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Blockchain - Things you need to know

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Here are the basics of Blockchain - Distributed Ledgers, Hashing, Merkle Tree, Architectural principles, etc. – PowerPoint PPT presentation

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Date added: 15 October 2019
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Title: Blockchain - Things you need to know


1
CHAPTER II BLOCKCHAIN BASICS
BY. ABHISHEK NIRMAL JAIN FCA, ISA, FAFD, CBE
2
Lets Recapitulate
  • Blockchain is a cryptography based software
    technology which functions as a distributed
    ledger
  • that is heavily secured due to its attributes of
    peer to peer verification and authentication.
  • Blockchain is a decentralized computation and
    information sharing platform which enables
    multiple authoritative domains which do not trust
    each other to cooperate, coordinate and
    collaborate in a rational decision making
    process.
  • The Public Blockchain systems task is to ensure
    that all this individual copies are consistent
    with each other, that the local copies every
    node has are
  • information.

identical, and are updated based on the global
3
Features
Decentr- alised
Transpa- rency
Security
Anonym- ity
Immuta- bility
Trust Building
Irrevers- ible
4
Potential Benefits
5
Working of Cryptocurrency
A Verified Transaction can involve Crypto-
currency, Contracts, Records or any other
Information
Validation The Network Nodes Validates the
Transactions and the User Status using known
Some one request the Transaction
The requested transaction is broadcasted to a
P2P network nodes
Algorithms
Once verified, the transaction is combined with
other transactions, to create a new block of
data in the
The new block is then added to the existing
blockchain, in a way that is permanent and
unalterable
ledger.
Transaction is Complete
6
Public Ledgers
  • The local information is a public ledger. It is
    something like everyone possesses his or her own
    copy of data.
  • Public ledger work like a data base, Public
    Ledger contains the historical information which
    is available to everyone and can be utilized for
    future computation.
  • The ledger which is available in an environment
    to everyone containing the information of all the
    transactions.
  • The parties in the network by looking into their
    local public ledger will be able to understand
    that the particular transaction is valid or not
    valid.

7
Much more than public ledger
  • Blockchain works like a public ledger however
    requires ensuring of different aspects such as
    protocol for commitment, Consensus, Security and
    privacy authenticity.

Consensus / Validity
Protocol for commitment
Privacy and Authenticity
Security
8
Network Architecture
CENTRALISED NETWORK
DECENTRALISED NETWORK
DISTRIBUTED NETWORK
9
Continue.
  • Centralized Architecture Network The Complete
    reliance for the information is on the Single
    point/ Node. The entire information get lost or
    denied if the main node collapses
  • Decentralized Architecture Network The Reliance
    for the Information is on multiple points, which
    are again connected to their Individual nodes,
    these points acts as Mediators for individual
    nodes.
  • Distributed Architecture Network In a
    complete distributed architecture you have all
    the nodes participating in the information
    sharing process where nodes coordinate with each
    other.
  • Conclusion Blockchain is a platform which helps
    you to support this kind of decentralized
    platform or a distributed platform where you can
    share the information among yourselves in a very
    custody manner.

10
Hashing -
  • Hash function is a function that map
  • any sized data to a fixed size.
  • One advantage of this hash function is one way
    function, that means, for given a x and n, H(x)
    can be computed. But if H(x) is given then the
    corresponding value of x cannot be uniquely
    identified.
  • It can be said blockchain is nothing, but data
    structures which are built upon the concept of
    hash function.

11
Conti
  • This hash function concept is used widely in
    cryptographic context and this is called as
    cryptographically secured hash function. The
    properties of this cryptographically secured hash
    function are
  • Function is one way that means, given a x, you
    can compute H(x), but given H(x) you cannot
    compute x with any deterministic algorithm.
  • For any two different x1 and x2, the H(x)1 and
    H(x)2 will be different.
  • The cryptographically secured hash function have
    an important property which is called avalanche
    effect. The avalanche property of this
    cryptographically secured hash function - given
    an input whenever computing the digest, if you
    make little change in the input you will see
    significant change in the digest.
  • Link for Demo http//www.sha1-online.com/

12
Harber and Stornetta
  • The first use of this concept of
    cryptographically secured chain or blocks it came
    in 1991 in a paper by Harber and Stornetta.
  • What they did? They have taken parameters like
    the initial number in order the people have
    accessed the document, it started from 0 1 2 3,
    then corresponding change value constructed.
  • This particular architecture looks like something
    similar to blockchain, where you have multiple
    blocks of data and these blocks of data are
    connec
  • This was the first use of this concept of the
    chain o in securing this digital document.

ted by hash value. f blocks which was a earlier
version blockchain
13
Merkle tree
  • Merkle Tree is widely used and is also the
    foundation for blockchain concept. Lets
    understand what is a Merkle tree? Merkle tree is
    a tree structure, where the leaf nodes will
    contain the hash of the document and every
    individual node and intermediate node will
    contain the hash of the combination of the
    Childs.

14
A Chain of Blocks
The Longest Chain Rule ensures that network will
recognise the chain with most work as the main
chain. The chain with the most work is typically
the longest of the Chain.
15
Working of Bitcoins
  • Satoshi Nakamoto through his Bitcoin paper
    digital currency or crypto currency, which is
    completely Decentralised where no central
    authority (bank or a government) will have
    control over the currency.

S
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16
Continue.
The Wallet constructs the transactions, sign
using Senders Private Key, and broadcasts it
to the Network
The network nodes validates transactions based
on existing Blockchain and propagate the
transactions to the miners
The miners adds the transactions to the next
block to be mined within the time duration as
per the mining procedure
Once the Mining is done and the harsh is
obtained the block is included in the existing
blockchain in the network.
Network
Miners
Updation
Wallet
17
Building Blocks
18
Continue.
19
Blockchain 2.0
  • The concept of blockchain gradually applied to
    multiple other sectors like Healthcare industry,
    Banking and Finance, Government, Supply chain and
    many more, it is some times termed as blockchain
    2.0.
  • Satoshi Nakamoto in 2010 envisioned that "the
    blockchain design supports a tremendous variety
    of possible transaction types. Escrow
    transactions, bonded contracts, third party
    arbitration, multiparty signatures, etc.
  • Blockchain 2.0 expands the scope of the
    technology to enable the decentralisation of
    markets more generally, and the transaction
    involving variety of assets by providing
    registers for certificates and rights and
    obligations.
  • As blockchain 2.0 is code the new application is
    said to be running on a new set of protocols
    ("blockchain 2.0 protocol"). Blockchain 2.0
    applications would be akin to browsers, social
    networks and file sharing services

20
Continue.
  • The main idea behind Ethereum was to
    use blockchain in applications which were
    not limited to cryptocurrency, though it started
    with Crypto.
  • Architecture of Ethereum is more
    developer-friendly and allows more use-cases
    and applications.
  • Few of the applications made with the (https//
    www.dapp.com/) Ethereum Platform Dapps

21
Lets have your
22
Thats all
23
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