2. Blockchain Overview
Blockchain technology is a digital innovation that is
poised to significantly alter financial markets within
the next few years, within a cryptographic
ecosystem that has the potential to also
significantly impact trusted computing activities
and therefore cybersecurity concerns as a whole.
3. Where it all started
Blockchain technology was first introduced in a white paper entitled:
“Bitcoin: A Peer-to-Peer Electronic Cash System,” by Satoshi Nakamoto in
2008.
● No reliance on trust
● Digital signatures
● Peer-to-peer network
● Proof-of-work
● Public history of transactions
● Honest, independent nodes control majority of CPU computing power
● Nodes vote with CPU computing power
● Rules and incentives enforced through consensus mechanism
4. Three levels of blockchain
1. Storage for digital records
2. Exchanging digital assets (called tokens)
3. Executing smart contracts
- Ground rules – Terms & conditions recorded in code
- Distributed network executes contract & monitors compliance
- Outcomes are automatically validated without third party
5. Ledger
A ledger is a document that stores all the transactions made between the
people.
All the transactions are sent to everyone in the network so we say it is a
decentralized network in which there is no central authority have access to
the transactions but all the nodes in the network has the access.
And anyone in the network can create a transaction .
Now would that mean that someone say alice tries to make a face copy of
transaction that some has sent him 20 dollars , and add this to the ledger.
6. Digital Signature
This problem is solved by using a digital signature of every transaction of block that is created.
A digital signature contains a public and a private key so that every person can sign a block using
his private key and the data in it .
And all the other member can use his public key to ensure that the block is valid and is
generated by an authentic user
Sign( Message , Secret key) = Signature
Verify(Message , Signature , public key )
Now your would be wondering that what if someone guesses signature value and tampers with
it
7. Private key and Public key
There are various algorithms that define 2 keys one is named as public key and the other is
defined as a private key.
Such algorithms are :
1. RSA
2. EDSC
3. DH
Consider EDSC that creates 256 bits key, so in order to guess this signature a computer has to
generate all the permutations which is about 2^256 combinations . This is too much for even a
ton of supercomputers to crack.
8. Hash Functions or Digest
These are the functions that generate values which are related to the message used in it
Bitcoins use SHA256 .
SHA256(“Hey this is bob”) = {
e0xuwgr97q2r9qncrm928rcnq9p4cwr8cy237r9cgnwprl8c2mp9rc7ung9foc7uwegfc9unfco92
c7mitcq3p8fcnmg9c4nmfnc8yfc2emfhc28rny498fcqw0rncnfc92qprncf018y4m2 }
SHA256(“Hey this is boc”) = {
zefiaiufgwnfioqweucmgqpwocfugqmwpofihwxpfluqwfnhw98ecr297tyn9724tcm1402pctnymp
048tym49ptnym0tp48tym08tymc084ytmc28yte0924ymct0284ymc2ycmtc8m40 }
Even if i slightly change the message the whole hash changes . so there is no way of getting the
message back from the hash.
9.
10. Proof of work
To get the authenticity of every block you need to solve or get the mathematical hash of the
whole block
Certainly every block contains the hash of the previous block . So in order to confirm the
current block one should have already verified the previous blocks.
These require certain computational power. For giving this computational power and verifying
the ledger the user is awarded with some bitcoins that are generated from thin air .
This also prevents anyone to tamper with the data , if anyone does tamper with one block then
he has to calculate all the proof of work for the the respective blocks in the chain. This is
impossible for even tons of supercomputers .
Moreover the chain will become invalid
11. Consensus
The one underlying factor that cannot make alice fraud a transaction or create a fraud chain is
that only the majority chain is considered to be valid .
To fraud a chain you have to create 51 percent of the majority which is like tackling 50 percent
of the computers world wide .
