A BRIEF OVERVIEW OF THE PREVIOUS CLASS AND Q&A SESSION (05:10 PM)

BLOCKCHAIN AND CRYPTOCURRENCIES (05:35 PM)

• Blockchains are decentralized digital ledgers that facilitate the transaction between parties without the need for any third-party authentication. It maintains a time series of data in a chain of blocks in chronological order. Every block has a unique identifier that connects them to previous and subsequent blocks. 
• Each ledger is shared, copied, and stored on every node in the system thus the entire series is managed and stored across several computer systems. 
• [* Cryptographic hashing- The algorithm provides the unique address to the blocks created. It is used to write new transactions, timestamp them, and ultimately to add a reference to them in the previous block.
• The new block generated has a  hash that also has the record of previous transactions. When the new block is generated and if it is fake, the hash will not match, and all the other nodes will reject them. ] 
• 
• It is distributed database which is durable, robust, transparent, and tamper-proof, thus it can have applications in many areas.  
• 3 Levels of Security in blockchain technology
• 1) Cryptographic hashing
• 2) Proof of work (PoW) is a form of Cryptographic Proof in which one party proves to others that a certain amount of a specific computational effort has been expended. The time increases exponentially to solve the next 10 hash. 
• 3) Decentralized ledger- Consensus mechanism
• Applications of blockchain technology (06:11 PM)
• Banking and Finance 
• Protection of intellectual property
• Government schemes- Examples such as national identity management systems, land title registration, and health care. 
• Cyber security
• Challenges 
• The processing speed is very less in blockchains compared to traditional transactional networks. 
• Blockchains are not interoperable
• Limited availability of skilled workforce, high power consumption (Although this has been resolved through proof of stake blockchain). 

CRYPTOCURRENCIES (06:23 PM)

• It is a type of digital currency that uses cryptography for security and anti-counterfeiting measures. Cryptocurrencies work through distributed ledger technology called the blockchain. Example- Bitcoin, Ether (Ethereum blockchain). 
• Benefits of cryptocurrencies (07:16 PM)
• Difficulty to counterfeit
• Privacy protection
• Benefits of blockchain technology
• Issues with Cryptocurrencies
• Because of their anonymous nature, cryptocurrencies are used for many illegal activities such as the smuggling of drugs, and terror financing among others.
• Cryptocurrencies have shown very high volatility in the exchange market, such volatility can introduce instability in the market and economy.
• There are no consumer protection or dispute settlement mechanisms. 
• There are money laundering risks. 
• Note- The government of India and RBI even though haven't banned crypto-based transactions, they have cautioned regarding their uses. 
• [* Government is taxing 30% on profits made out of the crypto trade]

PROOF OF STAKE (07:37 PM)

• It is an alternative approach to designing a blockchain. 
• In proof of stake, there are no miners but there are validators who validate transactions on the blockchain for a brief duration. 
• Once the validator fulfils the job he/she is rewarded with new ether currency, however, to become a validator one has to stake a minimum amount of ether currency, and if the job is not done properly then this stake is lost
• Ethereum blockchain has shifted to proof of stake to reduce power consumption. 

NON-FUNGIBLE TOKENS (07:56 PM)

• Drawings, photos, videos, GIFs, music, in-game items, selfies, and even a tweet can be turned into an NFT, which can then be traded online using cryptocurrency.
• If anyone converts a digital asset to an NFT, he/she will get proof of ownership, powered by blockchain
• 
• The value of the token varies from person to person. 

The topic for the next class:- Artificial intelligence and the Internet.