DLT Consensus Mechanism, Data Encryption, and Cyber Currency
HW: DLT Consensus Mechanism
1-2 Pages (Maximum)
You can answer eachquestion on this word document,save, and submit/upload online.
Questions:
For each of the items below provide i) description, ii) advantages and disadvantages, iii) give an example of how and where it is being used in business and industry (e.g.,what type of distributed ledger uses this consensus mechanism, please note that the DLT may be something that was not coveredin our class lectures).
1. Proof of Work
2. Proof of Stake
- Proof of Authority
- Proof of Activity
- Proof of Identity
- Virtual Voting
HW: Data Encryption
- 1-2 Pages (Maximum)
- You can answer each question on this word document, save, and submit/upload online.
Questions:
1. What is Cryptography?
2. What is Data Encryption?
3. Describe Symmetric Data Encryption process? E.g.,Single Key for encryption and decryption.
4. Describe Asymmetric Data Encryption process? E.g.,Public Key and Private Key.
5. What is Hash Encryption? How is it used in our Fintech World?
6. What is AES Data Encryption? How is it used in our Fintech World?
7. What is RSA Data Encryption? How is it used in our Fintech World?
8. What is a Digital Signature? Briefly describe the process used to authenticate the user an message.
- SHA256: Hash Encryption #1:
Use: https-//emn178 gjthub jo/on line-too ls/sha256 html
Part a) Create the Hash Code for your name (e.g.,Robert Kissell) Hash Code =
Part b) Create the Hash Code for your name with a period at the end (e.g.,Robert Kissell.) Hash Code
Notice how difference these two Hash Codes are with only a single character difference in the message.
10. SHA256 : Hash Encryption #2
Use: https ·//emn178.gjthub jo/on line-too ls/sha256 html
Fintech Questions: Cyber Currency; Consensus Mechanism; Data Encryption
Student’s Name
Institution
Course Name and Number
Lecturer’s Name
Due Date
DLT Consensus Mechanism
1 Proof of Work
Proof of work (PoW) is a consensus mechanism used in distributed ledger technology (DTL) to validate the accuracy of new transactions added to a blockchain (Yusoff et al., 2022). Its primary advantage is that it provides a decentralized method of verifying transactions and preventing fraud. The disadvantage of this technology is high energy consumption because it uses powerful computers. It is also inefficient, with slow transaction speeds and expensive fees. Proof of work is used to verify transactions in cryptocurrencies like Bitcoin, Litecoin, and Dogecoin.
2 Proof of stake
Proof of state (PoS) is a consensus mechanism or protocol for processing transactions and creating new blocks in a blockchain (Yusoff et al., 2022). Unlike PoW, this mechanism is energy-efficient since it does not require users to utilize powerful computers that consume large amounts of energy. However, PoS is subject to dominance by validators with large holding. These validators can have an excessive influence on transaction verification. PoS is being used in cryptocurrencies like Cardano, Tezos, and Algorand.
3 Proof of authority
Proof of authority (PoA) is an alternative consensus mechanism that delivers a practical and efficient solution for blockchain networks (Yusoff et al., 2022). The benefits of PoA include minimum energy consumption, high security, and scalability. Its limitation is the risk of human error because the blockchain architecture is less automated than other solutions. PoA is also less decentralized than the other algorithms. The most notable platforms that use this consensus mechanism include Palm Network, VeChain, Xodex, and Bitgert.
4 Proof of activity
Proof of activity is a hybrid of PoW and PoS. It is used to ensure that all transactions registered on a blockchain are genuine and that all miners arrive at a consensus (Wang et al., 2019). PoA makes the blockchain more secure than other mechanisms. It has zero chances of 51% attacks (Wang et al., 2019). However, PoA uses high computational power like PoW. Additionally, it lacks any measure to stop double signing by the validators. The Decred and Espers blockchain projects use this consensus mechanism.
5 Proof of identity
Proof of identity is cryptographic evidence for a user’s private key attached to a specific transaction (Wang et al., 2019). It ensures the integrity and authenticity of created data. However, with proof of identity, the amount of data stored in the blockchain is considerable and may require some daily downtime for cohort leader servers to reboot. Proof of identity is used in cryptocurrencies to verify the user’s identity.
6 Virtual Voting
Virtual voting is a consensus mechanism that allows voters to submit their votes electronically to the electoral body. With virtual voting, issues regarding transparency, voter confidence, and accessibility can be solved. This system also increases efficiency and accuracy. However, the algorithm is vulnerable to security threats. It also raises verifiability issues because the electronic nature of the voting process makes it difficult to validate the results. Virtual voting can be used in the blockchain voting system to eliminate vote tampering.
7 Proof of elapsed time
Proof of elapsed time (PoET) is a consensus algorithm based on a fair lottery system (Yusoff et al., 2022). It leverages trusted computing to enforce random waiting times for blockchain construction. The advantage of PoET is efficiency. This mechanism uses a fair lottery system to maintain efficiency while preventing excessive energy consumption and resource wastage (Wang et al., 2019). Its primary disadvantage is that it significantly relies on Intel technology. This consensus Permissioned blockchain networks like Bitcoin and Ethereum use PoET to determine mining rights and the next block miners.
Data Encryption
Cryptography is the practice of securing information and communication through algorithms in a way that only authorized individuals can process and decipher (Maqsood et al., 2017).
Data encryption is the protection of data using secret codes to prevent access by unauthorized parties.
Symmetric data encryption is encryption, where a single key (a secret code) is used to encrypt and decrypt electronic data (Al-Shabi, 2019). This process differs from asymmetric encryption, which uses a pair of keys: - a public and a private key, to encrypt and decrypt data.
Hash encryption is a one-way method of hiding sensitive data. It uses a fixed length value known as a hash value that cannot be reverted to the original plain text (Maqsood et ...