Blockchain – An Overview
Types of blockchain:
1. Public / permission less
2. Private / permissioned
3. Hybrid / consortium
Layers in blockchain:
1. Protocol layer (programming language, consensus, transactions, reward/PoW, PoS)
2. Network layer (How minors, nodes will communicate with each other)
3. Application layer (Which application can run on this technology, rules and regulations)
· Protocol Layer
1. Programming language
2. Computing resources
3. How consensus will take place?
4. How the value or funds will be transferred?
5. How the reward will be given?
6. Type of Blockchain (Public or Private or Hybrid)
7. Functionality, Design, Throughput specs
8. Available developers pool
9. Research and Frameworks
· Network Layer – Most Complex Layer
1. How the minors, nodes, data and applications communicate with each other
2. Who runs the node?
3. Who has the read/write access?
4. What is the calculation complexity and requirements for a given node?
5. How data is stored and archived?
6. Technology Integration
7. Government Regulations
8. Stakeholders: minors, standard formation bodies, crypto-exchanges and traders
· Application Layer
1. Applications or clients
2. Laws and conditions of the system
3. Who are end users?
4. UI/UX Specs
5. Stakeholders: consumers, investors and venture funds, corporates and institutions, entrepreneurs and startups
6. Entrepreneurs would build new use cases to increase business and profits, corporates will use technology for efficiency and optimization, consumers will use the products for better services, features and cost optimization and investors would fuel the growth for long-term financial gains
Problems:
1. Tools are still under process to develop DApps/De-centralized apps (blockchain apps)
2. How to store off-chain data?
3. Transactions are very slow on blockchain as compared to other payment gateways
4. Communication hurdles from one blockchain to other e.g. etherium to bitcoin
Advantages:
1. Distributed
2. Encrypted using cryptography
3. Contains complete history
4. Immutable i.e. it can’t be changed once block is created
5. Public (anyone can join and leave)
6. Uses currency or value token for transactions
Dirty Framework:
Is your problem dirty enough to be cleaned with blockchain?
· Diverse set of data and stakeholders
· Immutability of records & Intermediaries
· Repetitive longtime processes well suited for automation
· Transfer of Value, Token, Currency or Digital Asset (music, art, legal document)
· Transparency
Examples/Applications:
1. Census (population counting)
2. Supply chain tracking
3. Electronic voting
5 Basic Components of A Blockchain Network
1. Distributed Ledger.
4. Peer-to-peer network – P2P.
5. Consensus Mechanism.
6. Cryptography.
7. Virtual Machine.
Consensus Algorithms:
“A consensus algorithm is a process in computer science used to achieve agreement on a single data value among distributed processes or systems; it is designed to achieve reliability in a network involving multiple unreliable nodes.
1. Byzantine Fault Tolerance (BFT)
2. Practical Byzantine Fault Tolerance (PBFT)
3. PoW = Proof of Work
4. PoS = Proof of Stake
5. PoA = Proof of Activity
6. Proof-of-Capacity (PoC)
7. Proof-of-Elapsed-Time (PoET)
8. Proof-of-Space-and-Time (PoST)
9. Proof-of-Social-Impact (PoSi)
10. Proof-of-Identity (PoI)
11. Proof-of-Burn (PoB)
Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary's involvement or time loss.