blockchain technology term introduction to information system

It is considered a breakthrough in securely storing and transmitting information.In simple terms, blockchain is a distributed and public system where transactions and information are rec

DUY TAN UNIVERSITY

FACULTY OF SOFTWARE TECHNOLOGY

-o0o -BLOCKCHAIN TECHNOLOGY Term: Introduction to Information System

Class: CMU-IS 100 AIS (2023F) -YEAR (2023-2024)Instructors: Nguyễn Thị Thanh Tâm

1.4 How blockchain work 7

1.5 Introduction to the different types of blockchains in English: 7

Real-time Data Access 19

3.3 Increased Efficiency and Cost Reduction: 20

Reduced Manual Processes 20

Smart Contracts 20

3.4 Enhanced Security and Trust: 21

Immutable Records 21

Secure Transactions 21

3.5 Case Studies and Examples: 21

IBM Food Trust 21

Walmart's Leafy Greens 22

CHAPTER 4: BLOCKCHAIN APPLICATIONS IN MANY FIELDS 23

4.1 Banking & Finance: 23

Trading and payments 23

Academic and Certificate Verification 26

Sharing of documents and content 26

4.5 Human resources: 27

Employee Records Management 27

Salaries and payments 27

Blockchain is an increasingly popular technology that is making a significant impact in various fields It is considered a breakthrough in securely storing and transmitting information.

In simple terms, blockchain is a distributed and public system where transactions and information are recorded in blocks and interconnected through encrypted links Each block contains a copy of the data that is verified by a network of users (nodes) globally.

One of the notable features of blockchain is its immutability, meaning that the data recorded in a previous block cannot be altered With complex verification and encryption mechanisms, blockchain ensures data integrity and prevents unauthorized changes.

Blockchain has been widely used in the realm of cryptocurrency, with Bitcoin being a prominent example However, the applications of blockchain extend beyond the financial sector and into areas such as supply chain, asset management, electronic voting, certification, verification, and more.

In the next section, we will explore the history of blockchain, from its beginnings to its development and current uses.

CHAPTER 1: INTRODUCTION OF BLOCKCHAIN

1.1 History of blockchain:

The history of blockchain can be divided into three main phases:  Phase 1: The 1980s and 1990s

This phase was marked by early research into decentralized systems and

cryptography In 1982, David Chaum developed blind signatures, a technology that can be used to protect privacy in financial transactions In 1991, Stuart Haber and W Scott Stornetta invented the timestamping system, a system that can be used to verify the integrity of data.

 Phase 2: 2008 to 2015

This phase was marked by the development of Bitcoin, a digital currency that uses blockchain technology Bitcoin was invented by Satoshi Nakamoto in 2008 and released to the public in 2009 The advent of Bitcoin brought blockchain technology to the world's attention

Phase 3: 2015 to the present

This phase has been marked by the widespread development and application of blockchain technology During this phase, there has been the development of many different types of blockchains, including public blockchains, private blockchains, and consortium blockchains Blockchain technology has also been applied in a wide range of industries, including finance, healthcare, supply chain, and government.

Trade Bitcoin, Ethereum and Litecoin Every Day (January 2011 – January 2021)

1.2 What is Blockchain?

Blockchain is a chain-block technology that allows the safe transmission of data based on an extremely complex encryption system, similar to a company's accounting ledger, where money isclosely monitored and record every transaction on the peer-to-peer network.

Each block contains information about the creation time and is linked to the previous block, along with a time code and transaction data Once data is accepted by the network, there is no way to change it Blockchain is designed to prevent fraud and alteration of data.

1.3 Blockchain structure

The specific structure of the blockchain consists of two main components: blocks and chains.

A block is a unit of data stored in the blockchain Each block contains the following information:

 Previous hash: This is a unique string of characters generated from the data of the previous block It helps link blocks together into a chain.

 Current hash: This is also a unique string of characters generated from the data of the current block It helps protect the data in the block and prevent data from being changed.

 Data: This is the actual data stored in the block, such as transaction information, asset information, etc.

 Timestamp: This is the time the block was created.

 Nonce: This is a random number used to generate the hash of the current block A chain is a collection of blocks linked together by hashes The blockchain is always expanding as new blocks are created.

The blockchain structure gives it several important properties, including:

 Decentralization: Blockchain data is stored on multiple computers in the blockchain network This helps prevent data control by a specific individual or organization.

 Transparency: Everyone in the blockchain network can access and view blockchain data This helps ensure data transparency.

 Immutability: Blockchain data is protected by hashes Changing data in a block will change the block's hash This makes it very difficult to change blockchain data.

1.4 How blockchain work

Blockchain works on a network of computers that are connected Every computer in the network has a copy of the blockchain, and new transactions are added to the blockchain by these computers.

When a new transaction is made, it is sent to all the computers in the network These computers verify the transaction using cryptography If the transaction is valid, it is added to the blockchain.

To add a new block to the blockchain, a computer in the network must solve a mathematical problem The first computer to solve this problem is allowed to add the new block to the blockchain and receive a reward.

1.5 Introduction to the different types of blockchains in English:

There are four main types of blockchains: public blockchains, private blockchains, consortium blockchains, and hybrid blockchains Each of these platforms has its own set of benefits, drawbacks, and ideal use cases.

Public Blockchains

Public blockchains are the first and most popular type of blockchain They are designed to be permissionless, meaning that anyone can join the network, including those without any access controls Public blockchains use a consensus algorithm called proof-of-work (PoW) to validate transactions In PoW, nodes in the netproof-of-work compete to add new blocks to the blockchain The node that solves a mathematical puzzle first is rewarded with cryptocurrency

The advantages of public blockchains include:

Transparency: All transactions on a public blockchain can be viewed by anyone.

 Security: Transactions on a public blockchain are protected by strong cryptography.

 Decentralization: Public blockchains are not controlled by any single individual or organization.

The drawbacks of public blockchains include:

 Efficiency: Public blockchains can be slow and expensive to use.

 Security: Public blockchains can be vulnerable to network attacks.

Private Blockchains:

Private blockchains are permissioned blockchains, meaning that only authorized participants can join the network Private blockchains are often used by businesses or organizations to store sensitive data Private blockchains do not use PoW, but instead use other consensus algorithms, such as proof-of-authority (PoA) or proof-of-stake (PoS).

The advantages of private blockchains include:

 Efficiency: Private blockchains can be faster and cheaper to use.

 Security: Private blockchains can be more secure than public blockchains The drawbacks of private blockchains include:

 Transparency: Transactions on a private blockchain can only be viewed by authorized participants.

 Decentralization: Private blockchains are controlled by a group of individuals or organizations.

Consortium Blockchains:

Consortium blockchains are a hybrid of public and private blockchains Consortium blockchains allow nodes in the network to communicate with each other, even if they belong to different networks Consortium blockchains are often used to connect different systems, such as accounting systems or data storage systems.

The advantages of consortium blockchains include:

 Interoperability: Consortium blockchains allow different systems to communicate with each other.

 Security: Consortium blockchains can be more secure than public blockchains The drawbacks of consortium blockchains include:

 Complexity: Consortium blockchains can be more complex to deploy and manage.

Hybrid Blockchains:

Hybrid blockchains are a combination of public and private blockchains Hybrid blockchains allow nodes in the network to choose how to participate in the network Nodes can choose to participate in the public blockchain or the private blockchain, depending on their needs.

The advantages of hybrid blockchains include:

 Flexibility: Hybrid blockchains allow nodes in the network to choose how to participate in the network.

 Security: Hybrid blockchains can be more secure than public blockchains The drawbacks of hybrid blockchains include:

 Complexity: Hybrid blockchains can be more complex to deploy and manage.

1.6.Versions of Blockchain technology:

Blockchain technology has evolved through various stages, each with its own characteristics and applications It can be divided into four main versions:

Version 1.0: Money and Payments

This version emerged with the introduction of Bitcoin in 2009 Bitcoin is a digital currency that utilizes Blockchain technology to store and verify transactions Blockchain 1.0 exclusively focuses on applications related to money and payments.

Version 2.0: Finance and Markets

Building upon Version 1.0, Blockchain 2.0 introduces new features to expand its applicability This version centers on the financial and market sectors, including:

 International remittances

 Stock trading

 Supply chain management

 Insurance

Version 3.0: Design and Operation Monitoring

Blockchain 3.0 further develops the functionalities of Version 2.0, incorporating additional features like:

 Smart contracts: Smart contracts are self-executing agreements that operate autonomously on the Blockchain without human intervention.

Dapps: Dapps are decentralized applications built on the Blockchain platform.

Blockchain 3.0 unlocks broader applicability across various domains, including:

Tailored to meet the demands of businesses, Blockchain 4.0 focuses on enhancing enterprise operational efficiency, including:

 Strengthening security

 Reducing costs

 Improving productivity

Blockchain 4.0 is considered the version with the greatest potential for application Currently, numerous businesses worldwide are beginning to implement Blockchain projects to boost operational efficiency.

Additional Blockchain versions also exist, such as:

Blockchain 5.0: This version concentrates on applying Blockchain in novel fields,

including the metaverse, artificial intelligence, etc.

Blockchain 6.0: This version focuses on developing new Blockchain functionalities, such

as scalability, security, etc.

Blockchain technology is continuously evolving and being applied in diverse domains With its remarkable advantages, Blockchain is anticipated to reshape the operations of various industries in the future.

CHAPTER 2: BLOCKCHAIN FEATURES

2.1 Decentralization:

Blockchain is not controlled by any agency or organization at all, but it operates independently based on authentication algorithms and nodes to ensure decentralization This decentralization makes the blockchain transparent and highly resistant to fraud.

2.2 Distribution:

The blockchain network is maintained by nodes in the system across the globe When a new transaction is added to the blockchain, it is transmitted to nodes in the network for verification and added to the blockchain This process creates a dispersion of computing power, which increases the stability and reliability of the system to ensure better results.

2.3 Immutability:

Ensures that the information on it cannot be altered after it has been confirmed and added to the blockchain Each block on the blockchain has a hash that represents its contents and the hash of the previous block Any change in the contents of the block will alter the hash, and this will cause the invalidity of the block and the entire chain from then on This creates unmodifiability and reliability for information on the blockchain.

2.4 Security:

Blockchain secures information through cryptographic technology, to encrypt stored data into hashes All blocks in the blockchain have a hash of their own and the hash of the block before it So, changing or trying to tamper with the data will mean changing all the hash IDs And that's impossible

2.5 Transparency:

Every transaction on the blockchain is recorded in the blockchain and is public, auditable by anyone All parties involved in the network can view and check transaction information This transparency creates trust and verifiability for the blockchain network.

2.6 Trustlessness:

The blockchain network works thanks to nodes that validate transactions

automatically, based on algorithms including complex rules and cryptography Nodes do not need to trust each other, but only need to follow the blockchain's algorithm to operate and maintain the network.

CHAPTER 3: THE BENEFITS OF BLOCKCHAIN

3.1 Improved traceability:

Enhanced product traceability: Blockchain technology allows for the

tracking of the supply chain, from raw material sourcing to production and distribution, each transaction is recorded, and a transparent, immutable record is created, making it possible to trace the origin and movement of product with precision.

Example: The food industry is a prime example of improved

traceability through blockchain Walmart implemented a blockchain system for tracking its leafy greens In the event of a food safety issue or recall, they can quickly identify the source of contamination, reducing the scope of the recall and protecting consumers.

3.2 Enhanced Transparency and Visibility:

Real-time Data Access: Blockchain provides real-time access to data

and documents for all stakeholders This transparency enables participants to monitor the status and progress of products, orders, and shipments at any point in the supply chain.

Example: IBM’s Food Trust network is a collaborative platform

involving major food companies It uses blockchain to enhance transparency and traceability in the food supply chain Consumers can scan a QR code on a product to access information about its journey, including when and where it was harvested and processed This transparency builds trust with consumers and ensures the authenticity of the product.

3.3 Increased Efficiency and Cost Reduction:

Reduced Manual Processes: Blockchain automates many supply chain processes,

reducing the need for manual data entry and reconciliation This automation leads to fewer errors, quicker processing, and cost savings.

Smart Contracts: Smart contracts, self-executing agreements written in code, can

automate and enforce contract terms, reducing the need for intermediaries and ensuring that conditions are met.

Example: The shipping and logistics industry benefits from increased efficiency through

blockchain Maersk and IBM implemented a blockchain platform for tracking shipping containers.

Smart contracts within the platform automatically trigger actions when specific conditions are met, such as releasing payment to a carrier upon the successful delivery of goods This reduces administrative work and minimizes disputes.