Briefly explain about Blockchain Technology

1. Blockchain Technology
Md. Yeasin Tanin
Credit- various source on the internet

2. After exchange practices, money becomes very popular
and widely accepted. Day by day money is the most
precious thing in the world. Money is a medium of
exchange. As a result of globalization digital currency is
become the most popular. Bitcoin is one of them.
History of Currency

3. Example of exchange practices

4. In 2008 an anonymous man who was invented "Bitcoin"
or “Blockchain”. He is known as “Satoshi Nakamoto”.
About 14 years ago “Nick Szabo” an American computer
scientist who invented a virtual currency called
"Bitgold". In fact, “Nick Szabo” is often rumored to be
the real “Satoshi Nakamoto”. But it has no proved.
Never believe a lie

5. Brief story
Now a day’s technology has improved vastly. Money
exchange, private sharing have been a phenomenon in
the online sector. Thieves are increased vastly in this
platform too. For the betterment of any kind of
transaction “blockchain” brings a lot of assurance and
stability in online platforms. For centuries, businesses
and in some cases entire industries have been built on
the simple principle of trust between multiple parties.
However, this business of trust is about to be disrupted
and transformed with the advent of “blockchain”
technology.

6. Data security
Naw a day's data is the most valuable thing. But the
major issue is security. The blockchain can give us data
security, unhackable data, and also reduce
double-spending data.

7. What is blockchain?
❖ The blockchain is a distributed record of transactions.
❖ It is constantly growing as new sets of recordings are added to it.
❖ Each block contains a timestamp and a link to the previous block,
so they actually form a chain.

8. Formal Definition of a Blockchain
❖ A blockchain is "an open, distributed ledger that can record
transactions between two parties efficiently and in a verifiable
and permanent way"
lansiti, Marco,Lakhani,karim R.(January 2017)."The Truth About Blockchain".Harvard Business
Review.Harvard University.

9. What is distributed system ?
❖ It is based on peer to peer network.
❖ It is a subset of a decentralized system.
❖ It is processing shared across multiple nodes.
❖ The decisions may still be centralized.

10. Examples of distributed systems
❖ Banking systems
❖ Communication-email
❖ Distributed information system
www
federated database
❖ Manufacturing and process control
❖ Inventory systems
❖ General-purpose(university, office automation)

11. Blockchain/distributed record
❖ A chain of blocks, where each block:
• Consists of a header, hash of the previous block, and transactions.
❖ Once a block is part of
the chain
● Transactions inside it are
practically irreversible after a
certain period of time

12. What is a peer to peer network?
❖ The peers are computer or node which are connected to each other
via the internet.
❖ Files can be shared directly between systems on the network without
the need for a central server.

13. Example of peer to peer network
❖ eBay
❖ KaZaA
❖ Skype is a good example of peer to peer network

14. Non-peer to peer network example
❖ This is called a server-client network.
● Example – Google, Microsoft

15. Blockchain-One Truth
Everyone knows the same
In a village called “X” in Bangladesh, there are about 200
people. Assume there is no “Matabbar” in “X”. Everyone knows
which house piece of land, cow, goat, duck, chicken belong to
whom. If someone sells something to someone everyone
knows it. They all depend on synchronous common knowledge
of the truth.

16. What is a decentralized system?
❖ Decentralization is the process of distributing and
dispersing power away from a central authority.
❖ The decentralized system has no core authority to dictate
the truth to other participants in the network.
❖ Every participant in the network can access the history of
transactions or confirm new transitions.

17. Example of Decentralized System
❖ Systems of Control involve authority
● In decentralized systems,
individuals have full
authority.
● In centralized systems, they
have given up some authority to
other groups of individuals in
exchange for gains in safety
and efficiency.

18. What is the block ?
❖ Blocks are files where data pertaining to the blockchain
network are permanently recorded. A block records some or
all of the most recent blockchain transactions that have not
yet entered any prior blocks.
❖ It is like a page of the record book.
❖ The first block is called the
genesis block.

19. Example of Block
❖ In the book of the page
where we keeping a
record same thing as the
block.

20. What is the genesis block?
❖ It is the first block in any blockchain.
❖ It has no previous hash value.
❖ It was created by ‘Satoshi Nakamoto’.

21. Example of Genesis block
❖ On the train where
each compartment has
a number, same as the
block has hash number.
❖ But the train engine
has no number same
as the genesis

22. Orphan Block
❖ Are blocks that are not accepted into the blockchain
network due to a time lag in the acceptance of the
block in question into the blockchain.
❖ It is valid and verified blocks but have been rejected
by the chain.

23. Orphaned transactions
It is returned to the memory pool, they are never "lost". If the
TXV did cease to exist from the mem pools, it would just be
as if it has never been sent, so again they wouldn't be lost.

24. Property of blocks
1.Time stamp
2.Version
3.Merkle Root
4.Difficulty Target
5.Nonce
6.Hash
7. Previous Hash

25. What is timestamp?
❖ In networking it is the current time of an event that is
recorded by a node.
❖ In blockchain it is show that the blocks
are connected in a chronological order.
❖ It marks the time for each
transaction on the blockchain.

26. What is merkel root?
❖ It is the hash of all the hashes of all the transactions that
are part of a block in a blockchain network.
❖ It is like a binary tree.

27. What is nonce?
❖ It is a summarization for number only used once which is a
number added to a hashed.
❖ The purpose of a nonce is to make each request unique so that an
attacker can't replay a request in a different context.
❖ The server generates the nonce and sends it to the client. Nonce,
defined by the client can also be used to improve security.
❖ To ensure nonce uniqueness for an authentication session, nonce is
often generated based on system time, from a sufficiently accurate
timestamp source.

28. What is hash?
❖ It is a function that converts an input of data into an encrypted
output of a fixed length.
❖ The fixed length is 64 hexadecimal characters.
❖ Every encrypted output is unique.
● Example Human Fingerprint

29. What is previous hash?
❖ It is a previous block’s of current hash.
❖ Genesis block has no previous hash. It is always ‘zero’.

30. Blockchain properties

31. Distributed Data Sharing
❖ Blockchain data is distributed across multiple nodes.
❖ The protocol ensures that data inserted in a particular
node gets synced across all nodes in a timely fashion.

32. Example of Distributed Data Sharing
❖ In the blockchain
network, each of the
nodes has equal data.
❖ The data is storing in
node memory.
❖ The nodes are always
sharing the data.

33. Immutability
❖ Data immutability in blockchain emerges from the fact
that to change data inserted in a previous block, an
attacker must possess either.
❖ Significant computational power, in case of a public
blockchain.
❖ Compromise the majority of nodes in any type of
blockchain.

34. Example of Immutability
❖ Therefore each of the block
data is converted to the hash
and the hash is connected next
block.
❖ If any block hash code will
change the chain will be
destroyed.

35. Data Persistence
❖ Being a distributed system implies that data in a
blockchain will persist as long as there are enough
nodes to execute the protocol in a secure way.

36. Example of Data Persistence
❖ Data will be stored in the
block.
❖ On the other hand data will
be converted in the hash
code.
❖ The hash code will be
generated the blockchain.

37. Autonomous Code Execution
❖ A smart-contract will facilitate autonomous code execution
without a single point of failure.

38. Example of Autonomous Code Execution

39. Accountability & Transparency
❖ All authorised entities can verify each single
transaction which can ensure accountability and
transparency.

40. Example of Accountability & Transparency
❖ The level of transparency that
blockchain affords adds a degree
of accountability that has not
existed to date.
❖ The ability of the technology to
prove in a cryptographic way to
third parties that data is
immutable, it has the potential to
make payments more transparent
and systems more accountable.

41. Data Provenance
❖ Data in a blockchain can only be stored with a signed
transaction which ensures data provenance.

42. Example of Data Provenance
❖ Data provenance solutions
together with blockchain
technology are one way to
make data more
trustworthy.
❖ In short, a data provenance
system tracks who has
created, updated, deleted,
and in some cases read
particular data points

43. Types of blockchain
1.Public Blockchain
-> Open for all, Anyone can be part of it
2.Private Blockchain
->Specially for single company
3.Federated Blockchain
->Group of people or company

44. What is public blockchain?
❖ It is a permissionless blockchain.
❖ It is decentralised no one has control over the network.
❖ The data can't be changed once validated on the blockchain.
❖ The most common examples of public blockchain are
Bitcoin and Ethereum

45. What is private blockchain?
❖ It is a permissioned blockchain.
❖ It is an invitation only network governed by a single entity.
❖ It allow organisations to employ distributed ledger technology
without making data public.
❖ It works based on access controls which restrict the people who
can participate in the network.
❖ There are one or more entities which control the network and this
leads to reliance on third-parties to transact.

46. What is federated blockchain?
❖ It is a private permissioned.
❖ This sort of blockchain is suitable for use between
companies that often have dealings with each other.

47. Item Public Private Federated
Access R/W-Anyone R/W-A company R/W-Selected multiple
company
Speed Slower Lighter & Faster Lighter & Faster
Efficiency Low High High
Network Decentralize Partially decentralize Partially decentralize
Security
Proof of Work, Proof of Stack, and
many other consensus algorithm
Pre-approved participants
and voting
Pre-approved participants
and voting
Immutability Nearly impossible to tamper Could be tampered Could be tampered

48. Blockchain Architecture
❖ It is a decentralized structure based distributed network.
❖ Two vital data structures used in the blockchain-
1. Pointers
2. Linked lists

49. Pointers
❖ Variables that keep information about the location of another
variable.
❖ Specifically, this is pointing to the position of another
variable.

50. Linked lists
❖ A sequence of blocks where each block has specific
data and links to the following block with the help of a
pointer.

51. How does blockchain work?
❖ It is a simple database and it will solve data related problem.
❖ Any new record within the blockchain implies the building of a new
block.
❖ Each record is then proven and digitally signed to ensure its
genuineness.
❖ Before the genuineness block is added to the network, it should be
verified by the majority of nodes in the system.

53. Hash functions
❖ It is a cryptographic hash functions.
✔ SHA 256: An output of a 256-bit hash and currently in use on
the Bitcoin network
✔ Keccak-256: An output of a 256-bit hash currently in on the
Ethereum network

54. SHA-256
(Secure Hashing Algorithm)
❖ In the case of SHA-256 no matter big or small input is the
output will always have a fixed 256 bits length(64 characters).
❖ This become critical when your are dealing with a huge amount
of data and transactions.
❖ So basically instead of remembering the input data which could
be hug you can just remember the hash and keep track.

55. Example of Secure Hashing Algorithm(SHA-256)

56. Hashing
❖ It is most important part in blockchain technology.
❖ A hash is a function that converts an input of letters and numbers
into an encrypted output of a fixed length(64 hexadecimal characters).
❖ Hashing is a one-way process. Data can be encrypted but not
decrypted.

57. Cryptographic hash functions
❖ Consistent: hash(X) always yields same result
❖ One-way: given Y, hard to find X s.t. hash(X) = Y
❖ Collision resistant: given hash(W) = Z, hard to find X such
that hash(X) = Z
❖ Arbitrary length of input always results in a fixed size hash
Hello world!

58. Example of Cryptographic hash functions

59. Asymmetric crypto/public key cryptography

60. Digital signature

61. Consensus Algorithm
❖ A consensus algorithm is a procedure through which all the
peers of the Blockchain network reach a common agreement
about the present state of the distributed ledger.
❖ A consensus algorithm aims at finding a common agreement
that is a win for the entire network.

62. Proof of work(Pow)
❖ Block has to be validated before making change.
❖ If takes at least 10 minutes to add the blockchain.
❖ Blockchain will be stored on multiple machines.
Every machine in a blockchain network will have the
copy of the blockchain.

63. Example of Proof of work(Pow)

64. Proof of stake (Pos)
❖ The concept states that a person can mine or validate block transactions
according to how many coins miner.
❖ It is a typical computer algorithm through which some cryptocurrencies
achieve their distributed consensus.
❖ It is also a better alternative to the pow algorithm by achieving the same
distributed consensus at a lower cost and in a more energy efficient
way.

66. Pow VS Pos
Validators are stakeholders with
voting power proportional to
economic stake locked up.
Miners have voting power
proportional to their
computational power.

67. Smart Contracts
❖ Smart contracts are lines of code that are stored on a blockchain and
automatically execute when predetermined terms and conditions are
met.
❖ At the most basic level, they are programs that run as they've
been set up to run by the people who developed them.

71. Who invented smart contracts?
Smart contracts were first proposed in 1994 by Nick
Szabo, an American computer scientist who invented
a virtual currency called "Bit Gold" in 1998, fully 10
years before the invention of bitcoin.

72. How does blockchain smart contract work?
A smart contract is an agreement between two people in the
form of computer code. They run on the blockchain, so they
are stored on a public database and cannot be changed. The
transactions that happen in a smart contract processed by
the blockchain, which means they can be sent automatically
without a third party.

73. Ethereum
❖ Ethereum is a computing platform on top of a blockchain
• Equipped with a virtual machine called EVM (Ethereum Virtual Machine)
• Based on a stack-based architecture with RAM, ROM and arbitrary storage
❖ Ethereum supports several new Turing-complete programming
languages:
• Solidity, Vyper and LLL
❖ Using these languages
• Programs can be written to be executed in the blockchain
• Data can be stored in the blockchain

75. Ethereum Virtual Machine (EVM)
❖ The EVM is a “mini computer” that runs contract code
❖ Contract code that actually gets executed on every node is
EVM code
● EVM: low-level, stack based byte code language(i.e. JVM code)
❖ Every Ethereum node runs EVM.

77. Ether
❖ Ether is the cryptocurrency generated by Ethereum miners
as a reward for computations performed to secure the
blockchain.
❖ Ethereum provides a decentralized virtual machine, the
Ethereum Virtual Machine (EVM), which can execute
scripts using an international network of public nodes.

78. Hyperledger Fabric
❖ It is an umbrella project of open source blockchains and related tools, started in
December 2015 by the Linux Foundation, and has received contributions from
IBM, Intel and SAP Ariba, to support the collaborative development of
blockchain-based distributed ledgers.
❖ It is also a modular blockchain framework that acts as a foundation for
developing blockchain based products, solutions, and applications using plug
and play components that are aimed for use within private enterprises.
❖ It is a private blockchain.

80. How does hyperledger fabric work?
1.A participant in the member Organization invokes a transaction
request through the client application.
2.Client application broadcasts the transaction invocation request
to the Endorser peer.
3.Endorser peer checks the Certificate details and others to validate the
transaction. Then it executes the Chaincode and returns the Endorsement
responses to the Client. Endorser peer sends transaction approval or
rejection as part of the endorsement response.

81. Hyperledger fabric work(cont.)
4.The client now sends the approved transaction to the Orderer peer
for this to be properly ordered and be included in a block.
5.Orderer node includes the transaction into a block and forwards the
block to the Anchor nodes of different member Organizations of the
Hyperledger Fabric network.
6.Anchor nodes then broadcast the block to the other peers inside their
own organization. These individual peers then update their local
ledger with the latest block. Thus all the network gets the ledger
synced.

83. Blockchain Misconceptions

84. Data Immutability
❖ There are mostly two types of data in a smart-contract
supporting blockchain
❖ Transaction data is immutable
❖ Smart-contract data can be changed as required
❖ However, how such data is changes is recorded in the
blockchain and hence, is immutable

85. Example of Data Immutability
❖ Immutability can be
defined as the ability of a
blockchain ledger to
remain unchanged, for a
blockchain to remain
unaltered and indelible.
❖ More succinctly, data in the
blockchain cannot be
altered. Each block of
information, such as facts or
transaction details, proceed
using a cryptographic
principle or a hash value.

86. Large-Scale Data Storage
❖ Data immutability feature tempts many to store as much as
possible data in the blockchain
❖ Performance of any database in terms data access rate is
much better than that of any blockchain system
❖ Thus, it is advisable to store as minimum data as possible
in the blockchain

88. Data integrity
❖ A blockchain system is essentially “Garbage-in-garbage-out”
system
❖ A corrupted data will be stored and remain as corrupted
❖ It can guarantee the integrity of data only after it is stored in the
blockchain

89. Example of Data integrity
❖ By design, blockchains are
inherently resistant to the
modification of data.
❖ Blockchain ledgers are
immutable meaning that if data
addition or transaction has been
made, it cannot be edited or
deleted.

90. Data encryption
❖ Many believe that a blockchain provides data encryption by default
❖ A blockchain system strongly depends on cryptographic mechanisms,
such as digital signature and cryptographic hash, to function
❖ Digital signature is used for data provenance while a cryptographic
hash is used to ensure data integrity
❖ In a blockchain system, data encryption is not provided

91. Example of Data Encryption
❖ Data at rest encryption is
the ability to secure the
privacy and confidentiality
of the blockchain data
stored on the database, by
encrypting it with a
predefined key, that is
sufficiently complex,
and is stored securely
elsewhere.

92. Power consumption
❖ Only public blockchain systems consume huge
electricity
❖ The power consumption of any private
blockchain system will be comparable to any
existing system

93. Example of Power consumption

94. Advantages of blockchain
1. Get rid of third party troubles
2.More Security in terms of data storing and transactions
3. Prevent corruption

95. Disadvantages of blockchain
1. The transaction's transfer rate is low. Only 7 transactions/second.
2. Reverse transaction is not possible.
3.Now a days illegal activities of underworld is mostly done by this
technology.

96. Sl.No Blockchain Database
1 Blockchain is decentralized because there is no
admin in-charge.
The database is centralized because it has admin and
in-charge.
2 Blockchain is permission less because anyone
can access it.
Database is permission because it can be accessed
only by entities who have rights to access.
3 Blockchain is slow. Databases are fast.
4 Blockchain is confidential Database is not confidential.
5 Blockchain has only insert operation. Database has create, read, update and delete
operation.
6 It is fully robust technology. It is not entirely robust technology.

97. Blockchain Use Case
1.Accounting 10. Notary
2.Government 11. Food Safety
3.Financial Serves Industry 12. Intellectual Property
4. Supply Chain 13.Media
5.Cybersecurity 14.Manufacturing and Retail
6.Digital Identity 15.Transport and Tourism
7.Voting 16. Real Estate
8. Fundraising 17.Education
9. Healthcare 18.Charity

98. Use Cases-Government
1.Government all across the world are adopting it fast
2.Dubai-Dubai is at the forefront to achieving true Digital Government-has
set sights on becoming the world's first blockchain-powered state.
Investigating Opportunities across health records, shipping, business
registration and preventing the spread of conflict diamonds.
3.Estonia-the most digitized nation on earth-The Estonian government has
partnered with Ericsson on an initiative involving creating a new data center
to move public records onto the blockchain.
4.South Korea- Samsung is creating blockchain solutions for the South
Korean government which will be put to use in public safety and transport
applications.

99. Use Cases-Government(cont.)
5.Govcoin-The UK Department of Work and Pensions is
investigating using blockchain technology to record and the
administer benefit payment.
6. Democracy. Earth -This is an open-source project aiming and
to enable the creation of democratically structured organization,
and potentially even states or nations, of using blockchain tools.
7.Followmyvote.com- Allows the creation of secure, transparent
voting systems, reducing opportunities for voter fraud and
increasing turnout through improved accessibility to democracy.

100. Use Cases-Financial Services
1.Bank Hapoalim- A collaboration between the Israeli bank and Microsoft to
create a blockchain system for managing bank guarantees.
2.Barclays- Barclays has launched a number of blockchain initiatives involving
tracking financial transactions, compliance and combating fraud. It states that
"Our belief….is that blockchain is a fundamental part of the new operating
system for the planet.“
3.Maersk -The shipping and transport consortium has unveiled plans for a
blockchain solution for streamlining marine insurance.
4.Aeternity - Allows the creation of smart contracts which become active when
network consensus agrees that conditions have been met - allowing for
automated payments to be made when parties agree that conditions have been
met, for example.

101. Use Cases-Supply Chain
1.Issues are
a. Transparency as product progresses through supply chain
b. Product authenticity as counterfeit goods are common
2.Blockchain establishes a transparent chain with business and its
suppliers
3.Various stages that product passes through are record immutably for
customers to see through QR code say

102. Use Cases-Manufacturing and Industrial
1.Provenance- This project aims to provide a blockchain-based
provenance record of transparency within supply chains.
2.Jiocoin-India’s biggest conglomerate, Reliance Industries, has
said that it is developing a blockchain-based supply chain logistics
platform along with its own cryptocurrency, Jiocoin.
3.SKUChain- Another blockchain system for allowing tracking and
tracing of goods as they pass through a supply chain.

103. Use Cases-Manufacturing and Industrial(cont.)
4. Blockverify- A blockchain platform which focuses on
anti-counterfeit measures, with initial use cases in the
diamond, pharmaceuticals and luxury goods markets.
5. Transactivgrid-A business-led community project based in
Brooklyn allowing members to locally produce and sell
energy, with the goal of reducing costs involved in energy
distribution.
6. STORJ.io- Distributed and encrypted cloud storage, which
allows users to share unused hard drive space.

104. Use Cases-Real Estate, Transport and Tourism
Real Estate
1.Ubiquity- ease legal process- This startup is creating a blockchain-driven system
for tacking the complicated legal process which creates friction and expense in real
estate t transfer.
Transport and Tourism
1.IBM Blockchain Solutions -IBM has said it will go public with a number of
non-finance related blockchain initiatives with global partners. One application is
for how efficiencies could be driven in the vehicle leasing industry.
2. Arcade City -An application which aims to beat Uber at their own game by
moving ride sharing and car hiring onto the blockchain.

105. Use Cases-Real Estate, Transport and Tourism(cont.)
3. La Zooz -A community-owned platform for
synchronizing empty seats with passengers in need
of a lift in real-time.
4. Webiet-The online travel portals developing
blockchain solution to allow stock of empty hotel
rooms to be efficiently tracked and traded with
payment fairly routed to the network of middle-men
sites involved in filling last-minute vacancies.

106. Use Cases- Healthcare
1.Gem-This startup is working with the Centre for Disease control to put
disease outbreak onto a blockchain which it says will increase the effectiveness
of disaster relief and response.
2.SimplyVital Health- Has two health-related blockchain products in
development, Connecting Care which tracks the progress of patients after they
leave the hospital, and Health Nexus, which aims to provide decentralized
blockchain patient records.
3. MedRec- An MIT project involving blockchain electronic medical records
designed to manage authentication, confidentiality and data sharing

107. Use Cases- Cybersecurity
Cybersecurity
1.Guardtime - This company is creating "keyless" signature
systems using blockchain which is currently used to secure the
health records of one million Estonian citizens.
2.REMME- It is a decentralized authentication system which
aims to replace logins and passwords with SSL certificates
stored on a blockchain.

108. Use Cases- Charity and Retail
Charity
1. Bitgive- Ensuring efficient use of donated monies- This service aims
to provide greater transparency to charity donations and clearer links
between giving and project outcomes. It is working with established
charities including Save The Children, The Water Project and Medic
Mobile.
Retail
1.OpenBazaar- Really open peer to peer - OpenBazaar is an attempt to
build a decentralized market where goods and services can be traded
with no middle man.

109. Use Cases- Charity and Retail(cont.)
2.Lovval-loyalty tokens or coins-This is a
blockchain-based universal loyalty framework,
which aims to allow consumers to combine and
trade loyalty rewards in new ways, and retailers to
offer more sophisticated loyalty packages.
3.Blockpoint.io- pay through crypto and loyalty
coins -Allows retailers to build payment systems
around blockchain currencies such as Bitcoin, as
well as blockchain derived gift cards and loyalty
schemes.