This presentation Blockchain will help you understand what is Blockchain, the Bitcoin story, features of Blockchain which include public distributed ledger, hash encryption, proof of work, mining and at the end you will also see a use case on how banks are using Blockchain in validating user identities. A blockchain is a digitized, decentralized, public ledger of Bitcoin transactions. The technology verifies transactions and creates a “chain” of blocks of data including a timestamp that is linked to other blocks so that a block can’t be changed. In simple words, Blockchain is a list of records (blocks) which stores data publicly and in chronological order and mining is the process of adding a block to the Blockchain. Now, let us get started and understand what is Blockchain and its features. Below topics are explained in this Blockchain presentation: 1. What is Blockchain? 2. The Bitcoin story 3. Features of Blockchain - Public distributed ledger - Hash encryption - Proof of work - Mining 4. Use case: Blockchain and banks Simplilearn’s Blockchain Certification Training has been designed for developers who want to decipher the global craze surrounding Blockchain, Bitcoin and cryptocurrencies. You’ll learn the core structure and technical mechanisms of Bitcoin, Ethereum, Hyperledger and Multichain Blockchain platforms, use the latest tools to build Blockchain applications, set up your own private Blockchain, deploy smart contracts on Ethereum and gain practical experience with real-world projects. Why learn Blockchain? Blockchain technology is the brainchild of Satoshi Nakamoto, which enables digital information to be distributed. A network of computing nodes makes up the Blockchain. Durability, robustness, success rate, transparency, incorruptibility are some of the enticing characteristics of Blockchain. By design, Blockchain is a decentralized technology which is used by a global network of the computer to manage Bitcoin transactions easily. Many new business applications will result in the usage of Blockchain such as Crowdfunding, smart contracts, supply chain auditing, etc. The Blockchain Certification Training Course is recommended for: 1. Developers 2. Technologists interested in learning Ethereum, Hyperledger and Blockchain 3. Technology architects wanting to expand their skills to Blockchain technology 4. Professionals curious to learn how Blockchain technology can change the way we do business 5. Entrepreneurs with technology background interested in realizing their business ideas on the Blockchain Learn more at: https://www.simplilearn.com/

1. In a city not so far away…

2. In a city not so far away…

3. Somebody was up to something bad…

4. Somebody was up to something bad…
I hate ABC Bank! I’m going
to steal all their money!

5. High international
transfer costs
Here’s why I hate them even more!

6. High international
transfer costs
A lot of documentation setting
up an account
Here’s why I hate them even more!

7. High international
transfer costs
A lot of documentation setting
up an account
Not always accessible
(bank holidays)
Here’s why I hate them even more!

8. Banks are a central
point of failure!

18. All of this with a
click of a button!

20. And although the hacker was caught…

21. And although the hacker was caught…

22. THE incident caught the bank manager’s attention
I want to make sure this
doesn’t happen again!

23. That’s what I’m here to
make sure!

24. So, have you thought about
a set-up using Blockchain?

25. Blockchain? What’s
that?

26. There’s a lot you need to learn before you can understand Blockchain completely.
Here’s what we’ll be going through today:
What is Blockchain?
The Bitcoin story
Public distributed ledger
Hash encryption
Proof of work
Mining
Use Case: Blockchains and Banks
Features of Blockchain:

27. What is a Blockchain?
A Blockchain is a list of records (blocks) which stores data publicly and in chronological
order
Secured using
cryptography

28. What is a Blockchain?
A Blockchain is a list of records (blocks) which stores data publicly and in chronological
order
Secured using
cryptography
It ensures that the privacy of the
user is maintained and data cannot
be altered

29. What is a Blockchain?
A Blockchain is a list of records (blocks) which stores data publicly and in chronological
order
Secured using
cryptography
Not controlled by a
central authority

30. What is a Blockchain?
A Blockchain is a list of records (blocks) which stores data publicly and in chronological
order
Secured using
cryptography
Not controlled by a
central authority
Unlike modern financial
institutions, nobody controls the
data within a Blockchain

31. What is a Blockchain?
A Blockchain is a list of records (blocks) which stores data publicly and in chronological
order
Secured using
cryptography
Not controlled by a
central authority
Access to anyone on
the network

32. What is a Blockchain?
A Blockchain is a list of records (blocks) which stores data publicly and in chronological
order
Secured using
cryptography
Not controlled by a
central authority
Access to anyone on
the network
As long as you have access to the
network, you have access to the
data within the Blockchain

33. What is a Blockchain?
A Blockchain is a list of records (blocks) which stores data publicly and in chronological
order
Secured using
cryptography
Not controlled by a
central authority
Access to anyone on
the network
Everyone has copies
of the data

34. What is a Blockchain?
A Blockchain is a list of records (blocks) which stores data publicly and in chronological
order
Secured using
cryptography
Not controlled by a
central authority
Access to anyone on
the network
Everyone has copies
of the data
Everyone in the network has a
copy of the Blockchain, which is
used for ensuring that the data
remains untampered

35. Oh! Is this the same
technology that Bitcoin
works on?

36. Yes! Bitcoin couldn’t have
been possible without
Blockchain

37. The Bitcoin Story
Bitcoin was introduced in 2009,
by someone or a group of people
known as Satoshi Nakamoto

38. The Bitcoin Story
Bitcoin was introduced in 2009,
by someone or a group of people
known as Satoshi Nakamoto
It aimed to solve the problems
faced by fiat currencies, with the
help of Blockchain technology

39. The Bitcoin Story
Bitcoin was introduced in 2009,
by someone or a group of people
known as Satoshi Nakamoto
It aimed to solve the problems
faced by fiat currencies, with the
help of Blockchain technology
Now, in 2018, there’s more than
1600 cryptocurrencies that follow
the concepts of Bitcoin and
Blockchain

40. The Bitcoin Story
Now, let me explain how a Bitcoin
transaction works

41. The Bitcoin Story
Sender Receiver
The sender transmits the
transaction details worldwide

42. The Bitcoin Story
Sender Receiver
The sender transmits the
transaction details worldwide
Verification to authenticate users, by
miners around the world

43. The Bitcoin Story
Sender Receiver
The sender transmits the
transaction details worldwide
Once authenticated, the
transaction is added to a block
and made part of the Blockchain
Verification to authenticate users, by
miners around the world

44. The Bitcoin Story
Sender Receiver
The sender transmits the
transaction details worldwide
Once authenticated, the
transaction is added to a block
and made part of the Blockchain
Money is deducted from the
sender’s wallet
Money is added to the
receiver’s wallet
Verification to authenticate users, by
miners around the world

45. The Bitcoin Story
Sender Receiver
The sender transmits the
transaction details worldwide
Once authenticated, the
transaction is added to a block
and made part of the Blockchain
Money is added to the
receiver’s wallet
Everyone in the network updates their copy of the
Blockchain
Verification to authenticate users, by
miners around the world
Money is deducted from the
sender’s wallet

46. So, what makes
Blockchain special?

47. Blockchain has 4 major features
The Features of Blockchain
Public
distributed
ledger

48. Blockchain has 4 major features
The Features of Blockchain
Public
distributed
ledger
Hash
encryption

49. Blockchain has 4 major features
The Features of Blockchain
Public
distributed
ledger
Hash
encryption
Proof of work

50. Blockchain has 4 major features
The Features of Blockchain
Public
distributed
ledger
Hash
encryption
Proof of work
Mining

51. Blockchain has 4 major features
The Features of Blockchain
Public
distributed
ledger
Hash
encryption
Proof of work
Mining

52. Public Distributed Ledger
Imagine 4 friends sharing
a particular document
amongst each other

53. Public Distributed Ledger
If there was only a single
copy of that document, and
one of them altered the
data, it may go unnoticed

54. Public Distributed Ledger
However, the outcome
would be different if each
one of them had a copy of
the data

55. Public Distributed Ledger
However, the outcome
would be different, if each
one of them had a copy of
the data

56. Public Distributed Ledger
Even if one of them
changed the data, the
others would find that the
data doesn’t match with
their own

57. Public Distributed Ledger
Blockchain works in a
similar manner!

58. Public Distributed Ledger
The data within a
Blockchain is accessible to
everyone

59. Public Distributed Ledger
The data within a
Blockchain is accessible to
everyone
With this, as long as you are part of the
network, you could access the entire history of
transactions that have taken place since the
Blockchain was created

60. Public Distributed Ledger
The data within a
Blockchain is accessible to
everyone
Any additions to
Blockchain have to be
approved by the users

61. Public Distributed Ledger
The data within a
Blockchain is accessible to
everyone
Any additions to
Blockchain have to be
approved by the users
A majority of the members within the network have to
approve any additions to the Blockchain. This is the
‘public’ part of the ledger. This is important because…

62. Public Distributed Ledger
The data within a
Blockchain is accessible to
everyone
Any additions to
Blockchain have to be
approved by the users
Any additions made to the
Blockchain are permanent

63. Public Distributed Ledger
The data within a
Blockchain is accessible to
everyone
Any additions to
Blockchain have to be
approved by the users
Any additions made to the
Blockchain are permanent
This means that each and every detail is recorded and
any alterations can be detected by verifying it against
everyone’s personal version of the Blockchain

64. Public Distributed Ledger
The data within a
Blockchain is accessible to
everyone
Any additions to
Blockchain have to be
approved by the users
Any additions made to the
Blockchain are permanent
No central authority to
control how it works

65. Public Distributed Ledger
The data within a
Blockchain is accessible to
everyone
Any additions to
Blockchain have to be
approved by the users
Any additions made to the
Blockchain are permanent
No central authority to
control how it works
This is where being decentralized helps. Everyone has a copy
of the Blockchain. Which means there’s no central point of
failure. Even if things go wrong, the data can be recovered

66. But what about security?
How is privacy maintained
if everything is so public?

67. Hash encryption takes
care of that!
Hash Encryption

68. Blockchain has 4 major features
Hash Encryption
Public
distributed
ledger
Hash
encryption
Proof of work
Mining

69. But to understand hash
encryption, you need to
know the contents of a
block
Hash Encryption

70. A block is a container that
holds transaction details
Hash Encryption

71. A block has two parts:
Hash Encryption
Header
Transaction Details

72. Header
The header contains the
metadata about the block.
Hash Encryption
Block ver. No
Hash(Prev. Block)
Timestamp
Nonce
Target

73. Transaction Details
Hash Encryption
The transaction details contain:
Sender and receiver
information
Amount to be
transferred
It is represented in the form of a 256 bit
hash value in the header called Merkle
root or Hash root

74. The transaction details of a block are contained in the header in a hex value known as Merkle
root
Hash Encryption
The Merkle root can be calculated in this way:
f98534ab…
aca987c2… a4b5213c...
List of transactions Each transaction is
passed through a
hashing algorithm
Hashed outputs
are paired
Passed through
hashing algorithm
Until there’s only one
value remaining

75. Let me tell you how a hash
function works
Hash Encryption

76. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size

77. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
1) These are deterministic
2) Small changes in the data
can drastically change the
output
3) Can be computed easily
4) Are one way functions

78. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
2) Small changes in the data
can drastically change the
output
3) Can be computed easily
4) Are one way functions
1) These are deterministic

79. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
2) Small changes in the data
can drastically change the
output
3) Can be computed easily
4) Are one way functions
1) These are deterministic
The same input produces
the same output

80. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
3) Can be computed easily
4) Are one way functions
1) These are deterministic
2) Small changes in the data
can drastically change the
output

81. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
2) Small changes in the data
can drastically change the
output
3) Can be computed easily
4) Are one way functions
1) These are deterministic
Any change to the input
produces an output that’s
drastically different from
previously obtained
outputs

82. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
2) Small changes in the data
can drastically change the
output
4) Are one way functions
1) These are deterministic
3) Can be computed easily

83. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
2) Small changes in the data
can drastically change the
output
3) Can be computed easily
4) Are one way functions
1) These are deterministic
The output values can be
obtained without whole lot
of calculation

84. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
2) Small changes in the data
can drastically change the
output
3) Can be computed easily
1) These are deterministic
4) Are one way functions

85. Hash Encryption
Blockchain utilizes a hash function to perform cryptography
Data from a
dataset of
random size
Hashing function Encrypted output of
fixed size
Some unique properties of
hashing functions are:
2) Small changes in the data
can drastically change the
output
3) Can be computed easily
4) Are one way functions
1) These are deterministic
You won’t be able to
determine the input based
on the output values

86. Let’s go back to the block
we were talking about
earlier…
Hash Encryption

87. Transaction
Details
Nonce
Hash Encryption
Target Hash value
The previous hash is the resultant hash
value of the previous block in the
Blockchain
Previous Hash

88. Nonce
Previous Hash
Hash Encryption
Target Hash value
Transaction
Details
These are used to provide details about the
sender, receiver and how much money was
sent between them

89. Transaction
Details
Previous Hash
Target Hash value
Hash Encryption
Nonce
The nonce is a value that is varied
to create a unique hash address for
the block

90. Transaction
Details
Nonce
Previous Hash
Hash Encryption
Block ver. No
Hash(Prev. Block)
Timestamp
Nonce
Hash value
Hashing
Algorithm
(SHA256)
Header
Target Hash value

91. Transaction
Details
Nonce
Previous Hash
This value is a 256 bit value
that is used to uniquely
identify that particular block
Hash Encryption
Target Hash value

92. Hash Encryption
SHA256 ensures that alterations to data can be easily detected
Transaction
Details
Nonce
Previous Hash
Transaction
Details
Nonce
Previous Hash
For example, consider these two blocks in the Blockchain…
Target Hash value Target Hash value

93. Hash Encryption
If someone alters the transaction details in the first block…
Transaction
Details
Nonce
Previous Hash
Transaction
Details
Nonce
Previous Hash
Target Hash value Target Hash value

94. Hash Encryption
The corresponding hash value of the block would change too
Transaction
Details
Nonce
Previous Hash
Transaction
Details
Nonce
Previous Hash
Target Hash value Target Hash value

95. Hash Encryption
The values of ‘Hash value’ of the first block and ‘Previous Hash’ of the other block will not match
Transaction
Details
Nonce
Previous Hash
Transaction
Details
Nonce
Previous Hash
Target Hash value Target Hash value

96. Hash Encryption
Transaction
Details
Nonce
Previous Hash
Transaction
Details
Nonce
Previous Hash
Target Hash value Target Hash value
The values of ‘Hash value’ of the first block and ‘Previous Hash’ of the other block will not match
This raises an alarm among the users informing
them that data alteration has taken place. The
users will then be able to flag the block

97. Hash Encryption
Transaction
Details
Nonce
Previous Hash
Transaction
Details
Nonce
Previous Hash
Target Hash value Target Hash value
The values of ‘Hash value’ of the first block and ‘Previous Hash’ of the other block will not match
So, the alteration can be easily
identified and rectified immediately

98. Hash Encryption
To ensure security, Blockchains also include digital signatures
These ensure:
That the message came
from the right person

99. Hash Encryption
To ensure security, Blockchains also include digital signatures
These ensure:
That the message came
from the right person
That the message wasn’t
tampered with

100. Hash Encryption
To ensure security, Blockchains also include digital signatures
Users are provided their own private and public keys
Private key
Used by user to control his/ her
account. This is kept as a secret
by the user

101. Hash Encryption
To ensure security, Blockchains also include digital signatures
Users are provided their own private and public keys
Private key
Used by user to control his/ her
account. This is kept as a secret
by the user
Used to identify the user in the
network. This is shared by the
user
Public key

102. Hash Encryption
The steps involved in creating and authenticating a digital signature are:
The sender’s side:
a4b5213c...
The message to be transmitted is passed
through a hashing algorithm (SHA256)
Private key

103. Hash Encryption
The steps involved in creating and authenticating a digital signature are:
a4b5213c...
The output is passed through a signature
algorithm along with the user’s private key to
create a digital signature
The sender’s side:
Private key

104. Hash Encryption
The steps involved in creating and authenticating a digital signature are:
During transmission:
The user’s message, their digital fingerprint and public key are
transmitted across the network
Public key

105. Hash Encryption
The steps involved in creating and authenticating a digital signature are:
At the receiver’s end:
a4b5213c...
a4b5213c... }First, the message is passed through a hashing algorithm. At the same time, the sender’s public key and
his/her digital signature are passed through a verification algorithm. The output hashes are then
compared to authenticate the user

106. What about the people
who verify these
transactions? And how do
they actually do it?

107. Remember that one field in
the block header called the
nonce? That becomes very
important here

108. Blockchain has 4 major features
Proof of Work
Public
distributed
ledger
Hash
encryption
Proof of work
Mining

109. Proof of Work
Proof of work involves people around the world (called miners) competing to be the
first one to add a block to the Blockchain

110. Proof of Work
Proof of work involves people around the world (called miners) competing to be the
first one to add a block to the Blockchain
Competing miners around
the world

111. Proof of Work
Proof of work involves people around the world (called miners) competing to be the
first one to add a block to the Blockchain
Competing miners around
the world
Try to solve a mathematical
puzzle

112. Proof of Work
Proof of work involves people around the world (called miners) competing to be the
first one to add a block to the Blockchain
Competing miners around
the world
Try to solve a mathematical
puzzle
To be the first one to be
rewarded and to add a
block to the Blockchain

113. Proof of Work
Proof of work involves people around the world (called miners) competing to be the
first one to add a block to the Blockchain
Previous Hash
Transaction
Details
Nonce
They need to find a hash
value that satisfies certain
predefined conditions
Target Hash value

114. Proof of Work
This target hash value is
decided months in advance

115. Proof of Work
The miners variate the nonce value to find an output that falls within the target requirement
Hash value obtained
Target value
Target value
The hash value is accepted
The hash value is rejected
If greater than
If lesser than

116. Proof of Work
A miner transmits across the
world that he has found a nonce
that satisfies the target
requirement

117. Proof of Work
And thanks to the hashing
algorithms used, this claim can
be easily verified by others

118. That’s a whole lot of work!
What’s a miner’s payoff here?

119. For all his/ her hard work, they
get paid in Bitcoins! Sometimes
they get other forms of
renumeration as well!

120. Blockchain has 4 major features
Mining
Public
distributed
ledger
Hash
encryption
Proof of work
Mining

121. Mining
Mining is the process of adding a block to the Blockchain. This miner is the first person who found a
nonce value that fell within the target requirement
For doing this, the miner is
rewarded

122. Mining
Mining is the process of adding a block to the Blockchain. This miner is the first person who found a
nonce value that fell within the target requirement
For doing this, the miner is
rewarded
Currently, a miner is paid
12.5 Bitcoins for adding a
block

123. Mining
Mining is the process of adding a block to the Blockchain. This miner is the first person who found a
nonce value that fell within the target requirement
For doing this, the miner is
rewarded
Currently, a miner is paid
12.5 Bitcoins for adding a
block
The reward a miner gets
reduces every 4 years

124. Mining
Mining is the process of adding a block to the Blockchain. This miner is the first person who found a
nonce value that fell within the target requirement
For doing this, the miner is
rewarded
Currently, a miner is paid
12.5 Bitcoins for adding a
block
The reward a miner gets
reduces every 4 years
The miners also get the sum of all the transaction
fees’ for that particular block

125. Mining
Mining is the process of adding a block to the Blockchain. This miner is the first person who found a
nonce value that fell within the target requirement
For doing this, the miner is
rewarded
Currently, a miner is paid
12.5 Bitcoins for adding a
block
The reward a miner gets
reduces every 4 years
The 12.5 Bitcoin reward is justified, as mining is
a very expensive process. It has a heavy toll on
electricity, computing power and other resources

126. Use Case: Blockchains and Banks
So we have been incorporating a program
where banks can validate user identities…as
of now, a user needs to do the process over
and over again in each bank. Is there a way
we can ease the process with blockchain?
Use Case:
Blockchains and
Banks

127. Use Case: Blockchains and Banks
So we have been incorporating a
program where banks can
validate user identities…

128. Use Case: Blockchains and Banks
…as of now, a user needs to
do the process over and over
again in each bank. Is there a
way we can ease the process
with blockchain?

129. Use Case: Blockchains and Banks
Sure we can! We’ll be using
Truffle, Ethereum, Ganache and
Smart Contracts to make it work

130. That’s a lot of information! I’m a
Blockchain expert now, right?

131. Not quite yet! There’s a lot more
you need to learn, we’ll get to
that later.
Now let’s recap…

132. Here’s what you’ve learnt…
What is Blockchain? The Bitcoin Story Public Distributed Ledger
Hash encryption Proof of work

133. Here’s what you’ve learnt…
Mining Use case: Blockchains and Banks Use case: Blockchains and Banks