Blockchain Bitcoin Cryptocurrencies introduction to Blockchain what is Blockchain what is Bitcoin Proof of Work FinTech Digital Money

1. Introduction to Blockchain
Mohammad Al-khalil
Al-Quds Open University
Shared Ledger Technology
“IN US WE TRUST”

2. Agenda
Introduction, Blockchain structure.
What is Blockchain
01
Introduction, Bitcoins,
Cryptocurrencies
02
Wallets, Bitcoin Exploerer, Mining Pools, Online mining
calculater, Cloud Mining
Cryptocurrencies Tools
03
Healthcare, Academic degrees, Election system
Blockchain Usecases
04

3. What is Blockchain?

4. Blockchain Definitions
Blockchain is public distrebuted
ledger (ledger of facts) replicated
across several computers assembled
in a peer-to-peer network.
Distributed Ledger
Blockchain is Append only Database
across a distributed network of
computers.
Permission
The blockchain is a back-end
database that maintains a distributed
ledger that can be inspected openly
Database
Blockchain refers to a type of data
structure that enables identifying and
tracking transactions digitally and
sharing this information across a
distributed network of computers,
creating in a sense a distributed trust
network
Data structure
The blockchain is an exchange
network for moving transactions,
value, assets between peers, without
the assistance of intermediaries.
Business definition

5. Blockchain History
Set of Blockchain Usecases
Different solution based on
blockchain technology in
Healthcare, Supply Chain and
Finance sectors
Hyperledger - Linux
The Hyperledger project
was founded in 2015,
when the Linux
Foundation announced the
creation of the
Hyperledger project
Bitcoin
Satoshi Nakamoto
published a white-paper
titled “Bitcoin: A Peer to
Peer Electronic Cash
System”
Back to Blockchain
Around 2014, attention
shifted from Bitcoin to
Blockchain, hundreds of
cryptocurrencies were
issued
Timestamp Tampered
The first work on a
cryptographically secured
chain of blocks was
described by Stuart Haber
1991 2008 2014 2015 2018

6. Blockchain Bitcoin
Blockchain is the technology behind Bitcoin.
Bitcoin is the digital token, and blockchain is the ledger that keeps track of who owns the digital tokens.
Blockchains could not be without the Internet.
You can’t have Bitcoin without blockchain, but you can have blockchain without Bitcoin
The blockchain is a meta technology because it affects other technologies, and it is made
up of several technologies itself
What is Blockchain
1
3
4
5
6
2

7. The blockchain is a meta technology because it affects other technologies, and it is made
up of several technologies itself
Blockchain is a decentralized, distributed database that is used to maintain a continuously
growing list of records, called blocks. Each block in general contains a timestamp and a link to a previous
Block.
A blockchain is a distributed database with no central authority and no point of trust (truth).
Blockchain could be applied only when there is need to higher security and on specific module
7
9
10
8
What is Blockchain

8. What is Blockchain
Backup Database
Database
Blockchain Network Database
Security by sharing

9. Ledger Digital Asset Network ParticipantsConsensus Mechanism
A continually updated, network
hosted ‘database’ of all
transactions on a blockchain.
comprised of blocks of
transactions (with metadata)
chained together by cryptography
Programmed into each
blockchain protocol, and
responsible for verifying
and updating transactions
on the network’s digital ledger;
not necessary in private
blockchains
Blockchain Components
The good transacted
on a blockchain;
cryptocurrency
provided the initial
proof of concept
Computing nodes with
access to the blockchain,
able to manipulate the
ledger and view past
transactions; may be pre-
approved or verified by a
Consensus mechanism

10. Blockchain Demo
DEMO

11. Blockchain vs Traditional
Without blockchain Peter would send his bank a request to send
$100 of his account to his friends’ account. The bank would check a
few things like whether Peter actually has the $100. If everything
checks out the bank will send Peters $100 to James’ account.
Without Blockchain
With blockchain Peter creates a transaction of $100 to James and
sends this transaction over the internet. This transaction is included in
a block. All miners check whether this is a valid transaction. If it is,
James has the $100 of Peter
With Blockchain
Central Authority

12. Node (verification)
Proof of Work
Block
Blockchain
Node
Blockchain Security

13. Blockchain Security
A hash, also known in long form as cryptographic hash function, is a mathematical algorithm that maps
data of arbitrary size to a bit string of a fixed size. In the case of SHA 256, the result is a string of 32
bytes.
The resultant 32 bytes makes it effectively impossible to reverse the output,
The function was designed to be a one-way function
SHA 256

14. Block Header
• The previous block hash
• Mining competition (timestamp, nonce, difficulty)
• Merkle tree root (binary hash tree root).
Block identifier
• Cryptographic hash
Merkle Trees
• The transactions in a block are
Structure of a Block

15. Cryptocurrencies

16. Money
Function of Money
• Medium of exchange.
• Store of value
• Unit of account.
Money is any good that is widely used and accepted in transactions involving the
transfer of goods and services from one person to another.
• Commodity money.
• Fiat money.
• Bank money.
Type of Money

17. 01 Storg Cost
Have no storage costs. They take up no physical space regardless
of amount
02 Pseudonymous
Neither transactions or accounts are connected to real world
identities. You receive Bitcoins on so-called addresses, which are
randomly seeming chains of around 30 characters.
03 Secure
Bitcoin funds are locked in a public key cryptography system. Only
the owner of the private key can send cryptocurrency. Strong
cryptography and the magic of big numbers makes it impossible to
break this scheme
04 Permissionless
You don‘t have to ask anybody to use cryptocurrency. It‘s just a
software that everybody can download for free. After you installed
it, you can receive and send Bitcoins or other cryptocurrencies. No
one can prevent you. There is no gatekeeper
Why Cryptocurruncy

18. What is Bitcoin
Bitcoins Exist as Records of Bitcoin Transactions
We define a [bitcoin] as a chain of digital signatures. Each owner
transfers [bitcoin] to the next by digitally signing a hash of the
previous transaction and the public key of the next owner
and adding these to the end of the coin. A payee can verify the
signatures to verify the chain of ownership.
—Satoshi Nakamoto, Bitcoin Whitepaper

19. What is Bitcoin
Peer-to-peer electronic transactions and interactions01
02
03
Without financial institutions
Cryptographic proof instead of central trust
04 Put trust in the network instead of in a central
institution

20. World of Cryptocurrencies
Neutral
Governments that have not called
individual trading into question or that
have stopped short of giving any legal
or regulatory protection to users of
cryptocurrencies.
Restricted
Governments that have taken steps to
curtail virtual currencies, but stopped
short of banning individuals from
trading or exchanges operating with
cryptocurrencies.
legal
Removing bitcoins from double
taxation policies, the government also
legalized bitcoin and said it can be
used just like money
Illegal
Nations that have outlawed
cryptocurrencies within their borders,
some of which threaten punitive
sanctions to individuals caught using
them

21. Blockchain structure
Nodes(wallets)
ledger
miners
Network consensus

22. Transaction Flow
The request broadcast to P2P
network consisting of
computer knows as nodes to
MEMPOOL
Once verified all transactions
grouped into one block
Proof Of Work
the new block added to
blockchain and all transaction
inside block marked as
confirmed
confirmation
The network of nodes validate
the transaction using known
algorthim
Transaction Validation
Miners starts to solve difficult
math problem based on
merkle root and nounce
Proof Of Work
Alice
Bob
Unconfirmed Transaction

23. Bitcoin Mining
01 Miners validate new transactions and record them on the
global ledger
Miners receive a reward when they solve the
complex mathematical problem
Miners compete to solve a difficult mathematical problem
based on a cryptographic hash algorithm. The solution found
is called the Proof-Of-Work.
When a block is 'solved', the transactions contained
are considered confirmed
02
03
04
Mining is the mechanism that allows the blockchain to be a decentralized security. It secures the system and
enable a system without a central authority

24. Transaction Verification
 Verification
 Verify that the digital signature are sound
 Verify that the inputs are unspent
 Verify that the sum of output<= sum of input

25. Proof-Of-Work
What is Proof of work?
It’s method to ensure that the information (the new block)
was difficult (costly, time consuming ) to be made
It costs processing power
Which can be translated to
HARDWARE ENERGY TIME

26. Unconfirmed Transaction
Overloaded Network
The Bitcoin network is overloaded. Due to its limited capacity, the network simply cannot process
transactions fast enough, especially during high transaction periods..
.
Fuel
The blockchain fee is too low or absent. The
lower the blockchain fee, the lower you
transaction's priority in the Bitcoin network.
Therefore, the longer the confirmation will
take
Time
You have just made the transfer. The Bitcoin
network needs at least 10 minutes, on
average, to include the transaction in a block
Email confirmation
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Canceled Block(Reversed)
Transaction returned to unconfirmed pool
after the miner lose the race in longest chain
rule
Unconfirmed
Transaction

27. Demo Merkle Tree
Explorer DEMO
Merkle Tree Demo

28. DEMO
Online Calculator

29. Cryptocurrencies Tools

30. CPU (Central Processing Unit)
In the beginning, mining with a CPU was the only way to mine bitcoins.
Now, you might mine for decades using your laptop without earning a single coin.
GPU (Graphical Processing Unit)
About a year and a half after the network started, it was discovered that high end graphics
cards were much more efficient at bitcoin mining and the landscape changed. While any
modern GPU can be used to mine, the AMD line of GPU architecture turned out to be far
superior to the nVidia architecture for mining bitcoins
FPGA (Field Programmable Gate Array)
While the FPGAs didn't enjoy a 50x - 100x increase in mining speed as was seen with the
transition from CPUs to GPUs, they provided a benefit through power efficiency and ease of
use. A typical 600 MH/s graphics card consumed upwards of 400w of power, whereas a typical
FPGA mining device would provide a hashrate of 826 MH/s at 80w of power.
ASIC (Application Specific Integrated Circuit)
The bitcoin mining world is now solidly in the Application Specific Integrated Circuit (ASIC) era.
An ASIC is a chip designed specifically to do one thing and one thing only. Unlike FPGAs, an
ASIC cannot be repurposed to perform other tasks. An ASIC designed to mine bitcoins can only
mine bitcoins and will only ever mine bitcoins.
Bitcoin Mining Hardware

31. Bitcoin Mining Hardware
ASIC (Application Specific Integrated Circuit)

32. Pizza Day
Pizza Day

33. A mining pool is the pooling of resources by miners, who share their processing
power over a network.
Split the reward equally, according to the amount of work they contributed to the
probability of finding a block.
A "share" is awarded to members of the mining pool who present
a valid partial proof-of-work.
Mining Pools

34. Mining Pools

35. Mining Pools vs Cloud Mining
Mining pools are for people who have mining hardware to split profits.
Cloud mining offers a mechanism to mine a cryptocurrency such as bitcoin
without having to install all the hardware and related paraphernalia.

36. Private wallet:
• You will hold the private key.
• Transactions will be issued only by you.
• You have to secure your coins/tokens.
Exchange Wallet:
• You will not hold the private key of the wallet.
• Transactions will be issued by the exchange.
• The exchange should secure your coins/tokens.
Bitcoin Wallet

37. Bitcoin Private/Public keys

38. DEMO
Wallet Demo

39. Bitcoin Exchange
A crypto-exchange is a digital marketplace where traders
can buy and sell coins using different fiat currencies.
A currency exchange is an online platform that acts as an
intermediary between buyers and sellers of the cryptocurrency.
DEMO

40. •Both are decentralized peer-to-peer networks, where each participant maintains a
replica of a shared append-only ledger of digitally signed transactions.
•Both maintain the replicas in sync through a protocol referred to as consensus.
Blockchains that are private or permissioned work similarly to public
blockchains but with access controls that restrict those that can join the
network, meaning it operates like a centralised database system of today that limits
access to certain users
Private Blockchains
The similarities of public and private blockchain

41. Private EXAMPLE
HYPERLEDGER
Hyperledger is an open source collaborative effort created to advance cross-
industry blockchain technologies. It is a global collaboration including leaders in
banking, finance, Internet of Things, manufacturing, supply chains, and
technology. The Linux Foundation hosts Hyperledger under the foundation.

42. Thank you