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BSU Coin INSS 890 Whitepaper - Spring 2018
1. The problem
In this digital era, money from one point to another point of the world trans-ferred complete digitally in no time which makes the user transaction much e cient and simpler. But at the same time many security risks are there. As internet is an open gateway, its much easy for an intelligent intruder to enter into this transaction scenario and do whatever he/she wish. The current banking system holds lots of databases to save transaction history of each and every customers. i.e. the customer always need to stick to an third party for intermediary for doing the transaction.
Blockchain eradicates the need of nancial intermediary like a bank. Un-der blockchain transaction scenario customer assets ownership details are stored under pseudonym. This blockchain provides an immutable chain of customer transaction history. This opensource technology reduces transac-tion costs. In traditional banking system many protocols are there and the banking transaction can only be done during bank working hours. Blockchain allows customers individual transactions to have there own proof of validity. If suppose the customer transaction fell into the hands of an intruder, only a small data will be get leaked not the entire network gets hacked. In most of the developed countries, defence and trade secrets are distributed across multiple data centers using the latest blockchain technology which provides extra security for the data (Peters, et al 2016).
Here in this document we are going to discuss about ethereum based blockchain called Bitcoin, the largest cryptocurrency by market cap. Blockchain facilitates moving coins (assets) from one individual to another individual.
2. Proposed solution
Bitcoin provides a way for safe and secure money transaction in which ev-eryone in the blockchain system knows that the transfer has taken place and at the same time nobody can change the legitimacy of the transfer. Each and every blockchain is like a individual bank statement. Blockchain is like a distributed database system which serves as like a open electronic ledger simplifying business operations of all sectors. A recent survey from stock market reveals that bitcoins based blockchain system saves around 6 billion dollars a year.
In this Bitcoin protocol, the blockchain database gets shared by complete set of nodes interconnected with the system. Each and every computer re-ceives a copy of blockchain. The complete transaction process gets recorded into blocks and then into blockchain which in turn gets veri ed and relayed by other Bitcoin users. For every 10 minutes once, a new block is added to the blockchain (Garay, J., et al 2015).
In this Bitcoin protocol, the blockchain database gets shared by complete set of nodes interconnected with the system. Each and every computer re-ceives a copy of blockchain. The complete transaction process gets recorded into blocks and then into blockchain which in turn gets veri ed and relayed by other Bitcoin users. For every 10 minutes once, a new block is added to the blockchain (Garay, J., et al 2015).
3. Description of the solution
Once the user installed Bitcoin wallet in smartphone or computer, the bit-coin address will automatically get generated. The user can share there Bitcoin address to their neighbours. The blockchain is so called as a shared ledger or distributed system in which the bitcoin network works. The blockchain maintains a database in which all the user transactions are stored. Each and every byte of data inside Bitcoin wallets are kept safe and securely. This piece of data are so called as private key or seed. The transaction process was broadcasted and the con rmation will be shared between two di erent users within the next 10 minutes. This process is so called Mining. The waiting transactions will be added into the block chain. After adher-ing to the strict cryptographic rules every transactions will be tted into a network.
Bitcoin was the rst ever cryptocurrency discovered. The main advan-tage of Bitcoin is that it can be stored in a persons local computer hardware even though in o ine mode. This process is so called cold storage which protects the currency from other strange users. If accidently a person loses his/her access to hardware which containing the bitcoins the currency is gone from the users hand. As of now around 30 billion in bitcoins got losted by shareholders and investors.
4. Critical part of the paper
Bitcoins wallets can be stored both online in cloud or o ine in hard disk or USB. Among this two methods, o ine mode is more secure. The real data loss risk in bitcoin revolves around not backing up the wallet with a failsafe copy. Bitcoin contains a .dat le which got updated every time when user send or receive bitcoins.
During the transaction con rmation time gap between peer-to-peer it is possible for an hacker to double spend the money as the transaction process hardly takes some seconds. In this case the hacker can send second payment to another recipient.
5. Description of the Catalysts and network
Ethereum is another open source blockchain technology which facilitates smart contracts and cryptocurrency trading securely without the need of third party such as bank. Ethereum allows users to deploy all decentralizes apps. Due to its advanced technology no doubt it will soon overtake Bitcoin in nearest future
The major similiarity between Ethereum and Bitcoin was that the Bit-coin allows only public (permissionless) transactions to takes place, whereas Ethereum allows both permissioned and permissionless transactions to takes place. The block time of Ethereum was very less around 12 seconds but in bitcoin its 10 minutes. Ether cryptocurrency can be transferred between accounts.
When comparing Bitcoin based Blockchain, Ethereum have several added security features. All user applications are safely protected against hacking activities. None of the apps will go down and also the apps never gets switched o .
Ethereum have another interesting feature called DAO (Decentralized Autonomous Organizations) an fully autonomous decentralized organiza-tion. DAO runs completely on the basis of secure programming codes which cant be hacked easily. The programming codes are written inside Ethereum blockchain (Wood, G. 2014).
6 Ethereum and ETH clones
Ethereum technology was founded by Vitalik Buterin in the year of 2013. Ethereum works on the principle of Ethereum Virtual Machine (EVM), an 256 bit register stack. Ethereum has an internal secure transaction mecha-nism called "Gas" which is used to mitigate spam and allocate data resources on network. These scrips are executed using an international public trans-action network The advantage of using Ethereum than Bitcon is that the transaction fees for very low around 0.33 dollars while for bitcoin it was 2.33 dollars. Ether is nothing but a mining process for creating ethereum to-kens. The tokens are generated by mining process at the rate of 5 ether per mined block. This mining process makes decentralized transaction record-ing. Ether mining is almost same as like bitcoin
7. Bene ts of Blockchain
In healthcare industry, digital signatures containing blockchain data that allows multiple patients at the same time to maintain the privacy health records. In addition to that all persons in that healthcare community (doc-tors, nurses, healthecare specialist) will also be accessible to that speci c healthcare blockchain.
Blockchain technology plays a vital role in defence industry. Each and every network equipments in the defence industry have blockchain installed rmware. Hence unauthorized logins or access modi cation is not possible.
In supplychain management industry, the blockchain technology o ers e ective cost e ectiveness such as movement of goods and asset tracking etc. In accounting industry, blockchain facilitates e ective accounts data processing.
As like in supply chain management, e-voting can be done e ectively using the blockchain technology (Pointcheval, et al 2000).
8. Future of Blockchain
In future, Blockchains will be used by almost all nationalised banks which facilitates the usage of cryptographically secured currencies.
Nasdaq will soon launch blockchain supported digital ledger technology which improves equity and share trading much e ciently.
E-voting will be there at all developed countries by blockchain technology(Yli-Huumo, at al 2016).
9. Conclusion
No doubt blockchain will rule the whole world digitally in money transaction process. Hope this document provides adequate information about bitcoin and ethereum based blockchain system.
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Place Your Order10. References
Peters, G. W., & Panayi, E. (2016). Understanding modern banking ledgers through blockchain technologies: Future of transaction processing and smart contracts on the internet of money. In Banking Beyond Banks and Money (pp. 239-278). Springer, Cham.
Garay, J., Kiayias, A., & Leonardos, N. (2015, April). The bitcoin backbone protocol: Analysis and applications. In Annual International Conference on the Theory and Applications of Cryptographic Techniques (pp. 281-310). Springer, Berlin, Heidelberg.
Wood, G. (2014). Ethereum: A secure decentralised generalised transaction ledger. Ethereum Project Yellow Paper, 151, 1-32.
Pointcheval, D., & Stern, J. (2000). Security arguments for digital signatures and blind signatures. Journal of cryptology, 13(3), 361-396.
Yli-Huumo, J., Ko, D., Choi, S., Park, S., & Smolander, K. (2016). Where is current research on blockchain technology?—a systematic review. PloS one, 11(10), e0163477.
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