BLOCKCHAIN BASED PAYMENT METHOD FOR SECURE TRANSACTION

Computer Engineering

There was no mechanism in place before Bitcoin that allowed any two willing parties to conduct transactions without the intervention of a third party. To prevent fraud, third parties were brought into the process. As a result, enlisting a third party resulted in additional transaction fees, which is a disadvantage of the current online transaction system. Due to the ease with which digital tokens can be reproduced and the inability of transaction parties to verify the digital currency's legitimacy, double-spending is a problem with digital currencies. Bitcoin has a process in place to prevent double-counting and ensure that each transaction is genuine. Bitcoin is a cryptocurrency that is built on encryption, blockchain, and a peer-to-peer electronic cash system. Because there are no prerequisites, the Bitcoin network is rapidly expanding. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and re-join the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.

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