Those were some of the critical concepts of the blockchain. These concepts make up the characteristics and the behavior of the blockchain. Now let's move on to some additional concepts of the blockchain. Apart from private keys, we have an additional concept known as HD private keys, where HD stands for hierarchical deterministic private keys. These are the types of private keys that allows the generation of child keys from a master key. The child keys are always generated from a seed and there is always a relation established between the child and the parent key.

Even if you lose your child keys, you can still produce the child keys by using the parent key. This kind of protocol was defined in BIP 32, which is described as Bitcoin improvement proposal, which is used for proposing changes or adding improvements over the Bitcoin blockchain by Using this protocol, you can generate a nearly infinite number of child keys from a seed, wherein key can be used to monitor all the child keys. For example, if you are running a company and you want your account managers to be distributed and tracked, then you can provide different child keys to your account managers. You can use a deterministic wallet like treasure where the owner of the company is holding the master key, and each department or account owner is keeping a child key. You can further drill down where each employee is holding a child key derived from the department head or account manager which is the master key.

Within a department, each employee can make transactions or track their account by using their keys. The department head or the account manager can monitor the whole department as their key is used to derive the keys for the Department employees. The owner of the company can maintain control across the whole enterprise. By using their key, as their key is the seed key used to derive all the keys for the organization. The owner can watch over the transactions and functioning of each department. And similarly each account holder can monitor their departments.

Another primary concept for the security of blockchain is mnemonics. The main problem with the blockchain wallet is the private keys. If some hacker can get your private key, then the hacker can take out the tokens from your account. Moreover, the private keys are not user friendly. A person who is accessing a blockchain wallet might not be able to remember the complex hex value of the private key to tackle such problem. Instead of using hex values of private keys.

We make sure that the new concept known as mnemonic protects the wallet. mnemonic acts as a substitute for the private key, where you can define 1218 or 24 words which can be easily remembered by humans instead of the hex format. mnemonic also allows the recovery of private keys and wallets, which is a convenient solution if somehow you lose your private key mnemonics was introduced in BIP 39, which also defined the implementation of mnemonic wallet. Currently, most of the mnemonic wallets contains a random set of 2048 English words, and a blockchain wallet is established through the combination of these words. For example, well 18 or 24 random words are taken from this 2048 word list. If anybody tries to hack a 12 word mnemonic seed, they're required to calculate almost to zero for eight to the power 12 possible combinations to Break the security.

After the success of Bitcoin blockchain aetherium also came into the market, with the aim of capitalizing over the limitations of the Bitcoin aetherium brought in some new concepts and one of the vital concepts introduced was smart contracts. smart contracts are similar to the legal contracts between two or more parties and stored over the immutable blockchain. In other words, smart contracts or digital expressions for your legal contracts. smart contracts can perform functions as defined and agreed by the parties who are using the contracts. smart contracts help you exchange money, assets, property, shares, or anything which holds a value in the real world. smart contract removes the middleman services, thus reducing the cost of dependency.

For example, if you have a smart contract for rent, renting a house. You don't require property dealers in the middle, the house owners can share their homes over the smart contract, and the lenders can rent the house by depositing money on the smart contract. that trust is developed by the immutable nature of the ledger and cryptographic algorithms running behind the blockchain. Many blockchains have adopted the concept of smart contracts. Some other block chains like hyper ledger have their own definition of smart contract, where they call the smart contracts as chain code, which is used to define business logic over the blockchain. smart contracts are the second evolution for the blockchain industry.

And there are multiple use cases where the smart contracts can be employed. We will discuss some use cases by the end of this course. In this session, we covered some interesting and significant concepts of the blockchain in the next session, we are going to talk about how a transaction works in the blockchain. Thank you for attending the session. And if you have any queries feel free to contact us at info at the rate v2. blogspot com