Blockchain is a distributed ledger where transactions are recorded in blocks that are chained together. It allows for trust among nodes without a central authority by using a consensus algorithm. Common use cases that could benefit include customer data sharing between companies, property records, medical records, and supply chain management. The document discusses how blockchain works, compares traditional centralized approaches to distributed peer-to-peer models, and outlines some myths about blockchain's capabilities.

1. Blockchain Introduction
Author: Nikhil M Dhokale

2.  Overview
 Traditional Vs Peer Based Approach
 Use Cases ripe for disruption
 Consensus Algorithm
Agenda

3. Overview
Blockchain is a unique amalgamation of existing concepts
& technologies to achieve Trust in Information being
recorded on the chain. This protocol is deployed in a peer-
to-peer (Napster) network with no master & slave nodes.
Blockchain grows by adding blocks to the existing chain.
The longer the chain the harder to hack it. The main
challenge in designing such a protocol is to achieve
consensus amongst the nodes when adding a new block.
In BitCoin a block is
added to the chain every
10 minutes.
The party that adds the
block is rewarded with
BitCoins. This process is
termed mining.

4. Overview: Traditional Approach
Repository
(Centralized
Ledger)
App
AppApp
App
App App
Org is
Custodian
& Trustee
Firewall
Firewall
Heloc
Mortgage
ReFi
Auto Loan

5. Overview: Distributed - Peer to Peer Approach
App
App
App
App
App
App
No Single
Custodian
or Trustee
HELOC
Mortgage
ReFi
Auto Loan
HELOC
Mortgage
ReFi
Auto Loan
Trusted Actors
Malicious Actors
Distributed
Ledger
The objective is to ensure that the transactions are faithfully and
consistently recorded by all data nodes. The accuracy and validity of
the transactions themselves is not at question.
HELOC
Mortgage
ReFi
Auto Loan
HELOC
Mortgage
ReFi
Auto Loan
HELOC
Mortgage
ReFi
Auto Loan
HELOC
Mortgage
ReFi
Auto Loan
HELOC
Mortgage
ReFi
Auto Loan

6. Overview: Blockchain
App App
Trusted Actors
Malicious Actors
Distributed
Ledger
TX0-1
TX0-2
TX0-3
TX0-4
TX1-1
TX1-2
TX1-3
TX1-4
TX2-1
TX2-2
TX2-3
TX2-4
TX3-1
TX3-2
TX3-3
TX3-4
App
App AppApp
Immutable Record
Node 0 Node 2Node 1 Node 3
The energy
consumed by
the
Computation
involved in
adding
Blocks to the
chain
(mining) is
equal to the
energy
Consumption
of the entire
country of
Denmark
(Machines
computing at
petabytes /
sec)

7. Use Cases : AML KYC Customer Hub
Chase
Address
Update
BMO Harris
Name
Update
BofA
Marital Status
Update
HSBC
DOB
Correction
DMV
Address
Change
BMO Harris
New
Mortgage

8. Use Cases : Title Ownership
Chase
New
Mortgage
Coldwell
Banker
Sale
WellsFargo
Bankruptcy
Dupage
County
New Parcel
Dupage
County
Destroy
Parcel
BofA
Lien Hold

9. Use Cases : Driving Record
AllState
Claim Open
DMV
Purge
Naperville
Police
Traffic Stop
Lisle Police
Car Accident
Geico
Claim
Denied
Warreville
Police
Car Theft

10. Use Cases : Books without Borders Library
Naperville
Issued
Lisle
Returned
Downers
Grove
Extended
Warrenville
Late (Fee)
Lemont
Reissued(1)
Chicago
Hold

11. Use Cases : Mobile Telephone Registry
TMobile
Assign
Verizon
PortOut
Cricket
PortIn
AT&T
Reclaim
Xfinity
Hold
Sprint
Release

12. Consensus Algorithm : Byzantine Generals Problem
General
Loyal
Traitors
Enemy
General
General
General
Y – ATTACK
N- STAY PUT
Problem Statement: The enemy can be defeated
only if ALL loyal generals ATTACK.
Even if 1 loyal General STAYS PUT the enemy will
not be defeated.
So the objective is to make sure that all loyal
generals either ATTACK (Victory) or STAY PUT
(No loss).
The protocol used to achieve the above
agreement is called Consensus Algorithm.
This Consensus Algorithm works iff the # (Traitor Generals) < 1/3 (Total
Generals)

13. Consensus Algorithm : Byzantine Generals Problem
General
Loyal
Traitors
Enemy
General
General
General
Y – ATTACK
N- STAY PUT
Problem Statement: The enemy can be defeated
only if ALL loyal generals ATTACK.
Even if 1 loyal General STAYS PUT the enemy will
not be defeated.
So the objective is to make sure that all loyal
generals either ATTACK (Victory) or STAY PUT
(No loss).
The protocol used to achieve the above
agreement is called Consensus Algorithm.
Y
Y
Y
Y,Y,Y
N,Y,Y
N,Y,Y
This Consensus Algorithm works iff the # (Traitor Generals) < 1/3 (Total
Generals)

14. BlockChain Myths
• BitCoin will replace all local currencies (like Euro): Local currencies is a
mechanism for governments to control fiduciary policy. No government is
going to release that control. However BitCoin is being used by some
developing countries where the local government and hence the local
currency is not stable.
• Blockchain will disrupt Financial Industry: The reality today is that Financial
Institutions are using BitCoin to disrupt other industries like the Title
Insurance industry. FIs are also looking at Blockchain for better Customer
Controls
• Blockchain as BOR for Financial transactions: There is a tremendous
potential in this space but we are not talking about the day-to-day
transactions you make against your Bank Accounts as your Bank is still the
Custodian of your Bank Accounts. BlockChain is more a ledger for inter-
institutional transfers and records.