Priyanshi Dave SYBMS 107

Gurpreet Sethi SYBMS 152

Blockchain Technology and its Impact on World Economy

Blockchain technology is an advanced database mechanism that allows transparent information sharing within a
business network. A blockchain database stores data in blocks that are linked together in a chain. Blockchain
emphasizes on maintaining a ledger of transactions that is duplicated and distributed across entire network of
computer systems.
The objective of the research paper is to analyse the role of blockchain technology and the future that it holds in
various sectors of the economy.

 Five important blockchain benefits

 Enhanced security
By creating a record that can’t be altered and is encrypted end-to-end, blockchain helps prevent fraud and
unauthorized activity. Privacy issues can also be addressed on blockchain by anonymizing personal data and
using permissions to prevent access. Information is stored across a network of computers rather than a single
server, making it difficult for hackers to view data.
 Greater transparency
Without blockchain, each organization has to keep a separate database. Because blockchain uses a distributed
ledger, transactions and data are recorded identically in multiple locations. This enables members to view the
entire history of a transaction and virtually eliminates any opportunity for fraud.
 Instant traceability
Blockchain creates an audit trail that documents the provenance of an asset at every step on its journey. In
industries where consumers are concerned about environmental or human rights issues surrounding a product
— or an industry troubled by counterfeiting and fraud — this helps provide the proof.
 Increased efficiency and speed
By streamlining these processes with blockchain, transactions can be completed faster and more efficiently.
Documentation can be stored on the blockchain along with transaction details, eliminating the need to exchange
paper. There’s no need to reconcile multiple ledgers, so clearing and settlement can be much faster.
 Automation
Transactions can even be automated with “smart contracts,” which increase your efficiency and speed the
process even further. Once pre-specified conditions are met, the next step in transaction or process is
automatically triggered.

Much of the reason behind blockchain technology's emergence was the failure of bank and other intermediaries
to ensure transparency and efficiency of such transactions. Some of the problems were:
 Technical issues- glitch or system crashes
Most banks, including bigger ones, continue to use outdated technology platforms, making upgrades difficult.
Secondly, these banks severely lack the adequate number of talented tech professionals to support large-scale
tech-enabled banking operations, often resulting in major delays in the event of an outage
 Security issues
With a series of high-profile breaches over the past few years, security is one of the leading banking industry
challenges, as well as a major concern for bank and credit union customers.
 Transfer limits
Along with the money transfer limit, there is a limit to the number of UPI transfers to be carried out in one day.
The daily UPI transfer limit is set to 20 transactions
 High Transfer Charges
Cash handling charges form a significant part of charges levied by the bank. While transacting from your home
branch allows you higher limits, you still have to pay charges of ₹50-150 per transaction, if you exceed that limit.

HISTORY OF BLOCKCHAIN TECHNOLOGY

Blockchain history dates back to early 1990’s by two researchers: Stuart Haber and W. Scott Stornetta. They
both touted as the co-inventor of the blockchain technology. Several aspects of the Bitcoin blockchain
architecture are based on Stornetta’s work. The first mention of blockchain architecture was held in a
publication that Stornetta coauthored described a digital hierarchy system known as a “block chain” that utilized
digital time-stamps for ordering transactions. They worked on a cryptographically secured chain of blocks
whereby no one could tamper with timestamps of documents. It wasn’t until 2009 that developer Satoshi
Nakamoto implemented the first blockchain. Nakamoto is known for creating the world’s first digital currency
called Bitcoin. Nakamoto is a group of developers who collaborated in order to use blockchain technology to
create Bitcoin. Bitcoin utilized blockchain technology on a peer-to-peer network as a ledger for any transactions
made with Bitcoin.
The first reported real-world financial transaction involving Bitcoin took place on May 22, 2010, when a Florida
man negotiated to pay 10,000 BTC for two Papa John's pizzas priced at about $25. That transaction valued the
price of one Bitcoin at roughly a fourth of a cent.
Ethereum is an open source, distributed software platform based on blockchain technology.Cryptocurrency
researcher Vitalik Buterin first described Ethereum in a proposal in 2013 that suggested the addition of a
scripting language for programming to Bitcoin. Ethereum's development was funded by an online crowdsale,
which is crowdfunding done through issuing cryptocurrency tokens, and the project came online on July 30,
2015.
The DAO was a decentralized autonomous organization (DAO) that was launched in 2016 on the Ethereum
blockchain. After raising $150 million USD worth of ether (ETH) through a token sale, The DAO was hacked due
to vulnerabilities in its code base. The Ethereum blockchain was eventually hard forked to restore the stolen
funds, but not all parties agreed with this decision, which resulted in the network splitting into two distinct
blockchains: Ethereum and Ethereum Classic.
Blockchain has so many applications in every sector you can imagine such as healthcare, finance, government,
identity, etc. And that's not including its most popular application which is Bitcoin.

APPLICATIONS OF BLOCKCHAIN TECHNOLOGY

 Healthcare
Blockchain can have a big impact on healthcare using smart contracts. These smart contacts mean that a
contract is made between 2 parties without needing any intermediary. All the parties involved in the contract
know the contract details and the contract is implemented automatically when the contract conditions are met.
This can be very useful in healthcare wearing personal health records can be encoded via Blockchain so they are
only accessible to primary healthcare providers with a key.

 Cryptocurrency
Perhaps one of the most popular applications of Blockchain is in Cryptocurrency. Who hasn’t heard about
bitcoin and it’s insane popularity. One of the many advantages of cryptocurrency using blockchain as it has no
geographical limitations. So crypto coins can be used for transactions all over the world.

 Banking

It is possible to transfer a business process between several participants within the Blockchain, through Smart
Contracts to enable the programming of the entire negotiation flow. the entire process can be automated, and,
through a web interface or application, the cycle can be monitored, and the agreements reached can be
consulted.

 Supply Chain Management

Blockchain makes global supply chains more efficient by allowing companies to complete transactions directly
and without third parties. Food and pharmaceutical products often have specialised storage needs. Moreover,
enterprises see the value in sharing warehouses and distribution centres instead of each one paying for its own.
Sensors on sensitive products can record temperature, humidity, vibration, and other environmental
conditions.These readings can then be stored on a blockchain.

BLOCKCHAIN- THE PILLAR ON WHICH BITCOINS WORK

Rather than being an optional technology for cryptocurrency, blockchain is a foundational feature of it.
Ultimately, the growth and development of blockchain has been fuelled by cryptocurrencies, as crypto relies on
its network to exist. But blockchain transcends cryptocurrency applications. Not restricted to the financial
sector, the technology offers multiple solutions that have already, and will continue to, disrupt diverse markets
in the years to come. The terms have become synonymous, perhaps because the first blockchain was the
database on which every bitcoin (the first cryptocurrency) transaction was stored

ILLUSTRATION OF WORKING OF BLOCKCHAIN

Let us consider a story of four boys named Sam,Ted,Phil and Jack to simply explain how a bitcoin transaction
using blockchain works. Jack pays the restaurant bill and Sam, Ted and Phil decide to give their share in the form
of bitcoin to avoid transfer charges levied by the bank. Sam, Ted and Phil initially have 3 Bitcoins while Jack has 5
Bitcoins. All three of them have to give 2 Bitcoins to Jack and so eventually the number of Bitcoins all three of
them have at the end of transaction is 1 but Jack has 11 Bitcoins. The bitcoin status of each of the members
involved in a transaction is stored in a block and this information is transferred to all of them. The record of such
transactions is called a ledger and the concept is based on decentralisation wherein everyone has the authority
to check the transaction related information rather than one person having the entire control over it.

TECHNOLOGIES BLOCKCHAIN CAN COMPLEMENT WITH IN AN ECONOMY

 5G Technology

5G in blockchain could involve vehicular networks to enable the sharing of traffic information. For instance,
two vehicles on the road will be able to communicate with each other and provide information such as
safety warnings. This could be effective in avoiding accidents and traffic congestion

 Cloud Computing

The decentralization affords greater security, as hacking one central server will not really give the hacker
much information. Therefore, any application that necessitates high security will benefit from
blockchain technology. By using blockchain in cloud computing, data recovery will not be an issue.

 AR/VR

Many in the AR and VR space are investigating ways to harness blockchain technology to give virtual
items and assets unique properties and value. Some, like Verses, SuperWorld, and Arcona are
experimenting with merging AR and blockchain technology to sell virtual real estate.

 Big Data

Blockchain Technology is an append-only ledger that aids transaction or information recording on a

distributed network. Big Data Analytics is the use of techniques to extract quality data from large,
unstructured, and semistructured data sources. The synergy of these two has made room for a diverse
and unimaginable number of applications. You can simply relate to a Cryptocurrency Transaction from
user X to user Y, an NFT being sold from user A to user B, and more such transactions on a digital asset
or NFT marketplace. These are some live examples of the combined technology use of Blockchain and
Big Data Analytics.

 Artificial Intelligence
 Blockchain’s digital record offers insight into the framework behind AI and the provenance of the data it
is using, addressing the challenge of explainable AI. This helps improve trust in data integrity and, by
extension, in the recommendations that AI provides. Using blockchain to store and distribute AI models
provides an audit trail, and pairing blockchain and AI can enhance data security. 

DATA ANALYSIS ON FUTURE OF BLOCKCHAIN

There has been an upward trend in the use of blockchain technology over the years and much of the
reason behind it is the transparency and confidentiality it offers

 In 2020, the industry with the largest blockchain spend was banking at 29.7%. Other big spenders on
blockchain technology are process manufacturing (11.4%), discrete manufacturing (10.9%), professional
services (6.6%), and retail (6%). (IDC, 2020)
 The professional services industry is expected to have the fastest growth in blockchain spending, at a
CAGR of 54%. This is followed by healthcare (43.9%) and state and local government (48.2%). (IDC, 2020)
 The US is projected to spend $4.2 billion in 2022, which will make it the largest regional spender on
blockchain solution. The next biggest regional spenders are Western Europe ($2.9 billion), the People’s
Republic of China ($1.4 billion), Asia Pacific and Japan, ($0.75 billion), Middle East and Africa ($0.5
billion), and others ($1.9 billion). (Statista, 2019)
 Blockchain market is fragmented but has to potential to revolutionize the way we conduct transactions
which is evident through its incremental growth and accelerating compound annual growth ratio.
 North America and Europe constitute major markets of this technology.
 Growing requirement of security, data privacy has eventually accelerated the rate of adoption of this
technology and has ensured that other aspects like internet of things and cloud computing are well
complemented and looked after.

Conclusion

Distributed ledgers named blockchain have the ability to securely digitize many current operations in economics
and finance, and legal and government services. Blockchain can be defined as a decentralized public ledger,
which records transactions between users in a permanent, secure and verifiable way. The important thing is that
blockchain can be programmed to record not only financial transactions, but anything of value. There is a
growing realization that blockchain technology will bring a radical shift of especially on financial assets. It is no
doubt that the financial sector is at the forefront in adoption of blockchain technology. Blockchain is rapidly
revolutionizing the global economy. The potential effect of blockchain technology – distributed ledgers - on the
society and the global economy are hugely important, as they promise to always have an optimistic impact.
Actually the potential benefits of the blockchain are more than just economic and the technological capacity of
the blockchain is already being harnessed to address real world problems by specific groups. Only nine years
after the first Bitcoin white paper, blockchain technology is now studied by companies and governments to find
possible use cases for efficiency and can possibly trigger the third industrial revolution. On the other hand,
debate over blockchain’s promise, as well as its limitations, is ongoing. Blockchain technology, in all its forms,
continues to evolve rapidly. It is widely accepted that Blockchain technology future looks bright and attractive in
part because of the way governments, developers, firms and investors are investing big as they seek to spur
innovations and applications. The opportunities that blockchain offers need to be developed and governed
wisely, with upfront and continual management of unintended consequences and downside risks. Blockchain is
the kind of technological breakthrough that has the potential to make global changes. Its predicted impact on
the world economy is big enough that some of the countries and biggest companies are already preparing for it.

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