# Questions peer presentations

**PP 1: What generations of altcoins exist? What are their main features? Give some prime examples.**
There exist 4 generation of altcoins:
- Generation 1
- Bitcoin forks
- Use Proof of work and often a different hash than SHA25. Also try to increase transactions per second and try to lower transaction costs.
- Examples are Litecoin and Dogecoin
- Generation 2
- Not bitcoin forks
- These aim to be more that just a currency, introducing smart contracts that have a turing complete scripting language
- Example is Ethereum
- Generation 3
- These are built on top of the second generation
- They use different consensus algorithms (PoS, Elapsed time, ...) and focus more on scalability, cooperation with other coins and a formal verification of smart contracts.
- Examples are Solana, Cardano and IOTA
- Generation 4
- NFT support
- AI based to increase transactions per second
- Deepbrain Chain and SingularityNet

**PP 2: Explain the basics of Polkadot. What does it aim for, what are its essential concepts and components?**

The main idea of Polkadot is to connect multiple, independent blockchains. Polkadot has a main chain, called the **relay chain**. The different chains that are connected through Polkadot all push their block on this relay chain. Validators of the Polkadot network can then **validate** these blocks through a provided validation function, thus using PoS. The interoperability between the different chains is then implemented by passing **messages** in the blocks that are pushed (standardized by the XCMP protocol), nodes from other chains can then respond to this accordingly.

**PP 3: Explain the basics of SegWit. What is it, what problem does it help solving and how?**
SegWit, segregated witness, is a **first layer scalability solution**. It addresses both the **scalibility** (the low amount of transactions per second) and the **malleability** issue (where the transaction ID could be changed by altering a signature, and hence, an unconfirmed payment that occurs after this alteration, could become invalid). It is a change that was proposed in how the blocks are structured. Mainly, the transactions from a standard block are seperated from the signatures. After this, the block that only contains the transactions (without signatures) is called the **base transaction block** and still has size 1MB. The other block, with the signatures and other data known as the *witness* is called the **extended block** and has size 3MB. Together they form the **segwit block**.

If we now change the signature of a transaction, it won't change the transaction ID, which solves the malleability. Since the block size has effectively increased to 4MB, we have also increased the scalability.

**PP 4: What is, in 5 sentences, the lightning network? What problems does it solve and how/why (in 2 sentences)? (The answer to the first question focuses on permanent payment channels and networks thereof, over which many transactions can be conducted without needing to record transactions on the main blockchain.)**
The lightning network is **second layer scalability solution**, it is a network that is built on top of the existing bitcoin network. A permanent payment channel network is built out of the nodes that represent the lightning network. With this network, we can continuously make payments with another node without having to publish every transaction on the blockchain. A network of routing nodes is used to prevent that you need to have a direct connection (channel) with every node with which you whish to have this permanent payment channel. Note that the route of routing nodes can be chosen by the user, but that the channel capacity has to be taken into account to make sure that the channels between the routing nodes are not depleted.

With the lightning network, we can effectively increase the transactions per second of bitcoin, because not every transaction has to be recorded on the blockchain. It uses the concepts of revocation secrets and time locks to make sure that both parties don't get scammed.

**PP 5: What is sharding (in 2 sentences or so)? What forms are used in practice? What problem can it help solve and how (in 2 sentences)? The second question should focus on the concepts, not on details of existing implementations.**
Sharding is a **third layer scalability solution**. In sharding, the network is split up in different shards, meaning that a fraction of the nodes is only responsible for a fraction of the transactions, instead of every node processing every transaction.
2 types of sharding are used in practice:
- **state sharding**, where the global state is split up in different shards. This requires verifying a global truth, without having the full state stored.
- **transaction sharding**, where every node still maintains the global state, but transactions are just processed by different shards.
Due to the fact that the network is now split up, we can increase the transactions per second because transactions can be handled in parallel.

**PP 7: Proof of work consensus algorithms require investing in resources to solve crypto puzzles that are not useful for anything else. What other uses of resources have been proposed as proofs to participate in alternative consensus algorithms?**
- **Proof of useful work:** Compared to traditional PoW, in PoUW resources are used to **solve useful, real world problems**. Examples of this are finding prime numbers or solving machine learning tasks.
- **Proof of elapsed time:** Using **specialised hardware from intel (CPU)**, whenever a block gets added to the blockchain, the hardware can generate a random number. The lowest number then gets to mine the next block. It is essentially a lottery.
- **Proof of Capacity:** Here, miners can increase their chance of wining the lottery by **using hard disk space**. They take some data and hash this over and over again. Then they compute a deadline function on a pair of hashed values and in the end, the miner with the lowest deadline value wins (so by computing more hashes, we increase the chance of getting a lower deadline value).
- **Proof of Activity:** Here, blocks without transactions are first mined using PoW. And then, PoS is used to validate the block and to add transactions if they are chosen. Here **stake is used as a resource**.

**PP 9: Explain the concept of coin age? In what context is it used, what is it?**
Coin age is the time that that your coins have been sitting in your wallet, without having been touched. The concept is used in cryptocurrencies like PeerCoin where a hybrid PoW and PoS exists. For PeerCoin, if you want to become a staker (for PoS), your coins have to have been held in your wallet for atleast 30 days, before this, you are not eligeble to mint. When the coin age increases from 30 days to 90 days, your chance of being selected to mint increases, reaching the maximum probability when the coin age >= 90 days. After minting, the coin age of the wallet gets reset back to 0.

**PP 10: Explain conceptually and briefly how PoW and PoS co-exist for the time being with Ethereum’s Casper.**
The current implementation of Ethereum Casper, FFG (friendly finality gadget), let's PoW and PoS co-exist by adding an additional chain, the beacon chain, on top of the existing ethereum blockchain. Blocks on the original chain are still proposed using PoW, but every 32 blocks, the proposed block from the main chain is chosen as a candidate for the beacon chain. For this chosen block, PoS consensus is performed and it is added to the beacon chain if it accumulated enough votes.

**PP 10: Explain the role of justified and finalized blocks in Ethereum Casper, in relation to how voting is performed on the beacon chain.**
When voting on a block of the beacon chain, the validators have to vote for the new block, given that they believe that a previous block was final. If this new block, say block N, gets > 2/3 of the votes, then block N is considered justified. If for a next block, N+1, > 2/3 of the voters use the justified block N as the 'source' of the new block N+1, then the justified block N becomes finalized. This is because we now know that > 2/3 of the voters also believe that the justified block N was final.

**PP 12: What is the IPFS?**

IPFS stands for InterPlanetary File System and is a protocol and peer-to-peer network for storing and sharing data in a distributed way. It thus represents a distributed file system. It can be used to store and access files, websites, apps, data… .
In order to access data, you need to refer to the data’s unique hash rather than the location (eg. URL). Loading a specific website equals asking the network if any data corresponds to the hash of that site. To make the whole lookup process user-friendly, a decentralized DNS-like system is used, called IPNS.

**PP 13: What differentiates Enterprise Ethereum from the original Ethereum? (List the differences using the proper terminology, and explain their meaning).**
Sometimes the all public nature is not in the best interest for certain enterprises but still want the distributed nature (banks etc.). Ethereum enterprise is an extension on the normal ethereum chain with some extra features. Key differencens lay in the following:
- **Privacy:** Information is not public to everyone
- **Permissioning:** Not everyone has the same rights to execute operations
- **Performance:** Because state has to be updated by all the nodes, this should be efficient.
- **Credential mgmt:** There is no central credential management and this must be specified.
- **Deployment and Crashes/Faults:** Enterprise ethereum also has specifications for these.

**PP 14: What does the World Food Program use blockchain for? How do they use it?**
They use this to distribute money to people in need. Local banks are not really reliable so they **open a wallet** for the persons they want to financially help. Participating food stores will also have a wallet and the people in need can buy groceries with their wallet and an **iris scan**. At the end of the month, the store gets paid in its local currency.

**PP 14: What does the Mojaloop Foundation use blockchain for? How do they use it?**
In some countries, cash transactions are still required because of infrastructural limitations. Mojaloop wants to **ease interactions between different financial service providers**. They use **ripple** to facilitate the transactions between the different fsps. The mojaloop hub comprises of an **account lookup service**, a **central ledger** and the **central settlements service**.

**PP 15: What problems of centralized credential systems does Self-Sovereign Identity solve and how does it do so? (Answer at the conceptual level, we don’t need to know specifically how the used keys are named).**
Current centralized credential systems rely on a third party, are easy to counterfeit and often expose to much information than is necessary. Self-sovereign identity solves this by allowing the user to have a **decentralized identifier (DID)**. Issuers can sign on the DID of the user to approve a certain document (degree, birthdate, ..). Using a **zero-knowledge proof document**, a user can prove to a verifier that he/she indeed has those documents. The verifier can be sure about this because it trusts the issuer of the documents.

**PP 16: Explain how anchoring is used in the Georgia land registry system to achieve at once the necessary transparency and confidentiality of records and transactions.**
With anchoring, a private blockchain is linked to a public blockchain. This way, sensitive private data is kept from the public. In the Georgia land registry system, a user can **request a registration** for land. When this registration is granted, the **information and a timestamp** is stored in the **private blockchain**. **Hashes** of this private information are anchored on the **public blockchain**. This way, legitimacy of documents can be checked without revealing the private information.

**PP 17: What problems that the insurance industry (i.e., the industry in general, not a specific branch such as marine insurance) is facing can be solved by adopting blockchain technology? What advantages does blockchain deliver to the insurance industry?**
The insurance industry covers **many different parties** that have to work together in certains scenarios. Because interactions between these parties involve a **lot of human work** and documents, it **takes a long time** to accomplish interactions. On top of that, a **lack of reliable data** and the possibility of **fraud** increases the inefficiencies further. A blockchain can help here because of the **low-latency sharing** and the **immutability** of documents. On top of that, everybody gets to see the **same information**.

**PP 18: Explain the three categories of benefits that the use of blockchain offers in supply chains tracking. Explain why they were problems in the first place in the traditional modus operandi in industry.**
Blockchain technology offers benefits in **provencance (backward tracking)**, **tracking (forward tracability)** and **automation**. Backward tracking allows supply chain parties to know exactly where source products came from. Tracking is useful to know where a certain product is right now and automation can be useful for fast payments or interactions between these parties. Not being able to know where products came from resulted in **huge waste of material** in for example food supply chains. If there was an virus outbreak, they had to destroy all the food to be entirely sure. As a manufacturer you often did not know where your source products came from and where your products would end up. The blockchain technology can solve al of those.

**PP 19: Explain in what scenarios and how Ripple is used in the FinTech industry.**

Ripple is an alternative for SWIFT based on blockchain technology. SWIFT allows parties to transfer funds across banks in different countries, without having to trust the bank. With SWIFT the banks need to have an established relationship, otherwise an intermediatory bank needs to be found. This results in slow and expensive transfers. With Ripple a blockchain network is introduced between banks on which they can trade XRP coins. When a sender now wants to transfer a certain amount of money to the receiver, his bank will convert it into XRP coins, which the receiver's bank will then convert back into fiat.

**PP 19: What are the four major drawbacks/issues with the use of cryptocurrencies in the financial industry?**

- **Security**: Since most blockchains used in fintech applications are private blockchains, that are ran on a small amount of servers, a 51% attack can become a lot easier to execute.
- **Regulatory issues**: Most governments have no legal basis for crypto use in financial applications and block a lot of these technologies because of this.
- **Scalability**: Crypto transactions have shown to be a lot more efficient than inter-bank transaction systems such as SWIFT, but they are still quite a bit slower then intra-bank payment systems or credit card systems such as Mastercard. Thus it is important to know when using a blockchain based approach for transactions, is actually beneficial.
- **Privacy**: In certain cases financial transactions need to be kept secret, e.g. when buying stock of a company that you are looking to overtake. With blockchain technology however all transactions that have been done on the blockchain are publicly available on the distributed ledger.

**PP 21: Which third parties do decentralized marketplaces rely on to increase the trust between buyers and sellers? How do they do so?**
One one hand, they can use **escrow agents**. Here the escrow agents can be centralized instances or multi-sign transactions. The buyer will put twice the buy price in the escrow transaction and the seller one time the price of the item. When they both sign on the escrow transactions. The buyer gets back twice the price of the item and the seller gets back one time the price of the item. This way, only when both parties agree, the transaction is exectuted. On the other hand, they can also use **moderators** to increase the trust. Moderators go trough a verification process so they can be trusted by both the buyer and the seller.

**PP 22: Compare a DAO to a traditional company. What aspects differ, in particular what roles do the blockchain and smart contracts play in DAOs in comparison to processes in traditional companies.**
The differences lay in the following aspects:
- **Centralization:** Traditional companies have a central authority and DAOs have decentralized consensus of its members. The distributed consensus is made available by the blockchain.
- **Automation:** Traditional companies require decision making through the entire hierarchy of members while in DAOs, decisions can be automatically distributed/executed with the help of smart contracts.
- **Shares:** In traditional companies, value of the company is divided using shares. In blockchain technology, this is equivalent to tokens.

An additional benefit of the blockchain is that it offers more **transparency** for the company.