Blockchain
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The document discusses the concept, history, and application of blockchain technology, detailing its origins in the 1990s and the introduction of Bitcoin by Satoshi Nakamoto in 2009. It explains how blockchain operates as a decentralized, transparent ledger that records transactions securely through complex cryptographic techniques, empowering users with control over their funds without intermediaries. Additionally, it highlights various use cases of blockchain, including cryptocurrencies, smart contracts, and potential risks associated with its implementation.
![PUBLIC key cryptography
• Asymmetric encryption.
• Two parties involving in communication will have a pair of
keys public key and a private key. [RSA algorithm]
• These keys are mathematically linked but you cannot re-
engineer private key from public key and vice versa.
• When exchanging data both parties shares their public keys.
• Suppose Alice is sending a data to Bob. Alice encrypt the
data with Bob’s public key. Then sends the data. Bob on
receiving the data can decrypt the data using his private
key. Only bob is able to do this not even Alice. They require
to keep private key safe
• In Cryptocurrencies this makes sure that only the owner can
retrieve the money.](https://image.slidesharecdn.com/blockchain-190406101851/85/Blockchain-13-320.jpg)
Blockchain
- 1. Blockchain Application & Implementation ABHINAND VALASSERI
- 2. For today • Block chains are incredibly popular now a days. • How do they work? • How can they be used? • What are the threats to technology?
- 3. A LITTLE History • This technique was originally described by a group of researchers in 1991 and was originally intended to timestamp digital documents so that it is not possible to backdate them or to tamper with them. • 2009 Satoshi Nakamoto (pseudonym) in his paper “ Bitcoin: A Peer-To-Peer Electronic Cash System ”. • This paper introduced a peer-to-peer version of electronic cash which allows to conduct online payments without need of a bank as intermediate.
- 4. WHAT IS IT ACTUALLY ? • A blockchain is a distributed ledger which is open to anyone. • once a data has been recorded inside a blockchain it becomes very difficult to change it. • Each participant (device) in the blockchain network are termed as ‘node’. • Blockchain ensures transparency and integrity of transaction through mathematics and not through trust. • Persistent, transparent, public and append-only ledger
- 5. BLOCK Data (different) Hash(unique, on creation, changes) Previous block Hash (integrity)
- 6. BLOCKCHAIN OR BLOCKING CHAIN HASH : ZD23 PRE HASH : 0000 HASH : HY1T PRE HASH : ZD23 HASH : WRIO PRE HASH : HY1T HASH : ERTY PRE HASH : ZD23
- 7. THE Flow diagram Requestfora transaction TransactionisbroadcastedtoP2P network validation Networkof nodesvalidatesthe transaction Once verifiedthistransactionbecomes part of thenew blockfor ledger New block isaddedto existing blockchain Transactioniscomplete
- 8. GET into some details • Open ledger ANDY $15 Andy Bobby CandyDerby Andy -> Bobby $5 Bobby -> Candy $10 Candy -> Derby $20 $5 $10 $20 ANDY $15 Andy -> Bobby $5 Bobby -> Candy $10 Candy -> Derby $20 ANDY $15 Andy -> Bobby $5 Bobby -> Candy $10 Candy -> Derby $20 ANDY $15 Andy -> Bobby $5 Bobby -> Candy $10 Candy -> Derby $20 ANDY $15 Andy -> Bobby $5 Bobby -> Candy $10 Candy -> Derby $20 • Distributed ledger
- 9. THE WORKING Bobby Candy $10 $5 Andy -> Bobby $10 Bobby -> Candy $5 Andy Andy -> Bobby $10 Bobby -> Candy $5 $3Bobby -> Derby $3 Derby Bobby -> Derby $3 Bobby -> Derby $3 • Miners • Incentive
- 10. Proof-of-work • Modern computers can mine a block seconds. Modern computers are powerful • If someone tamper with blockchain and recalculates all hashes then system will be valid even though a block is modified • To solve this • Miner has to put a lot of computing power. • Bitcoin requires hash of block to begin with zeros. • Output of hashing function cannot be influenced. A lot of combinations have to be tried. Requires lot of computing power
- 11. Proof-of-work • This amount of zeros require is termed as ‘difficulty’. If machines gets more powerful difficulty will be increased by the Bitcoin team. • Difficulty : 6,379,265,451,411
- 12. Key features Public key cryptography P2P networks Blockchain program
- 13. PUBLIC key cryptography • Asymmetric encryption. • Two parties involving in communication will have a pair of keys public key and a private key. [RSA algorithm] • These keys are mathematically linked but you cannot re- engineer private key from public key and vice versa. • When exchanging data both parties shares their public keys. • Suppose Alice is sending a data to Bob. Alice encrypt the data with Bob’s public key. Then sends the data. Bob on receiving the data can decrypt the data using his private key. Only bob is able to do this not even Alice. They require to keep private key safe • In Cryptocurrencies this makes sure that only the owner can retrieve the money.
- 14. PUBLIC key cryptography • All blockchain transaction involves two parties. Sender (request initiator and receiver). Both have a public key • This public key or unique identification is received by each other.
- 16. P2p network • Distributed ledger ANDY $15 Andy Bobby CandyDerby Andy -> Boby $5 Bobby -> Candy $10 Candy -> Derby $20 $5 $10 $20 ANDY $15 Andy -> Boby $5 Bobby -> Candy $10 Candy -> Derby $20 ANDY $15 Andy -> Boby $5 Bobby -> Candy $10 Candy -> Derby $20 ANDY $15 Andy -> Bobby $5 Bobby -> Candy $10 Candy -> Derby $20 ANDY $15 Andy -> Boby $5 Bobby -> Candy $10 Candy -> Derby $20
- 17. Blockchain program • Blockchain program, not only in finance sector. • Currently implemented across multiple domains. • Blockchain can be implemented by using any language, • Solidity is the preferred • 24 hours is required to implement a new blockchain.
- 18. Blockchain transactions • Each transaction is verified by a miner by solving a complex puzzle. Once he solves the puzzle and verify the block he maintains and updates the ledger. • The mathematical principle ensures that the nodes automatically and continuously agree the current state of the ledger and every transaction in it. Ensures that everyone in network has same set of transaction and same set of ledger. • If anyone tries to corrupt a transaction, the nodes will not arrive at consensus and hence will refuse to incorporate the transaction in blockchain.
- 19. TYPES • Public: similar to Bitcoin, go ethereum. Anyone in the word can be a part of it. You can read and write data to this blockchain if you are a miner of part of peer-to- peer network as well. • Private: only allow specific central persons of an organization has the right to verify and add blocks to blockchain. Anyone on internet can view the blockchain. • Consortium: it is something public as well as private, here a group of people can verify and add transaction to blockchain. The creator has to specify the view of blockchain to public if required by him.
- 20. Blockchain use cases • Payment and transaction • Health care • Law enforcement agencies • Voting system
- 21. CURRENT IMPLEMENTATION • Cryptocurrencies • Smart Contracts
- 22. Cryptocurrencies • Concept of money • The ledger concept • Issues in this conventional system • Require a transaction fee for each transactions • Bank’s ledger is private and customer can’t even know where his own money is getting invested or utilized by the bank • A hacking attempt on ledger of bank can cause complete loss of our money. • Double spending issue • Bitcoin is a blockchain not build on blockchain tech.
- 23. Cryptocurrencies Benefits • You control your money not banks. • You can store your money on a smartphone or a pen drive. • Send money to anyone anywhere in world anytime. • No transaction fee or intermediate commissions required. • Your identity completely anonymous thus no one can track you even the receiver.
- 24. Smart contracts • First used by Nick Szabo in 1997. He wanted to use a distributed ledger to store contracts. • Similar to real world, difference is that they are digital • Smart contracts are tiny computer programs that are stored inside a blockchain. • Kickstarter • Removes the middle man. • Loans to offer automatic payments, insurance companies can use them to process certain claims, postal companies can use them to payment on delivery.
- 25. Smart contracts • Ethereum • Special programming language: solidity (JavaScript like syntax) • Bitcoin has support for smart contracts it is limited. • A smart contract is a computer program that runs on a blockchain network. It can be used to automate the movement of cryptocurrency according to prescribed rules and conditions.
- 26. RISK IN IMPLEMENTATION • No system build perfect • Blockchain is not yet hacked • Faulty implementation
- 27. HACKING The 51% rule • Inherent to most cryptocurrencies • Proof of work protocol for verifying transactions. • Nodes spend vast amounts of computing power to prove themselves trustworthy enough to add information about new transactions to the database. • Creating an alternative version of the blockchain: fork • Attacker having dominance in computing power can make fork the authorized version • Double spending.
- 28. HACKING Smart-contract bugs • Fund, called the Decentralized Autonomous Organization (DAO), 2016, Ethereum. • Flaw allowed the hacker to keep requesting money from accounts without the system registering that the money had already been withdrawn, stole $60 million • Patch – Additional Smart Contracts, Centralized Kill switches. • Re forked new chain, old one is now Ethereum Classic
- 29. QUANTUM COMPUTING • It makes use of quantum bits or qubits instead of binary digits like we use in the current computing system. • Quantum bits (qubits) which had multiple values at the same time • 100 million times faster than current systems • Cryptocurrencies work on public key cryptography. • Only on forward creation of key must be made possible (easy) • Always a way to go backward. By going through every single possibility. • This link is equal to the factors of a number which is a product of two enormous prime number. For the hackers to extract the private key, the hacker would have to work out the factors of that number which is the product of the prime numbers
- 30. QUANTUM COMPUTING • Shor’s Algorithm. (Quantum Algorithm) • Quantum Cryptography
- 31. CONCLUSION • Blockchain basically uses various mathematical functions and as well as algorithms to create a highly secure and distributed ledger system. Which enables transactions to take place with our need of a third-party or any need of transactions fee or commission. This is why blockchain is called as a trust less system. You don’t have to trust a third-party to make out your transactions.
- 32. THANK YOU
Editor's Notes
- #3: Gone through number of documents websites and video tutorials to give summarised idea about this Since we are masters in computer science. This is the tech of future. We all are supposed to know the topic. This seminar may fruitful to you. Promising tech. seniors
- #4: Not a real name. Referred original paper Tough subject
- #5: Explain ledger. Technical defenition
- #9: One can deny a transaction happened since there is no proof In distributed ledger. If one losses the ledger he can collect it from anyone in network. Every one in network has a complete copy of all transactions. Andy lost -> request Bobby :: Bobby no payback: modify the transaction he request Candy to do the same. [only gets accepted majority of chain is accepted ] Majority interest issue. Blockchain now is distributed all over world! Impossible.
- #10: 21 million left 3,373,838 2140 12.5 BTC 1 BTC = 3,43,567
- #11: Difficulty : 6,379,265,451,411
- #17: Central ledger corrupted One can deny a transaction happened since there is no proof In distributed ledger. If one losses the ledger he can collect it from anyone in network. Every one in network has a complete copy of all transactions. Andy lost -> request Bobby :: Bobby no payback: modify the transaction he request Candy to do the same. [only gets accepted majority of chain is accepted ] Majority interest issue. Blockchain now is distributed all over world! Impossible.
- #25: Working of kikstarter Middle man