Basics of Block Chain

Lecture Series by
Tharindu Weerasinghe
For the 3rd Year Undergrads of APIIT – Sri Lanka
www.tharinduweerasinghe.com
Basic Concepts
Of
Block Chain

Outline
• Basic information on Block Chain
• Sample Code in Python
• Output of the above code sample
• Mining
• About Cryptocurrencies!
• Other Business areas that user Block Chain apart from
Cryptocurrencies!

The Concept
A very smart set of secured digital records or journal that contains some “DATA”,
their integrity (or validity) information!
The name Blockchain comes as each record (block) has set of data attached to it!
This mechanism is very handsome not only in Cryptocurrency but also in various
other industries!
The very first block in the chain developed/created by an organization or
whoever the person, is called the “Genesis Block”. Literally it is impossible for you
and me to own a genesis block(unless we plan to create a new cryptocurrency)

• Ref: Blockchain explained and its application to payments | Paiementor
Basic information on Block Chain

Ref: http://cs.unibo.it/~danilo.montesi/CBD/Articoli/2017Blockchain.pdf

import hashlib
import json
from time import time
class Blockchain(object):
def __init__(self):
self.chain = []
self.pending_transactions = []
self.new_block(previous_hash="The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.", proof=100)
# Create a new block listing [key/value pairs) of block information in a JSON object.
# Reset the list of pending transactions & append the newest block to the chain.
def new_block(self, proof, previous_hash=None):
block = {
'index': len(self.chain) + 1,
'timestamp': time(),
'transactions': self.pending_transactions,
'proof': proof,
'previous_hash': previous_hash or self.hash(self.chain[-1]),
}
self.pending_transactions = []
self.chain.append(block)
return block
#Search the blockchain for the most recent block.
@property
def last_block(self):
return self.chain[-1]
# Add a transaction with relevant info to the 'blockpool' - list of pending tx's.
def new_transaction(self, sender, recipient, amount):
transaction = {
'sender': sender,
'recipient': recipient,
'amount': amount
}
self.pending_transactions.append(transaction)
return self.last_block['index'] + 1
# receive one block. Turn it into a string, turn that into Unicode (for hashing). Hash with SHA256 encryption, then translate the Unicode into a hexidecimal string.
def hash(self, block):
string_object = json.dumps(block, sort_keys=True)
block_string = string_object.encode()
raw_hash = hashlib.sha256(block_string)
hex_hash = raw_hash.hexdigest()
return hex_hash
blockchain = Blockchain()
t1 = blockchain.new_transaction("Satoshi", "Mike", '5 BTC')
t2 = blockchain.new_transaction("Mike", "Satoshi", '1 BTC')
t3 = blockchain.new_transaction("Satoshi", "Hal Finney", '5 BTC')
blockchain.new_block(12345)
t4 = blockchain.new_transaction("Mike", "Alice", '1 BTC')
t5 = blockchain.new_transaction("Alice", "Bob", '0.5 BTC')
t6 = blockchain.new_transaction("Bob", "Mike", '0.5 BTC')
blockchain.new_block(6789)
print("Genesis block: n", blockchain.chain)
Sample Code in Python to implement a simple
Blockchain and print a Genesis Block
Kudos:
https://github.com/mchrupcala/blockchain-walkthrough

The output of the above code
Kudos:
https://github.com/mchrupcala/blockchain-walkthrough

• The block header is a summary of the contents of the block itself. It
contains the following six components:
• The version of software the Bitcoin client is running
• The timestamp of the block
• The root of its containing transactions' Merkle tree
• The hash of the block before it
• A nonce [number only used once]
• The target

• It is the process of creating new bitcoin by solving puzzles. It
comprises of complex computing systems equipped with specialized
chips competing to solve mathematical puzzles. The first bitcoin
miner (as these systems are called) to solve the puzzle is rewarded
with bitcoin. The mining process also confirms transactions on the
cryptocurrency's network and makes them trustworthy.
• For a little time after Bitcoin was launched, it was mined on desktop
computers with regular central processing units (CPUs). But the
process was extremely slow. Now the cryptocurrency is generated
using large mining pools spread across many geo locations.
Mining related to Blockchain

• At a very high level, Bitcoin mining is a system in which all Bitcoin
transactions are sent to Bitcoin miners.
• Miners select one megabyte worth of transactions, bundle them as an
input into the SHA-256 function, and attempt to find a specific
output the network accepts.
• The first miner to find this output and publish the block to the
network receives a reward in the form of transaction fees and the
creation of new Bitcoin.
• Reference: https://www.freecodecamp.org/news/how-bitcoin-mining-really-
works-38563ec38c87/
Mining related to Blockchain (Contd.)

Kudos: https://vulcanpost.com/736388/what-is-bitcoin/
Cryptocurrency : Bitcoin

Kudos: https://en.bitcoinwiki.org/wiki/Bitcoin_transaction

• Ether (ETH)
• Solana (SOL)
• Terra (LUNA)
• Binance Coin (BNB)
• Aave (AAVE)
• Uniswap (UNI)
• Reference:
https://money.usnews.com/investing/cryptocurrency/slideshows/whats-
the-best-cryptocurrency-to-buy
Cryptocurrency : Others

Other Business areas that user Block Chain apart
from Cryptocurrencies!
• SMART CONTRACTS
• Smart contracts are programs stored on a particular blockchain that run when predetermined conditions are met.
• They’re operated by following simple “if/when…then…” statements that are written into code on a blockchain. A network of
computers executes the actions when predetermined conditions have been met and verified. These actions could include
releasing funds to the appropriate parties, registering a vehicle, sending notifications, or issuing a ticket.
• The relevant blockchain is updated when the transaction is completed. That means the transaction cannot be changed,
furthermore, only parties who have been granted permission can see the results.
• They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the
outcome, without any mediator involvement or time loss.
Reference: https://www.ibm.com/topics/smart-contracts

• In Supply Chains
• In Agriculture
• In Food Safety
• In Health Sector
• In Electricity/Power Generation and Distribution
• You need to read on your very own!
Ref: https://www.ibm.com/topics/blockchain-for-business
Blockchain for Business beyond Crypto

References (Due kudos):
• Python coding related:
• https://medium.com/coinmonks/python-tutorial-build-a-blockchain-713c706f6531
• https://www.geeksforgeeks.org/create-simple-blockchain-using-python/
• Mining related:
• https://www.investopedia.com/tech/how-does-bitcoin-mining-work/
• https://www.freecodecamp.org/news/how-bitcoin-mining-really-works-38563ec38c87/
• Bitcoin related:
• https://medium.com/coinmonks/bitcoin-mempool-simply-explained-7f76be235e85
• https://en.bitcoinwiki.org/wiki/Bitcoin_transaction
• https://vulcanpost.com/736388/what-is-bitcoin/
• https://www.investopedia.com/terms/m/merkle-tree.asp
• Other business’s related:
• https://www.ibm.com/topics/blockchain-for-business
• Watch:
• How does a blockchain work - Simply Explained – YouTube
• Creating a blockchain with Javascript (Blockchain, part 1) - YouTube

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