Blockchain

Fundamentals

IOE 411 BLOCKCHAIN AND CRYPTOCURRENCIES

Dr Panchami V
Department of CSE- Cyber Security
IIIT Kottayam
IOE 411 BLOCKCHAIN
Blockchain AND CRYPTOCURRENCIES
Fundamentals
Prerequisite for the Course
Computer Networks and Security, Information Security and Applied Cryptography

Course Objectives
1. Introduce the concept and the basics of Blockchain Technology,
2. Enable awareness on the different generations of Blockchains.
3. Provide knowledge on various applications of Blockchain Technologies

Expected Outcome
Students who successfully complete this course will be able to:-
1. Understand the basics of Blockchain Technologies and its various applications.
2. Understand the Cryptocurrency Bitcoin.
3. Implement of Smart contract using Ethereum.
4. Capable to identifying problems on which Blockchains could be applied.
IOE 411 BLOCKCHAIN
Blockchain AND CRYPTOCURRENCIES
Fundamentals
Introduction – Blockchain history, basics, architectures, Types of Blockchain, Wallets,
Base technologies – Dockers, Hash function, Digital Signature - ECDSA, Zero Knowledge
Proof.

Bitcoins – Fundamentals, aspects of bitcoins, properties of bitcoins, bitcoin transactions,

bitcoin P2P networks, block generation at bitcoins, consensus algorithms- Proof of
Work, Proof of Stake, Proof of Burn.

Ethereum- Introduction to Ethereum, Consensus Mechanisms, Smart Contracts.

Applications – Blockchain applications, e-governance, smart cities, smart industries,

Finance, Medical Record Management System, use cases, trends on Blockchains.
IOE 411 BLOCKCHAIN
Blockchain AND CRYPTOCURRENCIES
Fundamentals
Reference Books
1. Baxv Kevin Werbach, The Blockchain and the new architecture of Trust, MIT Press,
2018
2. Joseph J. Bambara and Paul R. Allen, Blockchain – A practical guide to developing
business, law, and technology solutions, McGraw Hill, 2018.
3. Joseph J. Bambara and Paul R. Allen, Blockchain, IoT, and AI: Using the power of three
to develop business, technical, and legal solutions, Barnes & Noble publishers, 2018.
4. Melanie Swan, Blockchain – Blueprint for a new economy, OReilly publishers, 2018.
5. Jai Singh Arun, Jerry Cuomo, Nitin Gaur, Blockchain for Business, Pearson publishers,
2019.
6. Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System.
Evolution of Blockchain Technology

Image- knoldus
Applications of Blockchain Technology

Image- edureka
Why we need Blockchain?

• High Transaction fee

• Double spending

• Net Frauds

• Poor data recovery

These problems can be solved using Bitcoin and Blockchain Technology

Bitcoin and Blockchain Technology

Bitcoin is a digital currency which is used to send and

receive money across the world in a decentralized manner
with minimum transfer fee.

Bitcoin does this by storing and transacting the money over

a distributed peer to peer network called BLOCKCHAIN.
www.cryptopick.com
• Blockchain is NOT Bitcoin

• Blockchain is NOT just about Cryptocurrency

Blockchain Technology

What is a Blockchain?

• A cryptographically secure, distributed open ledger.

• Immutable transactions are written on this distributed ledger on distributed

nodes

• Transformational technology in which business and government invest in.

• It’s a decentralized database which stores information in the form of

transactions.
Blockchain
Technology
A B

D C
Blockchain
hain Fundamentals
• Block chain is a distributed public database of immutable records called blocks
which are secured using cryptography.

• Block is a record book which contains the details of transaction data.

• A block consists of 4 details:

 Hash of the previous block
Transaction Data
Nonce
Hash
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Demonstration of Blockchain
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Features of Blockchain Technology

Digital Identity is established

• SHA-256 Hash

• Digital Signature

• Public and Private Key

• Proof of Work

• Mining
BlockchainSHA-256 Hash
Fundamentals
Hash function
• Fixed Length Output (Hash Value)
o Hash function coverts data of arbitrary length to a fixed length. This
process is often referred to as hashing the data.
o In general, the hash is much smaller than the input data, hence hash
functions are sometimes called compression functions.
o Since a hash is a smaller representation of a larger data, it is also referred
to as a digest.
o Hash function with n bit output is referred to as an n-bit hash function.
• Efficiency of Operation - Generally for any hash function h with input x,
computation of h(x) is a fast operation.
• One way function
• Collision Resistance
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Demonstration of Public / Private Keys & Signing

Proof of Work

• Proof of Work is the process to determine a number (Nonce) along

with a cryptographic hash algorithm to produce a hash value lower
than a predefined target.

• Miners main task is to identify the nonce which is a random number

in order to generate the hash value which is less than or equal to the
target.

• To determine the nonce the miners need to try about 20.6 quadrillion
nonce values to get a valid hash.
Blockchain
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Blockchain
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Proof of Work- Working

• Transaction data is distributed across the users of the bitcoin

network.
• Miners will validate the unverified transactions and add them to a
block.
• To do so miners compete to solve a difficult puzzle based on the
generation of nonce and cryptographic hash function know as Proof
of Work.
• The first miner who solves the puzzle gets the reward.
• The rewarded block is added to the existing block.
Mining

• In Blockchain when the transaction contained are considered confirmed, a

new block is added to the existing Blockchain and the Bitcoin concerned in
the transaction can be spent.

• The miner who solves the puzzle gets a reward of 6.25 bitcoins.

• The amount of Bitcoin rewarded for each block added to the blockchain is
halved for every 210,000 blocks(appro every 4 year)
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Candidate Block-Proof of Work- Working
Candidate Block-Proof of Work- Working
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Blockchain
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THANK YOU
Blockchain
Contact me:
Fundamentals

panchamam036@iiitkottayam.ac.in
cyberlabs@iiitkottayam.ac.in
Phone: 0482-220-2151