BN208 Networked Applications

Answer:

Introduction

The block chain technology is an emerging technology that is used in the security purpose. The block chain can be used in various fields of innovations like cloud computing and distributed system. The  block chain technology was initially used in the security of the crypto currency like bit coin and Ethereum [4]. The block chain has blocks which contains the records of the transaction and the user’s information. Each of the blocks in the chain contains the cryptographic technique and the hash functions. The ledger used in the block chain helps to keep the records of the transactions. Block chain is typically managed by the peer to peer network and it is decentralized in nature. The main purpose of this study is to understand the block chain application in the crypto currencies like bit coin and Ethereum and the working principals of the these crypto currencies.

Discussion

Field and purpose of the application:

Both bit coin  and Ethereum  are crypto currency . However, there is some difference between these two crypto currencies.

Bit coin is the first virtual currency invented by Satashi Nakamoto in 2008. The bit coin  promises the lower fees for the transaction than the traditional money transaction.

Ethereum, is launches in 2015. It is the most established , decentralized platform for performing the virtual currency transaction [3]. It is not just a platform for the transaction of the virtual currency is can be regarded as a programming that enables to use Smart Contracts and Distributed Applications. Ethereum is regarded as the most significant rival of the bitcoin as it uses faster transaction protocols like Ghost Protocol. The transaction method of the Ethereum is different from the bit coin as it uses different bandwidth and computational complexity.

The purpose of application for both these crypto currencies are same,  which is the transaction of the virtual currency. However, Ethereum is becoming more popular than bit coin as it is much flexible to use than bit coin.

Working model of the application:

Working principal of bit coin:

In order to use the transaction through bit coin, bit coin wallet  has to be installed in the user’s system. The e-wallet of the user will generate the first bit coin address and user can create more address if needed [2]. The user can disclose the personal bit coin address to the friends and the others so that they can pay through that address. One address of the bit coin can be used only once.

Balance-block chain:

Block chain is considered as the public ledger which contains the records of all confirmed transactions. The bit coin wallet can be calculated on the basis of the block chain and the new transaction is verified on the basis of spending the bit coin owned by the actual owner. The logical order of the block chain is maintained by the cryptographic protocol.

Transaction- private keys:

The private keys are used for the transaction process. It is used to sign the transaction which is also regarded  as the mathematical proof of the transaction [4]. All the transactions are broadcasts to the owner and the network after every 10 minutes.

Process –mining:

The waiting transactions can be confirmed by the mining process. It helps to protect the neutrality of the network.

Working principal of the Ethereum:

The structure of the Ethereum block chain is similar with the block chain structure of the bit coin. It is a shared record of all the transaction history and every node of the structure has a copy of the transaction history.

The specialty of the Ethereum block chain is that , each node in the structure holds the most recent history of transaction as SmartContracts [6]. In case of application the network needs to aware of the current state which includes the current information and the balance of the users. Ethereum uses the account for the future transaction.

Scalability issues:

Scalability issues of bit coin and Ethereum:

Bit coin has some scalability issues. The interface through which the transaction of the bit coin happens is developed by the programmers. The working process and the interface are the same  the initial stages of the invention of bit coin [1]. At the initial stage of the bit coin , the application of the crypto currency and its users were less than the present. Presently, with the growing user transaction, the bit coin interface cannot process all the transaction fast enough.

Bit coin is not able to cope up with all the other transactions because of the ‘block size limit’. Overall the scalability issues can be summarized in to following categories:

  • Time required to put the transaction in the block.
  • Required time to reach to the consensus.

Features and weakness of application:

Features:

  • Bit coin is the first crypto currency. It also uses the block chain concept.
  • The maximum supply of bit coin  is 21,0000
  • The exchangeable symbol of the bit coin is BTC
  • The maximum supply of the Ethereum is infinite.
  • Ethereum uses SmartContracts.

Weaknesses of the bit coin and Ethereum:

Difficulty in understanding: The main disadvantages of these kind of crypto currencies  is that the working principal of these crypto currencies is difficult to understand[7]. There is a lack of knowledge among most of the people about the usage of crypto currencies.

No reverse payment: In case, if the payment is made accidently to someone elese, that payment cannot be cancelled or reversed.

Scalability issues: The scalability issues and the current trend of the crypto currencies have made these volatile in nature.

Security issues:  There are some security issues which includes double spending of the crypto currencies which are not desirable.

Socio technical aspects of crypto currencies: 

The use of crypto currencies like bit coin and Ethereum has changed the global economic situation. Initially, mass adaptation of the crypto currency happened. However,  certain security flaws of using these currencies and the block chain technology has been discovered [8]. Many people have been affected by the scalability issues and the security issues of the crypto currencies and block chain technology.

The adaptation of the crypto currencies and the adaptation of the block chain technology in various system will be beneficial if the weaknesses of the crypto currencies can be mitigated.

Conclusion

The paper discussed about the application of block chain in the crypto currencies. The  application of the crypto currencies and  the weakness of the crypto currencies has been discussed in this article. The social technical aspect indicates that the mitigation of the certain weakness of the crypto currencies can make these emerging innovation of technology more acceptable to the users.

References

  • Zheng, Zibin, Shaoan Xie, Hong-Ning Dai, and Huaimin Wang. “Blockchain challenges and opportunities: A survey.” Work Pap.–2016(2016).
  • Kosba, Ahmed, Andrew Miller, Elaine Shi, Zikai Wen, and Charalampos Papamanthou. “Hawk: The blockchain model of cryptography and privacy-preserving smart contracts.” In Security and Privacy (SP), 2016 IEEE Symposium on, pp. 839-858. IEEE, 2016.
  • Pilkington, Marc. “11 Blockchain technology: principles and applications.” Research handbook on digital transformations(2016): 225.
  • Böhme, Rainer, Nicolas Christin, Benjamin Edelman, and Tyler Moore. “Bitcoin: Economics, technology, and governance.” Journal of Economic Perspectives29, no. 2 (2015): 213-38.
  • Crosby, Michael, Pradan Pattanayak, Sanjeev Verma, and Vignesh Kalyanaraman. “Blockchain technology: Beyond bitcoin.” Applied Innovation2 (2016): 6-10.
  • Nofer, Michael, Peter Gomber, Oliver Hinz, and Dirk Schiereck. “Blockchain.” Business & Information Systems Engineering59, no. 3 (2017): 183-187.
  • Chen, Lin, Lei Xu, Nolan Shah, Nour Diallo, Zhimin Gao, Yang Lu, and Weidong Shi. “Unraveling blockchain based crypto-currency system supporting oblivious transactions: a formalized approach.” In Proceedings of the ACM Workshop on Blockchain, Cryptocurrencies and Contracts, pp. 23-28. ACM, 2017.
  • Hacker, Philipp. “Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems.” (2017).

Leave a Reply

Your email address will not be published. Required fields are marked *