The document provides an overview of blockchain technology. It discusses what blockchain is, how it works through decentralization and distributed ledgers, and why it is needed to solve issues of trust on the internet. It covers key aspects of blockchain like public vs private blockchains, cryptography techniques used for integrity and authentication, how blocks are structured in the chain using hashing and Merkle trees, and consensus mechanisms like proof of work that allow the decentralized network to agree on the valid state. Use cases like managing music copyright are also presented.

1. Blockchain

2. Agenda
❖ Whats is Blockchain?
❖ How Blockchain works?
❖ Why do we need Blockchain?
❖ Public Vs Private Blockchain
❖ Use cases
❖ Cryptography
❖ Blocks - Single / Multiple / Transaction
pool
❖ Merkle Tree
❖ Consensus Mechanism
❖ Byzantine’s problem
❖ Proof of work

3. Blockchain - VC Investment

4. What is
Blockchain?
Like distributed
database
Large world wide
computer where
everyone can securely
access data & execute
transaction code
Data is stored in blocks
that are very hard to
manipulate
Gives a trustworthy
way to store data in
scenarios where there
will be no trust
Data stored on
blockchain is focused
on transactions and
states of objects rather
than the actual objects

5. Quotes
The blockchain is an incorruptible digital ledger of
economic transactions that can be programmed to record
not just financial transactions but virtually everything of
value - Don & Alex Tapscott : Blockchain Revolution
A blockchain is a continuously growing list of records,
called blocks, which are linked and secured using
cryptography - Wikipedia

6. Digital
Ledger
Quotes -
Keywords
Incorruptible
Continuously
growing list of
records
Linked and
secured using
cryptography

7. How Blockchain works?

8. Why do we need
Blockchain?
❖ One of the biggest problems on internet is trust
❖ Blockchain solves it using decentralization
❖ Depositing money in bank where the power is in
hand of one monolithic organization
❖ US dollars or Euros or Rupee which are under the
power of governments

9. Blockchain == Bitcoin?
First digital currency or
cryptocurrency that can be
spent electronically for
both digital or physical
good
Founded by Satoshi
Nakamoto - Software
developer or Group of
people
Digital currency created
and held electronically
instead of being printed
currency
Bitcoin algorithms and not
Banks or Governments
control bitcoins
Bitcoin algorithms control
rate at which new bitcoins
are introduced
People are incentivized to
help and mine new bitcoins
Bitcoin :: Digital Currency
Blockchain :: Underlying technology & data structure

10. Public Vs Private
Public
❖ Anyone can write to a blockchain -
Democratic
❖ You pay for transaction, execution
and storage cost
❖ Public network on nodes
contributing to the creation and
mining of blocks
❖ Every node contains copy of the
complete chain, so no specific point
for hacker
Private
❖ Community believes this does not
offer full anonymity and openness of
blockchain- Not Democratic
❖ Here company will write transactions,
mine and verify blocks
❖ Lack of decentralized security.
Company decides who can read and
verify blocks
❖ Fewer points to attack

11. Public Fully Distributed
Blockchain
❖ Each node is responsible for Mining / Creating new blocks / Maintaining the copy of the
Blockchain
❖ Every transaction to be sent to every node so that next block can be mined

12. Private Partial Distributed
Blockchain
❖ Transactions are managed by Central Authority
❖ Central Authority creates blocks and sends it to nodes for verification
❖ Nodes contains complete copy of chain and does verification
❖ Losses the main advantages of fully distributed public blockchain

13. Use Cases

14. Integrity
Cryptography Blocks - Validity
Confidentiality Authentication Non-Repudiation
❖ Integrity - Solved by Hashing - SHA256
❖ Authentication & Integrity - Solved by Authenticated Hashing - HMAC (SHA-256)
❖ Non-Repudiation - Solved by Digital Signatures
➢ Guarantee that the original author of the data further down the line cannot deny the
ownership
➢ Way of proving that some activity is done by the user
➢ Since block is created using HMAC Key and Private Digital Signature

15. Hashing
❖ Core of any Blockchain
❖ Mathematical function that gives a
hash
❖ One way function - Will return same
result given the same input
❖ Input can never be regenerated based
on hashing algorithm
❖ More advance the algorithms, the
more power it takes to execute
Characteristics
❖ Easy to compute
❖ Not possible to generate the original
message
❖ Not possible to modify message without
changing the hash
❖ No two messages will have same hash

16. Authenticated
Hashing (HMAC)
❖ Hash Message Authentication Code
❖ Hashing function + Secret Cryptographic Key
❖ Integrity & Authentication
❖ Hashing gives the hash of the message but does
not make sure if the hash is from a trusted source
❖ HMAC gives you ability to recompute the original
message using a secret key that only you and the
trusted source know

17. Digital Signatures
❖ Solves the problem of Non-Repudiation - Receiver cannot deny
that message is authentic
❖ Non-Repudiation & Authentication
❖ Consists of -
- Public and Private Key Generation (using RSA)
- Signing Algorithm (uses Private key to create the signature)
- Signature Verification Algorithm (uses the Public key to validate the
signature)
❖ Public and Private keys are mathematically linked

18. Digital Signatures

19. Cryptography - What achieves what?
Hashing Integrity
Authenticated Hashing (HMAC) Integrity Authentication
Digital Signature Integrity Non-Repudiation

20. Music Company -
Blockchain
❖ As a part of their Digital transformation wants to implement
Blockchain
❖ Record the Songs submitted by Artists on their Blockchain
❖ Other Music companies have also joined
Advantages
❖ Each and every business can verify and validate each others
song submission keeping level of anonymity with data
❖ Once the song verification has been reached create
permanent entry on Blockchain

21. Song Name
Song Record Details
Song Number Album Name
Artist or Band
Ownership
Percentage Per
Band Member
Publication
Label

22. Block - Single Transaction
Genesis Block
❖ First Block in the chain
❖ Has no Previous Block Hash
Block Hash
SHA-256 Hash [Transaction Details] + SHA-
256 Hash [Block Headers]

23. Block - Single Transaction
❖ Similar to Double Linked List
❖ Blockchain only flow in one direction
❖ Change the details of one block and the block that follows will not verify
❖ Tampering very easy to spot

24. Block - Multiple Transaction
❖ Hashes for Multiple transactions are computed using Merkle tree

25. Merkle Tree

26. Block - Transaction Pooling
❖ Makes use of HMAC, Digital Signature & Merkle Tree

27. Updating Keys & Versioning Blocks
❖ Updating Keys regularly is a good practice
❖ Certain challenges with regular updation of keys
Solution
❖ Blocks in the chain are Versioned
❖ Keys used by the Block are tagged with Version
Reason
❖ On Updating the key, hashing the entire chain with the newly updated
keys will be very inefficient

28. Blockchain - Consensus Mechanism
❖ Blockchain is decentralized peer-to-peer system with no central
authority
❖ Because of this the challenges here are
➢ How are decisions made?
➢ How to get anything done?
❖ In organization, leader makes all the decisions
❖ In blockchain, there are no leaders and hence the need for
Consensus

29. Consensus Mechanism
❖ Dynamic way of reaching an agreement
❖ Voting settles on majority without considering feelings and wellbeing of majority
❖ Consensus is agreement where in the entire group as a whole is benefitted
Objectives of Consensus Mechanism
Agreement Seeking : Bringing as much agreement as possible
Collaborative : Work to put best interest of group first
Co-operative : Work as a team more than individuals
Egalitarian : Each and every vote has equal weight
Inclusive : All the people should be involved in the consensus

30. Byzantine Generals Problem
Generals must have an algorithm that
guarantees :
❖ All generals decide upon same plan
❖ Small number of traitors cannot
expect the loyal generals to adopt a
bad plan
Problems these Generals face are :
❖ Generals and Armies are far. So no centralized
authority that can coordinate the attack
❖ City has huge army. So only way the city army can
be defeated is if all attack at once

31. Solving Problem with Hashing
Original message from Gen1 to Gen2 : Halla Bool Suprabhat 7am Ravivaar
Message with Nonce : Halla Bool Suprabhat 7am Ravivaar 5s43dfg456
Message policy between generals : Hash should start with 6 Zeros
Hash (Halla Bool Suprabhat 7am Ravivaar 5s43dfg456) = 00000021dfsd4678347923d842849d123
Hash (Halla Bool Suprabhat 7am Ravivaar 0) = 23g5h621dfsd467834234fgh42849d12342
Hash (Halla Bool Suprabhat 7am Ravivaar 1) = 034gdfh68hjh789898909h87789845335ffg

32. Proof of Work
❖ Decentralized participants - Miners that validate
blocks have invested significant computing power
in doing so
❖ Miners compete to solve complex hash puzzles
❖ Puzzle that needs solving is to find a number
that, when combined with the data in the block
and passed through a hash function, produces a
result that is within a certain range
❖ Nonce is time-consuming to calculate for
message sender. Straightforward to verify for
recipient
❖ For Bitcoin, it is between 0 and 4,294,967,296
❖ When a miner solves the puzzle, they present
their block to the network for verification. First to
solve the puzzle, wins the Bitcoins and the
Transaction fees

33. Prevent Tampering
❖ Difficulty of transaction is adjusted frequently
❖ At an average 10 minutes to solve a block
❖ Adjustment in terms of number of starting Zeros
❖ Varies from 3 to 10 starting Zeros
If someone tries to Tamper a Blockchain of 5000 Blocks then
he will need
5000 Blocks at 10 Minutes per block
833 Hours of effort
35 days

34. Longest Chain Consequences &
Orphaned Blocks
❖ Public Blockchain reward miners for
creating blocks
❖ Rewards compensate for energy used in
mining
❖ If block is orphaned mining reward is
reclaimed
Orphaned
Orphaned

35. Thanks