Introduction to BlockChain

1. Anuj Agarwal
Welcome to World of Blockchain
8

3. High-Level Schedule
Bitcoin Blockchain
Usecases
Smart Contracts
Understanding
Blockchain
Blockchain and
Databases
First
Break
Second
Break
Closing
Presentation

4. Anything that is capable of being owned or controlled to produce value, is considered an asset
•can be tangible or intangible
•value can be converted into cash.
Cash also an asset.
Asset examples:
•Cars, value clothes (physical)
•Bonds, securities, repurchase agreements (intangible)
•Licenses & patents (intangible assets)
•Music, video, games (intangible, digital)
Value and Asset

5. A participant is a member of a business network
Customer, Supplier, Government, Regulator
Usually reside in an organization
Have specific identities and roles
A transaction is an asset transfer between two or
more participants, for example
•John gives a car to Anthony (simple)
•John gives a car to Anthony, Anthony gives
money to John (more complex)
A contract is set of conditions under which
transactions occur, for example
•If Anthony pays John money, then car passes
from John to Anthony (simple)
•If car won't start, funds do not pass to John (as
decided by independent third party arbitrator)
Participants, Transactions & Contracts

7. BlockChain
Simply defined a Blockchain is
little more than a:
Distributed
Secure
Logfile

8. Intrinsic Need for Blockchain
We should now have a clear and basic understanding
of the motivations behind bitcoin. The goal is a “peer-
to-peer version of electronic cash”, a bypass of the
current payment-processing middlemen, a digital
equivalent of you directly giving money. These
motivations lead us to blockchain technology.

9. What is Blockchain
A blockchain is a ledger of facts, replicated across several
computers assembled in a peer-to-peer network. Facts
can be anything from monetary transactions to content
signature. Members of the network are anonymous
individuals called nodes. All communication inside the
network takes advantage of cryptography to securely
identify the sender and the receiver. When a node wants
to add a fact to the ledger, a consensus forms in the
network to determine where this fact should appear in
the ledger; this consensus is called a block.

12. A database is a repository of structured information, grouped into spreadsheet-like
entities called tables. A simple example of such a table is a list of bank accounts, in
which each row contains an account number along with the balance of that
account.
Understanding Database

13. In MVCC, each transaction sees a
consistent snapshot of the data at
a certain point in time, even if part
of that data is in the process of
being updated by a
second simultaneous transaction.
MVCC
Concurrency control keeps our data (especially
financial) sane and secure, and it comes in
many forms. But all share the principle that
database operations are grouped into
“transactions”, which are treated atomically,
meaning that they succeed or fail as a whole.
Concurrency preserves consistency by locking
or freezing parts of a database while they are in
use by one transaction, to prevent other
transactions from operating on the same
information in a conflicting way.

14. 1. To increase reliability, so that if one copy of
the database is lost (e.g. due to a disk
failure), we can instantly switch over to a
second copy.
2. To increase throughput, if the volume of
operations goes beyond the capacity of a
single database server.
3. To reduce latency, so that processes running
in the Singapore office need not wait for
responses from a database sitting in Toronto.
Multi-master database replication
Concurrency control keeps our data (especially
financial) sane and secure, and it comes in
many forms. But all share the principle that
database operations are grouped into
“transactions”, which are treated atomically,
meaning that they succeed or fail as a whole.
Concurrency preserves consistency by locking
or freezing parts of a database while they are in
use by one transaction, to prevent other
transactions from operating on the same
information in a conflicting way.

15. Blockchains as distributed MVCC

16. Blockchains vs centralized databases
Disintermediation
The core value of a blockchain is
enabling a database to be directly
shared across boundaries of trust,
without requiring a central
administrator
Confidentiality:
A node has full visibility into: (a) the
database’s current state, (b) the
modification requested by a
transaction, and (c) a digital
signature which proves the
transaction’s origin.
Robustness:
Benefit of blockchain-powered
databases is extreme fault tolerance,
which stems from their built-in
redundancy.
Performance
Blockchains will always be slower
than centralized databases.

17. Do you need a Blockchain

18. •Unpermissioned ledgers such as Bitcoin have no single
owner — indeed, they cannot be owned. The purpose of an
unpermissioned ledger is to allow anyone to contribute data
to the ledger and for everyone in possession of the ledger to
have identical copies.
• This creates censorship resistance, which means that no
actor can prevent a transaction from being added to the
ledger. Participants maintain the integrity of the ledger by
reaching a consensus about its state. Unpermissioned
ledgers can be used as a global record that cannot be
edited: for declaring a last will and testament, for example,
or assigning property ownership. But they also pose a
challenge to institutional power structures and existing
industries, and this may warrant a policy response.
Unpermissioned ledgers and Permissioned ledgers
•Permissioned ledgers may have one or many owners.
When a new record is added, the ledger’s integrity is
checked by a limited consensus process. This is carried out
by trusted actors — government departments or banks, for
example — which makes maintaining a shared record
much simpler that the consensus process used by
unpermissioned ledgers.
•Permissioned block chains provide highly-verifiable data
sets because the consensus process creates a digital
signature, which can be seen by all parties. Requiring many
government departments to validate a record could give a
high degree of confidence in the record’s security, for
example, in contrast to the current situation where
departments often have to share data using pieces of
paper. A permissioned ledger is usually faster than an
unpermissioned ledger.

19. A hash function is any function that can be used to map digital data of arbitrary size to digital
data of fixed size, with slight differences in input data producing very big differences in output
data.
MD5, SHA1, SHA256
For example, the MD5 hashes of ‘abc’ compared to ‘abC’
abc
0bee89b07a248e27c83fc3d5951213c1
abC
2217c53a2f88ebadd9b3c1a79cde2638
“The Quick Brown Fox Jumped Over the Lazy Dog”
2dfd75162490ed3b4c893141f9ab37cf
The Hash Function

20. Blockchain Durability and robustness
Blockchain technology is like the internet in that it
has a built-in robustness. By storing blocks of
information that are identical across its network, the
blockchain cannot:
•Be controlled by any single entity.
•Has no single point of failure.
Bitcoin was invented in 2008. Since that time, the
Bitcoin blockchain has operated without significant
disruption.

21. Transparent and incorruptible
The blockchain network lives in a state of consensus,
one that automatically checks in with itself every
ten minutes. Two important properties result from
this:
•Transparency
data is embedded within the network as a whole, by
definition it is public.
•It cannot be corrupted
altering any unit of information on the blockchain
would mean using a huge amount of computing
power to override the entire network.

22. Blockchain Technology
From a technical point of view, the blockchain is an
innovation relying on three concepts:
•peer-to-peer networks,
•public-key cryptography,
•and distributed consensus based on the resolution
of a random mathematical challenge

23. A network of nodes
A network of so-called computing “nodes” make up
the blockchain.
Node
(computer connected to the blockchain network
using a client that performs the task of validating
and relaying transactions) gets a copy of the
blockchain, which gets downloaded automatically
upon joining the blockchain network.

24. How order of facts is managed?
Facts sent roughly at the same time may arrive in
different orders in distant nodes.
To guarantee integrity over a P2P network, you need a
way to make everyone agree on the ordering of facts. You
need a consensus system.
The blockchain implements another algorithm, the proof-
of-work consensus, using blocks.

25. 1. Backed by United States
2. Controlled by US
3. Primarily US-only
4. Created by government
5. Supply controlled by politics
6. Easy to steal by muggers
7. Hard to steal by hackers
8. Hard to transmit
9. Hard to trace
10.Non-refundable
11.Used for crime
US Dollar Vs BitCoin
1. Backed only by other users
2. Controlled by users
3. International
4. Created based on work done
5. Fixed number issued
6. Hard to steal by muggers
7. Easier to steal by hackers
8. Easy to transmit
9. Hard to trace
10.Non-refundable
11.Used for crime

26. Secure Bitcoin Wallet
•Keep keys offline if you can
•Encrypt your wallet
•Make backup copies of your wallet
•If you are going to keep your savings at home, put
them on a computer you ONLY use for bitcoins
•Keep multiple wallets
•Always receive money to a new address
•Online wallets: use 2-factor authentication
•Don’t spend from your “savings” address(es)
•Don’t brag about how many coins you have or
where you stash them.

27. Future of Bitcoin?
I don’t know.
Is there a demand for digital currency?
•Prepaid credit cards ($77 billion/year)
•Western Union ($5 billion/year revenue)
•MoneyGram
•e-gold
•e-Bullion
•WebMoney
•DigiCash/eCash (bankrupt)
•Tencent QQ Qcoins
•Liberty Reserve
•Paypal ($5.6 billion/year revenue)

28. When people talk about items being bundled
together to form a block in the blockchain, they’re
actually talking about encrypting the data.
The hash value serves as a unique identifier for the
transaction data. It is relatively easy to go from the
transaction data to the hash value, but it is
impossible to go from the hash value to the
transaction data.
Bundling of Data

29. Blockchain technology is really just a framework that
combines different incentives to build trust in a
decentralized system.
The mathematical puzzle that is generated by the
blockchain protocol is a way of ensuring that the
miner receiving the prize is essentially random.
Miners have to work hard to solve the puzzle, but all
hard-working miners have essentially the same
probability of solving the puzzle and winning the
prize. This setup ensures that miners compete with
each other, but in a way that strengthens the
accountability of the blockchain record.
Why solve a mathematical Problem

30. The reason that the blockchain is safer is because it
removes the central intermediary. Normally, criminal
activity targets this trusted third party. Banks and
corporations are the entities responsible for
protecting our records and information, so they are
often targeted by criminals.
*an attacker would need to target at least 51% of all
blockchain participants in order to successfully alter
the data.
Why is the blockchain a safer way to store data?

31. Participants, Transactions & Contracts

33. Businesses are made on contracts. Hundreds and hundreds of them.
Traditional contracts are printed on huge amounts of paper and need
many layers of human approval before they are legally binding. They’re
time-consuming, expensive and often open to opposition.
Smart contracts do away with these problems. They are contracts
written in computer code and published to a public blockchain
network. The result is a contract capable of automated facilitating,
executing, and enforcing of the legal agreements made.
Smart Contract

34. Investment in Blockchain
Governments, large banks, software vendors and
companies involved in stock exchanges (especially
the Nasdaq stock exchange) are investing heavily in
the area.
For example, the UK Government recently
announced that it is investing £10M into blockchain
research and Santander have identified 20-25
internal use cases for the technology and predict a
reduction of banks’ infrastructure costs by up to
£12.8 billion a year.

35. Do you need a Blockchain ?

36. Pointless blockchain project
The database
Do you have a need for shared
Database ?
Multiple writers
Blockchains are a technology
for databases with multiple
writers..
Absence of trust
If multiple entities are writing to the
database, there also needs to be some
degree of mistrust between those entities.
Disintermediation
Blockchains remove the need for trusted
intermediaries by enabling databases with
multiple non-trusting writers to be modified
directly.
Transaction interaction
Blockchains truly shine where there is
some interaction between the
transactions created by these writers.
Product category is
still in its diapers.
A large proportion of these
incoming projects
have nothing to do with
blockchains at all.

37. Identify Management
Blockchain can help solve the
GDRP Issue
CSR Compliance
Special Purpose currency for
special activites.
Trade Finance
Remove intermediately in the
business . Smart contract s.
Supply Chain
Tracking of goods and
payments
Provenance tracking
Block chain can act as a source
for proving asset ownership.
Inter department
Permission Block chain can
reduce the cost due to multiple
reconciliation between
organization department
databases.
Business Use Cases

38. Blockchain in numbers
Global GDP
Will be stored in
Blockchain by 202510%
Financial Organizations
Are look for significant
investment in Blockchain in
next 2 years.
86%
Infra Saving
Blockchain will result in
more then 200 billion of
saving over next 5 years
200B
Trust
Executives believe trust is
the corner stone for
bussiness.
83%
Investment
Is invested in Blockchain
and Blockchain related
products
1.5B
Crypto currency
There are more then 300
cryptocurrency200

40. The Connected World