UNIT 03

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3.1 Introduction to Blockchain finance, supply chain

3.1.1 Backstory of blockchain management, healthcare, and
Year Story voting systems.

1982 Stuart Haber and W. Scott

Stornetta propose a 3.1.2 What is blockchain?
cryptographically secured chain Blockchain is essentially a special kind of
of blocks for timestamping database. Here's a breakdown to understand it
digital documents . This is better:
considered an early conceptual
precursor to blockchain. 3.1.2.1 Shared Ledger: Imagine a giant
spreadsheet recording transactions, but
1991 Haber, Stornetta, and Drew S. instead of being on one computer, it's
Touretzky publish a further shared across a network of computers.
developed version of their This shared system makes it very secure
secure chain of blocks concept . and transparent.
3.1.2.2 Immutable Records: Transactions are
1998 Nick Szabo introduces the grouped into "blocks" and
concept of "Bit Gold," a chronologically linked together. Each
decentralized digital currency block contains a reference to the one
secured by cryptography . This before it, creating a chain. This
concept shares some similarities chaining makes it nearly impossible to
with what would later become alter any record without changing
Bitcoin. everything after it.
3.1.2.3 Decentralized: There's no single
2008 Satoshi Nakamoto publishes the authority controlling the blockchain.
Bitcoin whitepaper, outlining a It's maintained by a network of
decentralized digital currency computers working together. This
called Bitcoin that utilizes a eliminates the need for a trusted third
blockchain for secure record- party like a bank and makes the system
keeping . more resistant to fraud.
3.1.2.4 Secure: Cryptography keeps everything
2009 The first block of the Bitcoin tamper-proof. Strong encryption
blockchain is mined, marking protects the data stored on the
the official launch of Bitcoin blockchain.
and the first public blockchain.
In a nutshell, blockchain provides a secure and
2013- The concept of blockchain reliable way to track and record transactions
2014 starts to gain wider recognition without a central authority.
and interest beyond Bitcoin.
Developers begin exploring 3.2 Centralized versus Decentralized
applications of blockchain
technology beyond Feature Centralized Decentralized
cryptocurrencies.
Third-Party Yes No
Involvement
2015 Ethereum, a blockchain
platform designed to support the Control Full control Control stays
creation of decentralized stays with the with the user
applications (dApps), is central itself
authority
launched.
Hackable More prone to Less prone to
Present Blockchain technology hacks and data hacks and data
Day continues to evolve rapidly, with leaks leaks as no
applications being explored in single point of
failure
various industries such as
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Single Point Yes No Bottlenecks Since all data and processes
of Failure flow through a central point,
Ease of Use Intuitive and Not as easy to bottlenecks can occur, leading
easy to use use to delays and inefficiencies.
Exchange Higher fees Less fees Security Risks Centralized systems are
Fees attractive targets for hackers. A
successful attack on the central
Anonymous Users are not Offers server can compromise a vast
anonymous anonymity amount of data.
Limited Centralized control can stifle
3.3 Layers of Blockchain
Innovation innovation as new ideas and
approaches need approval from
Layer Description the central authority.
This layer interacts with the
underlying blockchain network. 3.4.2 Blockchain Adoption so far
It allows users to build Blockchain adoption has been on a steady rise,
Application applications on top of the but it's still considered an emerging
Layer blockchain.
technology. Here's a breakdown of its adoption
This layer is responsible for so far:
Execution processing and executing Growth and Potential:
Layer transactions on the blockchain.
• Increased Interest: Blockchain has
This layer provides a way to gained significant traction across various
Semantic define and interpret the meaning industries, with many companies
Layer of data on the blockchain. exploring its potential applications.
This layer is responsible for • Financial Services: Early adopters
transmitting transactions and include the financial sector, where
Propagation data across the blockchain blockchain is being used for tasks like
Layer network. cross-border payments, trade finance, and
This layer ensures that all asset management.
participants in the blockchain • Supply Chain Management: Tracking
Consensus network agree on the state of the goods and ensuring transparency
Layer ledger.
throughout the supply chain is another
promising area for blockchain adoption.
3.4 Importance of Blockchain • Other Industries: Blockchain is also
3.4.1 Limitations of centralized Systems being explored in healthcare, voting
systems, identity management, and more.
Limitation Description
Challenges and Limitations:
Single Point A centralized system relies on a • Scalability Issues: Current blockchain
of Failure central server or authority. If technology struggles to handle large
this central point fails, the transaction volumes, hindering wider
entire system can become adoption.
unavailable.
• Regulatory Uncertainty: The legal and
Limited As the number of users or data regulatory landscape surrounding
Scalability in a centralized system grows, blockchain is still evolving, creating some
its performance can slow down. hesitation for businesses.
Scaling a centralized system
• Technical Complexity: Blockchain
often requires significant
upgrades or infrastructure technology can be complex to understand
changes. and implement, requiring specialized
knowledge and resources.
Lack of In a centralized system, users
• Security Concerns: While generally
Transparency have limited visibility into how
data is managed and decisions secure, blockchain systems can still be
are made. This can raise vulnerable to hacks, highlighting the need
concerns about accountability for robust security measures.
and trust. Future Outlook:
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• Continuous Development: Developers are Supply Tracking the
constantly working to address limitations Chain movement of
like scalability and security, paving the way Management goods
for wider adoption. throughout the
• Standardization and Regulation: As the supply chain
technology matures, we can expect more for better
standardized practices and clearer transparency
regulations to emerge. and
traceability.
• Increased Integration: Blockchain is
likely to become more integrated with Food Safety Ensuring food safety
existing systems and infrastructure, by tracking the origin
facilitating broader use cases. and journey of food
products.
Overall, blockchain adoption is in its early
stages, but it holds immense promise for Inventory Optimizing inventory
various industries. Overcoming current Management management by
limitations and fostering collaboration between improving visibility
and reducing errors.
developers, businesses, and regulators will be
key to unlocking its full potential. Healthcare Medical Securely storing and
Records sharing patient
Management medical records,
3.5 Blockchain use & use cases
improving access and
control.
Drug Combating
Tracking counterfeit drugs by
tracking their
movement through
the supply chain.
Clinical Streamlining clinical
Trials trials by improving
data integrity and
transparency.
Voting Secure Enabling secure and
Voting tamper-proof voting
Systems systems, reducing
Industry Use Case Description fraud and increasing
trust.
Finance Cross-border Faster, cheaper, and
Identity Decentralized Providing individuals
Payments more secure
Management Identity with control over
international
their own digital
payments compared
identities.
to traditional SWIFT
system. Secure Data Enabling secure and
Sharing controlled sharing of
Trade Streamlining trade
personal data between
Finance finance processes by
institutions.
improving
transparency and Government Land Title Streamlining land
reducing paperwork. Registration titling processes and
reducing fraud.
Securities Enabling efficient and
Trading secure trading of Tax Improving tax
assets like stocks and Collection collection efficiency
bonds. and transparency.
Fractional Dividing assets like Contract Automating and
Ownership real estate into Management securely managing
smaller units for contracts using smart
easier investment. contracts.