Blockchain is a decentralized ledger or list of all transactions across a peer-to-peer network. It underlies technologies like Bitcoin and has potential to disrupt many business processes. No single user controls the blockchain, transactions are broadcast to the network and validated through consensus. The author of the blockchain concept is unknown, thought to use the pseudonym Satoshi Nakamoto. Blockchains use techniques like proof-of-work to serialize changes and achieve distributed consensus to maintain integrity without centralized authority.

1. BLOCKCHAIN
By Narendranath Reddy
Distributed Ledger

2. Name: Narendranath Reddy Thota
 d3 Whitepaper Core Team
 Trainer from Gama
 Blockchain Full Stack Developer
 Technology Analyst
 Software Developer
 Technology Speaker
MAERSK
Email: narendranath.thota@ust-global.com
P: +917288838869

3. Blockchain
 At a very high level, the Blockchain is a decentralized ledger, or list, of all transactions
across a peer-to-peer network. This is the technology underlying Bitcoin and other
cryptocurrencies, and it has the potential to disrupt a wide variety of business
processes.
 If the Internet is the foundation for digital innovation of all kinds, Blockchain technology
is the underpinning of a radical rethinking of how we pay for things—as well as how we
verify who owns what and who has the right to buy and sell it.

4. BlockChain what?
 No one knows who invented blockchain.
 The idea for it came from a paper published
online eight years ago
 The author, Satoshi Nakamoto, is thought to be
using a pseudonym.
BLOCKCHAIN Is Like
“The blockchain is a simple digital platform for
recording and verifying transactions so that
other people can’t erase them later -- and
anyone can see them.” - GIZMODO

7. Fiat Currency Characteristics

8. Cryptocurrency

9. 1000+

10. Cryptographic Hash Functions

14. Merkle Tree

15. Digital Signatures

16. 16
How does it work?
Source: http://blockgeeks.com/

17. 17
Key Concepts
Public Key: (a long, randomly-generated string of numbers) is a users’ address on the
blockchain. Transactions (money sent from) get recorded as belonging to that address.
Private Key: Gives its owner access to their digital assets. Store your data on the
blockchain and it is incorruptible.
Replication: Every node in a decentralized system has a copy of the blockchain. No
centralized "official" copy exists and no user is "trusted" more than any
other. Transactions are broadcast to the network using software applications.
Mining nodes: They validate transactions, add them to the block they're creating and
then broadcast the completed block to other nodes. Blockchains use various
timestamping schemes, such as proof-of-work to serialize changes.
Peers keep the highest scoring version of the database that they currently know of.
Whenever a peer receives a higher scoring version (usually the old version with a single
new block added) they extend or overwrite their own database and retransmit the
improvement to their peers.
Encryption
Replication
Integrity
When miners try to compute a block, they pick all transactions that they want to be
added in the block, plus one coinbase (generation) transaction to their address.
For a block to be accepted by the network it needs to contain only valid transactions:
inputs that are not yet spent, inputs that have the valid amount, signature that verifies
ok and etc...
Mining

18. Bitcoin

21. Bitcoin Address Generation
http://lenschulwitz.com/base58

22. Private Key ECM – Elliptical Cure Multiplication

23. Transactions

24. Why Gopesh’s
Output is Unspent?

25.  Outputs of a transaction are initially unspent outputs, until
they are used as the input for another transaction, then they
are spent outputs.
The balance of an address is the sum of all unspent outputs
that were sent to that address.
Answer

26. Spent vs unspent
 The first block contained 50 mined BTC in address A (A = 50)
 The second block contained 50 mined BTC in address A, a transaction
sending 20 BTC to address B, and putting the change in address C (A = 50,
B = 20, C = 30)
 The third block contained 50 mined BTC in address A, a transaction
sending the 20 BTC from address B to address D (A = 50 + 50, C = 30, D =
20)
So, after three blocks, there are four unspent outputs:
•A has two unspent outputs worth 50 BTC each
•C has a single unspent output worth 30 BTC
•D has a single unspent output worth 20 BTC
And there are two spent outputs:
•the 50 BTC generated in the first block, spent in the 2nd
block
•the 20 BTC output created in the 2nd block and spent in
the 3rd block

29. Blockchain Cycle

30. Proof Of Work

33. Some Factors That Influence The Bitcoin Price
 Government Regulation
 Media Influence
 Stability of the Bitcoin Network
 The Bitcoin Demand and Supply
 Wider Mainstream Acceptance
 Technological Changes and Innovations
 Market Manipulation
Source: https://totalbitcoin.org/some-factors-that-
influence-the-bitcoin-price/

35. 35
Abu Dhabi
Securities
Exchange
Announces
Blockchain e-
Voting Service

36. The Basics
 A type of distributed ledger
 comprises of unchangeable, digitally recorded data in packages called blocks.
 These digitally recorded "blocks" of data is stored in a linear chain.
 Each block in the chain contains transaction data
 Is cryptographically hashed.
 The blocks of hashed data draw upon the previous-block in the chain,
 This ensures all data in the overall "blockchain" has not been tampered with and remains unchanged.
The blockchain represents a "golden record" of transactions, a complete, historical record that
technically cannot be interfered with or undone.

38. 38
Leading Blockchain Consortiums and Collaborative Projects
The very nascent Blockchain market is already seeing
massive consolidation with around four major mining
service companies gaining prominence globally over
independent miners and smaller companies. Future
years might see multiple interoperable blockchains
coming into existence.

40. National Currencies on Blockchain
E-Dinar Tunisia
E-CFA - west Africa
Lakshmi India

42. Definitions -
 Cryptology
 Cryptography
 Cryptanalysis
 Steganography
 Cryptosystem

43. History of Cryptography
 The first known evidence of the use of cryptography (in some form) was
found in an inscription carved around 1900 BC, in the main chamber of the
tomb of the nobleman Khnumhotep II, in Egypt.
 Around 400 B.C., the Spartans used a system of encrypting information by
writing a message on a sheet of papyrus.
 Around 100 B.C., Julius Caesar was known to use a form of encryption to
convey secret messages to his army generals posted in the war front.

45. Cryptography is everywhere
 Secure communication:
–web traffic: HTTPS
–wireless traffic: 802.11i WPA2 (and WEP), GSM, Bluetooth
 Encrypting files on disk: EFS, TrueCrypt
 Content protection (e.g. DVD, Blu-ray): CSS, AACS
 User authentication
… and much much more

46. Ciphers
In cryptography, a cipher is an algorithm for performing encryption or decryption—a
series of well-defined steps that can be followed as a procedure. An alternative, less
common term is encipherment.

47. CRYPTOGRAPHY METHODS
 Symmetric
 Same key for encryption and decryption
 Key distribution problem
 Asymmetric
 Key pairs for encryption and decryption
 Public and private keys

48. Symmetric Algorithm
 It is also called as Secret Key Cryptography
 Single key used for both encrypt & decrypt
 Key must be known to both the parties
Encryption Decryption
Key
Plaintext Ciphertext
Original
Plaintext
Symmetric Cryptosystem

49. Stream cipher or State cipher
 A Stream Cipher is a secret-key encryption algorithm that encrypts a single bit
at a time. With a Stream Cipher, the same plaintext bit or byte will encrypt to a
different bit or byte every time it is encrypted.
 e.g. :
Plain text: Pay 100
Binary of plain text: 010111101 (hypothetical)
Key: 100101011 ----- Perform XOR
____________________
Cipher text 110010110 ----- ZTU9^%D
 To decrypt make the XOR operation of the cipher text with the key .

50. Block cipher
 Block cipher technique involves encryption of one block of text at a time
.Decryption also takes one block of encrypted text at a time. Length of the
block is usually 64 or 128 bits.
e.g. :
Plain text: four and five
Four and five
Key Key Key
wvfa ast wvfa --- cipher text

51. Symmetric Algorithm
 Data Encryption Standard (DES):
56 bits key
 Advance Encryption Standard (AES):
128, 192 or 256 bits key
 International Data Encryption Algorithm(IDEA):
128 bits key

52. Asymmetric Algorithm
 Private keys are used for decrypting.
 Public keys are used for encrypting
encryption
plaintext ciphertext
public key
decryption
ciphertext plaintext
private key

53. Hybrid cryptosystem
 A hybrid cryptosystem can be constructed using any two separate cryptosystems:
 a key encapsulation scheme, which is a public-key cryptosystem,
 a data encapsulation scheme, which is a symmetric-key cryptosystem.

55. COMMON TYPES OF ATTACKS
Brute force
 Trying all key values in the keyspace.
Chosen Ciphertext
 Decrypt known ciphertext to discover key.
Dictionary Attack
 Find plaintext based on common words.
Frequency Analysis-(occurrence of same letter)
 Guess values based on frequency of occurrence.

56. Digital Signatures

57. SHA
http://www.fileformat.info/tool/hash.htm

58. Secure Hash Algorithm ( SHA )
 Secure Hash Algorithm (SHA) was developed by
NIST along with NSA.
 In 1993, SHA was published as a Federal
Information Processing Standard.
 It has following versions-
 SHA-0
 SHA-1
 SHA-2
 SHA-3

59. SHA
 SHA - standing for secure hash algorithm - is a hash algorithm used by certification
authorities to sign certificates and CRL (certificates revocation list). Introduced in 1993 by NSA
with SHA0, it is used to generate unique hash values from files.
 Example: A file hashed with SHA1 could look like:
752c14ea195c369bac3c3b7896975ee9fd15eeb7
 As for any cryptographic solution, SHA must evolve along with our computers' calculation
capacities in order to avoid any weakness.
 There are, therefore, several versions of SHA: SHA0 (obsolete because vulnerable), SHA1 (the
most popular one), SHA2 (the one we are interested in) and finally SHA3 introduced in 2012.
SHA2
SHA2, not often used for now, is the successor of SHA1 and gathered 4 kinds of
hash functions: SHA224, SHA256, SHA384 and SHA512.
It works the same way than SHA1 but is stronger and generate a longer hash.

61. Attacks
Collision
Preimage
Second PreImage
https://security.googleblog.com/2017/02/announcing-first-sha1-collision.html
https://shattered.io/

62. Comparison between MD5 and SHA-1 & SHA256
Point of discussion MD5 SHA-1
Message digest length in bits 128 160
Attack to try and find the
original message given a
message digest
Requires 2128 operations to
break in.
Requires 2160 operations to
break in, therefore more secure.
Attack to try and find two
messages producing same
message digest
Requires 264 operations to
break in.
Requires 280 operations to break
in.
Speed Faster Slower
Successful attempts so far There have been reported
attempts to some extent.
Announcing the first SHA1
collision – by Google
February 23, 2017
SHA-256
256 –( 32bytes)
Requires 2256 operations to
break in, therefore more secure.
Requires 216bytes operations to
break in.
Slower
No successful attempts so far

63. Parameters for various versions of SHA
Parameter SHA-1 SHA-256 SHA-384 SHA-512
Message digest size(in
bits)
160 256 384 512
Message size(in bits) <264 264 2128 2128
Block size (in bits) 512 512 1024 1024
Word size (in bits) 32 32 64 64
Steps in algorithm 80 64 80 80

65. Without technical
Bank - passport basic Analogy

68. One Way
Browser to Bank
Bank to Browser?

72. Whole Process
Client send req to the server
Server sends res to the Client [public key and certificate] Has Private key
installed
Client send one of the symmetric key to the server
Encrypted with server public key
Secure End – to – End Communication with symetic

73. http://www.fileformat.info/tool/hash.htm
Digital Certificate

74. Intelligent Courier guy

75. Brief
 What is the SSL Certificate?
 How does the client(Browser) know the server is genuinely his Bank
 What are certificates authorities and what role do they play?
 What is a digital certificate?
 Various ways SSL protocol could be breached?
 Sha1 and Sha 2 in certificate Chain

77. ==
YES or NO

80. Proof Of Work
Proof Of Stake
Proof Of Existence

82. POE
 https://proofofexistence.com/

83. The Bitcoin Network

84. Node Types and Roles
Although nodes in the bitcoin P2P network are
equal, they may take on different
roles depending on the functionality they are
supporting.
A bitcoin node is a
collection of functions: routing, the Blockchain
database, mining, and wallet
services.

87. How does a new node find peers?
DNS – List of IP Address
DNS seeds are implementation of BIND (Berkeley Internet Name Daemon)
BIND get a list of bitcoin network details by crawlers

88. SPV Node
 A lightweight client, also known as a simple-payment-verification
(SPV)client, connects to bitcoin full nodes (mentioned previously) for
access to the bitcoin transaction information, but stores the user wallet
locally and independently creates, validates, and transmits transactions.
Lightweight clients interact directly with the bitcoin network, without an
intermediary.

90. Live Demo
http://localhost:3000/

91. Private Blockchain from Scratch

92. Important Links
 http://Bitcoin.org
 https://bitnodes.21.co
 https://insight.is
 https://Blockchain.info
 https://coinmarketcap.com/currencies/views/all/
 http://Btcrates.in

93. THANK
YOU.