Blockchain is a distributed database that maintains a continuously growing list of records called blocks. Each block contains a timestamp and a link to the previous block. Blocks are encrypted and immutable, making the data within resistant to modification. The blockchain is managed by a peer-to-peer network with no central authority. This allows for transactions to be recorded and verified across the network independently and in a permanent manner. Key aspects that enable this include hashing, mining, and public/private encryption. While providing advantages like security and decentralization, blockchains also face challenges with efficiency and governance due to their design.

1. Blockchain
Definition, benefits and issues
The Innovation Network, Warwick Business School, July 2018
Marc Stephenson,Technical Director, Metataxis

2. About Metataxis
• Metataxis is an information management consultancy
• We help organisations manage their most important asset: information
• Architect, govern, organise and maximise use of information
• 16 years old and a client list of 200+
• Staff of experienced information management professionals
• Private, public and third sector clients
• Client range from SMEs to large multi-nationals
• Projects from 2 days to 2 years

4. Blockchain can be thought of as…
• A concept
• A framework
• A mechanism
• A platform
• An algorithm
• A protocol
• A technology - Digital LedgerTechnology (DLT)
• Having implementation “instances”

5. Blockchain is also…
• Powerful
• Simple – technically
• Complex – socially, economically…
• Subtle – the more you understand, the more you need to understand
• A disruptive technology? Or a foundational technology?
• Difficult to understand?

6. Blockchain vs. Bitcoin
• Bitcoin is implemented using Blockchain
• Bitcoin is the “largest” instance of Blockchain (so far)
• Blockchain has numerous other implementations
• For example, the Ethereum computing platform
Satirist JohnOliver onCryptocurrencies: “…everything you don’t understand about money
combined with everything you don’t understand about computers.”
Blockchain Bitcoin

7. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
https://en.wikipedia.org/wiki/Blockchain

8. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are "an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
It’s a massively distributed database.
There are many full/partial copies of
blockchains over many servers, in
many organisations, in many
countries, in many jurisdictions.
Similar to DNS.

9. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are "an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
It’s a continuously growing,
ordered list which means you only
ever add records, and only at the
end of the chain. Bitcoin
Blockchain currently 168 GB (13
May).

10. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are "an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
Blocks are timestamped and
encrypted to ensure they are not
tampered with (ensures block
integrity).

11. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are "an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
The timestamp is linked to other
blocks and encrypted which
further ensures block integrity.

12. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are "an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
The blocks are immutable - cannot
be changed once created, even if
you created the them.

13. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
It’s peer to peer – there is no
central server/s. No central
governing body (except the
underlying mathematics). Peers
collectively make decisions via
consensus.

14. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
It’s managed autonomously – no
single entity, person, organisation
or country in control (again, except
the underlying mathematics).

15. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
All blocks can be independently
verifiable, by anyone.

16. A Definition of Blockchain
A blockchain […] is a distributed database that maintains a
continuously growing list of ordered records called blocks. Each block
contains a timestamp and a link to a previous block. By design,
blockchains are inherently resistant to modification of the data — once
recorded, the data in a block cannot be altered retroactively.Through
the use of a peer-to-peer network and a distributed timestamping
server, a blockchain database is managed autonomously. Blockchains
are an open, distributed ledger that can record transactions between
two parties efficiently and in a verifiable and permanent way.The
ledger itself can also be programmed to trigger transactions
automatically.
Blocks can be more than just data
– they can be automatically
actionable. They they can “do”
something, or “instigate”
something with no user control or
mediation, so can be trusted (?)

17. To recap, Blockchain is…
• Distributed
• Timestamped and linked
• Encrypted
• Continuously growing
• Immutable
• Decentralised
• Verifiable
• Automatically actionable

18. Key Blockchain Concepts
• Encryption
• Hashing
• Mining

19. Blockchain Encryption
• Blockchain uses public-key encryption
• Public key = disseminated widely
• Private key = owner only
• Encrypted data embedded in each block
• Uses SHA-256 encryption (≈ 1037) permutations
• Deemed almost unbreakable
• But, quantum computing is coming…
https://en.wikipedia.org/wiki/Public-key_cryptography

20. Blockchain Hashing
• Blockchain uses hashing extensively
• Hashing is a mathematical “operator” (a function)
• Takes an input, produces an output (the hash)
• E.g.The bits that constitute a document (stored in a block) to a hash
• The hash appears random, irrespective of input
• The hash is one way
• Hash only reversible with a vast computation effort
Some text in
a document…
Hash function 5c504ed432cb51138bcf09aa5e8a410dd
4a1e204ef84bfed1be16dfba1b22060
Encryption Key+( )

21. Blockchain Hashes
• Identify every block – like a identifier
• Are quick to create
• Are quick to compare
• Have a fixed size
• Contain an encryption key
• Very “collision” resistant
• Different data = different hash (very nearly all the time)

22. Blockchain Mining
• An important mechanism of Blockchain
• Using Bitcoin mining as an example of Blockchain mining
• Creation of new Bitcoins and verification existing Bitcoins are done in the
same indivisible action
• Mining enables distributed trust – consensus algorithms
• Mining operation is defined via software code (a simple algorithm)
• Mining is why Bitcoin is practically unhackable

23. Bitcoin Mining
• Done via finding a “Proof-of-work” number (a “nonce”)
• Only way to find a nonce is to guess (create hashes)
• If you find a nonce – the Bitcoin is yours!
• Testing the nonce simultaneously verifies other hashes
• Bitcoin is algorithmically defined to produce a certain number of blocks over
time (about 1 every 10 minutes )
• Bitcoin = £4827 (2 July 2018), £6369 (13 May 2018)
• As more mining is done, the mining difficulty increases
• The bitcoin algorithm is updated to maintain a stable creation rate

24. Part of a Blockchain
Block: N
Timestamp: 17:15 01/01/2017
Data: Any data at all
Previous Hash: 0x67ea7b60 d0
Hash: 0xea34ad5c
Block: N+1
Timestamp: 17:17 01/01/2017
Data: Any data at all
Previous Hash: 0xea34ad5c
Hash: 0xf6e1da92 de
Block: N+2
Timestamp: 17:19 01/01/2017
Data: Any data at all
Previous Hash: 0xf6e1da92 de
Hash: 0xea3401sd

25. What’s good about Blockchain?
• Truly distributed
• Across any boundary – sovereign, legal or commercial (or is that bad?)
• Hence the use of Bitcoin in the DarkWeb
• Blockchain within a boundary is a Distributed Ledger (DLT)
• The hash is a very goodGUID
• Globally unique (persistent) identifier
• Internet-of-things and more
• Secure and private
• Uses strong encryption
• Effectively anonymous (or is that bad?)


26. What’s bad about Blockchain?
• Storing data is not efficient
• Store the hash and the “rest” is elsewhere
• Mining is exponentially expensive – by design
• Many servers, much energy, much time
• Consensus algorithms changes may improve this
• Blockchains only ever grow – by design
• Many servers, much energy, much time
• No single authority to mediate or govern
• What if it goes wrong?! Like recently…
• Is the encryption good enough?


27. An actual block
https://blockchain.info/block/00000
00000000000062e8d7d9b7083ea45
346d7f8c091164c313eeda2ce5db11

29. Questions?
marc.stephenson@metataxis.com