Blockchain basics are explained in the document. It discusses that blockchain technology was first conceptualized by Satoshi Nakamoto to provide an alternative payment system. It focuses on blockchain's core elements as a distributed ledger for transactions. Blockchain allows value transfer without permission of a third party through decentralization and recording/validating every transaction with miners, making transactions immutable and preventing hacking. It also discusses key components like blocks, hashes, proof of work, blockchains and different types of blockchains like public, private and hybrid.

1. Blockchain
Basics
By
Rohit Kumar
Shailesh J. Mehta School of Management, IIT Bombay

2. Bitcoin
Is blockchain confined to the Bitcoin?
Bitcoin, however, is just the first of many potential applications
of Blockchain Technology.
Did you know?
Who holds the maximum number of bitcoins?
• A Bitcoin is type of digital currency in which encryption techniques
are used to regulate the generation of units of currency and verify
the transfer of funds, operating independently of a central bank.
• It is used for online transactions between individuals

3. BlockChain Technology
Introduction Blockchain technology was first conceptualized to
provide an alternative approach to payments by a
person or group of people known by pseudonym,
Satoshi Nakamoto.
Trust-mechanism between two transacting parties
Shifting focus of application – Previously
cryptocurrency
Today, focus is on its core elements and its nature as a
‘distributed ledger for transaction’

4. BlockChain Technology
 Transmit value at a distance without permission and support of the third party
 Revolutionary idea of value transfer
Robert Greifeld Bill Gates
Figure Source: Unknown

5. Decentralization of the technology
Records and validate each and every transaction made.
Authorized by miners, which makes the transactions immutable
Prevent it from the threat of hacking
Discards the need of any third-party or central authority for
peer-to-peer transactions
CurrentpaymentsystemBlockchainpaymentsystem
BlockChain Technology - Payment System

6. BlockChain Technology - Components of Block Chain
transaction
TransactionBlock
BlockChainBlockChainNetwork

7. BlockChain Technology - Generalized view of block chain transaction
Transaction – Sender
(S) wants to transfer
money to Receiver (R)
Transaction Authentication –
Transaction added to the block
for authentication
Block Formation
Block is broadcasted to the networkBlock is validated by the networkBlock is added to the network

8. BlockChain Technology - Basic Terminologies
Basic
Terminologies
2. Hash
Functions
3. Proof of
Work
4. Block
Chain
5. Miners
6. Public /
Private/
Hybrid
Blockchain
1. Merkle
Tree
1. Merkel Tree
Figure Source -Wikipedia

9. BlockChain Technology
2. Hash Functions
• These are one way hash functions
• Takes electronic records and produces a fix length
output.
• Value changes, when a slightest of change is made in
the document.
• Original record cannot be retrieved from the hash.
Rohit
ROHIT
rohit
2173hgs67alit980axorm1234
7697idhb87ya12pljk6789x3
0923i3jhkl121lk34456yux9
Input Corresponding Hash code
3. Proof of Work
• Sender ^ Receiver ^ Date ^ Nonce
• The "nonce" is a 32-bit field whose value is set so that the
hash of the block will contain a run of leading zeros
• Hash begins with 4 zeros
• More the zeros, greater is the difficulty to find proof;
Hence secured.
2173hgs67alit980axorm1234
Input Sender^Receiver^10062017^1
Hash
2173hgs67alit980axorm1234
Input Sender^Receiver^10062017^2
Hash
0000hgs67alit980axorm1234
Input Sender^Receiver^10062017^1
Hash
Increase the Nonce until the hash has at lease 4 zeros in the beginning….

10. BlockChain Technology
4. Block Chain
Previous
Hash
Time
Stamp
Transaction
Root
Nonce
Block Number X
Previous
Hash
Time
Stamp
Transaction
Root
Nonce
Block Number X+1
Previous
Hash
Time
Stamp
Transaction
Root
Nonce
Block Number N
 Ordered and time stamped records
 Prevents double-spending
 Restricts modification of previous records

11. BlockChain Technology
5. Miners
 While a gold miner digs into the earth to discover gold,
a bitcoin miner uses computational power to calculate
hashes.
 To add an entire block to the block chain, a Bitcoin
miner must successfully hash a block header to a value
below the target threshold.
 Miners spend on computational power and electricity
and are compensated by way of a reward for each block
they mine and transaction fees.
 Miners usually operate as part of a large pool instead of
as individuals.
Blockchain Eco-System
Figure Source: Unknown

12. BlockChain Technology
6. Types of BlockChian
BlockChain
Public
(Bitcoins)
Private
Completely
Private
Hybrid
Public Private Hybrid
• Fully
Decentralized
• Everyone can
read, write, send
transactions to,
and participate
in the
collaborative
process.
• Writing
permissions are
centralized and
is confined to
one organization
• These are
usually used by
organizations.
• Consensus
process is
confined to pre-
defined set of
nodes
• Public can read,
hence carry a
partially
decentralized
character
*PS: I will touch upon the use cases in my next post*

13. BlockChain Technology
Thank You !