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Experts suggest if Blockchain technology was used to manage transactions and accounts, frauds like Vijay Mallya and Nirav Modi could have been prevented or detected at an early stage and the money recovered partially, if not entirely. In the recent years, many exponential financial frauds surfaced in public and private sectors banks. As reported by the Reserve Bank of India, answering an RTI, state-run banks have said as many as 8,670 “loan fraud” cases totalling Rs 61,260 crore over the last five financial years up to March 31, 2017.

Cyber-attacks and data tampering problems have posed severe threats, Blockchain is a highly recommended process to check these maladies. In fact, as per Juniper Research, $290 million was invested into the development of the global blockchain industry in the first half of 2016. Financial organisations were first to start protecting their electronic payments using blockchain.

What is the Blockchain?

The Blockchain is as a promising, secure, tamper-proof digital recordkeeping platform. It maintains the asset transfer record thoroughly and in a stable manner. When a transfer is performed using blockchain network, the payee or any other party has the right and ability to trace the complete wire transfer/s. This promising attribute is one of the primary reason financial institutions are exploring Blockchain technology and its implementation in financial framework.

Most of the internet savvy population relates blockchain with the digital currency Bitcoin only. No doubt, it is the underlying technology behind the successful virtual currency, but it has much more potential to assist a variety of industries and verticals.

Because of its ability to eliminate the need for a middleman, Blockchain shows promising potential for the financing sector. It brings back the power in the hands of the individual trading partners and makes processes more transparent than ever.

How Blockchain functions?

The Blockchain is a bookkeeping system that functions on connected computers recording every transaction. Every transaction made over blockchain platform is visible and traceable, if need be. For easy comparison, blockchain is just like ledger, we use to maintain day to day transactions with the only difference that it needs no middlemen for registering the transaction details. You do not need the assistance of any centralised agency for transferring assets.

On an average, a security transaction in the market space takes approximately three days to complete. However, with blockchain technology, it can be quickly achieved in minutes or maybe seconds. The current payment processing services are complicated and slow moving, making it tedious to follow the flow of money. Blockchain allows tracking transactions until it reaches the end user.

How does Blockchain help fight fraud?

The Blockchain has a complex functionality wherein digital records combine into blocks, and such blocks make a chain cryptographically and chronologically connecting network with each other through sophisticated mathematical algorithms. Each block has a unique set of records with a connection to the previous one. Any new block is added to the end of the blockchain only.

The process of encryption is known as hashing and is performed by ‘n’ numbers of computers across the network. Each block computes the same digital calculation and has its unique digital signature. Once a new block is registered, the participant gets notice of the same. The information on this block cannot be changed or altered. The participants can only add value to the existing old information.

Three Applauding Features Of Blockchain That Help Prevent Fraud

As per the study performed by Association of Certified Fraud Examiners, “typical organisation loses five percent of revenues to fraud each year.” Here are three features of blockchain that makes it a perfect fraud preventing technology:

Distributed Network

The blockchain is a distributed digital ledger that contains data which is shared between numbers of computers and reconciled periodically. There is no central authority and thus no one point of failure. The management and authorisation of the data spread across the entire network and transparent, so there is no one place to commit fraud. There are many methods used by criminals to instigate frauds. Some of the standard practices include deleting or altering data in the records, creating corrupt files, altering or creating digital/ electronic papers and more. Because of the higher visibility and transparency, blockchain prevents any such kind of fraudulent activity.

The members of a business network or supply chain management over viewer can quickly check and verify the processes from scratch to end. Not only the current data, but the history of the asset transfer is also at the disposal of the participants of the network. In case one wishes to alter the data on the blocks or tamper the chain, one needs to have control over the majority of the systems.

Immutability

Once registered, the data or transaction on a block or blockchain cannot be altered (changed or deleted) and thus is immutable. Also, before a block is formed and attached to the chain, all the network participants have to validate the data on the block. This process of validation is known as Consensus. After consensus only, a block is approved and given a timestamp after which, it is connected to the previous block on the chain. If you wish, you can create a new transaction, but it will not affect the already available data in the blocks.

So, with blockchain, one can easily procure the data about the origin of the asset, its journey so far and the owner of the asset.

Blockchain has curbed the problem of fabrication of data. Most of the industries including clothing, food, luxury items, pharmaceuticals and more have been affected by this problem. When operating on a traditional supply chain, which is tedious, lengthy and time taking, businesses are prone to higher risk of data problems. With blockchain assets get provenance because of immutable transaction history, which makes it tough to false data.

Blockchain Can Be Permissible

There is a lot of confidential data involved in businesses, offering access to just anyone is not wise. To ensure that outsiders can’t peep into the company information and insiders can’t corrupt the data, there must be some system. Offering permissions is one way to make such an order come into existence.

A blockchain network can be built on permission or non-permission depending upon the type and formation of the blockchain. Such permission networks work great for preventing fraudulent activities as they put a restriction on who can access the system and who can’t. They are also known as private blockchains. A few advantages of private blockchain include

Also read: Different Types of Blockchains

  • Cheaper transactions because the transactions are verified by trusted nodes and not hundreds and thousands of participants.
  • It has a configurable TPS rate so you can perform a higher number of operations per second in comparison to a public network.
  • It offers advanced control, so companies get hold of the blockchain and provide quick update function.
    There is no need to provide proof of work in case of private blockchains.
Implementation Of Blockchain In Fraud Prevention

Besides finance, blockchain can prove useful in preventing different types of frauds in various industries. Here are a few promising roles of blockchain fraud prevention:

Blockchain For Avoiding Identity Fraud

Identity fraud is the most significant threat of recent times. It creates a potential risk to credit card companies and financial institutions. Such companies become alert and send alerts to its customers in case an identity fraud takes place. Despite strict rules and various permissions laid, criminals get access to confidential data. Such criminals steal valuable information and use it without due permissions.

Blockchain has made it possible to create a digital identity of individuals that is tamper proof. If all the identity information are put in a blockchain that is secured with permissions, only permitted parties will be able to verify transactions while authorised parties enjoy limited access.

Blockchain For Preventing Fraud In The Supply Chain

They very rarely see the light of the day, but cheating in supply chains is a significant issue. Because of their complex nature, as well as a multi-party intervention, it is easy to corrupt a supply chain. There are high chances of these frauds going undetected until and unless they create a huge problem. Thanks to the Blockchain, it is now possible to improve traceability and transparency of products in the supply chain. Because of its immutable nature, it is almost impossible to manipulate the data on a blockchain. To do so, one needs a consensus of the majority of participants of the network. Also, it is easy to trace the origin and ownership of any product since blockchain is a shared and distributed ledger.

Is Blockchain An Effective Way To Eliminate All Types Of Frauds?

Sadly, no, blockchain cannot eliminate all types of frauds. There are chances that frauds can occur despite putting a Blockchain in place. Although, such kinds of thefts are a part of attempting to layer service on the top of blockchains and cannot affect the core technology.

There are always chances that there can be some doors open, welcoming vulnerabilities despite it being a decentralised platform. Therefore, it is critically imperative to avail professional blockchain development services in account while implementing blockchain in your business model.

The post How Can Blockchain Put An End To Fraud In Financial Transaction? appeared first on Sofocle Technologies - A blockchain company.

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Although Bitcoin got introduced in the market in the year 2011, it was 2015 when it reached the popularity and identification. It was the same year when the underlying technology- Blockchain caught the attention of the experts and the revolution of exploiting its potential started. Before this, Blockchain got recognised as just another data structure supporting an emerging trend, but in reality, it encapsulated great technology and promises of a tech-driven future.

However, Bitcoin wasn’t the first cryptocurrency known to the world, and neither was Blockchain. Before Bitcoin, many cryptocurrencies and supporting technologies emerged and submerged subsequently. Amid the cluttered environment, what made Blockchain an accessible and intriguing choice was its ability to provide a decentralised platform to facilitate critical Bitcoin transactions. The tamper-proof technology with this much extent of immunity to maintain ledgers with massive data was unbeatable, and this is a base of several experiments today, all targeted towards exploiting its benefits for different spectrums.

As the Bitcoin gained popularity, experts categorised the first version of the technology as – Blockchain 1.0. The technology progressed, and Ethereum surfaced and supported the execution of various applications as programmed, the technology got the new name as Blockchain 2.0. Now, a more original version of the technology is about to release, and there is a constant debate amid the experts about its name as Blockchain 3.0 Direct Acyclic Graph or DAG.

Understanding DAG or Directed Acyclic Graph (DAG)

DAG is a directed graph data structure that functions using topological ordering. The technology operated in a fixed pattern wherein the sequence can only go from earlier to later. DAG is an acutely important application for data processing, scheduling, finding the best route in navigation, and data compression.

Being the third generation of the blockchain technology, DAG inevitably comes jam-packed with more and enhanced features. Bitcoin is more regulated with proof-of-work (POW) system; it restricts the regular creation of blocks. It stores the data of all transaction occurring at the same time in one block only. And one single block is created in every 10 minutes and miners have to complete the block validation process to proceed further.

These limitations needed a plausible solution, a community came up with the refined idea of altering the chain-like storage structure a DAG structure of blocks. It supports the extension of the storage by X times with X blocks on the network at any time. The only condition is that the time of mining must remain unchanged.

Blockchain Vs. Directed Acyclic Graph (DAG)

The blockchain identifies itself as a cryptographically verifiable list. It is a data structure wherein every entry made to a particular block holds a reference to a previous entry. With such leverage, the blockchains gain the potential of traceability, and a user can easily trace any block written and recorded in the ledger. However, it is the reason that scalability issues lie with bitcoin, and it takes 10 minutes to append new blocks in the chain.

On the other hand, Directed Acyclic Graph is a data structure that operates on the implementation of graphs. The technology offers the networks an ability to combat the limitations of the blockchain. Unlike blockchain, there is no loop system in DAG or Directed Acyclic Graph. All the nodes in the chain directed towards the same facilitate management. DAGs structure can be compared with a file directory structure wherein there are folders connected with sub-folders which have further branches connecting with sub-folders and so on.

DAG also compares bitcoin with a common ancestry tree. When analysed in-depth, it does not appear as a tree theoretically but is a directed acyclic graph as to follow a tree-like structure in which every two nodes must connect through different paths.

While Ethereum or Bitcoin was limited, DAG powered networks have great potential and allows appending parallel nodes till the time things flow in a single direction.

Concepts used in the DAG Blockchain

Bitcoin’s theory is based on UTXO (Unspent Transaction Output) model. Here users are allowed to place a single transaction placed under their UTXO. One or more miners now can perform the hash function and seek the authority of validating the block.

The validation value here depends upon the number of transactions following a single transaction. What makes the trade safer is that once a business has more sales following it, it has lower chances to return to the network.

The Width Of The Network

After validation, a transaction must be lined parallelly to an existing and relatively new transaction on the DAG network. In case, every time, the sales are linked with an earlier transaction, it will result in a way too broad network where validating the new transaction would become complicated. For this reason, the DAG network links a new transaction to an existing one. It is targeted to regulate the width of the system and ensure that the network is limited with a rapid rate of validation.

Swift Transactions

There are no blocks in the network, and thus the transactions directly enter the DAG networks. It makes the DAG system faster than other Blockchain systems that operate on PoW and PoS platform.

No Need for Mining

Unlike Bitcoin, DAG network has no miners. Automated validation makes transactions safe and secure, resulting in faster processing and the user can reap the transactions instantly.

Small Payments Friendly

The vision behind fostering DAG technology is to make a future network smooth & functional with minimum transaction fee levied. In this way, the users willing to transact smaller amounts can quickly send them without paying hefty prices, unlike Bitcoin & Ethereum.

How IOTA Uses DAG?

IOTA is the most widely known cryptocurrency nowadays. With its unique features and claims of removing the transaction fee as well as the miners, the currency has left many industries enthralled.

Bitcoin is complicated. Miners have to compete and solve a mathematical puzzle and win the opportunity to contribute to the blockchain’s history. People with higher hashing power do have a competitive edge than people who do not. So, the group of people (miners) that get the benefit out of the blockchain is relatively smaller.

On the Contrary, in IOTA, everyone enjoys the benefits and may act as a miner.
It directly implies that if you wish to mine and submit a transaction to IOTA, you need first to validate at least 2 previous transactions.

With this effort, the IOTA creates restriction free zone as unlike Bitcoin; there aren’t robust pools that regulate the industry. Moreover, there is no transaction fee involved. It offers excellent scalability, and each new member adds value to the chain by just joining in. In this way, the system bolsters quick work for the best results in comparison to Bitcoin.

Concerns about IOTA

Just like every other technology, IOTA too has come up with its issues:

      1-IOTA functions on its cryptographic algorithm. According to the industry experts is a big alarm sign.
      2-As per a report issued by MIT in 2017, there are many significant concerns in the IOTA System. However, the issues have been dealt with. But for any other project like IOTA that uses their crypto algorithms, such problems arise time to time.
      3-It is susceptible to market risk, and attackers can easily break in without any trouble. In Bitcoin, a miner has to collect over 50% of the network’s hash rate and thus can invalidate any legitimate transaction. But for IOTA, anyone having only 33% of the hashing power is enough.
      These security risk might fade away as more members join in. As of now, IOTA has started using a centralised server known as Coordinator (Coo) for resolving such problems.

    Also Read: How to build an Effective Blockchain Solution?

    There is another project that operates on DAG and is likely to become the market leader- IoT Chain (ITC). The system is capable of handling more than 10,000 transactions per second. Backed by leading blockchain funds, the technology is likely to boom shortly. It shows all the signs to be categorised as Blockchain 3.0.

    DAG is for sure a marvellous human made invention and will be best used in areas where businesses require scalability and thus involve in thousands of transactions per second. When comparing DAG with Ethereum, there are different sets of pros & cons. The smart contracts offered by Ethereum are way more efficient and straightforward than DAG. Indeed, DAG offers intelligent, and they are more user-friendly and direct than the one provided by Ethereum.

    This way users get a bright idea as to how their currency will be used, and they will be paid in the future.

    If, DAG becomes the future, it offers all the signs to be more advantageous than Blockchain at the current level. With users facing problem in blockchain system every other day, it is very much expected that there will be a massive transfer of users. Ethereum was clogged because of its slow processing and high feed. Though Ethereum has a solution for the same, it is at least five years out. To scale, applications will shift to DAG very soon, and the future will be brighter, indeed!

    The post A Complete Guide To Directed Acyclic Graph (DAG) appeared first on Sofocle Technologies - A blockchain company.

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    Till now most of the people across different verticals know what blockchain is and how it is one of the most innovative technologies that has the potential to disrupt various industries. Blockchains are immutable, and forge-proof making them the best platform for data related transactions. Blockchain also happens to be a platform that prevents a diverse range of frauds including identity theft, financial forgery, data thefts and more. While collecting all the necessary information about Blockchain and its functions, most of us misunderstand the mechanism behind such a tamper-proof nature of this incredible technology. The secret of Blockchain security and tamper proof nature is ‘Cryptography’.

    Cryptography contributes to maintain the security of the network. It makes data manipulation hard or impossible and offer high-level protection to each user. It is because of cryptography only that users enjoy transparent transactions while keeping their privacy intact.

    Blockchains Cryptographic features:

    It is because of the cryptographic features of Blockchain that users enjoy high-level integrity. Two primary elements that make Blockchain such a robust platform includes cryptographic hash functions and digital signatures. Though there is no correlation between your trade success and knowledge of these features as one can invest, buy, sell or store bitcoins without knowing anything about cryptography, but if you are interested in the technological aspect of this fantastic platform, cryptography or encryption is an interesting aspect that you must know.

    Hash Functions

    Hash functions are the base of an encrypted network. They are the reasons Blockchain is a reality today and thus understanding them is important. While there is a lot of speculation about their origin, hash functions became popular in 1960’s when researchers and scientists first realised how their potential could prove revolutionary in the field of computing. In technical language, hash functions are a type of services that are responsible for returning a string of characters of a fixed size from a dataset of arbitrary size. Similarly, cryptographic hash functions are hash functions that have critical application in cryptography and contain features that are highly useful.

    • Hash functions are deterministic: this means whenever you set any input, it will always produce the same results.
    • They can be disruptive: This means that changing the information can bring considerable changes in the output.
    • Easy and instant to compute.
    • One way function: You can determine the output when given input but identifying the data when presented a piece of information is extremely difficult and often impossible.

    Also Read: Hashgraph & Blockchain: Similarities & Differences

    The US National Institute of Standards and Technology published SHA (Secure Hash Algorithm), which is a family of hash functions. Mostly blockchains use SHA or any other similar cryptographic hash functions to ensure the flow of information. In case of bitcoin, the cryptocurrency uses SHA-256.

    Cryptography and Passwords

    Understanding cryptography and passwords can be difficult if not explained through an example. Let us take this easy example to help you understand the critical use cases of hash functions. Let us assume the Dereck and Jane are a member of a society where they need a secret password to prove their membership to each other.

    Now in the first instance, Jane can merely ask Dereck if or not he has the secret password. In case he has, he must tell it to Jane to prove his membership. However, Dereck, not being sure about the association of Jane, is sceptical about sharing the password with her.

    Here hash functions play as the problem solver.

    Let us suppose that the password is: Jessica Alba is a phenomenal actress.

    To prove their membership, both Dereck and Jane can use a hash function input (the passphrase of the password in Hash function) and see if it brings the same output.
    They can also check and compare each other password and testify whether or not they both are the members of the same group. A minor change in the password Hash, the results will be drastically differ.

    How cryptographic hash functions in Blockchain?
    Any unconfirmed transaction broadcasted to the Blockchain network is directed to the unconfirmed cloud. In this unconfirmed cloud, hundreds and thousands of nodes in the network work vigorously sorting and solving a puzzle by rearranging the transactions. This process is similar to packaging unconfirmed transactions into a block and adding any random number to the end of the block. It is similar to inserting a row at the end of an excel spreadsheet where previous rows are getting locked.

    The various part of the spreadsheets include:

    Hash Of The Previous Block

    It is a must for each block in the Blockchain to contain the hash function of the last block in the chain. In simpler terms, the output of the previous block of the hash function is present in the present block.

    List of Unconfirmed Transaction

    Miners have to add a different number of operation in the cloud of unconfirmed transaction cloud. For this, miners choose the activities that promise the highest transaction fees.

    Miner’s Address

    It also contains miner’s address, and all the mining rewards go to this address.

    Random Number

    It is the number that completely changes the hash function of the block. It is one critical factor that contributes to solving the secret puzzle.

    To solve the secret puzzle, miners have to find a hash with a certain number of zeroes at the starting of the Hash. The more numbers of zero in the starting, the smaller Hash is considered.

    Wondering how miners get success in finding the smallest size of hash? Well, it is the real outcome of trial and error.

    When the hash is small, only then it can be added to a Blockchain. Other nodes instantly cancel any large Hash added to the blockchain by any node. The complexity and difficulty level of the puzzles is continuously set and adjusted to ensure each problem takes a fixed amount of time to be solved. For bitcoin, the speculated time to solve a mystery is approximately 10 minutes, and for Ethereum, it is 15 seconds.
    It occasionally happens that two nodes find two different solutions for the same puzzle at the same time. It occurs when a temporary split occurs in the blockchain wherein half of the nodes support one solution while the other half supports the other.

    In such cases, to solve the ambiguity of the chain, the golden rule of blockchain is made active.
    “The longest blockchain is the true blockchain.”

    It eliminates the scope of arguments as the nodes accept the block that is allowed at the first moment and continues to build blockchain on that only. In this way, all the nodes on the network have to ditch old blockchain and join the new most extended chain as the official blockchain.

    Digital Signatures

    Digital signature acts as a filter and protector to check any unauthorised and suspicious activities on the network.

    With digital signatures the recipient of a message is allowed to confirm two things:

    • The message came from the right person
    • The message arrived untampered throughout the transit

    Checking the authentication of the transaction in a block is the first thing a node checks when it receives a new block from another node. The authentication happens through public and private keys. The private key allows you to have unique access to your account. It is the way how accounts differ in a blockchain. To gain access to your account and funds, assets and information stored in it, one needs this private key. Thus, it is mandatory to keep your private key. Each private key has a connected public key which in simpler terms is the hash of the private key.

    The public key, also known as the address of the account is a generic number which is shared with anyone on the network or server. The public key is the address that they have to direct access to all the transactions to be paid to the people on the network.

    Digital signatures, in this case, are used by someone, who has received the transaction, to confirm that the sender of the transaction or the message knew the corresponding private key.

    It is a two-step process wherein the owner of the essential private or also known as the key needs to:

    • Use a cryptographic hash function to feed the message
    • Use the output of the hash function and feed it along with a private key using a signature algorithm.

    After this, the recipient has to send out:

    • Your public key
    • Your message or transaction
    • Your digital signature

    A recipient to authenticate the same word or message has to:

    • Use a cryptographic hash function to feed the incoming signal. Use signature verification algorithm to feed the incoming signature and public key; it will produce a hash
    • Compare the two hashes, when the hashes are same, the message is authentic.
      This way, the public key is used to verify that a message is authentic as it produces the same hash as your message.

    The post Decoding Blockchain Cryptography appeared first on Sofocle Technologies - A blockchain company.

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    Be it news channels, social media or newspapers, currently all sources to reach masses are filled with news of how Nirav Modi duped the Punjab National Bank and Indian Economy. It is all about how the country’s second largest public-sector bank or lender was tricked into issuing loans worth ₹11,400 Crore to #57 ranked Forbes Indian billionaire diamantaire.

    What exactly happened?

    Punjab National Bank found fraudulent issuance of Letters of Undertakings or LoU (a bank guarantee against which another lender gives a foreign currency loan) , while the partnership firms of Nirav Modi approached the bank to request Buyer’s credit. The firms contested that they have been availing this facility for long, but the bank could not find any records to confirm the same. One of the complaints by PNB also states that the funds raised against the payment of import bills were not used for the same purpose in a number of cases.

    How did it happen?

    When the PNB enquired and probed the records, it was found that 2 of the employees of PNB were behind this. The said employees:

    • Were issuing the Buyer’s credits without following approvals and prescribed procedures.
    • Made no entries in the banking system of the transmission of SWIFT instructions to overseas Indian banks. In total, 5 SWIFT messages were issued to Hong Kong Branch of Allahabad Bank and 3 to Hong Kong Branch of Axis Bank.

    In addition, the SWIFT was not linked to the Core Banking System (CBS). Due to this and reporting related issues, the fraud ran for years without being detected. A total of 500+ LoUs were issued to Nirav Modi and firms.

    Reason for this scam?

    1. Lack of Transparency: The bank was unaware of the activities of its employees issuing LoU.
    1. Lack of Traceability: All the transactions were made under good faith, without any provable letter of authenticity.
    1. Lack of User Access Controls: The same employeed continued to issue LoUs despite required rotation practice in the Banks.

    What is Blockchain and Smart Contract?

    The blockchain is a decentralized, immutable and distributed shared ledger that keeps a track of all occurring transactions. All the users have their respective copy of ledger that keeps on updating continuously with the transactions occurring globally. These transactions are recorded onto the Blockchain after the approval by majority of the network.

    Smart Contract, also called as self-executing contract, blockchain contract or digital contract, is a set of instructions that automatically performs the obligations under the agreement, which parties have committed to. By being immutable and cryptographically secure, Smart Contract gives us the security of Blockchain Technology, that is, it provides distributed trustworthy business logic and controls.

    How Blockchain could have averted this scam?

    While all the transactions are recorded on the Blockchain, one can easily follow the trail to trace the beginning. Furthermore, all the changes made to the Blockchain are available and visible to participants. Being immutable in nature, the transactions made on Blockchain cannot be tempered, hence creating a trust-less condition. And one cannot pull out fraudulent transactions as these transactions are approved by the majority of network in the form of consensus.

    In the case of PNB scam, Blockchain could have completely averted it, if implemented in the system. This could be done by:

    • Creation of a Smart Contract for multiple parties, where the Letter of Undertaking would require the consent of different branches of the issuing bank. Once approved, this LoU would be broadcasted over the network and recorded.
    • Owing to the traceability, the designated bank onto receival of LoU could check all the transactions shared by the issuing bank, before transferring the funds.
    • The digital ledger would be available across banks to cross-check and confirm all the necessary transactions.
    • Creation of another Smart Contract to release funds for paying of bills would ensure that the loan is being used for the reason it was granted. Using this feature of Blockchain would only release funds when the consensus approves its usage.

    Considering the scenario and scams that are making headlines every day, incorporation of the Blockchain Technology and Smart Contracts in banking systems is need of the hour. This technology will facilitate in saving millions and millions by creating a secure, immutable and trust-less network to transact, based on community consensus.

    Sofocle has created a Smart Contract based Contract Lifecycle Management system along with Blockchain workflow to streamline the process of Bank Guarantee and LoUs. To know more about Blockchain solutions by Sofocle, drop an email at success@sofocle.com.

    The post Blockchain and Smart Contracts to tackle Nirav Modi like Charades appeared first on Sofocle Technologies - A blockchain company.

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    Blockchain is a revolutionary technology that can be leveraged in many sectors to inculcate the trust and transparency, and increase efficiency in the processes. It is a decentralized ledger that helps form a trustless network among the different participants, thereby bringing failure-resistant capability. It is currently the most widely discussed technology among different industries, all trying to harness its potential.

    Nonetheless, it is high time the decision-makers and strategists of the telecom industry evaluate the diverse applications of this technology in order to apply it in various business functions. Early adoption will help them gain early mover advantage in the market.

    Features responsible for the popularity of Blockchain technology are:

    • Decentralized and distributed ledger
    • Trustless operability
    • Immutable, auditable and irreversible nature of records
    • No or diminished role third party intermediaries
    • Cryptographically secured
    • Chronological and timestamped

    Challenges and Opportunities

    Communication service providers (CSPs) control the end-to-end value chain i.e. data connectivity, network infrastructure, and other related consumer services, for both the users and businesses. Nowadays there is a need to find new sources of revenues and reduce the costs as the revenue is decreasing due to the factors of high cost and high bandwidth demand.

    Blockchain has the capability to impact the core management system of CSPs by creating an environment where cost can be reduced, and the revenue can be increased with the efficiency. Following is the list of some of the use cases of Blockchain in Telecom sector, for the development of new products and streamlining internal functions:

    • Identity Management
    • IoT connectivity
    • Fraud Management
    • Data management
    • 5G Enablement
    • Roaming
    • Instantaneous Connectivity and Transaction

    Some of these use cases leveraging the characteristics of Blockchain technology has been discussed below.

    Identity Management:

    A user is always required to provide his or her personal details to several service providers during the process of signing up for the account and creating passwords. The process of filling the details for availing the numerous services is tiresome and time-consuming. This can be resolved when every subscriber is provided with an app or some kind of ‘eSim’ by the telecoms that can create unique virtual identities that are encrypted and kept on a Blockchain.

    This can be used by the subscribers to automatically validate and authenticate their identities while accessing partner websites. Different service providers can use the details of the subscribers through the stored virtual identity without making them sign up for new accounts with different passwords.

    Internet of Things:

    Presently, telecoms face issues of security and viability while implementing IoT and this can be overcome by reinforcing IoT with Blockchain technology that facilitates a secure environment of peer-to-peer self-managed mesh networks through several nodes. These nodes function using single embedded IoT sensors coupled with the capacity of authenticating every block within the Blockchain. If proven viable, a public network based on the concept of Ethereum or Bitcoin networks can be implemented for the customers that will provide a secured and seamless connectivity.

    Roaming:

    Presently, SIM cards are provided by virtual networks in order to connect several telecom networks and then prices add up automatically during the process of connection between different machines. This leads to increase in the roaming price.

    Here, Blockchain technology can be implemented for letting the telecoms enter into the micro-contracts for roaming services automatically. Smart contracts will enable the telecoms to trigger the roaming agreements between subscribers whenever they switch the networks and additionally, it can help in achieving transparency by tracking the transactions every subscriber makes.

    The use cases described above demonstrates the untapped opportunity lying across to be tapped by the telecom industry. Several major telecoms like Telstra, Sprint, NTT DOCOMO Ventures Inc and Verizon etc. have already started investing in the Blockchain technology by collaborating with the companies and investing funds for the purpose of conducting research and development.

    Also Read: How to Build an Effective Blockchain Solution

    Sofocle Technologies in one of the leading organization dedicated to researching and developing solutions based on Blockchain for various industries including Banking & Finance, Supply chain, Health, Telecom etc. To know more email at success@sofocle.com

    The post Implications of Blockchain in Telecom Industry appeared first on Sofocle Technologies - A blockchain company.

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    Cryptocurrencies, just like the fiat currency, are needed to be stored and secured. And just like the physical wallets, the cryptocurrencies also are kept in the wallets and generally, referred as Crypto wallets. In Crypto wallets, it is not the real coins that are stored inside, rather digital codes or two types of keys i.e. Private and Public key. Public key is visible to everyone and is used by others to send money. On the contrary, private key is used only by the owner of the wallet to perform send transactions. Losing the Private Key can result in loss of the currencies, since you lose whole control over your wallet and this is the reason it is recommended that at least two different techniques should be used for saving and storing of the private keys.

    Cryptocurrency wallet is a digital wallet that is used to send, receive and store various cryptocurrencies safely and in secure manner. The process of getting a crypto wallet can be quite confusing when it comes to choosing the safe cryptocurrency wallets since making a wrong decision can cost you dearly. Some basic features that should be noted and followed before opting for a wallet are:

    • Good Reputation: It is necessary to make sure that the wallet you are using has good reviews and reputation. The status of any wallet including the pro and cons can be known by checking out the features and feedbacks.
    • Software solutions: It is always recommended to avoid using certain software solutions that carry the malwares under the disguise of wallets. Wallets with such software solutions are always prone to be attacked and infiltrated. The best way to choose safe wallet is sticking to reputed providers.
    • Best Practice: Apart from the above considerations, the principle of sticking to the best practices helps in keeping the crypto wallets safe. It is a wise practice to keep a backup of your private keys using a storing device. It is also recommended to add an extra layer of security, for example, one can use Google authentication etc.
    Types of Wallets

    There are several types of wallets and choosing one depends on the requirement of the user and also on their purpose. Crypto wallets differ from the features point of view and can be selected on the basis of their pros and cons. It is essential to understand the difference between the cold wallets and hot wallets.

    Hot wallets: Hot wallets are like the cash in your pocket and it is accessible through a web portal or mobile app. It is called Hot because of its ability of greater accessibility and activity. It facilitates an environment where easily the activities like trading and other transaction can be performed. But this feature also poses threat since it makes it more vulnerable to attacks

    Cold wallets: Cold wallets are analogous to the saving accounts that are more secure and harder to access. It is less prone to attacks as compared to the hot wallets because it is held offline. It is best suited to the cryptocurrency that is not meant to be used frequently but meant for long-term holding. Although the accessibility in terms of performing transactions is limited but it also reduces the chances of loss of your fund.

    Furthermore, different kind of wallets has been categorized and discussed below in detail.

    1. Hardware wallets:

    Hardware wallets are considered as the most secure form of wallets for storing cryptocurrencies and accessing them is easy but relatively less friendly than a web or desktop wallets. They are in form of a portable device like the USB drive. It acts as wallet that can store various cryptocurrencies and are offline, thus, also considered cold wallets. Trezor, KeepKey and Bitbox are some examples.

    2. Software wallets:

    These are considered as ‘Hot’ wallet as software wallets are frequently used with the internet. These can be stored on different devices such as a computer, phone etc. and thus provides easy accessibility to tokens. Software wallets are of different types and it can be described as following:

    – Desktop wallets: It is one of the most secured options available for keeping the cryptocurrency. It is accessed through the software installed in the devices and the private key is stored locally. Desktop wallets can be used with the system or other device connected to internet and it can also act as a cold storage device if used without internet.

    – Mobile wallets: Wallet for the cell phones are very convenient to be used and come with decent security features. Easily a mobile app can be downloaded and quick transactions can be performed using features like QR codes.

    – Online web wallets: Online wallets require internet connectivity for operation and used online only. These are also referred as “cloud wallets” as several third-party wallets allow their software to be used through the cloud. Here the major issue is that the private key is generally stored on the centralized server.

    – Multi-Signature Wallets: Multi-signature wallets make use of multiple keys to operate. It reduces the chances of attacks to minimal since it is very difficult to get access to more than one private key. Another advantage is during the incidence of loss of a private key, the alternative key may help in getting the backup. The main motive behind deploying multiple keys are:

    • Adding an extra layer of security to the wallet and preventing the possible attacks from hackers.
    • Creating a wallet that can be used by one or more user.
    3.Paper wallets:

    Paper wallets provides a way to keep the cryptocurrencies completely in undigitized form or in hard copy format. These can be termed as the true cold storage wallets for cryptocurrencies. The process of using these wallets involves printing out the public and private keys (in the form of QR codes to be scanned for performing the future transactions) or the generated paper wallet and then, storing it safely. Here there is no scope for any form of online attack or malware.

    For More details and any services related to Crypto Wallets Development, you can contact us or mail us at success@sofocle.com

    The post Crypto Wallets – Best Way to protect your Cryptocurrencies appeared first on Sofocle Technologies - A blockchain company.

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    The world is finally moving to the next level of revolution in IT & Internet. The Blockchain is tout to be ‘the internet 3.0.’ It is based on the distributed ledger technology, though the real potential of this technology was realized only when the Blockchain came into existence. And when, still many people are in the process of understanding use cases of the Blockchain Technology beyond Bitcoin, a new technology is making news, hyped as the ‘future of distributed ledger,’ the Hashgraph.

    What is Hashgraph?

    Hashgraph is based on distributed ledger like Blockchain, however, it offers an alternative consensus mechanism. It uses techniques like ‘Gossip about Gossip’ and ‘Virtual Voting’ to achieve fast and secure consensus.

    ‘Gossip about Gossip’ technique attaches a small additional amount of information with the two hashes containing information about the last two people talked to. Utilizing this information, a Hashgraph is built and is regularly updated when more information is gossiped on different nodes. Once it is ready, the system knows what a node would vote, since it is aware of information that each node has and when they knew it. This data is further utilized to find which transactions have reached consensus quickly and as an input to the voting algorithm.

    The detailed explanation is as follows:
    A node in Hashgraph can spread signed information called events of the new transactions and transactions received from others, to randomly chosen neighbor nodes. These neighbor nodes will compile received events with the events received from other nodes into a new event and the process continues. Eventually, all the nodes are aware of the information created or received.

    What Hashgraph offers over Blockchain


    Blockchain is an immutable distributed ledger of transactions which can be coded to record not just financial transactions but anything that has a value. On the other hand, Hashgraph claims to support a superior data structure capable of solving the major problem which the Blockchain community is facing, the consensus mechanism.
    The consensus mechanism which Blockchains offer can be divided into two categories based on the type of Blockchain i.e. Public or Private.

    The Public Blockchain relies on consensus mechanism such as ‘Proof of Work’ or ‘Proof of Stake.’ For these, every node must agree with the order of the transactions in which they have occurred, which narrows down the number of applications where such technologies can be practically employed.

    On the other hand, Private Blockchain relies on leader-based consensus mechanism which restricts usage only to trusted partners. However, it has loopholes in the form of relaxed security standards make these networks potential targets for DDoS attacks.

    Read About : Different types of Blockchain

    Compared to these, Hashgraph consensus algorithm overcomes these shortcomings as it requires neither ‘Proof of Work/Stake’ nor any other leader-based mechanism. It is expected to deliver low-cost quality performance with no single point of failure. Low-cost quality performance means less energy consumption as compared to Bitcoin and Ethereum. Also, Hashgraph is 50,000 times faster than Bitcoin and offers up to 250,000+ transactions per second.

    Hashgraph – The Reality Check

    Hashgraph is no doubt a promising technology, but declaring that it will outdo Blockchain or make it obsolete would be a bias statement. Let’s do a reality check on what Hashgraph is and what it is not!

    • The Hashgraph claims to be very fast as compare to the Blockchain. However, till now, Hashgraph is only deployed in private, permissioned-based network. Its potential in a public network is yet to be discovered.
    • Hashgraph uses ‘Gossip of Gossip’ technique for faster and secure consensus. However, when a node chooses its successors uniformly at random, there is some probability that all the chosen nodes may be malicious. And in case these malicious successors node stop passing the transaction to the next group of nodes, it will prevent the transaction from reaching two-thirds of the network and eventually that would result in unfair outcome for the authentic creator.
    • Hashgraph employs ‘coin toss’ protocol for nodes to make decisions when there is no progress in the consensus protocol. There is a non-zero probability that all of the honest nodes will have the same value, after numerous rounds of coin toss. In case the malicious nodes disrupt the mechanism by manipulating the gossip protocol, it may take numerous rounds to reach consensus, decreasing the effectiveness of the protocol.
    Conclusion

    Hashgraph is another great technology like Blockchain and is surely promising. However, while we appreciate this technology we should not underestimate the original underlying technology i.e. Blockchain which has paved the way for this new technology. But like Blockchain has grown in last few years, and many of its limitation has been found and resolved, Hashgraph would also have to go through the similar stages of maturity and only then, its true potential would be revealed.

    The post Hashgraph & Blockchain: Similarities & Differences appeared first on Sofocle Technologies - A blockchain company.

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    Smart Contract, also called as self-executing contract, blockchain contract or digital contract, is a set of instructions that automatically performs the obligations under the agreement, which parties have committed to. By being immutable and cryptographically secure, Smart Contract gives us the security of Blockchain Technology, that is, it provides distributed trustworthy calculations.

    Smart Contracts help us perform business agreement in a transparent, conflict-free environment by avoiding the services of a middleman. It defines the rules and penalties of the agreement, like a traditional contract, but it enforces the obligations of the agreement automatically. This automated execution is at the heart of a smart contract.

    Insurance Policies, Copyrighted Content, Financial Data Recording, Trade Finance are just some of the examples where blockchain based smart contracts are being used.

    Smart Contracts: How do they work?
    Identify Agreement

    The concerned parties come together to decide the business process and the desired outcome.

    Identify Conditions

    The rules and penalties around the agreement are identified. These parameters become a part of smart contract .

    Writing the Business Logic

    The code is written in a computer language, which performs the conditions of the agreement automatically.

    Encryption

    Smart contracts are encrypted to provide secure authentication and messages between the parties relating to smart contract.

    Encryption

    Smart contracts are encrypted to provide secure authentication and messages between the parties relating to smart contract.

    Execution and Processing

    After consensus is reached on authentication and verification, the smart contract is written to a block and code is executed.

    Network Updates

    Once the smart contract is executed, all computers in the network update their ledgers to reflect the new state. The records written to the blockchain cannot be altered.

    Read More : Understanding Smart Contracts – What, What Not and Why?

    Smart Contracts for Insurance Policies: An Application Example

    In the current scenario of insurance policies, the claims process take weeks or even months to be paid. The process is completely manual and requires a lot of human effort. This adds up to a lot of administrative costs, which result in higher premiums for customers.

    These challenges can be overcome if insurance companies automate their insurance policies by writing them into a smart contract. In this scenario, the claims process is triggered immediately when the input condition of a smart contract is changed in an insured event.

    Parameters such as wind speed, hurricane location, earthquake’s magnitude can be recorded onto a blockchain. When these parameters cross certain pre-agreed thresholds, the claims process is triggered automatically and the exact amount of financial payout is delivered without need for any third party intervention.

    Not only does the smart contract reduce the administrative costs associated with fulfilling such policies, but transparency and trust in the process is visible to all stakeholders and all regulatory bodies. This is possible because of the distributed nature of the smart contracts on the blockchain.

    sofoSmart – Smart Contracts Development Platform by Sofocle


    Sofocle Blockchain Solutions powered sofoSmart is a do-it-yourself Smart Contracts Development Platform. You can utilize our platform to create Smart Contracts as per your business requirement, without the need for coding.

    Salient Features:
    • A user-friendly dashboard and workflows to set up contracts with automatic smart contracts creation on
      Ethereum Blockchain
    • Many custom made templates to choose from for your Smart Contracts
    • No need to install external tools or software to run Smart Contracts
    • Save and deploy your Smart Contracts from wherever you are.

    To know more about sofoSmart and other Blockchain solutions by Sofocle, drop an email at success@sofocle.com

    The post Smart Contracts : The Next Generation Blockchain Platform appeared first on Sofocle Technologies - A blockchain company.

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    Where ever there is a mention of Blockchain on the internet, you will always find reference to Smart Contracts too. The word Smart Contract originated in 1997, when Nick Szabo, used it to describe physical objects that change their behavior based on data. Today, in Blockchain, we used this word in a different sense. It is used to describe a computation that happens on the Blockchain which is influenced/triggered by external events/information such as the weather.

    In a broad sense, Smart Contracts are conditional codes written on Blockchain that gets autonomously executed, if exposed to specific data input which acts as a trigger. Based on its code, a Smart Contract can identify the source of the message, modify its data, even trigger other contracts, and/or send back a response to the caller. The broad functioning of the Smart Contracts can be divided into the following heading:

    a. Codes that express business logic as computer programs.
    b. Triggered by the events whose information is sent as messages to the programs.
    c. Using digital signatures to identify who sent the messages.
    d. Putting the programs, messages, and signatures on a Blockchain.
    e. Executing every program for every message on every node.

    Let’s discuss these further in the following sections about what is ‘Logical’ and ‘No-So-Logical’ about Smart Contracts.

    What is ‘Logical’ about Smart Contracts?

    In this section, we would be discussing points ‘a.’ to ‘d.’ as listed above. Plus, some other advantages of using Smart Contracts and specifically Ethereum Smart Contracts.

    Unambiguous: Computer codes are unambiguous, unlike legal contracts which can have a different interpretation. Since they are written in a well-defined language, a specific input always leads to the same output. For example, if a business logic is expressed as a computer code, and events are communicated as messages to that program, then the outcome/result is inevitable. This deterministic property of computation eliminates randomness in the system.

    Authentication: Smart Contracts does not need a central authority to determine the authenticity and order of the messages. Since they are present on the Blockchain, each participant of the network creates a pair of private and public keys, and distributes its public key once to the other participants. Now, each message is signed with the private key before the message is distributed across the network.

    The other participants can verify the message’s source using the sender’s public key. By putting the Smart Contract and signed messages on the Blockchain, it can be ensured that every participant has the same understanding of who did what and when. Hence, the participants can’t disagree over the final business outcome.

    Anti-Spam: Blockchain is a peer-to-peer network, in which whenever a transaction happens, the information about it spreads rapidly to the other nodes through a process called ‘relaying,’ which are randomly connected to each other. In a Public Blockchain, since the network is decentralized, each individual node assesses the new transactions as they come in, and decide whether or not to relay them. While this mechanism can’t prevent a spammer from effecting an individual node, but it does protect the network as a whole.

    Data Proofs: In the blocks of a Blockchain, apart from transactions, each block also has a compact ‘header,’ which contains important information such as a timestamp and a link to the previous block. This block header alone is the input for the hashing algorithm in many Public Blockchain which is based on PoW (Proof of Work) hashing. This means that the authority of a chain can be assessed by a lightweight client, without the need to download most of the content.

    Also Read: Understanding Smart Contracts – What, What Not and Why?

    What is ‘Not-So-Logical’ about Smart Contracts?

    In this section, we would be talking about the point ‘e.’ as explained in the opening section of this blog.
    Is it logical to execute every program at every node for every message? This is a debatable argument!

    Global Execution and the Concept of Computation

    Global execution might sound good but it’s not necessary. Since computation is deterministic, it makes no difference whether a program is executed by one node or every node. The fact is that the computation’s result is the same, always.

    Moreover, some computations never end! That’s they are unpredictable.
    To explain this, let’s take a random conditional statement:
    If
    a*256 > 1270, change X  Y
    and
    a*256 , repeat the process

    Let say, a Smart Contract, in which the above code is written, never gets a value of ‘a’ which satisfies the condition, and it keeps on repeating the step. This will lead to an infinite loop.

    Imagine if millions of transactions of this kind exist, and their impact on the computational power of the network! They will surely lead to network collapse. It is said, that the only way to find out if a program will finish running is to run it for as long as it takes, and that could be forever.

    But modern-day operating system, like Windows, gives us the option of forcefully close a program, which is not responding. What if, we apply the same concept in Blockchain. If we allow individual nodes to terminate computations at will, different nodes would have different results about the outcome of those computations. In other words, there would be no network consensus.

    To address this, Ethereum Blockchain applies the concept of ‘gas.’ The sender of each transaction pays the fees i.e. ‘gas’ for the computations it triggers, and this payment is collected by the miner who confirms it in a block. The fee is gradually spent as the contract executes, step-by-step, within the EVM (Ethereum Virtual Machine). In case, if a transaction runs out of fees before it finishes executing, any database changes are reverted, and the fee is not returned. Any remaining fee is returned to its sender when the transaction is successfully completed. However, this solution requires a native Blockchain currency in order to work, which doesn’t exist in many Private Blockchain developed for business enterprises.

    Concurrency of Blockchain Smart Contracts

    Concurrency is the ability of a computer system to perform several processes simultaneously and in any order. Since a process is not halted because of another process being performed, this reduces delays and enable much higher throughput.

    Discussing Smart Contracts in this light, they have poor concurrency.

    The reason behind this is that to perform a set of transactions simultaneously, they should be independent and shouldn’t interfere with each other. Otherwise, the difference in the order in which these processes are performed might lead to different outcomes.

    This is not true in the case of Blockchain Smart Contracts.

    A Smart Contract has an associated database. So, in response to a particular message, it might read or write information in its database. However, before running the contract’s program for a particular message, a Blockchain node cannot predict which subset of the contract’s database it’s going to use. Nor it has information on whether this subset might have been different under different circumstances.

    Adding to this, if one contract can trigger any other, this problem extends to the entire content of every database of every contract. So, each transaction needs to be treated as if it could interfere with every other. In other words, each transaction requires a global lock.

    Moreover, there is no centrally managed queue in Blockchain, the transactions come from different peers in no particular order. The order of these transaction is confirmed only when a Block of information is formed, which is 10 minutes for Bitcoin Blockchain and 12 seconds for Ethereum Blockchain. Also, the order of the transactions in the block is unlikely to reflect the order in which they arrived individually. Since the order of transactions might affect the outcome, this means transactions cannot be processed until their order in the Blockchain is confirmed.

    Also Read: Smart Contracts to Speed-Up Land Registration Process

    Let’s compare Ethereum and Bitcoin in this regard. An unconfirmed Bitcoin transaction can be reversed. However, unconfirmed Ethereum transaction has no predictable outcome at all. Currently, Ethereum doesn’t even process unconfirmed transactions. But, in case, if an Ethereum node needs to process transactions immediately, it would require to rewind and replay them in the correct order. Reprocessing all these transactions is a huge waste of effort, and prevents external processes from reading the Ethereum database concurrently.

    In contrast, in Bitcoin, each transaction explicitly states its relationship to other transactions. It has a set of inputs and outputs, in which each input is connected to the output of a previous transaction which it ‘spends.’ Thus, there are no other dependencies to worry about. Thus, a Bitcoin node can be sure that the transactions are independent, and it can process them in any order as long as two bitcoin transactions don’t attempt to spend the same output, and the output of one doesn’t lead to the input of another.

    Computer Logic V/s Human Judgment

    Let’s take an example of automatic deductions. A person took a loan, for which EMIs supposed to be deducted from his/her Bank account. What if, due to the inadequate amount in the Bank account, the EMI was not deducted. Would it be logical to deploy Smart Contracts even for the default management process?

    There are too many additional factors to consider in initiating the default management process. When someone defaults, it is not just about logic, but also about the reason. When reason is necessary, the default management process should consider consulting to a human, rather than a computer code. Sometimes a reason is more important than a logic.

    Similarly, the case for breach of the legal agreement. Contract breaches usually have consequences, such as paying for the damage caused. But there can be sound commercial reasons for breaching a contract, which needs to be taken into the account. Locking everything away in a fully-automated Smart Contracts doesn’t make sense in this regard.

    Conclusion

    In a commercial transaction. there are so many rights and options that need to be taken into consideration so that they entirely cover the relationship. The automated logic path should be used when it is most efficient, and human discretion and judgment should be used in other circumstances.

    Also, it is very necessary to lay special emphasis in coding Smart Contracts. If a code which would possibly lead into computational loops should be strictly avoided. Sofocle has mastered the art of developing comprehensive Smart Contracts for varied purposes. To know more about our Smart Contracts development services, drop us an email at success@sofocle.com

    The post Blockchain Smart Contracts- Logical or not-so-logical appeared first on Sofocle Technologies - A blockchain company.

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    The Blockchain technology was launched through the paper titled Bitcoin, by, Satoshi Nakamoto, in 2008, as an amalgamation of public key cryptography, cryptographic hash functions, and proof-of-work consensus protocol. Technically, Blockchain is a digital ledger of records that are gathered in clumps of data called blocks and these blocks are connected with other blocks, eventually forming a chain ­­­­­­­­­- a Blockchain.

    The data stored inside the chain are distributed across networks, thus, accessible to all and not alterable by any entity. Blockchain specializes in delivering following functions:

    • Authenticating and verifying the records: It provides an encrypted and fully secure environment by incorporating the functionality of immutable storage and digital signatures. It facilitates storing of different data types and creation of public-private key pairs.
    • Management of Smart/ Crypto Assets: Blockchain helps in managing the transactions, exchanges, issuance, and escrow etc.
    • Smart contracts: Blockchain helps in automating the work using smart contracts. Smart contracts are pre-defined computer code of agreement residing in the environment of a distributed database of the Blockchain network and it gets automatically triggered in case of occurrence of an event.
    Development of a Blockchain Solution

    The process involved in the development of an effective Blockchain solution is:

    1. Identification of desirable use-case: First step is the identification of use-case which suits and caters to the need of business. In other words, identification of the problem and then its definition is required. It must be ensured that Blockchain plays a bigger role in solving the problem, as on several occasions, the concept of a single and centralized database is efficient enough to address the problem. It is also important to explore the risks involved in its implementation and the factors that will be impacted by it.

    Some ideal Blockchain use-cases are:            

    • Banking sector: Blockchain in the banking industry can automate the tedious processes and at the same time increase the trust and transparency in its domain. The use-cases may include KYC, syndication of loans, registry of assets, peer-to-peer payments, cross-border payments, and trade finance etc.
    • Other financial sector: Incorporation of Blockchain is a kind of blessing in the financial industry. It addresses almost every issue and cut the time and effort involved in managing the business environment drastically. Few good use-cases in this field can be the asset-backed cryptocurrency, transaction gateway, depository receipts, corporate finance bookkeeping, settlement and clearance, fund portfolio management, securities trading, and settlement.
    • Government sector: Blockchain technology has the capability to address a wide range of governmental related issues viz-a-viz use cases related to voting, authentication, and verification of data, public distribution, contract and identity management and Land Registry etc.
    • Insurance sector: Insurance industry sees the revolutionary change in its archaic working model with the incorporation of Blockchain technology. The feature of the smart-contract has further expedited the tardy claim settlement process. Its use cases may include agent details Registry, verified and authentic policy records, fraud Repository, Risk Management, Reinsurance etc.
    1. Selection of a suitable Consensus Mechanism: As per the selected use case the consensus mechanism must be chosen. Initially, Blockchain, on which bitcoin is based, made use of Proof of Work (PoW) as a consensus mechanism. Today, the scenario has changed. Now there are many distributed ledger systems offering various consensus mechanism. For example, Proof of Stake, Deposit based Consensus, Proof of Elapsed Time, Federated Consensus, Delegated Proof of Stake, Federated Byzantine Agreement etc.
    1. Selection of Blockchain platform: Various Blockchain platforms are available nowadays which are free and open source. But the selection of the platform must be based on the chosen consensus mechanism, as in step 2. Some of the popular platforms are Ethereum, Hyperledger Fabric, Openchain, Multichain, Quorum, BigChainDB, Chain core, Credits, Hyperledger Iroha, Elements Blockchain Platform. It is also important to assess whether a public (like Bitcoin) or permissioned (like Trade Finance) Blockchain platform is required based on the requirements of data privacy & confidentiality, user identity etc.
    1. Nodes Designing: It is critically important to decide that where the nodes will run on i.e. on cloud, on-premise or on both network.
    1. Designing of the Blockchain instance: Meticulously planned configuration is required for the Blockchain platforms and it is very important, as some parameter cannot be tweaked with or changed at run-time. For example, parameters for which planned configuration required are Key Formats, Address Formats, Permissions, Hand-shaking, Block Signatures, Key Management, Atomic Exchanges, and Multi-Signatures etc.
    1. Development of APIs: There are various Blockchain platforms that have built-in APIs and while some come without APIs. Some APIs are required for:
    • a) Performing audit related functions
    • b) Generation of addresses and key pairs
    • c) Data storage and retrieval
    • d) Authentication of data using digital signatures and hashes
    • e) Smart contracts
    1. Designing the User interfaces:  At this phase, selection of the external databases such as MySQL, MongoDB, and servers such as FTP servers, web servers, and mail servers etc. is done. Accordingly, the front-end and programming languages such as HTML, CSS, Solidity, Angular JS Nodejs, PHP, C#, Javascript, Python, and Golang etc. are chosen. Some of these choices are impacted by the use of a specific Blockchain platform.
    1. Integration of Future Technologies: The functioning and power of the Blockchain solution can be tremendously enhanced by the integration of trend-changing technologies such as Internet of Things, Artificial Intelligence, Cloud, Data Analytics, Machine Learning etc. depending on the use case.

    Sofocle has developed three prime solutions by the name sofoCap, sofoChain and sofoInsure for streamlining the processes of supply chain financing, tracking product/raw material in a supply chain and to automate the process of claim settlement, respectively. We also develop Proof of Concept (POC) for various Blockchain-based solutions. To know more about our products, drop an email at success@sofocle.com

    The post How to build an Effective Blockchain Solution? appeared first on Sofocle Technologies - A blockchain company.

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