User:Parham Hosseingarakani/sandbox

Introduction to Blockchain
Blockchain technology is normally associated with cryptocurrencies such as Bitcoin. It is a database of records of transactions that are distributed, and which is validated, and maintained by a network of computers around the world. Instead of a single central authority such as a bank, the records are supervised by a large community and no individual person has control over it and no one can go back and change or erase a transaction history. As compared to a conventional centralized database, the information cannot be manipulated due to the blockchain’s built-in distributed nature of structure and confirmed guarantees by the peers. In another word, when a normal centralized database is located on an individual server, blockchain is distributed among the users of the software. Blockchain technology is based on a decentralized network meaning it operates as a peer-to-peer network. One of the most popular blockchain technology is Bitcoin which hosts a digital ledger. Bitcoin provides the platform to mine, store, and trade bitcoins via a complex computer algorithm that is tied to a distributed network. Blockchains can be not only used for transactions but they can be considered as registry and inventory for all assets.

History of Blockchain
In the year 1976, a paper was released on “New Directions in Cryptography” that discussed the concept of a distributed ledger. With the advancement in the field of Cryptography, another paper entitled as “Hot to Time-Stamp a Digital Document” by Stuart Haber and Scott Stornetta laid out the concept to timestamp the data instead of the medium. Another important concept called “Electronic cash” or “Digital Currency” which came into existence based on a model proposed by David Chaum also contributed to the development of the concept of Blockchain which was followed by Protocols such as e-cash schemes that introduced double spending detection. In 1997, Adam Back introduced another concept called “hash cash” which offered a solution to control spam emails. This led to the concept of creating money called “b-money” by Wei Dai based on a peer-to-peer network. Satoshi Nakamoto is considered the inventor of blockchain technology when he published a paper on bitcoin in 2008 as “Bitcoin: A Peer-to-Peer Electronic Cash System,”. The abstract of the paper was on the direct online payment from one source to another source without relying on a third-party source. The paper described an electronic payment system based on the concept of cryptography. Nakamoto’s paper provided a solution to double-spending where a digital currency cannot be duplicated, and no one can spend it more than once. The paper stated the concept of a public ledger where an electronic coin transaction history can be traced and confirmed if the coin has not been spent before to prevent the double-spending issue. In 2015, the Ethereum platform was launched which enabled blockchain to work with loans and contacts. It was based on an algorithm called smart contract ensuring the implementation of action between the two parties. Due to Ethereum’s ability to offer a faster, safer, and more efficient environment, the technology became widely popular.

Types of Blockchain
Blockchain has evolved greatly in the last few years and based on its different attributes, it can be divided into multiple types.

Public Blockchains Public blockchains are open to the public and any individual can involve in the decision-making process by becoming a node, but users may or may not be benefited from their involvement in the decision-making process. No one in the network has ownership of the ledgers and is publicly open to anyone participating in the network. The users in the blockchain use a distributed consensus mechanism to reach a decision and maintain a copy of the ledger on their local nodes.

Private Blockchains These types of blockchains are not open to the public and are open to only a group of people or organizations and the ledger is shared with its participated members only.

Semi-private Blockchains In a semi-private blockchain, some part of the blockchain is private and controlled by a group or organizations and the rest is open to the public for anyone to participate.

Sidechains These blockchains are also known as pegged sidechains where coins can be moved from one blockchain to another blockchain. There are two types of sidechains naming one-way pegged sidechains and two-way pegged sidechains. A one-way pegged sidechain allows movement from one sidechain to another whereas a two-way pegged sidechain allows movement on both sides of two sidechains.

Permissioned Ledger In this type of blockchain, the participants are known and already trusted. In a permissioned ledger, an agreement protocol is used to maintain a shared version of the truth rather than a consensus mechanism.

Distributed Ledger In a distributed ledger blockchain, the ledger is distributed among all the participants in the blockchain and it can spread across multiple organizations. In a distributed ledger, records are stored contiguously instead of sorted blocks and they can be both private and public.

Shared Ledger The shared ledger can be an application or a database that is shared by the public or an organization.

Fully Private Proprietary Blockchains These types of Blockchains are not a part of any mainstream applications and differ from the idea of decentralization. These types of blockchains come in handy when it is required to share data within an organization and provide authenticity of the data. Government organizations use private proprietary Blockchains to share data between various departments.

Tokenized Blockchains These are standard blockchains that generate cryptocurrencies through a consensus process using mining or initial distribution.

Token less Blockchains These blockchains are not real blockchains as they do not have the ability to transfer values, but they can be useful when it is not required to transfer value between nodes and there is only the need to transfer data among already trusted parties.

Tiers of Blockchain
Blockchain 1.0 This Blockchain is basically used for cryptocurrencies and it was introduced with the invention of bitcoin. All the alternative coins as well as bitcoin fall into this tier of blockchain. It also includes core applications as well.

Blockchain 2.0 Blockchain 2.0 is used in financial services and industries which include financial assets, options, swamps, bonds, etc. Smart Contracts were first introduced in Blockchain 2.0 which can be defined as the way to verify if the products and services are sent by the supplier during a transaction process between two parties.

Blockchain 3.0 Blockchain 3.0 offers more security as compared to Blockchain 1.0 and 2.0 and it is highly scalable and adaptable and provides sustainability. It is used in various industries such as arts, health, justice, media, and in many government institutions.

Generation X This vision is the concept of singularity where this blockchain service will be available for anyone. This blockchain will be open to all and would be operated by autonomous agents.

Applications of Blockchain
Blockchain’s transparent and decentralized platform has attracted various industries and organizations are inclining more and more towards using blockchain for various business purpose. Bank and Payment systems have started using blockchain to make their operations smoother, efficient and secure. Funds can be efficiently and safely transferred with the decentralization technology. Blockchain has become increasingly popular in healthcare industries as it is able to restore the lost trust between the customers and healthcare provides. With the help of blockchain, authorization and identification of people have become easier and frauds and records loss can be avoided. Due to blockchain’s ability to store and verify documents efficiently, the legal industries have started using blockchain to verify records and documents securely. Blockchain can significantly reduce the court cases and battles by providing an authentic medium to verify and confirm truthfulness of legal documents. Rigging of election results can be avoided with an effective use of blockchain. Voter registration and validation can be done using blockchain and ensure the legitimacy of votes by creating a publicly available ledger of recorded votes. Industries such as Insurance, Education, Private transport and Ride sharing, government and public benefits, retail, real estate etc. have started implementing blockchain to reduce costs, to increase transparency and to build trust. Top market analysts predicts that industries such as Banking and Capital Markets, Government, Insurance, Consumers would grow rapidly by 2020 and various other industries such as retail, health, pharmaceutical, travel and transport would also start to use blockchains heavily in their respective domains.

Disadvantages of Blockchain

 * Blockchains are expensive and resource intensive as every node in the blockchain repeats a task to reach consensus.
 * In blockchain, users verify a transaction based on certificate authentication, land titles, cryptocurrencies etc. But there is no way to reverse a transaction even if both the parties involved in the transaction are ready to do so or if the transaction go sour due to some reason.
 * A transaction in the blockchain is settled only when all the nodes in the blockchain successfully verifies the transaction. This could be a very slow process as the block inserted needs to be verified to mark the transaction as authentic by all the nodes. A new concept called as lightening network where transaction can be verified immediately could be good solution to this issue.
 * The size of blockchain grows with an addition of a block. A node needs to store the entire history of the blockchain to be a participant in validating transactions, causing the blockchain to grow continuously. Blockchain will grow faster if it has large blocks and thereby would separate the miners and this would impact the health of the blockchain as the health is dependent on the number of nodes in the network.
 * One of the disadvantage of blockchain is its complexity and complicacy to understand for a general human being. Blockchain is full of complex concepts and processes which is not yet refined so that common man can easily digest and consume the information on how to use it and hence it’s not yet ready for mainstream use.
 * In blockchain, all the transaction related information is available publicly which can become a great liability when distributed ledgers are used in sensitive environments Such as dealing with government data or patients medical data. The ledgers need to be altered and access should be limited with proper clearance only.