The document discusses the evolution of blockchain and cryptocurrency, highlighting key innovations such as peer-to-peer networks, distributed ledgers, and consensus mechanisms. It compares Bitcoin and Ethereum, emphasizing the advantages of smart contracts and the use of blockchain in various applications, including supply chain management and decentralized autonomous organizations. Additionally, it addresses when to use and not to use blockchain technology based on specific needs and conditions.

1. Better
software,
faster
MEETUP 31 AUGUST

2. BLOCKCHAIN
IN ACTION
Disruptive technology under the loop
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Roy Wasse / Twitter @roywasse

3. Encantado
◦ Roy Wasse
◦ Co-Founder OpenValue
◦ NLJUG Board member
◦ Blockchain & cryptocurrency fan 
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4. Trust is obsolete
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5. Evolution of digital cash
80’s 1st wave
• Digital Tokens
• Digicash
90’s 2nd wave
• E-gold
• Paypal
00’s 3rd wave
• Bitcoin & Blockchain
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6. 6

7. Two generals problem
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8. Issues payment system w/o bank
How to guarantee
messages arrive at
destination
How to do prevent
manipulation
How to make sure
a coin is only spend
once!
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9. Basic idea: don’t use messenger
◦ Image generals consult a nearby village
◦ 5% chance peasant from village gives wrong info
◦ Asks any 6 peasants, chance 4 giving incorrect information is
0,05 * 0.05 * 0.05 * 0.05 = 0,00000625%
◦ A malicious peasant will not be able to manipulate transaction
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10. 4 key
innovations
◦ Peer 2 Peer network
◦ Distributed Ledger
◦ Consensus mechanism
◦ Incentive to process
transactions through ‘proof
of work’
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11. Blockchain structure
◦ Every node records all transactions / holds
copy
◦ Transactions are collected in a block
◦ Every block links to the previous block
◦ New block should be accepted by the majority
of the nodes
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12. Size blockchain
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https://blockchain.info/nl/charts/blocks-size

13. Blockchain deep
dive: Hash
◦ Input “Hashing is niet ingewikkeld”
◦ Take position in alphabet for each letter,
add it all together. :
8+1+19+8+9+14+7+0+9+19+0+14+9+5
+20+0+9+14+7+5+23+9+11+11+5+4 =
240
◦ Multiply by 1 million
◦ Divide it by Julian date 28 june 2017 =
2457932.922454)
◦ Uitkomst = 97,64302 = Hash
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Original Hash

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15. Buying a cup of coffee
with BTC
◦ Julian buys a cop of coffee from Bob the barista and pays
with BTC
◦ Bob has to publish his bitcoin address, Julian then signs a
transaction wit his private key and sends it over the
network and only Bob can redeem the bitcoins send.
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16. 16

17. 17

18. 18

19. 19

20. Public/Private key encryption
◦ Encryption: Hello -> position + 1 -> Ifmmp
◦ Asymmetric encryption
◦ Key to read information not the same as one used to decrypt
◦ Elliptic Curve Multiplication used to derive Public key
◦ Lot safer than RSA, which is pretty safe
◦ y2 = x3 + ax + b
◦ Bitcoin address is SHA-256 hash from public key
◦ Base 58 encoded to make it (a bit) more readable
◦ Relatively safe for quantum computing
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21. Simplified
Bitcoin
Transaction
◦ Sender should acquire public key hash (bitcoin
address) from recipient
◦ Sender signs the transaction with his private key and
sends it to nodes in the bitcoin network
◦ Network checks if sender is allowed to spent the
bitcoins involved
◦ Recipients wallet detects transaction, runs
unlockingscript with that proofs he has private key
related to public key hash
◦ Transaction is put in a block
◦ Once block is adopted by blockchain, transaction is
settled
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22. 22

23. Mining & Consensus
◦ Nodes in network are incentivized to process next blocks = mining
◦ Miner solves crypto puzzle to process block = Proof of Work
◦ Other miners check if puzzle is solved correctly
◦ Blockchain is eventually consistent
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0
1 2 3

24. Concept of Proof of work
◦ “Hashing is niet ingewikkeld”
◦ For each letter, take position in alphabet and add:
8+1+19+8+9+14+7+0+9+19+0+14+9+5+20+0+9+14+7+5+23+9+11+11+5+4 = 240
◦ Multiply with one million
◦ Divide outcome by a missing number causing the result to start with 97 and end with 02:
◦ 240 * 1.000.000 / ? = 97,…02
◦ Now find ?
◦ If ? = Julian date 28 juni 2017 = 2457932.922454 a correct result is found: 97,64302
◦ Checking the outcome is easy, finding the missing parameter is hard
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25. Proof of work for bitcoin
◦ Nodes are all trying to process the next block by solving crypto puzzle
= Finding correct proof of work hash = mining
◦ The solution must be set in Block Header Field Nonce
◦ This nonce is a SHA-256 hash
◦ Bitcoin protocol dictates required number of leading zero’s for this hash => sets difficulty
◦ Correct hash is based on transactions in the block and other info in the block
◦ Every node checks if proposed block has correct nonce
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26. Exponential growth of Hashing power
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28. Ethereum
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29. Vitalik Buterin
◦ Son of Russian computer scientists
◦ In 2011 as a 15 yrs old started publishing about bitcoin
◦ Founder of Bitcoin magazine
◦ In 2013 financially secured for life
◦ 7 transaction per second doesn’t cut it
◦ Blockchain has more potential
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30. Blockchain as platform
◦ Blockchain as distributed computer
◦ Founded in 2014, 30 juli 2015 operational
◦ Ether (ETH) instead of Bitcoin
◦ Then: 2000 ETH per BTC. Or $0,30 per ETH.
◦ Now: +/- 10 ETH per BTC. Or +/- $250 per ETH
◦ 12 seconds per block instead of 10 minutes
It’s all about smart contracts
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31. Smart contracts
◦ Loop constructs
◦ Turing complete, Gas for transactions
◦ Every node in can execute a contract with the EVM
◦ Code your own (solidity)
◦ Still maturing
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33. Just send ETHER
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34. Or trigger another contract
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35. Contract responds
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36. Chain reaction
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37. Multiple parties
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38. Multiple contracts
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39. Distributed Anonymous Organization
◦ 100% autonomous organization on the Ethereum blockchain
◦ Goal: Funding commercial & non profit organizations
How it works:
1. Anybody can exchange Ether for DAO token and become an investor
2. Everybody can do a business proposal
3. Investors vote for ideas with DAO token
4. Winning proposals get funding
5. Investors become shareholders and recieves share of profit
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40. DAO (2)
◦ Written down in Smart Contracts
◦ In May 2016 $150 million was collected
◦ Unintended use of code in contract…$50 M was stolen
◦ Hard fork applied by Vitalik and core ethereum team
◦ 85% nodes joined.
◦ 15% did not. Went on and became Ethereum classic. Currently +/-
10% of Ether marketcap
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41. Some Ethereum blockchain tokens
◦ TenX, Tokencard & Monacocard: Wallet with
cryptocurrency linked with VISA card
◦ Steem. Get paid for publishing content
◦ Trutheum. Marketplace for ‘truth requests’
◦ EthLance. Freelance opdrachten bemiddelen
◦ Augur. Factoring through blockchain
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42. Altcoins
◦ LiteCoin. Based on BTC code, improved
performance
◦ Dash. BTC like. Instant payments, levels of
anonimity. Wallet accepted by Apple
◦ IOTA. No blockchain. No fees. Ideally
suited for IOT applications such as Drone
delivery
◦ RIPPLE. Centrally managed. Optimized for
financial institutions. No mining. Verify
transaction before its settled
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43. 43

44. Private blockchain
◦ As part of Public blockchain as a Sidechain (aka Off chain)
◦ Ethereum popular choice, but does this make sense?
◦ Ether, Gas & mining ‘hardcoded’ in system
◦ Maybe all you need is a distributed ledger
◦ Lots of other options for a private blockchain:
◦ OpenChain
◦ Hyperledger (IBM)
◦ Multichain
◦ Stratis
◦ NEO
◦ Azure BAAS / Coco
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45. Example use cases
◦ Unilever, Nestle, Walmart, Tracking & tracing of food in logistic chain
◦ Bitnation. Record laws, regulations & jurisdictions and provide dispute resolution
◦ Swarm City. Peer2Peer sharing platform
◦ Guts tickets. Prevent theater tickets from being sold in black market.
◦ Land registry. Georgia records land ownership in blockchain.
◦ Rent out your house. In Singapore renting a house is possible though P2P blockchain
◦ Digital ownership. Who owns what music rights
◦ And digital currency. Senegal is considdering a national blockchain currency
◦ ….
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46. “If there’s no central authority to go to, after
someone denies data recorded in the
blockchain is correct. What are you going to
do?”
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47. When to use blockchain
◦ Cut out the middle man or regulator
◦ If central authority is missing, eg. free market trading
◦ Transactions that require audit trails: eg. supply chains
◦ Triggering of events without anyone being responsible.
◦ Guarantee anonimity (e.g. auction)
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48. When not to use
◦If a regular database suffices
◦ Organization wants to have full control over their services and
data
◦ Performance is very important
◦ Continuous updating of software is needed
◦ Regulations require specific means of storage
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49. BLOCKCHAIN in
your next
application?
And ready to invest in cryptocoins?
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