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Introduction to blockchain and smart contracts

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Knowledge provider for blockchain
and smart contract technology

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OUR TEAM
André Wolke Meher Roy Sebastian Bürgel

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Train a generation of developers to
leverage blockchain technology in
order
to improve how we handle
financial assets, bui...

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Introduction to blockchain and smart contracts

  1. 1. Knowledge provider for blockchain and smart contract technology
  2. 2. OUR TEAM André Wolke Meher Roy Sebastian Bürgel
  3. 3. Train a generation of developers to leverage blockchain technology in order to improve how we handle financial assets, build organizations and structure societies. OUR MISSION
  4. 4. The blockchain will be to banking, law and accountancy what the Internet was to media, commerce and advertising. Joichi Ito, Director of the MIT Media Lab
  5. 5. YOUR INDUSTRY Schedule a free 1 hour technology evaluation session with us. We understand your industry and business need and tailor a blockchain-driven course for you.
  6. 6. Decentralized Autonomous Organizations Sebastian Bürgel
  7. 7. From To Amount 1 2 15 3 1 10 2 3 20 3 2 200 2 1 10 1 3 50 2 4 20 LET‘S BUILD A BLOCKCHAIN Use-case: logging of financial transactions
  8. 8. From To Amount 1 2 15 3 1 10 2 3 20 3 2 200 2 1 10 1 3 50 2 4 20 PROBLEM: MUTABILITY No inherent security against: Hacked database Rogue admin 5000
  9. 9. From To Amount 1 2 15 3 1 10 2 3 20 3 2 200 2 1 10 1 3 50 2 4 20 From To Amount 1 2 15 3 1 10 2 3 20 3 2 200 2 1 10 1 3 50 2 4 20 BATCH TRANSACTIONS IN BLOCKS
  10. 10. From To Amount 3 2 200 2 1 10 BATCH TRANSACTIONS IN BLOCKS From To Amount 1 2 15 3 1 10 2 3 20 From To Amount 1 3 50 2 4 20
  11. 11. CHAIN THE BLOCKS Block Number - 1 From To Amount 1 2 15 3 1 10 2 3 20 Digital root of block: 1 + 2 + 1 + 5 + 3 + 1 + 1 + 0 + 2 + 3 + 2 + 0 = 21 2 + 1 = 3
  12. 12. Block number – 2 / digital root of previous block - 3 From To Amount 3 2 200 2 1 10 CHAIN THE BLOCKS Block Number - 1 From To Amount 1 2 15 3 1 10 2 3 20 Digital root of block: 3 + 3 + 2 + 2 + 0 + 0 + 2 + 1 + 1 + 0 = 14 1 + 4 = 5
  13. 13. Block number – 2 / digital root of previous block - 3 From To Amount 3 2 200 2 1 10 CHAIN THE BLOCKS Block Number - 1 From To Amount 1 2 15 3 1 10 2 3 20 Block number – 3 / digital root of previous block - 5 From To Amount 1 3 50 2 4 20
  14. 14. Block number – 2 / digital root of previous block - 3 ( actually 7! ) From To Amount 3 2 200 2 1 10 LET’S CHEAT AGAIN Block Number - 1 From To Amount 1 2 15 3 1 10 2 3 20 Block number – 3 / digital root of previous block - 5 ( actually 9! ) From To Amount 1 3 50 2 4 20 5000
  15. 15. INHERENT VALIDITY Changes in a block invalidate all following blocks.
  16. 16. Ledger Jon → Alice Bill → Jon Alice → Bob 2 0 3 0 1 0 Ledger Jon → Alice Bill → Jon Alice → Bob 2 0 3 0 1 0 Ledger Jon → Alice Bill → Jon Alice → Bob 2 0 3 0 Ledger Jon → Alice Bill → Jon Alice → Bob 2 0 3 0 Ledger Jon → Alice Bill → Jon Alice → Bob 2 0 3 0 1 0 Ledger Jon → Alice Bill → Jon Alice → Bob 2 0 3 0 1 0 10 ETH to Bob BLOCKCHAIN + P2P NETWORK
  17. 17. IMMUTABILITY Nobody else will accept a transaction which is based on a modified version of the blockchain.
  18. 18. “It is very possible that... one machine would suffice to solve all the problems... of the whole [world]”
  19. 19. BLOCKCHAIN PLUS SMART CONTRACTS Ethereum blockchain with smart contracts Bitcoin blockchain
  20. 20. Block number – 2 / previous block hash - 3eb571a… From To Amount 3 2 200 2 1 10 ADDING CONTRACT TO OUR BLOCKCHAIN Block Number - 1 From To Amount 1 2 15 3 1 10 2 3 20 Block number – 3 / previous block hash - a97b130… From To Amount 1 3 50 2 4 20
  21. 21. Block number – 2 / previous block hash - 61b49d1…… From To Amount Payload 3 2 200 “Hello World!” 2 1 10 ADDING CONTRACT TO OUR BLOCKCHAIN Block Number - 1 From To Amount Payload 1 2 15 b1a12b4564… 3 1 10 2 3 20 Block number – 3 / previous block hash - 97bc510… From To Amount Payload 1 3 50 2 4 20 054e120380… Contract deployment Send data to contract id 2 is a contract Contract sends money to its creator! Contract deploys another contract!
  22. 22. SMART CONTRACT PROGRAM ON A BLOCKCHAIN, WHICH CAN CONTROL FINANCIAL ASSETS =
  23. 23. A NEW DIMENSION FOR PAYMENTS Since ~ 10.000 years Transaction of financial assets from and to: - People - Organizations
  24. 24. Since 07/30/2015 3:26 UTC (Ethereum genesis block): Transaction of financial assets from and to: - People - Organizations - Programs A NEW DIMENSION FOR PAYMENTS
  25. 25. SMART CONTRACT – Example (Timelock)
  26. 26. SMART CONTRACT – Example (Timelock) https://github.com/SCBuergel/timeLock-smartContract
  27. 27. SMART CONTRACT – Example (Timelock)
  28. 28. SMART CONTRACT – Example (Timelock)
  29. 29. contract DAO_Creator { function createDAO( address _curator, uint _proposalDeposit, uint _minTokensToCreate, uint _closingTime, string _tokenName, string _tokenSymbol, uint8 _decimalPlaces ) returns (DAO _newDAO) { Decentralized Autonomous Organizations Smart contracts can be arbitrarily complex… Like by-laws in corporations or investment funds.
  30. 30. Living on the Ethereum blockchain Aimed at investing in sharing economy / IoT Controlled by investors (“DAO token holders”) Currently in possession of over $150 M (in Ether) THE DAO (Experiment!)
  31. 31. Funding period: give Ether, get DAO tokens Submission of funding proposals: have to be whitelisted by curators Voting period: votes according to investment Receiving Ether: ROI Splitting: spawning of child-DAO CORE PROCESSES IN THE DAO
  32. 32. A range of security / market mechanism endanger assets in the current version of The DAO E.g., the “Stalker attack”: User A does not trust The DAO and initiates a “split” User B has a lot of tokens and follows A A cannot get their funds out since B can veto everything B extorts funds from A: “give me 90% and I leave you alone” CURRENT ISSUES OF THE DAO
  33. 33. Liability? Link to the real world? Incentive for paying back anything to DAO? How can it protect physical assets (e.g. copyright)? THE DAO: High Level Open Questions
  34. 34. THANK YOU! http://validitylabs. org hello@validitylabs. org @validitylabs

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