International Journal of Computer Engineering and Applications, Volume XIII, Issue II, Feb. 19, ISSN

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1 BLOCK-CHAIN: SURVEY ON PRIVACY, SECURITY AND CHALLENGES Monalisha Sinha ABSTRACT: Department of computer science & engineering Birla institute of technology Ranchi, India Blockchain has gained wide attention in the recent years due to the advantage related to the decentralised and distributed ledger technology. It contains block of chain, and each block is connected to everyone. Each block contains the information of every block. Peer to peer network is trusted by everyone as any single change is seen by everyone. Block-chain is used by every application like IOT (Internet of Things), finance and so on. But still its privacy challenge can temper block-chain applications. The survey of this paper is to highlight the privacy challenges of block-chain. We also highlight the overview of block-chain their working and their applications used in various field. Keywords: Block-chain, Crypto-currency, Privacy, Digital Signature, IOT, Smart contract, Security [1] INTRODUCTION As internet has covers all the industry, same as block-chain will cover all the industry. In the next 2 and 5 years, block-chain will be used by everyone. Marketing, the beginning of this recent era, block-chain has become the innovative innovation in this digital world. The application of blockchain is widely spread from crypto currency to IOT (internet of things) [1] and so on. Bit coin, the digital crypto currency is the first application of block chain application. It is used to exchange money. Bit coin works on peer-to-peer network. In traditional transaction, when we transfer money there is bank in between them but in block-chain there is no centralised user. It is distributed. But in distributed, the main points come in mind is of security and trust. Security can Monalisha Sinha 6

2 BLOCK-CHAIN: SURVEY ON PRIVACY, SECURITY AND CHALLENGES be achieved by asymmetric cryptography but how can we gain trust. To achieve trust each node will work as ledger and each person present in that node will be able to update and validate the transaction, which will be visible by all of them. This can make trust on each other. [2] CONCEPT OF BLOCK-CHAIN Block-chain is a peer-to -peer network technology, which compromises of several technologies like cryptography, mathematics, algorithm to solve problems of distributed database. The key elements of block-chain make it secure as compared with traditional database. The key elements of block-chain are: - [A]Distributed: Block-chain, P2P (peer-to-peer) network technology [5], where every incoming block are visible by another block in the following node. That incoming block will be verified by all other block in the node, if that block is invalid than it will be discarded otherwise it is added to the chain of block-chain. [B]Transparent: The blocks in the block-chain is seen by all the members present in the chain and if a block is updated then it is also seen by all the members of block-chain. This makes block-chain more secure and transparent. [C]Autonomy: Because of autonomous nature, no single person can control the network. Particularly any person can update and validate the block in the block-chain and view them anytime if they are accepted by other block i.e. members present in that chain in decentralised network. Meanwhile anyone can join the network and a new node will be created. According to consensus property, everyone present in the chain has to trust the entire member in the chain. [D]Immutable: Any block in the block chain cannot be altered by anyone. One has to gain51% of the total node so that he can challenge that block is inaccurate. [3] WORKING OF BLOCK-CHAIN The block-chain works as: - 1. When-ever a new block or an update comes in the chain of block-chain; majority present in the chain verifies the present block and check the history of that block. 2. If the majority in the chain agrees that the history of present block is valid, then that the present block is added to the chain of block-chain. 3. If the majority does not agree of the addition or validation of the block, then that block will be discarded from the chain. Monalisha Sinha 7

3 4. This property of distributed consensus model allows block-chain to be distributed ledger.it means that is no need of centralised database. [4] STRUCTURE OF BLOCK-CHAIN: Block-chain contains of sequence of blocks. That blocks consists of complete list of transactions records and main data, previous block hash, current block hash, timestamp and other information s. Each block present in the block chain points to the previous block and so on and contains the hash of that previous block called the parent block. The first block is called genesis block as it has no parent block and does not contain any hash of previous block. Genesis block only contain hash of its block. The diagram of structure of block-chain is given below: - Block hash Block hash Block hash Time-stamp Time-stamp Time-stamp Previous hash Other information information s GENESIS BLOCK Figure:1. Structure of block-chain Previous hash Other information Previous hash Other information [5] DIGITAL SIGNATURE: Digital signature is an electronic verification of the sender. It serves three purposes: 1. Authentication: a digital signature gives the receiver reason to believe the message was created and sent by the claimed sender. 2. Non-repudiation: with digital signature, the sender cannot deny having sent the message later. 3. Integrity: a digital signature ensures that the message was not altered in transit. It is commonly used for software distribution, financial transaction and other cases where it is important to detect forgery and tampering. Digital signature uses asymmetric cryptography which means public key is employed. In the transaction two keys are created public and private key. Private key is kept with sender and public key is given to receiver. Digest is created by the sender by hashing algorithm. Then the sender encrypts the digest with his private key. This encrypt digest is called digital signature. Elliptic curve digital signature (ECDSA) []is used by the block-chain as digital signature. Monalisha Sinha 8

4 BLOCK-CHAIN: SURVEY ON PRIVACY, SECURITY AND CHALLENGES [6] CONSENSUS IN BLOCK CHAIN: Firstly, what is consensus and why it is required. The dictionary meaning of consensus is general agreement and this is the exact thing happen in distributed system. The fundamental problem in distributed computing is that how we can achieve overall system reliability in the presence of a number of faulty processes. A consensus algorithm is a process in computer science which is used to achieve agreement among distributed processes or system. Proof of work is the example of consensus algorithm. Consensus algorithms in blockchain are: 1. Proof-of-work (PoW) 2. Proof-of-stake (PoS) 3. Proof-of-elapsed time 4. Byzantine fault tolerance 5. Proof of burn [7] PROOF OF WORK (PoW): Bit coins, devised by Satoshi Nakamoto, uses proof of work consensus algorithm. It does two things:- 1. It ensures that the next block in a block-chain is the one and only version of the truth 2. It keeps powerful adversaries from derailing the system and successfully forking the chain.the benefits of Proof-of-work (PoW) is that it works but since one has to do massive mining operation that means bit coin miner has to solve cryptographic puzzles to get reward and it required huge computational power. Huge amount to time and power is consumed in mining in proof of work. The cons of Proof-of-work (PoW) is that it is located in that place where electricity is cheap, it means its killing the planet and the second is that it is slow, it takes 10 to 16 minutes to do a bit coin transaction which actually tough to scale. Proof-of-work (PoW) runs on the system of longest chain wind it runs on the assumption that most of the miner working on the chain and that chain will grow the faster and the longest. Hence, bit coin is safe if more than 50% of the miners are honest. [8] PROOF-OF-STAKE(PoS) Crypto currencies like bit coin uses enormous amounts of energy to secure their networks, but why are that and more importantly- what are the solutions? Mining new coins takes a lot of computing power because of the proof-of work algorithm. Proof of stake is the solution of proof of work. Proof-of-stake uses an election process in which one node is randomly chosen to validate the next block. proof-of-stake has no miner but instead has validator and it does not let people mine block but instead mint or forge blocks. Validators are not chosen completely randomly. To become a validator, a node has to deposit a certain amount of coins into the network as stake. This is also known as security deposit. The size of the stake determines the chances of the validator to be chosen to forge the next block. [9] TYPES OF BLOCKCHAIN: Block-chain is of three types: Monalisha Sinha 9

5 1. Public block-chain: as the name suggests is the block-chain of public, meaning a kind of blockchain which is for the people, by the people and of the people. Anyone in the chain can participate in updating, validating the blocks. Public block-chain is open and transparent to all, it means anyone can see the transaction in the chain. In public block-chain no one is in charge so decision is made by various decentralised consensus mechanism such as proof of work (PoW) and proof-of- stake (PoS). Bit coin and ethereum are public block-chain. 2. Private block-chain: it is a private property of an individual or an organisation. There is an in charge that can validate and update the transaction. The consensus is achieved on the whims of the central in-charge who can give mining rights to anyone or not giving at all. It is cryptographic secured. 3. Consortium block-chain: In consortium block-chain, instead of having one in-charge, there is more than one in-charge. Basically, it is done in group of companies or representatives individuals coming together and making decision for the best benefit of the whole network. [10]APPLICATION OF BLOCK-CHAIN: 1. CRYPTOCURRENCY: BIT COIN Bit coin is a digital currency [2][3][4] which aims to do away with all the problems we have paying for things online. It is the electronic cash which does not depends on any bank. Money is transfer through peer-to-peer network. Bit coin is extremely fast instead of traditional bank. When we send money to someone, we can t get it back. This seems that no one can blame that they can t get their money. 2. SMART CONTRACT Smart contract, also called distributed apps) are very popular. It uses distributed ledger to store contracts. It is same as contract in the real world. The difference is that it is digital. It is tiny program that is stored in block-chain [6][8] 3. HYPERLEDGER Hyper-ledger is not a crypto currency, a block-chain and not a company. It is the project under Linux foundation. It is the open-source development project where people from all over the planet can come and help hyper-ledger to get developed as software and as a platform. It is the open sourced community of communities. 4. IOT IOT continues to grow at a rapid rate sensors and devices are becoming more common place to communicate information in business networks where data such as location temperature or other properties need to be shared a permission block-chain ledger can help create a tamper evident record this opens up new ways of automatic business processes among partner without having to set up a costly centralized It infrastructure and all participate have access to the same data. IOT permits packets transmit required status information as it passes through multiple carriers. the business contract specifies the conditions that must be met during the shipment from the factory to the grocery store and all parties must adhere to the term of the contract, a temperature sensor embedded in the package stores the data locally and sends it to the block-chain through the IOT platform, add weight points upon receiving connectivity information is shared across all peers. In this example, both carrier1 and carrier2 met the contractual obligation and the shipment arrived at its destination without exposure to access temperature using block-chain allows all the business partner to access the same temperature data without requiring central control. Monalisha Sinha 10

6 BLOCK-CHAIN: SURVEY ON PRIVACY, SECURITY AND CHALLENGES [11] SECURITY AND CHALLENGES Now mobile phones are also not safe. They are openly to various attacks. There are number of ways to detect the data such as pattern matching, which are stored in centralised server. So centralized server is also vulnerable for theft of data. Block-chain has helped the security of distributed network [7] 1. 51% attacks: It is the attack on a block-chain i.e. bit coin. In this attack, miners takes control more than 50% of the networks which helps them to prevent new transaction from getting permission to be added in the chain. They could also reverse the transactions that were already completed. Therefore, this could result in double-spending. 2. Fork problems in block-chain Cryptographic key that moves memory, the rules by which the memory is moved are set by the miner itself. So, rules are understood and if rules are changed, then fork is done, and the entire miner needs to agree about the new rules. There are two types of fork Hard fork In hard fork, it only accepts the new nodes, old nodes are made invalid. Updated version must be upgraded. One Path only follow the new and updated path while another path follows the old path. Soft fork In soft fork, previous valid blocks are made invalid. Soft fork requires majority of the miner updating the new rules and likes hard forks only new version is accepted. 3. Block-chain scale As the number of transaction increases, the chain of block-chain will increases and it will take a lot of times and computing power. 4. Block-chain confirmation time Traditional bank takes almost 2-3 days for transaction of money, but block-chain takes nearly 2-3 min to transfer the money. But still some factors are missing in it. [12] CONCLUSION As block-chain is increasing day by day, there are some advantages and disadvantages of blockchain too. People should be made aware about the block-chain technologies. Government should take care regarding their disadvantages and makes new laws so that this technology should change the digital world which should prevent misbehaves. [13] AKNOWLEDGEMENT I would like to thank the Computer Science department at BIT Mesra, Ranchi to provide me deep knowledge regarding block-chain. This helped me a lot in doing survey regarding this paper. Monalisha Sinha 11

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