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How blockchain networks work

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blockchain networks high-level concepts and architecture.

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How blockchain networks work

  1. 1. How blockchain networks work @QusaiJouda Unicef Ventrues qjouda@unicef.org
  2. 2. Session 1
  3. 3. Bitcoin Money, Digital cash, peer-to-peer
  4. 4. Google docs
  5. 5. Daniel
  6. 6. Daniel docs.google.com
  7. 7. Daniel docs.google.com Daniel’s copy Google’s copy
  8. 8. Daniel BobJoe docs.google.com Daniel’s copy Google’s copy
  9. 9. Daniel BobAlice Bob’s copyAlice’s copy Daniel’s copy Google’s copy docs.google.com
  10. 10. Daniel BobAlice Bob’s copyAlice’s copy Operations OperationsOperations Daniel’s copy Google’s copy docs.google.com
  11. 11. Daniel BobAlice Bob’s copyAlice’s copy Operations OperationsOperations Daniel’s copy Google’s copy Centralized Architecture docs.google.com
  12. 12. Daniel BobAlice Bob’s copyAlice’s copy Operations Operations Operations Daniel’s copy decentralized architecture
  13. 13. Daniel BobAlice Bob’s copyAlice’s copy Operations Operations Operations Daniel’s copy Another peer’s copy OperationsOperations
  14. 14. Daniel BobAlice Bob’s copyAlice’s copy Operations Operations Operations Daniel’s copy Another peer’s copy OperationsOperations Text editorDocument Network Conflicts Engine
  15. 15. Bitcoin
  16. 16. BlockchainBlockchain Blockchain Blockchain
  17. 17. BlockchainBlockchain Transactions Transactions Transactions Blockchain Blockchain TransactionsTransactions
  18. 18. Satoshi
  19. 19. Satoshi
  20. 20. Bitcoin Network
  21. 21. WalletBlockchain Network Miner Bitcoin NetworkBitcoin Core Implementation
  22. 22. WalletBlockchain Network Miner Bitcoin NetworkBitcoin Core Implementation Mining node
  23. 23. WalletBlockchain Network Miner Bitcoin NetworkBitcoin Core Implementation Full node
  24. 24. WalletBlockchain Network Miner Bitcoin NetworkBitcoin Core Implementation Light node
  25. 25. Bitcoin Network www.blockchain.info bittrex.com www.bitbonkers.com BitPay wallet CoPay
  26. 26. Session 2
  27. 27. Digital signing
  28. 28. @QusaiJouda Public key Private key Sender Can be shared with the public. Always stays private. No need to reveal it to any party. Used to sign messages
  29. 29. @QusaiJouda Public key Private key Transaction 1BTC from Bob -> Alice Sender Receiver
  30. 30. @QusaiJouda Public key Private key Signature Signing Sender Receiver Transaction 1BTC from Bob -> Alice
  31. 31. @QusaiJouda Public key Private key Signature Signing Sender Receiver Public key Signature Transaction 1BTC from Bob -> Alice Transaction 1BTC from Bob -> Alice
  32. 32. @QusaiJouda Public key Private key Signature Signing Sender Receiver Public key Signature Verify Transaction 1BTC from Bob -> Alice Transaction 1BTC from Bob -> Alice
  33. 33. @QusaiJouda Public key Private key Sender Bitcoin Address Bitcoin private key
  34. 34. How many available addresses? 1.46 x 10^48 possible addresses (7.5 x 10^18) x (7.5 x 10^18) = 56x10^36 <<< Bitcoin addresses grains on Earth grains on Earth
  35. 35. live transaction
  36. 36. Alice Qusai Private Public
  37. 37. Alice Qusai Private Transaction 1BTC from Qusai -> Alice Public
  38. 38. Alice Qusai Private Transaction 1BTC from Qusai -> Alice Public Signature
  39. 39. Alice Qusai Private Public Signed Tx
  40. 40. Alice Qusai Signed Tx Private Public
  41. 41. Alice Qusai Private Public Signed Tx
  42. 42. Alice Qusai Private Public Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx
  43. 43. Alice Qusai Private Public Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx
  44. 44. Alice Qusai Private Public Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx Signed Tx The transaction then needs to be mined in the blockchain
  45. 45. Visual Demo anders.com/blockchain/tokens.html Hashing, blocks, blockchain, distribution of a blockchain
  46. 46. Session 3
  47. 47. Consensus mechanisms Proof-of-work, proof-of-stake
  48. 48. Proof-of-work live demo anders.com/blockchain/tokens.html Mining, coinbase transaction, economic incentive model
  49. 49. @QusaiJouda PoW • Embeds economic incentives into the blockchain network, miners need to invest CPU power in the network in order to be rewarded. • Secures the network. It costs money to participate in the network. Thus, it’s better for someone to play fairly by the consensus rules or, mostly, he/she will be losing.
  50. 50. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 TheBlockchain
  51. 51. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 Block #23 TheBlockchain Found next block Found next block
  52. 52. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 Block #23 Block #23 Block #23 TheBlockchain Found next block Found next block
  53. 53. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 Block #23 TheBlockchain Block #24 Found next block
  54. 54. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 Block #23 TheBlockchain Block #24 Found next block Block #24
  55. 55. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 TheBlockchain Block #24 keep going
  56. 56. Transactions
  57. 57. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 The Blockchain Block #24 new block
 every 10mins
  58. 58. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 The Blockchain Block #24 new block
 every 10mins Block 24 Transactions Coinbase tx: block reward goes to the miner of the block Transaction #1 Transaction #2 Transaction #3
  59. 59. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 The Blockchain Block #24 new block
 every 10mins Block 24 Transactions Coinbase tx: block reward goes to the miner of the block Transaction #1 Transaction #2 Transaction #3 Transacton #1 Inputs Outputs
  60. 60. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 The Blockchain Block #24 new block
 every 10mins Block 24 Transactions Coinbase tx: block reward goes to the miner of the block Transaction #1 Transaction #2 Transaction #3 Transacton #1 Inputs Outputs Output #3 from tx 3 block 3 Output #1 from tx 5 block 20 +
 Signature of the owner pay 1btc to Qusai’s PublicKey pay 1btc to Mike’s PublicKey
  61. 61. Block #1 Block #2 Block #3 Block #20 Block #21 Block #22 Block #23 The Blockchain Block #24 new block
 every 10mins Block 24 Transacton #1 Inputs Outputs #1 pay 1btc to Qusai’s PublicKey #2 pay 1btc to Mike’s PublicKey Output #1 - can be called Locking script OP_DUP OP_HASH160 ‘9a31ab….’ OP_EQUALVERIFY OP_CHECKSIG Bitcoin Script/ Smart contracts
  62. 62. Session 4
  63. 63. Smart contracts Self executing governance mechanism over cryptocurrencies money systems
  64. 64. Ethereum
  65. 65. Solidity The Solidity Contract-Oriented Programming Language DAOs
  66. 66. ERC20 token Can represent currency, financial assets, equity shares, etc
  67. 67. Live demo Deploying ERC20 - Geth, truffle.js

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