Strategic Marketing Assignment

Submitted by:
Name: RIDDHI PAUL
Exam Roll No.: 95/MB/180024
Department of Business Management,
Calcutta University , Alipore Campus.
Introduction:
Blockchain being relatively a new technology, a representative sample of research
is presented, spanning over the last ten years, starting from the early work in this
field. Different types of usage of Block chain and other digital ledger techniques,
their challenges, applications, security and privacy issues were investigated.
Identifying the most propitious direction for future use of Blockchain beyond
crypto-currency is the main focus of the review study. Blockchain (BC), the
technology behind Bit coin crypto-currency system, is considered to be essential
for forming the backbone for ensuring enhanced security and privacy for various
applications in many other domains including the Internet of Things (IoT) eco-
system. International research is currently being conducted in both academia and
industry applying Blockchain in varied domains.

Technical aspects concerned with block chain

A Block chain comprises of two different components, as follows:
1. Transaction:
A transaction, in a Blockchain, represents the action triggered by the participant.
2. Block:
A block, in a Blockchain, is a collection of data recording the transaction and other
associated details such as the correct sequence, timestamp of creation, etc.

The Blockchain can either be public or private, depending on the scope of its use.
A public Blockchain enables all the users with read and write permissions such as
in Bit coin, access to it. However, there are some public Blockchains that limit the
access to only either to read or to write. On the contrary, a private Blockchain
limits the access to selected trusted participants only, with the aim to kee p the
users’ details concealed. This is particularly pertinent amongst governmental
institutions and allied sister concerns or their subsidies thereof. One of the major
benefits of the Blockchain is that it and its implementation technology is public.
Each participating entities possesses an updated complete record of the
transactions and the associated blocks. Thus the data remains unaltered, as any
changes will be publicly verifiable. However, the data in the blocks are encrypted
by a private key and hence cannot be interpreted by everyone.
Another major advantage of the Block chain technology is that it is decentralized.
It is decentralized in the sense that:
• There is no single device that stores the data (transactions and associated blocks),
rather they are distributed among the participants throughout the network
supporting the Blockchain.
• The transactions are not subject to approval of any single authority or have to
abide by a set of specific rules, thus involving substantial trust as to reach a
consensus.
• The overall security of a Blockchain eco-system is another advantage. The
system only allows new blocks to be appended. Since the previous blocks are
public and distributed, they cannot be altered or revised.

For a new transaction to be added to the existing chain, it has to

be validated by all the participants of the relevant Block chain eco-system. For
such a validation and verification process, the participants must apply a specific
algorithm. The relevant Block chain eco-system defines what is perceived as
“valid”, which may vary from one eco-system to another. A number of
transactions, thus approved by the validation and verification process, are bundled
together in a block. The newly prepared block is then communicated to all other
participating nodes to be appended to the existing chain of blocks. Each succeeding
block comprises a hash, a unique digital fingerprint, of the preceding one. Figure 1
demonstrates how Block chain transactions takes place, using a step-by-step
example. Bob is going to transfer some money to Alice. Once the monetary
transaction is initiated and hence triggered by Bob, it is represented as a
“transaction” and broadcast to all the involved parties in the networks. The
transaction now has to get “approval” as being indeed “valid” by the Block chain
eco-system. Transaction(s) once approved as valid along with the hash of the
succeeding block are then fed into a new “block” and communicated to all the
participating nodes to be subsequently appended to the existing chain of blocks in
the Block chain digital ledger.
A block chain is, in the simplest of terms, a time-stamped series of immutable
records of data that is managed by a cluster of computers not owned by any single
entity. Each of these blocks of data (i.e. block) is secured and bound to each other
using cryptographic principles (i.e. chain).
So, what is so special about it and why are we saying that it has industry-disrupting
capabilities?
The block chain network has no central authority — it is the
very definition of a democratized system. Since it is a shared and immutable
ledger, the information in it is open for anyone and everyone to see. Hence,
anything that is built on the block chain is by its very nature transparent and
everyone involved is accountable for their actions.
Let us take an example and discuss the methodology;

We buy tickets on an app or the web. The credit card company takes a cut for
processing the transaction. With block chain, not only can the railway
operator save on credit card processing fees, it can move the entire
ticketing process to the block chain. The two parties in the transaction
are the railway company and the passenger.
Here, the ticket is a block, which will be added to a ticket block chain.
Just as a monetary transaction on the block chain is a unique,
independently verifiable and unfalsifiable record (like Bitcoin), so can
your ticket be. Incidentally, the final ticket is also a record of all
transactions for, say, a certain train route, or even the entire train
network, comprising every ticket ever sold, every journey ever taken.
But the key here is this: it’s free. Not only can the block chain transfer
and store money, but it can also replace all processes and business
models that rely on charging a small fee for a transaction. Or any
other transaction between two parties.
Even recent entrants like Uber and Airbnb are threatened
by block chain technology. All you need to do is encode the
transactional information for a car ride or an overnight stay, and again
you have a perfectly safe way that disrupts the business model of the
companies which have just begun to challenge the traditional
economy. We are not just cutting out the fee-processing middle man,
we are also eliminating the need for the match-making platform.
Information held on a block chain exists as a shared — and continually
reconciled — database. This is a way of using the network that has
obvious benefits. The block chain database isn’t stored in any single
location, meaning the records it keeps are truly public and easily
verifiable. No centralized version of this information exists for a hacker
to corrupt. Hosted by millions of computers simultaneously, its data is
accessible to anyone on the internet.
How do we make a block? What does a simple block consist of? In
our simple crypto coin that we are going to make (Let’s call it
“BlockGeeksCoin”) each block will have the following pieces of
information:
 Index: To know the block number.
 Timestamp: To know the time of creation.
 Data: The data inside the block.
 Previous Hash: The hash of the previous block.
 Hash: The Hash of the current block.

How does it work?

 Information held on a blockchain exists as a shared — and
continually reconciled — database. This is a way of using the
network that has obvious benefits. The blockchain database isn’t
stored in any single location, meaning the records it keeps are truly
public and easily verifiable. No centralized version of this
information exists for a hacker to corrupt. Hosted by millions of
computers simultaneously, its data is accessible to anyone on the
internet. It is not owned by a single entity, hence it is decentralized

 The data is cryptographically stored inside.

 The blockchain is immutable, so no one can tamper with the data

that is inside the blockchain.

 The blockchain is transparent so one can track the data if they

want to. It is not owned by a single entity, hence it is decentralized.
 Consensus Mechanism: The mechanism by which a decentralized network
comes to a consensus on certain matters.
 Miners: Users who use their computational power to mine for blocks

Pillar 1: Decentralization
  Before Bitcoin and BitTorrent came along, we were more used to
centralized services. The idea is very simple. You have a
centralized
entity that stored all the data and you’d have to interact solely
with this entity to get whatever information you required.
Another example of a centralized system is the banks. They store all
your money, and the only way that you can pay someone is by going
through the bank.
In a decentralized system, the information is not stored by one single
entity. In fact, everyone in the network owns the information.
In a decentralized network, if you wanted to interact with your friend
then you can do so directly without going through a third party. That
was the main ideology behind Bitcoins. You and only you alone are in
charge of your money. You can send your money to anyone you want
without having to go through a bank.

Pillar 2: Transparency
One of the most interesting and misunderstood concepts in blockchain technology
is “transparency.” Some people say that blockchain gives you privacy while some
say that it is transparent. Why do you think that happens? So, while the person’s
real identity is secure, you will still see all the transactions that were done by their
public address. This level of transparency has never existed before within a
financial system. So, while the person’s real identity is secure, you will still see all
the transactions that were done by their public address. This level of transparency
has never existed before within a financial system. It adds that extra, and much
needed, level of accountability which is required by some of these biggest
institutions.
Speaking purely from the point of view of cryptocurrency, if you know the public
address of one of these big companies, you can simply pop it in an explorer and
look at all the transactions that they have engaged in. This forces them to be
honest, something that they have never had to deal with before.
The reason why the blockchain gets this property is that of
the cryptographic hash function.
In simple terms, hashing means taking an input string of any length and giving out
an output of a fixed length. In the context of cryptocurrencies like bitcoin, the
transactions are taken as input and run through a hashing algorithm which gives an
output of a fixed length.
Pillar 3: Immutability
Immutability, in the context of the blockchain, means that once something has
been entered into the blockchain, it cannot be tampered with. A cryptographic hash
function is a special class of hash functions that has various properties making it
ideal for cryptography. There are certain properties that a cryptographic hash
function needs to have in order to be considered secure. You can read about those
in detail in our guide on hashing.
There is just one property that we want you to focus on today. It is called the
“Avalanche Effect.”

Maintaining the Blockchain – Network, and Nodes

The blockchain is maintained by a peer-to-peer network. The network is a
collection of nodes that are interconnected to one another. Nodes are individual
computers that take in input and performs a function on them and gives an output.
The blockchain uses a special kind of network called “peer-to-peer network”
which partitions its entire workload between participants, who are all equally
privileged, called “peers”. There is no longer one central server, now there are
several distributed and decentralized peers.

Why do people use the peer-to-peer network?

One of the main uses of the peer-to-peer network is file sharing, also called
torrenting. If you are to use a client-server model for downloading, then it is
usually extremely slow and entirely dependent on the health of the server. Plus, as
we said, it is prone to censorship.
However, in a peer-to-peer system, there is no central authority, and hence if even
one of the peers in the network goes out of the race, you still have more peers to
download from. Plus, it is not subject to the idealistic standards of a central system,
hence it is not prone to censorship.
There is a definite need for better on the web. The ability to verify
your identity is the lynchpin of financial transactions that happen online. However,
remedies for the security risks that come with web commerce are imperfect at best.
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. A good
reputation, after all, is the most important condition for conducting transactions
online.

These decentralized cryptocurrencies are structured like that is because of a simple

reason, to stay true to their philosophy. The idea is to have a currency system,
where everyone is treated as an equal and there is no governing body, which can
determine the value of the currency based on a whim. This is true for both bitcoin
and Ethereum.
Now, if there is no central system, how would everyone in the system get to know
that a certain transaction has happened?
The network follows the gossip protocol.  A node is simply a computer that
participates in the Ethereum network. This participation can be in three
ways
 By keeping a shallow-copy of the blockchain aka a Light Client.

 By keeping a full copy of the blockchain aka a Full Node.

 By verifying the transactions aka Mining.

Technical challenges faced by Blockchain:

Reason 1: Security

Blockchains, as David Schwartz puts it, should be fortresses. Firstly, the

code is public and open for all to see. Anyone can look at the code
and check for bugs and vulnerabilities. However, unlike other open
code resources, the downside of finding vulnerabilities on blockchain
code is massive. Any programmer can hack in and get away with
potentially millions and millions of dollars. Because of these legitimate
security concerns, development on the blockchain is usually very slow.
Reason 2: Resource Management

It is important to keep pace with the network. You cannot fall too far
behind and not keep up with all the network demands. You should be
well equipped to handle remote and local queries.

Reason 3: Performance

The blockchain must always perform at its highest possible

capabilities, but for that to happen the language chosen must be
extremely versatile. The thing is that there are certain tasks in the
blockchain which are parallelizable whilst there are some tasks that
can’t be done in parallel. A good example of a “parallelizable” task is
digital signature verification. All that you need for signature
verification is the key, transaction, and signature. With just three data
you can conduct verifications in a parallelized manner.
 However, not all the functions on a blockchain should be done
that way. Think of transaction execution itself. Multiple transactions
can’t be executed in parallel; it needs to be done one at a time to
avoid errors like double spends. Some languages are good at
parallel operations while some are good in non-parallel operation.

Reason 4: Isolation

What is deterministic behavior?

If A + B = C, then no matter what the circumstances, A+B will always
be equal to C. That is called deterministic behavior.
Hash functions are deterministic, meaning A’s hash will always be H(A).
So, in blockchain development, all transaction operations must be
deterministic. You cannot have a transaction that behaves one way
and then behaves another way the next day. Similarly, you cannot
have smart contracts that work in two different ways on two different
machines.
The only solution to this is isolation. Basically, you isolate your smart
contracts and transactions from non-deterministic elements.
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