Here block chain technology is being explained with the help of a very common use case of this technology i.e. in banking how money transfer from one account to other in conventional way VS how money transfer in block chain

1. BLOCKCHAIN TECHNOLOGY
&
ITS APPLICATION
BY-SHUBHAM RAWAT

2. Technique originally described by group of researchers in 1991 to
timestamp digital document . However it was mostly unused
until it was adopted by Satoshi Nakamoto in 2009 to create a
digital crypto currency bitcoin .Now blockchain is the backbone
of the digital Crypto-currency bitcoin.
INTRODUCTION

3. Blockchain is a technology that enable moving assest from one individual to
other .It is a distributed ledger i.e. completely open to anyone.A ledger is just
like a database,which is just distributed in case of blockchain.A database that
maintain list of records and these records are stored in block and each block
containing details about previous block.So this create a chain of block linking
with each other.Unlike traditional methods blockchain enables peer to peer
transfer of digital assets.
Definition

4. To understand how blockchain works lets take to case in which
money transfer as a digital assest -
1. Conventional approach
2. Blockchain technology
How blockchain works ?

5.  MONEY TRANSFER IN BANK
• PAYING SOMEBODY WITH AN ACCOUNT AT THE
SAME BANK
• PAYING SOMEBODY WITH AN ACCOUNT AT THE
DIFFERENT BANK
CONVENTIONAL METHOD

6. Imagine you’re Alice and you bank with, say, barcalays. You owe
$1000 to a friend, Charlie,who also uses SBI. Paying Charlie is
easy: Alice tell the bank what he want to do, they debit the funds
from Alice’s account and credit $1000 to B’s account.It’s all done
electronically on SBI’s core banking system and it’s all rather
simple: no money enters or leaves the bank; it’s just an update to
their accounting system.They(bank) owe Alice $1000 less and
owe Charlie $1000 more.
PAYING SOMEBODY WITH AN ACCOUNT AT THE SAME BANK

7. Imagine Alice(who have a bank account in barclays bank) need
to pay Charlie, who banks with HSBC. Now we have a problem:
it’s easy for Barclays to reduce your balance by $1000 but how
do they persuade HSBC to increase Charlie’s balance by $1000?
Why would HSBC be interested in agreeing to owe Charlie more
money than they did before? They’re not a charity! The answer,
of course, is that if we want HSBC to owe Charlie a little more,
they need to owe somebody else a little less.
PAYING SOMEBODY WITH AN ACCOUNT AT THE
DIFFERENT BANK

8. Here’s what you could do:
 Barclays could reduce Alice’s balance by $1000
 Barclays could then add $1000 to the account HSBC holds with Barclays
 Barclays could then send a message to HSBC telling them that they had
increased their balance by $1000 and would like them, in turn, to increase
Charlie’s balance by $1000
 HSBC would receive the message and, safe in the knowledge they had an extra
$1000 on deposit with Barclays, could increase Charlie’s balance.
Cont….

9. In case where blockchain is used in transfer of digital assets like
money(cryptocurrency) its main purpose is to remove the third
party like bank in conventional method.By blockchain there is a
peer to peer transfer without any third party.
BLOCKCHAIN METHOD

10.  BLOCK-Block can be thought as a page in a ledger.In simple
terms, transaction in blockchain is the basic unit, which is a
transfer of asset. Group of transactions are put together in
blocks one after another, which is cryptographically hashed
and linked to the previous block. Together they form chain of
blocks known as Blockchain, which is the distributed ledger.
The blocks are ultimately stored in the ledger(DB) which is in
the blockchain node(computer), based on the number of nodes
in the blockchain network, the ledger will be present(1 in each
node).
WHAT IS BLOCK IN BLOCKCHAIN

12.  OPEN LEDGER-Anyone who is the participant in the
blockchain can seen the ledger i.e can see how much money
each one have and can see what transaction one had done so
far and is doing.
PRINCIPLE IN BLOCKCHAIN

13. 
DISTRIBUTED LEDGER- Suppose that we have four nodesA, B, C and D who want to use the blockchain to transfer money. To transfer the money from one node to another node, there will be no intermediate third party to make the transfer process, which is the idea of decentralization. Therefore, if node A wanted to transfer money to node B, it will be transferred directly. Suppose node A wants to send £5 to node B,
then a transaction will be created and verified by all other nodes in the network to include it in the ledger. In addition, if node B wants to send £10 to node D, then a transaction will be created and verified by all other nodes in the network to include it in the ledger. This will be the same scenario when node C wants to send £20 to node D. All the transactions are chained together in what is called ledger. This ledger is
distributed across all nodes in the network to make sure that all nodes have the same copy or version from the ledger, that is why it's called distributed

14. OPEN AND DISTRIBUTED
LEDGER

15. MINERS-The transaction is broadcasted by the wallet
application and is now waiting to be picked up by a miner on
the blockchain. This pool is a collection of unconfirmed
transactions on the network that are waiting to be processed.
Miners on the network (sometimes referred to as nodes, but
not quite the same!) select transactions from these pools and
form them into a ‘block’. A block is basically a collection of
transactions (at this moment in time, still unconfirmed
transactions). Every miner constructs their own block of
transactions. Multiple miners can select the same transaction
to be included in their block

16. Example: two miners, miner A and miner B. Both miner A and miner
B can decide to include transaction X into their block. Each blockchain
has its own maximum block size. On the Bitcoin blockchain, the
maximum block size is 1 MB of data. Before adding a transaction to
their block, a miner needs to check if the transaction is eligible to be
executed according to the blockchain history. If the sender’s wallet
balance has sufficient funds according to the existing blockchain
history, the transaction is considered valid and can be added to the
block. Miners will usually prioritise transactions that have a high
transaction fee set, because this provides them a higher reward.

17. By selecting transactions and adding them to their block, miners
create a block of transactions. To add this block of transactions to
the blockchain ,the block first needs a signature (also referred to as
a proof of work). This signature is created by solving a very
complex mathematical problem that is unique to each block of
transactions. Each block has a different mathematical problem, so
every miner will work on a different problem unique to the block
they built. All of these problems are equally hard to solve. In order
to solve this mathematical problem, a lot of computational power is
used (and thus a lot of electricity). This is the process referred to
as mining.

18. A hash function takes an input string of numbers and letters
(literally any string of random letters, numbers and/or symbols),
and turns it into a new 32 digit string existing out
of random letters and numbers. This 32 digit string is the hash
output. If any number or letter in the input string is changed, the
hash output will also change randomly. However, the same string
of input will always give the same string of output.
HASH FUNCTION

19.  miners repeatedly change a part of the data inside their block called the nonce
 Every time a miner changes the nonce the input string is changed, and hence it leads to a
different random output string (signature) as well. Miners repeat this process
indefinitely until they find an output string that meets the signature requirements
 Miners are spending electricity in the form of computational power in order to insert as
many random nonces as fast as possible until they find a nonce that find signature with
atleast seven zero’s
STEPS BY MINERS

20.  The miner that finds an eligible signature for its block first,
broadcasts this block and its signature to all the other miners.
 Other miners now verify the signature’s legitimacy by taking the
string of data of the broadcasted block, and hashing it to see if the
output hash indeed matches the included signature. If it is valid, the
other miners will confirm its validity and agree that the block can be
added to the blockchain (they reach consensus, aka they all agree
with each other, hence the term consensus algorithm). This is also
where the definition ‘proof of work’ comes from. The signature is
the ‘proof’ of the work performed (the computational power that
was spent). The block can now be added to the blockchain, and is
spread across all other nodes on the network
CONT…

21. THANK YOU