Blockchain

Satyakam
satyakam@datablock.tech
DataBlock Technologies
Blockchain Introduction
What is a blockchain
Key elements in a blockchain
Properties of a blockchain
 Evolution of Blockchain

The concept of distributed Use of cryptocurrency as Blockchain applications Permissioned blockchain ICOs scams, Birth of IEOs
computing has been there cash in transactions beyond currency picking up Permissioned blockchain
since 1990s transactions apps getting corporate
attention

Pre 2009 2009 2011-12 2012-13 2013-14 2014-15 2015-17 2017-18 2019-20

In 2009, Satoshi Nakamoto Crypto exchanges, wallets Ethereum introduced Start of DApps, ICO and
introduced Bitcoin and the and easy transfers among smart contract on cryptocurrency frenzy
concept of blockchain with people blockchain
PoW consensus protocol

Now it is about NFT

 Technology behind Bitcoin Blockchain

Bitcoin/ cryptocurrency/ tokens

as electronic assets

Network of computers keep track of coin exchange Thus maintained

and maintain them in blocks of data Ledger is called blockchain

Bitcoin value is created through transaction processing, referred as

“mining,” which is performed by distributed processors called “mining
nodes or miners” of the peer-to-peer network
 Role of miners/ validators

Collects transactions
from the mining pool Validates them and
Puts them in large bundles called blocks
doesn’t allow the
conflicting ones

Computes cryptographic hashes over and Broadcast it to the network

over until if finds one "good enough to count"
Earns reward- new coins in return
 Blockchain ? 1/2
A Blockchain is a digital, distributed database of cryptographically secured transactions of network
token shared by all the nodes in the network.
Block records are permanent, immutable and time stamped.Blocks are added by linking to a
previous block following the protocol, to form a linear and chronological chain of blocks.

PB Hash PB Hash PB Hash PB Hash

Time stamp Time stamp Time stamp Time stamp
Header
Merkle root Merkle root Merkle root Merkle root
Nonce Nonce Nonce Nonce

Body

6
Blockchain based solutions can address issues of intermediaries
 Blockchain? 2/2

Immutable, time stamped, share record of transaction data

That captures transactions information from origin in a time stamped fashion creating provenance
Features
Technology for directly Multiple parties Entries are verified by the Transparent single truth
securely sharing participate network with audit trails
information

Characteristics
Decentralized Multiple writers Validation by Events are
Multiple owners Rights can be consensus registered in time
permissioned Trust by stamped,
cryptography, rules chronological
and network fashion

Provides higher security from manipulation and cyber threats

Generates higher trusts 7
 Blockchain Protocol

X
Public Blockchains are Allows non reversible transactions Without the need to trust/ help of a third party
Permission-less Across the globe

The underlying technology components are

cryptographic hash function, Each transaction contains
digital signature,
private-and-public key encryption, Unique transaction ID,
peer-to-peer (P2P) network, Input token address,
PoW/ PoS consensus algorithm Number of tokens transferred,
Output token address
Every node has complete information
Making the network de-centralised
 4 key elements in Blockchain
Decentralized & Distributed
Shared Ledger Cryptography
Replicated databases (Nodes) Hashing
Parties identified with public key Public & Private Keys and Wallet
(anonymised) Encryption
Resilient for failure of one or more nodes Digital Signature

Consensus Smart Contracts

Majority of Nodes agree on Validity of

Transactions Hold conditions under which specific
Includes validation of Double spending actions to be performed
PoW/PoS for validity Business logic to be assigned to
transactions on the blockchain
Facilitates Escrow services
 Centralized & Decentralized systems
Centralized Systems Advantages Disadvantages Decentralized Systems
Censorship resistant Mistakes can not be
corrected
Redundancy built in Long decision making
Difficult to hack High cumulative
maintenance

There are master node & slave nodes All nodes are equal
Prone to single point of failure Resilient to single point of failure

Centralized system can be distributed also. Ex google, Facebook

Public, Private Key Cryptography & Digital Signature
• Asymmetric Cryptography
• Key used to encrypt the message differs from the key used to decrypt it
• Public key is distributed while the private key is kept secret
• A message encrypted with a public key can be decrypted with the
associated private key only
Ram Shyam
Ram’s Private Key Ram’s Public Key
Message Message
Hello Hello

Cypher Text
Encrypt Decrypt

Shyam’s Public Key Shyam’s Private Key

 Cryptographic hash function
• Maps an arbitrary length input to a fixed-size output.
• Collision free: It is almost impossible to find two different inputs having same hash output.

a
Hash a = Hash b (where a != b)
b
• One way function: Given the output, it is infeasible to find the input.

a Hash(a) a
Infeasible
 Properties of a good hash function
• Miner change results in major change in the output

‘ Blockchain’ SHA256 hash

625da44e4eaf58d61cf048d168aa6f5e492dea166d8bb54ec06c30de07db57e1

PUZZLE
FRIENDLY

‘ blockchain’ SHA256 hash

ef7797e13d3a75526946a3bcf00daec9fc9c9c4d51ddc7cc5df888f74dd434d1

Maintains the integrity of the data

Digital Signatures

• Second cryptographic primitive (in addition to

Hash functions) that we will need to build Ajay’s private Ajay’s public
cryptocurrencies (and bitcoins) key
Hello
Ajay (signature) key

• What are the properties we need from digital Sign Verify

signatures? – same as properties we need from Hello Hello

handwritten signatures Ajay Vijay

ü Only you can sign, but anyone can verify

ü Signature tied to a particular document - can’t
be cut-and-paste to another document Digital signature using public-
(unforgeability) private key combination
ü Easy to produce but difficult to copy
Public key is the identity and secret key is like password to prove the ownership of the public key
Private key is used to sign a message
Digital Signatures Requirements & functionality
• Digital signature algorithms are randomized (esp. ones used in
cryptocurrencies)
ü Need good source of randomness
ü Bad randomness à Even an otherwise secure signature algorithm is not secure
• Signature algorithms have fixed sized inputs à How to sign large messages
(whose size is greater than input size of the algorithm)?
ü Use Hash(message) rather than message
• How to sign the entire Block chain?
ü Sign the entire hash pointer of the head block!
ü This signature “covers” the whole block chain structure
 DEMO

https://andersbrownworth.com/blockchain/blockchain