Basics of Blockchain and Bitcoin

1. Blockchain
(BitCoin)
By : Mohit Shukla
Sr. Software Engineer
mohit.shukla1992@gmail.com

2. Introduction
Before getting this let's have a look why we need it

3. Issues in current banking system
1: Double Spending
2: Financial Crises
3: Private ledger / Centralised Power (Bank,Government)
4: Hacking

4. Current Banking System
Rs 100 Rs 98
Rs 2
Mahesh Suresh
Transaction fees is very high

5. Double Spending
Mahesh
Suresh
Leena
Rs 500
Rs 400
Rs 500
Let mahesh have Rs 500. If he initiated
two transactions at the same time for Rs
400 to suresh and Rs 500 to leena then
it is very typical to verify which
transaction is valid.

6. Financial Crises
Give loan
Wrong Investment
Not paid back
Big loss

7. Private Ledger
Insvested your money in stock
No Money
MarketDown

8. Hacking
Net Banking
Credentialsstolen
Transferinitiated
Got Money

9. How Blockchain overcome by these
Issues ?
Immutable to
hack
Decentralised
power
No Double
Spending
Public ledger
Blockchain

10. What is Blockchain
A blockchain is a digitized, decentralized, public ledger of all cryptocurrency
transactions. Constantly growing as ‘completed’ blocks (the most recent transactions)
are recorded and added to it in chronological order.
A. It is a Technology of Transaction management
B. Public distributed database that hold the encrypted ledger

11. What is Block
It is assume that every 10 min lots of blocks are created and block chain is growing up
accordingly

12. What is Block
Block Is a collection of recent transactions that happen and verified, basically it group all the
transaction a create a hash code and then it store it in a block. Once the transaction is
verified then this block is become the permanent part of the block chain. And the chain keeps
growing.
Blockchain
Block

13. 3 key concepts of block chain
1. Previous Block hashcode (This hashcode is highly secure and use dofr
identify a Block, every block have there hashcode ).
2. Complete hash details of every transactions that has happened to that
block
3. Value and Proof of work to that block (it is basically a mathematical
solution attach to a block to ensure validity of the block )

14. BitCoin
1: First Decentralised digital currency
2: introduced in 2009 by Satoshi Nakamoto
3: Open Paper = Bitcoin Concept + Blockchain Algorithm
Note: Even it is open source but the cryptographic and mathematical calculations restrict any individual to
create bitcoin for own.
4: Bitcoin community keep upgrading the algorithms as well as cryptographic technology involved in bitcoin on
regular basis.
5: ledger system insure the bitcoin transaction and there security. Which itself highly secure. Ledger is produced by
the software that solves mathematical problems

15. How Ledger System Work ?
1: Everyone have a valid copy of ledger
2: Suppose adam wants to add a false transaction in
the network
3: it's not gonna work here as each and every
member have the valid copy of the transactions .
For adding a false transaction in the network adam
have to convince more than 50 % peoples in the
network.
It's Impossible to do this !
Adam

16. Bitcoin transaction
34565895789387 1200
234234234234234 500
456456456456456 200
2342423524525223 5000
235253253452424 150000
Ladger
Miners
1: Suppose Rahul wants to send 500
BTC to Mahesh
2: Any one have to validate that Rahul
have enough money which he wants to
transfer.
3: Here the role of miners come into
picture.
4: Ram and Leena are the professionals
whose job is to insure that Rahul have
enough balance before he transfer
money to someone’s account.
Rahul
Mahesh
Ram
Leena

17. Bitcoin transaction
34565895789387 1200
234234234234234 500
456456456456456 200
2342423524525223 5000
235253253452424 150000
Ladger
Miners
Once a transaction takes place this
balance corresponding to account no. is
get updated. And this ledger is also get
updated itself. Here we store the
transactions of a block rather than the
transactions of a account
Rahul
Mahesh
Ram
Leena
Account No Balance
234234234234234 500
456456456456456 200
2342423524525223 5000
235253253452424 150000
Ladger

18. Bitcoin transaction
34565895789387 1200
234234234234234 500
456456456456456 200
2342423524525223 5000
235253253452424 150000
Ladger
Miners
Rahul
Mahesh
Ram
Leena
1. Ram and Leena have to
look into the ledger for
Rahul account that he have
sufficient balance to
transfer or not
2. Suppose Leena checks the
ledger and found Vivek has
given 1000 BTC to Rahul
past 2 days and Rahul
haven't spent it yet then
leena gives the
confirmation as transaction
is valid
vivek

19. Bitcoin transaction
34565895789387 1200
234234234234234 500
456456456456456 200
2342423524525223 5000
235253253452424 150000
Ladger
Miners
Rahul
Mahesh
Ram
Leena
Let's take another scenario
1. Ram found that Sanchit send 100 BTC to Rahul
and Vivek send 200 BTC to Rahul in past 3
days then still Ram have to keep checking the
ledger that Rahul have enough balance to
transfer or not
2. If Ram founds that Rahul doesn't have enough
balance in his account then he gives false
confirmation and transaction is invalid
3. Since the transaction is invalid it is not added
into the block
4. But if it is validated then it is added into the
block and once the block itself is validated then
the money transfer is successfully done and
that transaction is permanently become a part
of the block chain.
vivek
Ladger
sanchit

20. Resolve Double Spending
All the transactions goes one by one in the block. As every time a transaction is takes place,
Miners have to validate that transaction by checking the ledger, so once the transactions is
validated by the miners then it is added to the block. And once the block itself is validated
then the transfer is takes place.
That’s how the Blockchain resolves the Double spending problem

21. THANK YOU !