Blockchain Fundamentals
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This document provides an introduction to blockchain fundamentals and the Provide platform. It defines blockchain as a decentralized, distributed digital ledger that records transactions across many computers in an incorruptible manner. It explains key blockchain concepts like hash functions, digital signatures, elliptic curve cryptography, decentralized networks, proof of work, transactions, and preventing double spends. It positions Provide as a turnkey blockchain platform that allows existing teams and technologies to leverage distributed ledger technology without typical barriers to entry, providing scalable transaction throughput and fast time to value adoption.
Blockchain Fundamentals
- 1. Blockchain Fundamentals Pad Kankipati (VP Technology) Kyle Thomas (Founder/CEO) Blockchain 101 & Intro to the Provide platform
- 2. A blockchain is a decentralized, distributed and incorruptible digital ledger that is used to record transactions across many computers What is Blockchain?
- 3. • Distributed network of computers (nodes) • where each node contains a chain-of-blocks • where each block contains a ledger with a list of transactions • where each transaction is incorruptible (i.e. cryptographically secure) & is linked to the previous transactions for the resource it is representing. • Blockchain is an immutable, sequential chain of records called Blocks. • Blocks contain transactions, files or any data you like • Blocks are chained together using hashes Blockchain Terminology
- 4. • Achieves this by using 3 concepts: • 1. Hash Functions (H(x)): A function which is used to convert a random set of input to an output of a fixed size. • For any input x, H(x) is the value of the hash function. Incorruptible “crypto” of cryptocurrency
- 5. • 2. Digital Signatures: Digital signatures are like our normal signatures in digital form. They need to have this basic property: • Only you can sign BUT anyone can verify. • Uses Private Key to sign and Public key to verify • Bitcoin uses (Elliptical Curve Digital Signature Algorithm) ECDSA for digital signatures. Digital Signatures
- 6. • Public key encryption technique to create faster, smaller and efficient cryptographic keys. • Used for encrypting public keys • Relatively easy to verify, very difficult to traverse back to obtain critical private data • Bitcoin, Ethereum etc. use, secp256k1 (y2 = x3 + 7) Elliptic-curve Cryptography (ECC)
- 7. • 3. Hash Pointers • Hash pointer is another good data structure that is leveraged in the blockchain Incorruptible (cont.)
- 9. • Block 1 (from the left) contains the data and a hash-pointer to the previous block. Block 2 contains a pointer and the hash of the first block and also its data. • Key point is that hash is the hash of data and the hash of previous block combined. H(this-block) = H(H(previous-block) + data-in-this-block) Incorruptible (cont.)
- 10. • Effectively, altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network. And any block can validate whether this transaction is valid or not by following all the previous blocks in the chain. Incorruptible (cont.)
- 11. • Better data structure to avoid traversal of all blocks • The one used by Bitcoin and Ethereum is known as Merkle Tree. Merkle Tree
- 12. The idea here is to quickly validate a transaction by going from root to leaf rather than traversing all the blocks linearly Merkle Tree (cont.)
- 13. • A basic Peer to Peer network • Everybody is responsible for keeping the entire set of data and keeping checks on each other • Consensus among nodes is used to keep the distributed ledger in-tact, using incentives and Proof of work Decentralized & Distributed Ledger
- 14. • Addition of each block (ie transaction(s)) and creation of coin is managed by computational activity called “Proof of Work” • Whenever a new block is added by an honest computer, it gets reward or coin, incentivizing the miner • It is similar to mining gold etc., except CPU time and electricity is expended • A computer only gets paid if the block ends up in the longest-chain • There is additional Transactional fee to whoever creates a block and puts the transaction Incentives & Proof of Work
- 15. • The goal of PoW is to discover a number which solves a problem • The number must be difficult to find but easy to verify—computationally speaking—by anyone on the network. This is the core idea behind Proof of Work. • We vary the string by adding an integer value to the end called a nonce and incrementing it each time until the hash (SHA-256) starts with “0000” Nonce
- 16. • For eg: with “Hello world” we keep adding the number and hash it until it starts with “0000”, as we can see difficulty keeps going up until attempt 4251. • Attempt1 => "Hello, world!0" => 1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64 • Attempt2 => "Hello, world!1" => e9afc424b79e4f6ab42d99c81156d3a17228d6e1eef4139be78e948a9332a7d8 • Attempt3 => "Hello, world!2" => ae37343a357a8297591625e7134cbea22f5928be8ca2a32aa475cf05fd4266b7 ... ... ... ... ... • Attempt4249 => "Hello, world!4248" => 6e110d98b388e77e9c6f042ac6b497cec46660deef75a55ebc7cfdf65cc0b965 • Attempt4250 => "Hello, world!4249" => c004190b822f1669cac8dc37e761cb73652e7832fb814565702245cf26ebb9e6 • Attempt4251 => "Hello, world!4250" => 0000c3af42fc31103f1fdc0151fa747ff87349a4714df7cc52ea464e12dcd4e9 Nonce (cont.)
- 17. Transactions • In blockchain, every coin (or entity) is defined as chain of digital signatures • Each owner digitally signs the hash of previous transaction and the public key. • A simple transaction would look like
- 18. • This process continues to verify the chain of ownership (end-to-end) Transactions
- 19. • Verify that the owner did not spend the same coin at two different entities, ie double-spend • Nodes always consider the longest-chain to be the correct one and will keep working on extending it Double-spend & Longest Chain
- 20. • New transactions are broadcast to all nodes. • Each node collects new transactions into a block. • Each node works on finding a “difficult” proof-of-work for its block. • When a node finds a proof-of-work, it broadcasts the block to all nodes (and gets paid) Conclusion
- 21. • Nodes accept the block only if all transactions in it are valid and not already spent. • Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash. Conclusion (contd.)
- 22. Q&A
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- 24. 24 Provide is the blockchain acceleration platform. Have you heard about ?
- 25. 25 Vision In 2008, was founded to give developers an easy way to interact with cell phones. gives organizations an easy way to interact with blockchain.
- 26. 26 Solution ● Turnkey Networks ● End-to-end platform with automated provisioning of private and permissioned blockchain networks ● Chain- and protocol-agnostic platform; no risky bet on any given protocol or public blockchain ● Your Existing Ecosystem ● Turnkey blockchain platform that enables your existing teams, technologies and approved vendors to leverage DLT and participate in the Fourth Industrial Revolution without typical barriers to entry ● Enterprise-grade Scalability ● Scalable transaction throughput capable of reaching millions of tx/sec, even when the underlying blockchain network is slow
- 27. 27 Provide delivers the fastest time to value when it comes to adopting DLT Hiring a large team of expensive blockchain experts is no longer a barrier to entry Hybrid blockchain platform built in the spirit of hybrid cloud-- familiar to enterprise! Value
- 28. 28 EthATL