Briefly explain Blockchain transaction. List the risks associated with Blockchain. OR Explain briefly the financial measures that help in evaluation…

(a) Blockchain, sometimes referred to as Distributed Ledger Technology (DLT) is a shared, peer-to-peer, and decentralized open ledger of transactions system with no trusted third parties in between. This ledger database has every entry as permanent as it is an append-only database which cannot be changed or altered. All transactions are fully irreversible with any change in the transaction being recorded as a new transaction. Some of the risk associated with the use blockchain technology are as follows: (i) With the use of blockchain, organizations need to consider risks with a wider perspective as different members of a particular blockchain may have different risk appetite/risk tolerances that may further lead to conflict when monitoring controls are designed for a blockchain. There may be questions about who is responsible for managing risks if no one party is in-charge, and how proper accountability is to be achieved in a blockchain. (ii) The reliability of financial transactions is dependent on the underlying technology and if this underlying consensus mechanism has been tampered with, it could render the financial information stored in the ledger to be inaccurate and unreliable. (iii) In the absence of any central authority to administer and enforce protocol amendments, there could be a challenge in the development and maintenance of process control activities and in such case, users of public blockchains find difficult to obtain an understanding of the general IT controls implemented and the effectiveness of these controls. (iv) As blockchain involves humongous data getting updated frequently, risk related to information overload could potentially challenge the level of monitoring required. Furthermore, to find competent people to design and perform effective monitoring controls may again prove to be difficult. OR Financial Measures: - There are some financial measures that help in evaluation of performance of any Mutual Fund which are as follows: (a) Expense Ratio: - Discussed in earlier section, it ultimately impacts the return of a Mutual Fund Scheme. (b) Sharpe Ratio: As discussed in the chapter on Portfolio Management, this ratio measures the Mutual Fund's performance measured against the total risk (both systematic and unsystematic) taken. (c) Treynor Ratio: As discussed in the chapter on Portfolio Management, beta measures the volatility of return of a security vis-à-vis to the market, in mutual funds the Beta of a mutual fund measures volatility of a fund's return to return from its Benchmark. Treynor Ratio measures performance of a mutual fund against the systematic risk it has taken. (d) Sortino Ratio: - A variation of Sharpe Ratio that considers and uses downside deviation instead of total standard deviation in denominator.