ConfDada, a conference hosting company, wants to implement a rewards points system that can be used across partner companies. However, they face several issues: other companies do not accept ConfDada's points; partners do not trust ConfDada's centralized database to track points; and there is no way to ensure the integrity of transaction data. ConfDada proposes a decentralized blockchain network where all partners maintain an identical distributed ledger, solving the trust and integrity issues. However, achieving consensus across the network poses challenges. ConfDada suggests a proof-of-stake approach where nodes stake a deposit to validate transactions, avoiding the need for costly mining. This satisfies all partners and engineers the blockchain solution.

1. BlockChain – The essentials
Manoj Ganapathi
Chief Architect, CodeOps

2. ConfDada is a conference hosting company and wants to issue
rewards points for its members/users who attend their events
The business team realizes the need to increase customer retention,
so they want to start issuing reward points for every event
The idea is that these reward points gives them discounts in their
events and events hosted by their partners and other agencies too.
Context

3. ConfDada starts issuing reward points..
But…runs into a major issue
•No other company entertains rewards points from ConfDada
•Although well rewarded, customers end up dissatisfied

4. ConfDada thinks about a solution
•How about using a single reward point system that works with all
partners and point issuers?
•This way, points issued in ConfDada can be redeemed elsewhere and
vice versa
•Feeling excited, ConfDada starts to approach different partners and
issuers

5. But ConfDada hits another problem…
•Reward points (and the system managing it) are completely owned by
ConfDada
•Partners say they cannot trust this system, as ConfDada may mint
reward points and make them bankrupt!

6. ConfDada has a solution…
•Why not a shared, distributed database!
•Every partner will get a read only copy replicated in real time over a
secure network!

7. But ConfDada hits another problem…
•Partners still don’t trust this system!
•They feel data can be changed/tampered in the database. Having a
copy of the database does not mean integrity of the data is
maintained

8. ConfDada goes back to the drawing board..
What they need is a:
•A token that is not owned by one company, so this way
interoperability is ensured
•A decentralized “ledger” that keeps all transactions:
• All transactions should be anonymized, but traceable
• Transactions should be immutable, so integrity is ensured
•Perhaps, this can be trusted because, no “minting” is possible

9. ConfDada tries to address immutability
Hashing to the rescue! Age-old technique
Ref: BlockChain Concepts – Jan-Erik Sandberg
“Transferred 50 Reward points to ConfDada”
SHA-256 Hash:
1A275663F62502E25737B037B15
868B57F5FDF3CFA33D34969873
2614F78B9F3

10. ConfDada tries to make transactions unhackable
Ref: https://blockgeeks.com/guides/what-is-hashing/
Solution: A Chain of blocks
Block Header contains:
● Version: The block version number.
● Time: the current timestamp.
● Hash of the previous block.
● Nonce
● Hash of the Merkle Root.

11. ConfDada approaches partners with a
solution..
•Suggests the decentralized ledger approach
•Whoever wants to participate in the rewards program will be part of
the network which keeps the chain of blocks
Every is happy, but there is still a problem...

12. How will consensus be achieved in the network?
If every node on the network keeps a record of all transactions, then
how will the double spend problem be addressed?
ConfDada suggests an approach called “Mining”
• Miners validate new transactions and record them on the global
ledger On average, a block is mined every 10 minutes.
• Miners compete to solve a difficult mathematical problem based on
a cryptographic hash algorithm.
• The solution found is called the Proof-Of-Work.

13. But there is a problem...
• Proof-of-work consensus is costly, very costly (takes all the
electricity out there)
• Also, partners are not happy with the throughput of the system and
the latency for each transaction
• The question partners ask is:
• Why use a complex, crypto lottery for proof-of-work for a closed network of
miners?
• Why not have a private network and a simpler consensus mechanisms?

14. ConfDada comes up with a solution
• Proposes a private network of nodes
• Propose everyone on the network have a deposit (stake)
• Any node that misbehaves will lose the deposit
• They call it “Proof-of-Stake”
Expensive mining is not required anymore!

15. Everyone is happy now….
We just engineered BlockChain!

16. Thank You
Manoj Ganapathi
@manojgr
https://www.linkedin.com/in/manojg/