BASIC INTRODUCTION TO BLOCKCHAIN - JOEL SUMANTH RAJ.pdf
- 1. Technology that can change our world more than people’s imagination – Jack Ma. By JOEL SUMANTH RAJ
- 2. 01 Blockchain History Blockchain Introduction 02 Types of Blockchain Technologies 04 Blockchain Technology 03 Creation of Blocks in Blockchain Technology 07 Security in Blockchain Technology 05 Transactions Distributed Ledgers Consensus Smart Contracts 06 Live Demo of Blockchain in Education Sectors 08 Conclusion and Thank you How Blockchain Technology Works Industries Where Blockchain Technology Can be Implemented 09 10
- 3. This is not a Bitcoin introduction. This is a high-level introduction to Blockchain technology. However, we should acknowledge that Satoshi Nakamoto (pseudonym) and his/their creation, Bitcoin, popularized Blockchain technology. (There are currently arguments that Bitcoin was not the first blockchain.) Today there are various flavors of Blockchain. This presentation attempts to generalize Blockchain with samples in some of those flavors. Additional research, prototyping, and due diligence should be exercised before making any long-term decisions. Use at your own risk: The authors, contents, and the Information connected with this presentation, in any way whatsoever, can be responsible for the basic use of the information. All the information contained in this document or linked document is compiled from various web sources. The user and someone who reads or uses this article or presentation shall not follow only the information in the presentation as it is recommended to research the detailed methodology of the technology The author Mr. Joel Sumanth Raj assumes no responsibility or liability for any errors or omissions in the content of this document/presentation. The information contained in this document is provided on an "as is" basis with no guarantees of completeness, accuracy, usefulness, or timeliness... Lastly, it is the opinion of the author that no single Blockchain solution will fulfill all needs. As many Blockchain technologies are paradigm specific, one should educate themselves on when and how to implement a Blockchain solution. Perhaps more importantly, when NOT to implement a solution.
- 5. Blockchain technology was described in 1991 by the research scientist Stuart Haber and W. Scott Stornetta. They wanted to introduce a computationally practical solution for time-stamping digital documents so that they could not be backdated or tampered. They develop a system using the concept of a cryptographically secured chain of blocks to store the time- stamped documents. In 1992, Merkle Trees were incorporated into the design, which makes blockchain more efficient by allowing several documents to be collected into one block. Merkle Trees are used to create a 'secured chain of blocks.' It stored a series of data records, and each data record connected to the one before it. The newest record in this chain contains the history of the entire chain. However, this technology went unused, and the patent lapsed in 2004. In 2004, computer scientist and cryptographic activist Hal Finney introduced a system called Reusable Proof Of Work(RPoW) as a prototype for digital cash. It was a significant early step in the history of cryptocurrencies. The RPoW system worked by receiving a non-exchangeable or a non-fungible Hashcash-based proof of work token in return created an RSA-signed token that further could be transferred from person to person. Further, in 2008, Satoshi Nakamoto released the Bitcoin White Paper outlining a peer-to-peer electronic cash/digital asset transfer system. This is the first popular implementation of Blockchain and is attributed as birthing today’s Blockchain industry. Since then, additional Blockchains have been popular including, Ethereum, various Hyperledger project solutions, as well as numerous others including “Blockchain-like” solutions such as GuardTime’s KSI products
- 7. Blockchain technology is counted among the hot trends that businesses must keep an eye on to stay ahead. Gaining prominence rapidly has made everyone eager to learn about this new trend. Blockchain is bringing about significant advancements and leading to new opportunities in every industry, whether it is banking, education, insurance, healthcare, cyber security, advertising, legal, supply chain, energy, food, retail, or finance. Authentic Verifiable Most Secure Immutable Trackable Notarized
- 8. Blockchain is the technology that underpins the cryptocurrency Bitcoin, but Bitcoin is not the only version of a blockchain distributed ledger system in the market. There are several other cryptocurrencies with their own blockchain and distributed ledger architectures. Blockchain is a Technology and Bitcoin is a Cryptocurrency Cryptocurrencies are usually built using blockchain technology. Blockchain describes the way transactions are recorded into "blocks" and time stamped. It's a fairly complex, technical process, but the result is a digital ledger of cryptocurrency transactions that's hard for hackers to tamper with.
- 9. Blockchain technology is a distributed ledger, that stores transaction details in the form of immutable records or non-modifiable records (called blocks) which are secured using cryptography. Let’s consider the example of a school where Blockchain is similar to a digital report card of a student. Say, each block contains a student record that has a label (stating Name of Student, Report Card Details, Date & Time) of when the record was entered. Neither the teacher nor the student will be able to modify the details of that block or the record of report cards. ❑ The teacher owns a Private key that allows him/her to make or add new records ❑ The student owns a Public key that allows him to view and access the report card So basically, the teacher owns the right to update the record while the student only has the right to view the record. This method makes the data secure. Private Key Public Key
- 11. There are different types of blockchain technology for a variety of purposes. You can choose which type you want to use based on what you need it for. There are 4 types of blockchain technologies so far. They are public blockchain, private blockchain, consortium blockchain, and permissioned hybrid blockchain,
- 12. Consortium Blockchain As a semi-decentralized network, more than one organization manages the blockchain network. So it’s unlike a private blockchain network with only one authority. Here in the consortium blockchain network, the authority is shared among organizations. So organizations that are part of a consortium blockchain network can carry out transactions, exchange information, and even do crypto mining. You will find a lot of government organizations or banks using a consortium blockchain network. Public Blockchain A public blockchain has no restrictions on who can participate in the network. Anyone who wants to join the network can sign onto a blockchain platform with their device and internet connection. There is no need for anyone’s permission to distribute the ledger system. Public blockchains are common for mining. They are also common for exchanging cryptocurrencies. Once a person is part of the network, they are authorized to access records and transactions from a block. Private Blockchain Businesses and organizations use private blockchain networks because they tend to work on closed networks. Private networks give companies the ability to customize the accessibility of their blockchain network as it suits their organization. In addition, they can set the parameters for their network and manage the security as per their needs. Permissioned Hybrid Blockchain A permissioned blockchain is also known as a hybrid blockchain because it combines private and public blockchain networks. In a permissioned blockchain network, users can control who can get access to what information. Not all the data that goes on the blockchain is made public. Whoever manages the data can make it public or keep it private and only accessible to certain people. A permissioned blockchain also allows users to join a private network while being part of a few public networks; when a user tries to join a private network, they usually have to be verified and permitted into the network by someone inside the network.
- 13. There are currently Four Versions of BlockChain as depicted below : Blockchain 1.0: Currency The implementation of distributed ledger technology (DLT) led to its first and obvious application: cryptocurrencies. This allows financial transactions based on blockchain technology or DLT (for the sake of simplicity often seen as synonyms) to be executed with Bitcoin being the most prominent example in this segment. It is being used as “cash for the Internet”, a digital payment system, and can be seen as the enabler of an “Internet of Money”. Blockchain 2.0: Smart Contracts The new key concept is Smart Contracts, small computer programs that “live” in the blockchain. They are autonomous computer programs that execute automatically and conditions defined beforehand such as the facilitation, verification, or enforcement of the performance of a contract. Blockchain 3.0: DApps DApp is an abbreviated form for decentralized application avoiding centralized infrastructure. It uses decentralized storage and decentralized communication, so most DApps have their backend code running on a decentralized peer-to-peer network, a blockchain. Blockchain 4.0: Making blockchain usable in the industry (4.0) With the foundations laid by the previous versions, for us, Blockchain 4.0 describes solutions and approaches that make blockchain technology usable for business demands. Especially Industry 4.0 demands. Industry 4.0 meaning in short terms automation, enterprise resource planning, and integration of different execution systems. However, this industrial revolution demands an increasing degree of trust and privacy protection — this is where blockchain kicks in.
- 14. Details about the Creation of Blocks in Blockchain Technology
- 15. Blockchain is the technology that underpins the cryptocurrency Bitcoin, but Bitcoin is not the only version of a blockchain distributed ledger system in the market. There are several other cryptocurrencies with their own blockchain and distributed ledger architectures. Blockchain is a system and technology comprised of – Transactions – Immutable ledgers – Decentralized peers – Encryption processes – Consensus mechanisms – Creating Smart Contracts These are also called as Pillars of Blockchain Technology
- 16. The genesis block is the first block in the Blockchain which is also known as (block 0) In Blockchain, it is the only block that doesn’t refer to its previous block. It defines the parameters of the Blockchain such as level of difficulty, consensus mechanism, etc. to mine blocks
- 17. A block is a place in a blockchain where information is stored and encrypted. Blocks are identified by long numbers that include encrypted transaction information from previous blocks and new transaction information. Blocks and the information within them must be verified by a network before new blocks can be created. Magic number: A number containing specific values that identify that block as part of a particular cryptocurrency's network. Blocksize: Sets the size limit on the block so that only a specific amount of information can be written in it. Block header: Contains information about the block. Transaction counter: A number that represents how many transactions are stored in the block. Transactions: A list of all of the transactions within a block. Blocks are created when miners or block validators successfully validate the encrypted information in the block header, which prompts the creation of a new block. A block stores information. There are many pieces of information included within a block, but it doesn't occupy a large amount of storage space. Blocks generally include these elements, but it might vary between different types:
- 18. A block is actually the building block or the key element of a blockchain. A blockchain is a chain of multiple blocks Blocks contain transactions. Each block contains a different number of transactions. These transactions are contained in blocks so that they would be added to the distributed ledger. The number of transactions is limited by the block size and gas limit. Generally, the block contains more than 500 transactions.
- 19. Each Block structure contains Header, Block Version, Previous block hash, current block hash, Merkle root, Timestamp, Nounce, nBits and other details. The hash value of the previous block (thereby getting linked in a blockchain) It contains details of several transaction data It has a value called the nonce. The nonce is a random value that is used to vary the value of the hash in order to generate a hash value less than the target Hash of the block itself. It is the digital signature of the block and an alphanumeric value used to identify a block The hash address is the unique identification of the block. It is a hex value of 64 characters that have both letters and digits. It is obtained by using the SHA - 256 algorithms. SHA-256 stands for Secure Hash Algorithm 256-bit and it's used for cryptographic security. Cryptographic hash algorithms produce irreversible and unique hashes. The larger the number of possible hashes, the smaller the chance that two values will create the same hash. Below are the examples of the Hex Value of 64 Characters: b22dea43857f47b0f3353cf36917615118e8bdb3054f6090ee3540b58b000a04 9dde8dc862dd7b7f136d80d731fb77eb4a6f477e187ed3c8936194dee8e4eab3
- 20. As a significant part of Proof of Work consensus, it is important to know about nonce. A nonce is basically an abbreviation for “number used only once”, and it is a random number you can use only once. It is a four-byte number added to a hashed—or encrypted—block in a blockchain that, when rehashed, meets the difficulty level restrictions. The Nonce is a 32-bit field subject to adjustment by miners for ensuring validity to use in hashing a block’s value. After finding the perfect nonce, miners can add it to the hashed block. In addition, the hash value of a block can be rehashed for creating a difficult algorithm.
- 21. A hash tree is also known as Merkle Tree. It is a tree in which each leaf node is labeled with the hash value of a data block and each non-leaf node is labeled with the hash value of its child nodes labels. Merkle Tree Structure
- 22. In Blockchain Technology each page in a ledger of transactions forms a block. This block has an impact on the next block or page through cryptographic hashing. In other words, when a Block is completed, it creates a Unique Secure Code which ties into the next page or blocks creating a chain of blocks or a Blockchain. Each block header contains the previous block hash, current block hash, Merkle root, Nonce and other details.
- 23. SHA-256 takes the message that you're hashing, and it breaks it up into blocks that are 512 bits in size. The message isn't going to be exactly a multiple of the block size, so you have to add some padding at the end. The padding is going to consist of a 64 bit length field, which is the length of the message in bits. And then before that, it's going to consist of a one bit followed by some number of zero bits. And you choose the number of zero bits so that it comes out exactly to the end of a block. Cryptographic hash functions are characterized by several properties making them very useful when employed in the cryptographic sphere. Secure Hash Algorithm (SHA 256-bit) hash function The result of a hash function is always identical. This characteristic is called deterministic. Regardless of how many times you enter the same message, the output will be the same after the hash function is applied. However, the slightest change in the input data (‘Article’ instead of ‘article’) changes the result completely. It features fast computation as low speed would make the system inefficient. The preimage resistance feature in hash functions makes it computationally infeasible to determine the input from the hash value. Therefore, miners can only compare the result until a match is found.
- 25. Blockchain is a Distributed Ledger Technology (DLT) designed to engender trust and confidence in an environment. Blockchain is a decentralized ledger system that’s duplicated and distributed across a whole network of computer systems. It allows information access to all designated nodes or members who can record, share, and view encrypted transactional data on their blockchain. Blockchain technology gathers and stores information in groups, also referred to as “blocks,” and each block can hold a certain amount of data. When the block reaches capacity, it is chained to the previous full block, creating a chain of data, hence the clever name “blockchain.” Blockchain security is a complete risk management system for blockchain networks, incorporating assurance services, cybersecurity frameworks, and best practices to mitigate the risks of fraud and cyber-attacks. Blockchain technology's data structures have inherent security qualities because they are based on consensus, cryptography, and decentralization principles. Each new block of information connects to all the previous blocks in a way that it's nearly impossible to tamper with. In addition, all transactions in a block get validated and agreed on by a consensus mechanism (authorized users), guaranteeing that each transaction is true and accurate.
- 26. Blockchain was designed to be secure. Conceptually, blockchain's design makes it impervious to compromise. Each block, or data record, is digitally signed with a 'hash' – the result of a mathematical algorithm – that is based on the contents of the record and every other record in the blockchain. If any of the records are subsequently changed, the computed hash will no longer match the original hash – and the change will be detected. It’s all about trust: Because it is designed as a distributed ledger, blockchain entries can be spread across numerous ‘nodes’, with several copies providing high redundancy to ensure the data is always available. To protect against false or changed records being inserted into the blockchain, the system uses ideas of trust that are built on consensus: if the majority of distributed nodes agree that a particular blockchain has a particular hash, then that hash is considered to be correct. Only Majority Wins: In the case of public Blockchains such as cryptocurrencies, the number of nodes can reach millions. For a change to be made to a Blockchain, at least 51% of the participating nodes must verify it. For new transactions, this means that 51% of the network must be satisfied the verification criteria have been met ie. the rightful owner is making the transfer. 51% of Attacks Are Improbable: The longer a blockchain exists and the more new users it attracts, the less likely it is to suffer a 51% attack due to its growing hash power. Transaction Sealed: Once a transaction is sealed into a block and added to the Blockchain, changing it is close to impossible. Not only would it be necessary to reverse engineer the hashed block and make a change to the transaction data contained within but this would have to be done simultaneously over at least 51% of the copies of the ledger held on different nodes. This is why it is practically impossible to ‘hack’ a Blockchain.
- 29. A transaction is a transfer of value on the blockchain. In very simple terms, a transaction is when one person gives a designated amount of cryptocurrency they own to another person ❑ There are primarily two types of blockchains; Private and Public blockchains. However, there are several variations too, like Consortium and Hybrid blockchains. No participant can change or tamper with a transaction after it's been recorded in the shared ledger. If a transaction record includes an error, a new transaction must be added to reverse the error, and both transactions are then visible. ❑ For a public blockchain, the decision to add a transaction to the chain is made by consensus. This means that the majority of “nodes” (or computers in the network) must agree that the transaction is valid. The people who own the computers in the network are incentivized to verify transactions through rewards.
- 30. A centralized ledger needs a central authority to be trusted by transacting parties; however, in a distributed ledger, the need for a third party is omitted, which is one of the gravitational forces behind the attraction to DLT. Centralized system: ❑ One entity controls the entire system, where an entity can be a person or an enterprise. ❑ All the constituting parts of the system, such as servers, ledgers, and so on, are co- located and exist at the same location Decentralized system: ❑ In a decentralized system, there could be multiple entities controlling the system. There is no single point of control, and the control is shared between various independent entities. ❑ All the constituting parts of the system, such as servers, ledgers, and so on, are NOT co-located and exist at different locations.
- 31. Immutability in Blockchain is the ability of a blockchain ledger to remain permanent, indelible, and unalterable with the history of transactions. This is a definitive feature that blockchain evangelists highlight as a key benefit. ❑ As with existing databases, Blockchain retains data via transactions ❑ No participant can change or tamper with a transaction after it's been recorded in the shared ledger. If a transaction record includes an error, a new transaction must be added to reverse the error, and both transactions are then visible. ❑ For any rework, the Ledger requires to rework on all subsequent blocks and consensus of each. ❑ The transaction is, immutable, or indelible ❑ In database administration terms, Blockchain is Write and Read- only data. ❑ Like a ledger written in ink, an error would be resolved with another entry
- 32. The term consensus mechanism refers to the entire stack of protocols, incentives, and ideas that allow a network of nodes to agree on the state of a blockchain. What is consensus? The consensus means that a general agreement has been reached. Consider a group of people going to the cinema. ❑ If there is no disagreement on a proposed choice of film, then a consensus is achieved. ❑ If there is disagreement, the group must have the means to decide which film to see. ❑ In extreme cases, the group will eventually split No participant can change or tamper with a transaction after it's been recorded in the shared ledger. ❑ If a transaction record includes an error, a new transaction must be added to reverse the error, and both transactions are then visible.
- 33. There are different Consensus Mechanisms used to verify transactions and add new blocks to a blockchain. In cryptocurrency, the most common methods are proof-of-work and proof-of-stake. Bitcoin was introduced in Satoshi Nakamoto's 2008 paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System" and was the first major application of blockchain technology. ❑ It uses a proof-of-work consensus method to create new blocks and enter new bitcoins into circulation. ❑ This method verifies transactions through mining, and users who verify transactions are known as miners. In the context of blockchains and cryptocurrencies two of the most prevalent consensus mechanisms Proof-of-work (PoW) Proof-of-stake (PoS).
- 34. 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. Smart Contracts When the smart contract agreement is in place, it cannot be changed. Plus, smart contracts can automatically get executed once the conditions of the agreement are met, which means that there is no need for third-party interference. Think for a moment if you want to get your Academic Credentials in a Secured and Digital Format What would it all involve? You’re right! It may involve digitilazitation from your University, Signing of Issuing Authority, Adding your accurate Information, making it digitally accessible online, providing a verifiable option that can be used for obtaining authentication of your original documents, shareable option to share it with Employers or Universities for Higher Studies
- 35. Smart contracts are excellent digital protocols that enable us to deal with high-value digital assets to make businesses faster and more flexible. Here are some insights on the role of smart contracts in blockchain. ❑ Security and high reliability: The transactions can be performed with high reliability. Plus, as the distributed ledger is highly encrypted, it is impenetrable and offers high security. ❑ Disintermediation: Smart contracts eliminate the reliance on third-party intermediaries to perform transactions. So, it enables parties to enter into agreements without any dependence on intermediaries. ❑ Transparency: It creates a cohesive environment because both the logic and information in the contract are visible to all those participating in the blockchain network. Plus, parties involved can check out any edits made by a party to the contract’s content as it is visible to everyone involved in the cycle, improving transparency. ❑ Lesser errors: As the contracts use software code to automate tasks, they are less prone to manual errors. Moreover, they offer real-time updates with speed and precision. ❑ Lesser human intervention: The transactions don’t need much human management, which reduces the risks involved in the contract execution cycle. ❑ Speed and efficiency: Since smart contracts execute immediately when a pre-defined condition is met, they offer speed and efficiency. Furthermore, smart contracts are digital and automated, and there’s no paperwork to process and no time spent reconciling errors that often result from manually filling in documents. ❑ Savings: We’ve already talked of smart contracts removing the need for intermediaries to handle transactions, reducing their associated time delays and fees.
- 37. Blockchain aims to allow digital information to be recorded and distributed, but not edited. In this way, a blockchain is a foundation for immutable ledgers, or records of transactions, smart contracts that cannot be altered, deleted, or destroyed. This is why blockchains are also known as Distributed Ledger technology (DLT).
- 39. Distributed ledger technology (DLT) is a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
- 40. Distributed ledger technology (DLT) is a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality. Over the past decade, numerous types of distributed ledgers have been introduced, all offering a secure way to transfer assets. To qualify as a distributed ledger, three key elements must be present: Peer-to-peer networking and distributed data storage: Each network participant has a copy of a single ledger that contains a shared history of all transactions. Cryptography: The use of encryption provides security prior to a transaction, allowing participants to verify ownership and the availability of an asset to transfer. Consensus mechanisms: Participants mutually agree on what is added to the ledger, and a chronological, unchangeable history of previous transactions is created.
- 41. Each network participant has a copy of a single ledger that contains a shared history of all transactions.
- 42. Cryptography is a method of securing data from unauthorized access. In the blockchain, cryptography is used to secure transactions taking place between two nodes in a blockchain network. As discussed above, in a blockchain there are two main concepts cryptography and hashing. Cryptography is used to encrypt messages in a P2P network and hashing is used to secure the block information and the link blocks in a blockchain.
- 43. Consensus Mechanism refers to any number of methodologies used to achieve agreement, trust, and security across a decentralized computer network. Participants mutually agree on what is added to the ledger, and a chronological, unchangeable history of previous transactions is created. In the context of blockchains and cryptocurrencies two of the most prevalent consensus mechanisms Proof-of-work (PoW) Proof-of-stake (PoS).
- 44. Industries Where Blockchain Technology Can be Implemented
- 45. “Smart contracts” stored on the blockchain track contract parties, terms, transfer of ownership, and delivery of goods / services without legal intervention.
- 46. By utilizing a distributed ledger, companies within a supply chain business can gain transparency into shipment tracking, deliveries, and progress among other suppliers where no inherent trust exists.
- 47. Blockchain offers promising technology to store personal identity information, land records, tax records Criminal records, transportation vehicle records, and “e-citizenship,” authorized by biometrics, and many more
- 48. Decentralized energy transfer and distribution are possible via micro-transactions of data sent to the blockchain, validated, and re-dispersed to the grid while securing payment to the submitter.
- 49. Blockchain offers enhanced traceability of Food Products starting from farming, product origin, ingredients, lab test reports, batching, processing, date of manufacturing & expiration, storage temperatures, food supply chain, shipping, and retail.
- 50. In Retail using Blockchain, the Industry can Secure P2P marketplaces that can track P2P retail transactions, with product information, shipment, and bills of lading input and paying via Crypto Currencies.
- 51. Complete electronic medical records stored in a blockchain can be accessed and updated via biometrics, allowing for the democratization of patient data and alleviating the burden of transferring records among healthcare service providers.
- 52. Health, Vehicles, Valuables, and Travel Insurance stored on Blockchain using smart devices can communicate status updates with insurance providers will reduce premium costs, insured value details, validity, and all the accounting needs for auditing insurers and authenticating data.
- 53. Passengers store their authenticated “Single travel ID” on the blockchain for use in lieu of travel documents, identification cards, loyalty program IDs, and payment data.
- 54. Universities & Educational institutions utilize the blockchain to store credentialing data of students’ assessments, degrees, transcripts, convocations, and recommendation letters eliminating the chance of fake academic documents, authenticating, notarizing, and allowing them to be verifiable globally.
- 55. Live Demo About Blockchain Technology in Education Sectors
- 56. Entrance Exam Admit Cards Admission Call Letter Student ID Card Library Card Event Certificates Semester Marksheets Recommendation Letters Degree Certificates Documents Issued to Students at The College / Universities
- 57. All the documents are issued on just a URL making the secure and verifiable on the Blockchain
- 58. DocChain.io creates verifiable document on the blockchain New Technology of TRUST Security of Records Permanent Proof Authenticity of Records The world needs a new system to record, house, curate, SECURE and distribute records. The blockchain empowers institutions with permanent and tamper-proof infrastructure of TRUST. The blockchain acts as a NOTARY that can always attest to the authenticity of records.
- 59. Indian Institute of Management Ahmedabad 60dc69d6aa1aee2a323f6cb9 SCAN BELOW QR
- 60. Gujarat University LIVE DOCUMENT SCAN BELOW QR
- 61. Data Security Council of India 5f6e3cf94407090d3f162a7a SCAN BELOW QR
- 62. w w w . D o c C h a i n . i o By JOEL SUMANTH RAJ M : +91 9513971119 E : joelsumanth@gmail.com