CCT College Dublin Continuous Assessment

Programme Title: BSc (Hons) in Computing in IT (3rd Year)

Module Title: Distributed Digital Transactions
Assessment Title: CA2 Individual Weighting(s): 40%
Lecturer Name: Dr. Muhammad Iqbal
Programme Title: BSc (Hons) in Computing in IT (3rd Year)
Student Name: Joelma Rodrigues
Student Number: 2023246
Date of Submission: 28th December 2023
Late Submission Late submissions will be accepted up to 5 calendar days after the
Penalty: deadline. All late submissions are subject to a penalty of 10% of
the mark awarded. Submissions received more than five
calendar days after the deadline above will not be accepted, and
a mark of 0% will be awarded.
Method of
Moodle
Submission:
Instructions for Upload all MS Word files, code, dataset and any supporting
Submission: information on Moodle.
Feedback Method: Results posted in Moodle grade book
Feedback Date: After exams board

Declaration

By submitting this assessment, I confirm that I have read the CCT policy on Academic
Misconduct and understand the implications of submitting work that is not my own or does
not appropriately reference material from a third party or other source. I declare it to be my
own work and that all material from third parties has been appropriately referenced. I
further confirm that this work has not previously been submitted for assessment by myself
or someone else in CCT College Dublin or any other higher education institution.

Contents
Introduction................................................................................................................................3
Blockchain & Cryptocurrencies.................................................................................................4
 Comparative Analysis................................................................................................................................5
Smart Contract Implementation.................................................................................................7
Cryptocurrency Poster................................................................................................................9
Conclusion................................................................................................................................13
References................................................................................................................................14
Introduction
The advent of blockchain technology highlights a paradigm in the digital transaction field,
forecasting cryptocurrency as a propelling financial innovation, offering advantages like an
incorruptible digital ledger, blockchain decentralisation technology and solid security
protocols proved by cryptocurrencies like Bitcoin and Ethereum, restructuring the global
monetary scenery.

This article explores blockchain's core purpose and impact on the rise of cryptocurrencies,
illustrating real-world applications — a comparative analysis of the unique attributes of
Bitcoin and Ethereum and their contributions to the field. This paper articulates the
foundational elements of cryptocurrencies, demonstrating how blockchain can transform
modern commerce, particularly within the food industry sector.
Blockchain & Cryptocurrencies
The pillar of cryptocurrencies is blockchain technology, a distributed ledger that logs
transactions across several computers to ensure security, transparency, and resistance to
modifications (Nakamoto, 2008). This technology has been fundamental in creating and
operating cryptocurrencies, virtual tokens that use cryptography to ensure secure financial
transactions (Catalini & Gans, 2019).

According to Shin (Economic Adviser and Head of Research at the Bank for International
Settlements), one of the fundamental characteristics of blockchain is that it disrupts
traditional financial systems with its decentralised feature, eliminating the need for a central
authority. Proved by network nodes through cryptography and recorded in a public
distributed ledger, transactions on blockchain provide an unprecedented level of trust in the
digital space (Shin, 2018).

Cryptocurrencies, such as Bitcoin and Ethereum, function in a peer-to-peer electronic cash

system where the transactions are done directly without the intervention of financial
institutions, offering robust security, low-cost transactions and barriers to entry (Catalini &
Gans, 2019).

The impact of blockchain on cryptocurrencies in the real world is ample, and for example,
Bitcoin, the first cryptocurrency, enabled users to store and exchange values outside the
banking system. At the same time, Ethereum has expanded the utility of blockchain further
with its smart contracts functionality, admitting automatic execution of contact when
conditions predefined met, opening the horizon for complex decentralised applications
(Hosanagar & Werbach, 2018).

Moreover, blockchain has revolutionised the concept of money and influenced to facilitate
microtransactions and also provide financial services to the unbanked, promoting a more
inclusive and efficient financial ecosystem (Tapscott & Tapscott, 2016).

Comparative Analysis
Presented in 2008, Bitcoin was the first cryptocurrency, designed primarily as an alternative
to traditional currency, aiming to enable direct transactions without financial intermediaries
(Nakamoto, 2008). Based on blockchain technology, it maintains a ledger of transactions
across a network of computers, offering transparency and security. Proof of Work (PoW) is
Bitcoin's consensus algorithm, where miners must solve complex mathematical challenges to
approve transactions and mine new bitcoins.

Ethereum, launched in 2015, was created to expand the scale of blockchain technology,
introducing the concept of smart contracts that automatically execute contracts according to
the terms written in the code (Buterin, 2014). Allowing developers to create decentralised
applications (dApps) within the Ethereum platform, outstanding Bitcoin's functionality.

Figure 1: Proof of work vs Proof of stake Source: https://www.cryptobuzz.it

The two cryptocurrencies differ in processing speed and capabilities. While Bitcoin's block
time is approximately 10 minutes, Ethereum processes blocks in 12-14 seconds (Wood,
2023). Moreover, the Ethereum consensus mechanism, Proof of Stake (PoS), in its latest
update, Ethereum 2.0, addresses the major criticism of Bitcoin's consensus algorithm: the
energy-intensive, moving towards energy efficiency and scalability.
Although Bitcoin and Ethereum have deeply influenced the cryptocurrency market and are
based on the same technology, they serve distinct purposes within the blockchain system.
Bitcoin is viewed as digital gold and has a capped supply of around 21 million, which makes
it a deflationary asset (Anon., 2018). In contrast, Ethereum does not have a supply, which can
lead to different inflationary dynamics, and is also seen as a foundational platform for
building decentralised applications and executing complex contracts.
Smart Contract Implementation
According to Swan, smart contracts automatically execute agreements with terms written in
the code residing on a blockchain. The smart contract example demonstrates an agreement
between a taxi driver and passenger, where payments are executed automatically, a real-
world scenario where a taxi driver can offer the option to be paid with cryptocurrency,
illustrating transactional security and efficiency.

Once deployed, smart contracts are immutable to ensure both parties adhere to the original
terms and conditions (Buterin, 2014). Automated execution upon agreed conditions being
met, in this case, eliminates the need for intermediaries, reducing the possibility of disputes
and fraud.

Figure 2: Smar Contract Code Snippet

The contract functions include 'setFare' for a driver to specify the ride cost and 'payFare' for
the passenger to submit the payment, which is automatically transferred to the driver. They
exemplify how Ethereum's smart contracts can enforce agreements without intermediaries.

The diagram below describes the interactions between driver and passenger: (1) the driver
deploys the contracts, (2) The fare is set, (3) the passenger pays the fare, and (4) the contract
confirms and processes the payment.
 Figure 3: Smart Contract Taxi Payment Diagram

In summary, smart contracts for real-world transactions like taxi fare payments improve
transaction security and significantly expand trust between parties through transparent and
automatic execution.
Cryptocurrency Poster
Revolutionising the Food Industry with Cryptocurrency
Abstract
This research presents the integration process and security upgrades cryptocurrency payments
can offer in the food industry. Demonstrating how smart contracts automate processes in
future business operations implementing blockchain technology and the ethical implications,
benefits and challenges of adopting this digital revolution.
Blockchain Explained
Blockchain is a ledger technology that records transactions across multiple computers, in
principle, a sequence of unchangeable records linked through cryptography. It is a
transformative technology with a decentralised nature that prevents unauthorised alterations,
making it an ideal platform for financial trade.

Rise of Digital Currency

Digital currencies have risen from niche online tokens to
mainstream financial tools, led by Bitcoin, and are marked by their
ability to operate independently without an intermediary,
overcoming traditional financial systems. This digital revolution
provides an unprecedented opportunity for the food industry to
increase efficiency and expand its customer base since
cryptocurrencies offer faster and borderless transactions.
Security Upgrade
Cryptocurrencies enhance security through blockchain's fundamental features, which are
essential to promote trust among stakeholders:
Cryptographic hash transforms data input into a fixed size of
encrypted text, safeguarding fraud and unauthorised access,
surpassing the typical financial system vulnerability.

Decentralised consensus is a
system where multiple network participants validate
the transaction and record them permanently instead of
an individual central authority addressing fraudulent
activities.

Automating Agreements
Smart contracts are digital automated contracts that self-
execute the terms and are embedded directly into the
programming code, eliminating the need for intermediaries
and reducing potential disputes. This code runs in a
blockchain that automatically enforces obligations when
circumstances meet determined conditions, like transferring
funds, once the parties agree to the contract. These features
improve efficiency and reduce the likelihood of payment
defaults, making them crucial tools for transactions within the
food industry.
Ethical Issues
Although blockchain introduces new ethical parameters when providing transparency,
facilitating audition and reducing the scope for corruption, it also raises dilemmas about data
privacy and digital access inequity since the technology relies on digital infrastructure and
proficiency. These conditions risk excluding specific individuals or groups lacking the
resources from the blockchain's benefits.
Benefits vs Challenges
Implementing cryptocurrencies as a payment system in the food industry offers numerous
benefits; however, it poses some challenges, as shown in the table below:

Pros Cons

Reduced transaction fees: result from Cryptocurrency volatility characteristics can

removing intermediaries from the introduce financial risks due to their unpredictability,
processes. fluctuating unexpectedly.

Reduced risk of fraud: offered by

Regulatory uncertainty can lead to legal uncertainty
blockchain technology's foundational
since regulation is still in development.
features.

Instantaneous settlement eliminates Environmental impact of mining activities is an

delays in finalising the transactions issue because of the significant computational
immediately, enabled by a distributed resources required to mine cryptocurrencies, leaving
ledger. an energy footprint.

Conclusion
1. Cryptocurrencies and blockchain technologies can revolutionise the food industry,
enhancing security and operational efficiency.
2. Implementing smart contracts can reduce costs, modernise processes, and provide
trust through transparency and provable transactions.
Although the potential is vast, it is still essential to fully navigate the market challenges,
volatility, regulation development, and environmental considerations to tackle the benefits of
digital advancement.
Conclusion
This assignment has explained the multifaceted role of blockchain in revolutionising financial
transactions, particularly in the scope of cryptocurrencies. The analyses of the two most well-
known cryptocurrencies, Bitcoin and Ethereum, uncovered diverse functionalities that
address different aspects of the digital economy. The deployment of a Solidity-based smart
contract illustrated the implementation of cryptocurrencies in a taxi payment system,
providing a practical example of this technology's secure, transparent and automated features.
Furthermore, a poster was created to persuade the food industry to adopt cryptocurrency by
highlighting enhanced security, operational efficiencies, and the importance of ethical
considerations.

In conclusion, this paper suggests that cryptocurrency adoption is not without its hurdles. The
potential benefits are significant. Carefully considering ethical practices and collaborative
innovation, the implementation of blockchain and cryptocurrency can be manipulated to
adopt the best features for safer, more efficient, secure, and equitable access associated with
this revolutionising technology.
References
Anon., 2018. Blockchain: Background and Policy Issues. Congressional Research Service, 28th February.

Buterin, V., 2014. Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform.
[Online]
Available at: https://ethereum.org/669c9e2e2027310b6b3cdce6e1c52962/Ethereum_Whitepaper_-
_Buterin_2014.pdf
[Accessed December 2023].

Catalini, C. & Gans, J., 2019. Some Simple Economics of the Blockchain. MIT Sloan Research Paper,
20th April, pp. No. 5191-16.

Hosanagar, K. & Werbach, K., 2018. How the Blockchain Will Impact the Financial Sector. Knowledge at
Wharton, 16th November.

Nakamoto, S., 2008. Bitcoin: A Peer-to-Peer Electronic Cash System, s.l.: Bitcoin.org.

Shin, H. S., 2018. Cryptocurrencies: looking beyond the hype. BIS - Anual Economic Report, 17th June.

Siripurapu, A., Berman, N., Panda, A. & Merrow, W., 2023. Cryptocurrencies, Digital Dollars, and the
Future of Money. Council on Foreign Relations, 28th February.

Swan, M., 2015. Blockchain : blueprint for a new economy. 1st ed. Beijing: O'Reilly Media.

Tapscott, D. & Tapscott, A., 2016. Blockchain Revolution: How the Technology Behind Bitcoin is
Changing Money, Business, and the World. New York: Penguin Random House, 25(1), pp. Pages 64-65.

University, S., 2023. What is the Future of Blockchain and Cryptocurrencies? [Online]
Available at: https://online.stanford.edu/future-blockchain-and-cryptocurrencies
[Accessed December 2023].

Wood, D. G., 2023. Ethereum: A Secure Decentralised Generalised Transaction Ledger. [Online]
Available at: https://ethereum.github.io/yellowpaper/paper.pdf
[Accessed December 2023].