Digital Transformation using AI

and Emerging Technologies

Term IV Elective
Session 11
Agenda
• Blockchain - Origins
• What problem is it trying to solve?
• Blockchain – the underlying technology
• Blockchain Applications and use-cases
Origins
• October 2008 – an 8-page
whitepaper was released under the
pseudonym Satoshi Nakamoto.
• Based on cryptographic proof, it
allowed any two willing parties to
transact directly with each other
without the need for a trusted third
party.
 The current process
The need for a trusted
third party – where the
issue of privacy concerns
arise.

Cyberattack Service fees

Global losses
attempts per charged by
from fraud
week (Q4 2021) trusted third-
US$42Billion*
703** party
Problem of decentralized systems
How does blockchain
solve this problem?
• A blockchain solution can negate the
need for a trusted third party.
 Key technologies underlying blockchain
• The cryptographic hash function: a mathematical algorithm that creates a mapping from an
arbitrary amount of data to a bit string of fixed size. Characteristics of good hash function:
• The same input always generates the same output.
• One cannot easily recreate the original message from the hash.
• It is almost impossible to alter a message without changing the hash.
• It is impossible for two messages to create the same hash.
• Bitcoin uses the hash function SHA-256.

Hash of the previous Hash of the previous Hash of the previous

block block block

New transactions New transactions New transactions

 Creation of blocks
• Technically any node can propose a block. However,
the system makes it difficult for nodes having low
processing power (weakly invested nodes) to do it as
proposing a block requires solving a computationally
demanding mathematical puzzle.
• The mathematical puzzle can only be solved through
brute force (expending computational power).
• However, verifying the proposed solution (proof of
work) is trivial. Only the block proposed by the node
that first solves the mathematical puzzle is accepted
and added onto the blockchain.
Creation of blocks
Proof of Work
Proof of Stake
Public/Private vs Permissioned(less) Blockchains

• Anyone can join the network
and read the chain?
• Anyone who joins and
becomes a node can also
become a miner and verify
transactions for a reward?
• Censor-proof?
• Restricts who can join the
network, transact and verify?
• Entity or group of entities that
create the blockchain are the
ones allowed to verify
transactions?
• Imposes censorship?
Public/Private vs
Permissioned(less)
Blockchains
The blockchain ecosystem
Beyond crypto-currencies: Smart Contracts
Smart contracts are simply programs stored on a blockchain that run when
predetermined conditions are met. They typically are used to automate the execution of
an agreement so that all participants can be immediately certain of the outcome,
without any intermediary's involvement or time loss.
 Beyond crypto-currencies
R3: a consortium of 42 banks
 Beyond crypto-currencies
Maersk-IBM TradeLens
Beyond crypto-currencies
Beyond crypto-currencies
Beyond crypto-currencies
Some rules to be followed from next session
• Every student will have to be in the class by 8:05 AM.
No student will be permitted to enter the class after
8:05 AM.

• No student will be allowed to leave the class at any

time during the session.

• Please keep your mobile-phones in silent mode.

Thank you.