The document provides an introduction to blockchains, explaining distributed ledger technologies (DLT) as decentralized systems that ensure trust, accountability, and transparency. It details the definition of blockchain, its components, consensus mechanisms, and the differences between blockchains and traditional databases. The text also discusses popular algorithms like proof of work and proof of stake, highlighting their applications and characteristics.

1. Introduction to
Blockchains
J J ADRI JOVIN, M.Tech., PhD., Dip. Yoga, BGL,
Assistant Professor (Sl. Gr.)
Department of Information Technology

2. Distributed Ledger Technologies (DLT)
“The arc of the internet is now bending towards decentralization.”
— Naval Ravikant
• Decentralization – a major transformation
• Giving the rights to the user
• Crypto-economy
• Computer security engineer, applied cryptographer, and
distributed systems engineer
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3. DLT (Contd…)
• Distributed Ledger – a type of data structure
• Includes blockchains and smart contracts
• 3 basic components
• Data Model – maintains the current state of the ledger
• Language of transactions – changes the state of the ledger
• Protocol – used to build consensus among participants
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4. What is blockchain?
• Peer-to-peer distributed ledger
• Forged by consensus
• Combined with a system
• Used to build transactional applications that establish
• Trust
• Accountability
• Transparency
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5. Definition of blockchain
• According to Hyperledger
A blockchain is a peer-to-peer distributed ledger forged by consensus,
combined with a system for "smart contracts" and other assistive
technologies.
Smart contracts are computer programs that execute predefined
actions when certain conditions within the system are met.
Consensus refers to a system of ensuring that parties agree to a certain
state of the system as the true state.
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6. Bitcoin vs Blockchain
• Bitcoin made blockchain popular
• Bitcoin - Major innovation of blockchain
• Bitcoin is a use case for blockchain
• Transacted over an open, public, anonymous blockchain
network
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7. Blockchain – a little deeper perspective
• Subset of DLT
• Block - set of transactions that are bundled together and added
to the chain at the same time
• Block contains 4 pieces of metadata
• Reference of the previous block
• Proof of work, also known as nonce
• Timestamp
• Merkle tree root for the transactions included in this block
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8. Components of Blockchain
• Ledger: A distributed, immutable historical record
• Peer Network: Stores, updates, and maintains the ledger
• Membership Services: User authentication, authorization, and identity management
• Smart Contract: Program that runs on the blockchain
• Wallet: Stores users' credentials
• Events: Notifications of updates and actions on the blockchain
• Systems Management: Component creation, modification, and monitoring
• Systems Integration: Integration of blockchain with external systems.
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9. Blockchain Is Immutable
• If the data is tampered with anywhere in the chain, the links will
break
• This provides immutability and security.
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10. Transactions
• Record of an event, cryptographically secured with a digital
signature, that is verified, ordered, and bundled together into
blocks
• Cryptography has a key role to play both in the security, as well
as in the immutability of the transactions recorded on
blockchains.
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11. Databases vs Blockchains
Blockchains Databases
Write-only data
structure
Data can be easily
modified and deleted
Decentralized
applications
Centralized
applications
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12. Consensus Algorithm
• Ensures that the data on the ledger is the same for all the
nodes in the network
• Prevents malicious actors from manipulating the data
• Varies with different implementations
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13. Types
• Proof of Work
• Proof of Stake
• Proof of Burn
• Proof of Capacity
• Proof of Elapsed Time
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14. Proof of Work
• Involves solving a computational challenging puzzle in order to create new blocks
• Requires a huge amount of energy to be expended, given the computationally
heavy algorithm
• Has a high latency of transaction validation
• Concentration of mining power is located in countries where electricity is cheap
Proof-of-work (PoW) is the outcome of a successful mining process and, although the proof
is hard to create, [it] is easy to verify.
- 2016 Kudelski Security report
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15. Proof of Stake (PoS)
• Generalization of the Proof of Work
• Nodes are known as the 'validators‘ that validate the
transactions to earn a transaction fee
• Nodes are randomly selected to validate blocks
• PoS algorithm saves expensive computational resources that
are spent in mining under a PoW consensus
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16. Proof of Elapsed Time (PoET)
• Developed by Intel
• Hybrid of a random lottery and first-come-first-serve basis
• Each validator is given a random wait time
• The validator with the shortest wait time for a particular transaction
block is elected the leader.
• This "leader" gets to create the next block on the chain
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17. Proof of Authority
• Used for permissioned ledgers
• Uses a set of 'authorities', which are designated nodes that are
allowed to create new blocks and secure the ledger
• Require sign-off by a majority of authorities in order for a block
to be created
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18. References
• http://hyperledger.org/about
• https://github.com/hyperledger-archives/education/tree/master/LFS171x
• https://hbr.org/2017/02/a-brief-history-of-blockchain
• https://www.investopedia.com/terms/m/merkle-root-cryptocurrency.asp
• http://chimera.labs.oreilly.com/books/1234000001802/ch07.html
#_structure_of_a_block
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