Blockchain fundamentals
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This document provides an overview of blockchain technology and its applications for business. It defines blockchain as a distributed ledger that records transactions in grouped blocks chained together using cryptography. Blockchains can be public, private, or consortium. For business, blockchain enables shared ledgers and smart contracts to facilitate transactions across organizations more efficiently while reducing costs, risks of tampering, and increasing trust through transparency.
Blockchain fundamentals
- 1. Blockchain Fundamentals An overview of blockchain technology Linh Chau Software Engineer April 7th , 2018
- 2. 22 Agenda ▪ Introduction to Blockchain ▪ Blockchain for Business
- 4. 44 Starting from the ledger ▪ A book or computer file ▪ Record transactions: ▪ Money ▪ Assets ▪ Liabilities
- 6. 66 Problem Bank Factory Transport Provider Retailer Auditor ...inefficient, expensive, vulnerable.
- 7. 77 Solution → Distributed ledger Bank Factory Transport Provider Retailer Auditor shared, synchronized
- 8. 88 Definition of blockchain “Blockchain is a type of distributed ledger in which value exchange transactions (in bitcoin or other token) are sequentially grouped into blocks. Each block is chained to the previous block and immutably recorded across a peer-to-peer network, using cryptographic trust and assurance mechanisms.” Gartner IT Glossory(https://www.gartner.com/it-glossary/blockchain)
- 9. 99 Blockchain network key characteristics ▪ Consensus: For a transaction to be valid, all participants must agree on its validity ▪ Provenance: Participants knows where the assets came from and how its ownership has changed over time ▪ Immutability: No one can modify data after it’s been recorded to the ledger ▪ Finality: One single system of records, one single source of truth
- 10. 1010 Types of Blockchain Blockchain Public Blockchain Consortium Blockchain Private Blockchain
- 11. 1111 Public Blockchain ▪ Open, allows everyone in the network to join ▪ Using cryptographic mechanisms such as proof of work for verification ▪ Each transaction is verified and synced with every node before it is written into the system ▪ Slow and consumes a lot of computational power but secure and transparent
- 12. 1212 Private Blockchain ▪ Validator is centralized to one organization ▪ Read permissions may be public or restricted ▪ Verification process is faster and cheaper than in public blockchains ▪ This is used by our Car Dossier project
- 13. 1313 Consortium Blockchain ▪ Consensus process is controlled by a pre-selected set of nodes ▪ A “hybrid” between public blockchain and private blockchain ▪ Provide the efficiency and security of public blockchains ▪ Still allow to some level of central control and monitoring
- 14. 1414 Blockchain structure Data (transactions…) Block header: Ref number Timestamp H(prev. block) H(data) Data (transactions…) Block header: Ref number Timestamp H(prev. block) H(data) Data (transactions…) Block header: Ref number Timestamp H(prev. block) H(data)
- 15. 1515 Data structure of block ▪ Header: ▪ Block reference number ▪ Block’s creation time ▪ Hash of previous block ▪ Merkle root. ▪ Content: transaction data Data (transactions…) Block header: Ref number Timestamp H(previous block) H(data)
- 16. 1616 Hash “What is blockchain?” “What?” BA704D4D81D1C7D1555C09BE3E5C4B04EBEB8DA02982AAB9BD266773CF9775FC A4949E2C96DE26681C9519749E57BFB362BBAC2A8F40C89B24C35D1DE111336D SH A-2 56 ▪ Takes input string of arbitrary length, yields fixed length output ▪ One-way function ▪ Used to detect change in input
- 17. 1717 Merkle Tree ▪ Leaf node is a hash of transaction data. ▪ Non-leaf node is a hash of its previous hashes. ▪ Summarizes all the transactions in a block ▪ Maintain the integrity of the data ▪ Allows to verify that a transaction is part of a block quickly H1= H(A) H2= H(B) H3= H(C) H4= H(D) H12= H(1+2) H34= H(3+4) Merkle root H(12+34) Trx A Trx B Trx C Trx D
- 18. 1818 How it works Transaction is created Transaction is broadcasted Transactio n is validated Transaction s are grouped Transaction (inside block) is added to the chain Transaction is complete
- 20. 2020 Key Concepts Smart ContractShared Ledger ConsensusPrivacy
- 21. 2121 Shared ledger ▪ Records all transactions across business network ▪ Shared between participants through replication ▪ Permissioned, so participants see only appropriate transactions
- 22. 2222 Smart contract ▪ Agreement or set of rules that govern a business transaction ▪ Embedded in the blockchain ▪ Execute with the transaction
- 23. 2323 Privacy ▪ Ledger is shared, but participants require privacy ▪ Transactions need to be secure, authenticated and verifiable ▪ Ensuring appropriate visibility
- 24. 2424 Consensus ▪ The process by which transactions are verified ▪ Known methods: ▪ Proof of stake ▪ Multi-signature ▪ Practical Byzantine Fault Tolerance ▪ Blockchain for business needs “pluggable” consensus
- 25. 2525 Blockchain benefits Transaction time from days to near instantaneous Overheads and cost intermediaries Tampering, fraud and cyber crime Through shared processes and record-keeping Save time Reduce cost Reduce risk Increase trust
- 26. 2626 Start up with closed ICO >= $500k (2017)
- 27. 2727 Q&A
- 28. 2828