continue through all subsequent blocks denoting an alternation in the chain.
ped. When a block is complete, it is also gets its own time stamp.so all information is sequential, which helps avoid duplicate entries. Connecting Blocks in to Chain: In to the Network: The complete block is sent out across the network, where it’s appended to the chain. Forming a line: Other participants on the network may be sending out their own blocks at the same time. But the time stamps ensure the data is added in the right order, and all participants have the latest version.Securing the Chain: The key to a Block Chain security is something called a hash .it’s a bit of cryptographic math that makes the links between block virtually unbreakable. A Hash Function takes the information in each block and uses it to create the hash-a unique string of character. The key to a Block Chain security is something called a hash .it’s a bit of cryptographic math that makes the links between block virtually unbreakable. A Hash Function takes the information in each block and uses it to create the hash-a unique string of character. Locking it down: The hash from one block is added to the data in the next block.so when the next block goes through the hash function, a trance of it is woven in to the new hash. And so on throughout the chain. Raising the Alarm: So if there’s any attempt to alter a previously created block, the hash that’s encoded in the next block won’t match up anymore. The mismatch will continue through all subsequent blocks denoting an alternation in the chain.
Block Chain presence in different business Domains
Smart Contacts | Distributed ledgers enables the coding of simple contacts that will execute when specified conditions are met |
The Sharing economy | By enabling peer-to-peer payment, the block chain opens the door to direct interaction between parties A Truly decentralised sharing economy results |
Crowd funding | Block chains take this interest to the next level, potentially creating crowd-source venture capital funds. |
Governance | By making the results Fully transparent and publically accessible ,distributed database technology could bring full transparency to elections or any other kind of poll taking |
Supply Chain Auditing | Distributed ledgers provide an easy way to certify that the backstories of the thing we buy are genuine. Transparency come with Block chains – based time sampling of a date and location- on ethical diamonds for instance- that corresponds to a product number |
File Storage | Decentralising file storage on the internet bring clear benefits. Distributing data thought-out the network protects files from getting hacked or lost. |
Prediction markets | Prediction markets that pay out according to event outcomes are already active Block chains are a wisdom of the crowd technology that will no doubt find other application in the years to come. |
protection of intellectual property | Smart contacts can protect copyright and automate the sale of creative works online eliminating the risk of file copying and redistribution |
Internet of things (IOT) | Smart contacts make the automation of remote systems management possible. A combination of software ,sensors and the network facilitates an exchange of data between objects and mechanism |
Neighborhoodmicrogrids | Block chain technology enables the buying and selling of the renewable energy generated by neighborhoodmicrogrids |
Identity management | Distributed ledgers offer enhanced methods for proving who you are, along with the possibility to digitize personal documents. Having a secure identity will also be important for online interactions- for instance in the sharing economy |
AML and KYC | Anti- Money laundering (AML) and know your customers (KYC) Practice have a strong potential for being adapted to the block chain. Currently financial institutions must perform a labour intensive multi-step process for each new customers. KYC costs could be reduced through cross- institution client verification, and at the same time increase monitoring and analysis effectiveness |
The New Network | |
Centralized | Distributed Ledgers can be Public or Private and vary in their structure and size |
Decentralized | Public Block chains |
Required computers processing power to confirm transactions(Mining) | |
Distributed Ledgers | Users are anonymous-each user has a copy of the ledger and patriates in confirming transactions independently |
Users are not anonymous-Permission is required for users to have a copy of the ledgers and participate in confirming transactions. | |
Establishing Trust:
Since all participants have a copy of the entire block chain, they can detect any tampering. So when the hashes match up cross the chain, all parties know that they can trust their records.
Block chain in Action
The technology is new, but the potential is enormous. Here are some examples of how Block chain could hypothetically transform everyday transactions. Because Block chains established trust, they provide a simple, paperless way to established ownership of money, information and objects- like concert tickets.
Block Chain Contribution in Trusted Concert Tickets:
Can you Trust your Seller: It’s hard to tell real tickets from counterfeits especially if you brought them from a third party website or a private individual. Going straight to the source: A block chain can help buyers quickly establish that a ticket (and its seller) can be trusted. The event venue registers the event, date serial number of each ticket to a block chain, which is accessible online. When the ticket is first sold, it’s assigned an address- a string of data which is publically viewable on the block chain. The owner is given a private key, which is hash of address data. That key can be used to (unlock) the address.so by producing the correct key, the buyer can prove the item is hers, without having to check with the event venue. If Buyer chooses to sell the tickets it’s assigned a new address, and the new owner gets a new private key. And the new transaction is added to the block chain. The ticket can be resold multiple times, and when a seller unlock the address with his private key, the buyer knows the ticket he’s getting is authentic.
More efficient markets: Removing the Bottlenecks: In the financial markets, trades happen in a fraction of a second. But actually exchanging the assets and payments can take days, involving multiple banks and clearing house. That can lead to errors, delays added costs and unnecessary risks.
Block Chain Contribution in Smart Contract: A Smart contact is a piece of computer code that describe a transaction step by step. It can connect to multiple block chains, tracking multiple assets, so it can swap those assets as needed to execute the transactions. A Broker buys stock on behalf of a client. The order placed. It includes private keys from both buyer and seller. That triggers the execution of a smart contract. It connects to multiple block chains. It verifies the availability of the stock and the payment and then makes the transfer between the seller and buyer.
Block Chain Contribution in Smart Contracts Digital ID
Who goes their? Block chain can track more than commercial transactions, it can also hold and protect sensitive information. For example, ID papers have traditionally been issued and monitored by government. But digitally -issued identification via Block chain could be a more secure mechanism.ID at your fingertips: An international ID Block chain, accessible anywhere in the world, allow people to prove their identity, connect with family members and even receive money without a bank account. A Person is fingerprinted the fingerprint is digitalised and the information is added to the Block chain, along with her name and other key information. When an entity needs to est
ablish her identity they fingerprint her again. And that data can be used to unlock and verify her ID.
ablish her identity they fingerprint her again. And that data can be used to unlock and verify her ID.
Advantages of Block chains in different business domains.
Efficiencies resulting from DLT can add up to some serious cost savings. DLT systems make it possible for businesses and banks to streamline internal operations, dramatically reducing the expense, mistakes, and delays caused by traditional methods for reconciliation of records. The widespread adoption of DLT will bring enormous cost savings in three areas, advocates say: Electronic ledgers are much cheaper to maintain than traditional accounting systems; the employee headcount in back offices can be greatly reduced. Nearly fully automated DLT systems result in far fewer errors and the elimination of repetitive confirmation steps. Minimizing the processing delay also means less capital being held against the risks of pending transactions. In addition, some smaller number of millions will be saved by shrinking the amount of capital that broker are required to put up to back unsettled, outstanding trades. Greater transparency and ease of auditing should lead to savings in anti-money laundering regulatory compliance costs, too .Block chain’s removal of almost all human involvement in processing is particularly beneficial in cross-border trades, which usually take much longer because of time-zone issues and the fact that all parties must confirm payment processing. Blockchain systems can set up smart contracts or payments triggered when certain conditions are met. The block chain cotton transaction mentioned above, for example, used a smart contract that automatically made partial payments when the cotton shipment reached specific geographic milestones. Financial Industry Block chain Initiatives:R3 CEV,a fintech innovation company, and a consortium of more than 80 of the world’s biggest financial institutions is bankrolling research into methods to harness the speed, accuracy, and efficiency of the block chain. In 2016, it successfully trailed five distinct block chain technologies in parallel, using multiple cloud technology providers in a first-of-its-kind test, and is currently marketing its Corda, a “financial-grade” distributed ledger platform for commercial use. In 2017, after three years of work, Goldman Sachs Group Inc. (NYSE: GS) received a patent for the SETLcoin, which would create near instantaneous trade settlement times (see Here’s How the SETLcoin Trade System Will Work).In 2016, four major banks came together to develop the utility settlement coin (USC), a new digital currency whose use (mainly to buy securities) would be recorded via block chain. Led by UBS Group AG (NYSE: UBS), they include Bank of New York Mellon Corporation (NYSE: BK), Deutsche Bank AG (NYSE: DB) and Banco Santander S.A. (NYSE: SAN), along with broker ICAP PLC (LON: IAP). In 2017, six more banks joined them: Barclays Bank, Credit Suisse Group AG (CS),Canadian Imperial Bank of Commerce, HSBC Holdings PLC (HSBC), MUFG and State Street Corp (NYSE: STT). The consortium is aiming for a 2018 commercial release. However, for that to happen, a USC-based system or its competitor would need to obtain the approval of commercial institutions, central banks and regulators. And, although it is clearly almost there, block chain technology is not quite ready for prime time.
Organisation Using Block chain and their Views on Block chain: Companies such as IBM, Samsung, Overstock, Amazon, UBS, Citi, EBay, and Verizon Wireless, to name a few, are all exploring alternative and novel uses of the block chain for their own applications. Nine of the world’s biggest banks including Barclays and Goldman Sachs5 have recently joined forces with the New York based financial technology firm R3 in September 2015 in order to create a framework for using the block chain technology in the financial market. This is the first time banks have come to work together to find applications of block chain technology. Leading banks like JPMorgan, State Street, UBS, Royal Bank Of Scotland, Credit Suisse, BBVA and Commonwealth Bank of Australia have joined this initiative. Block chain is one of the bright sectors in technology,” said Roger Kay, president of Endpoint Technologies Associates Inc.In addition to hiring third parties for cloud use, companies will rely more on their own databases for storage, said Amit Zavery, senior vice president of Oracle Cloud Platform.
“In traditional database systems, there is only one copy of the data for all parties to reference, but blockchain’s distributed nature means all of the peers now hold a copy of the data,” Avery said. “That will expand the data storage requirements on businesses, especially those in industries with typically high transaction rates.”
In October, Oracle announced the formation of Oracle Blockchain Cloud Service, which helps customers extend existing applications like enterprise-resource management systems. A month earlier, rival SAP SE said clients in industries like manufacturing and supply chain were testing its cloud service. And on Nov. 20, Microsoft expanded its partnership with consortium R3 to make it easier for financial institutions to deploy block chains in its Azure cloud.
Big Blue, meanwhile, has been one of key companies behind the hyper ledger consortium, a non-profit open-source project that aims to create efficient standards for commercial use of block chain technology. IBM also offers companies a free trial of block chain in its cloud.
“We are seeing a lot of momentum and excitement in this space,” said Matthew Kerner, partner general manager for block chain at Microsoft.
Conclusion:
Block Chain is Bitcoin’s backbone technology. The distributed ledger functionality coupled with the security of Block Chain makes it a very attractive technology to solve the current financial as well as non-financial industry problems. As far as the technology is concerned, the cryptocurrency-based technology is either in the down ward slope of inflated expectations or in trough of disillusionment
As far as the technology is concerned, the cryptocurrency-based technology is either in the down ward slope of inflated expectations or in trough of disillusionment as shown in Figure 10 in the next page. There is enormous interest in Block Chain-based business applications and hence numerous start-ups working on them. The adoption definitely faces strong headwind as described before. However, even large financial institutions such as Visa, MasterCard, Banks, and NASDAQ, are investing in exploring applications of current business models on Block Chain. In fact, some of them are searching for new business models in the world of Block Chain. Some would like to stay that they are even ahead of the curve in terms of transformed regulatory environments for Block Chain. Environments for Block Chain. We envision Block Chain technology going through slow adoption due to the risks associated. Most of the start-ups will fail with few winners. Having said this, we should be seeing significant adoption in a decade or two.
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