Introduction To Blockchain Technology For Beginners

Introduction to the
Blockchain
Author: Omar El Rifai
Project Team Members:
Dr. Imen Megdiche, Pr. Franck Ravat, Pr.
Olivier Teste, Dr. Maëlle Biotteau (INSERM,
CHU), Pr. Xavier Deboissezon (INSERM,
CHU)

3
Alice Bob
Bank
Send 50€
to Bob Notified that 50€ were
added to account
(1) Alice -50€
(2) Bob +50€
Centralized Currency: the Banking System

4
Alice
Charlie
Bob
Decentralized (digital) Currency
Dave

5
What the blockchain is not:
A way to make quick money
A way to privately send data over a network
The solution to our worlds’ economic (or global) crisis
What the blockchain is:
A way for peers to reach consensus
An authority free network
An open source, mathematically based solution

6
Technical Presentation
Overview

7
Part I: Background concepts
• Digital Currencies
• Cryptographic Primitives
Part II: Blockchain Implementations:
• Bitcoin Implementation
• Ethereum Implementation (Smart Contracts)
• Consensus Protocols
Part III: Use Cases
• General cases
• Health care

9
Digital Currencies
 The idea of a trust-less decentralized currency has been around
for decades [Chaum 1989]
 Motivation:
 Free of administrative and government control
 Value based on supply and demand only
 Challenges:
 Digital Fingerprint
 Digital Signatures
 Consensus

10
Secure Communication with
Cryptography
 Classical (Symmetric) cryptography
 There exists a secret key that we use for encrypting a message
 The secret key is the same for encrypting and deciphering a message
 Analogy: we put a message in a safe
 Problem: how to share the password safely?
 Modern (Asymmetric) cryptography 1976
 No need for initial password exchange
 Every user has one private key and one public key
 Analogy: public mailbox where the address is the public key

11
Secure communication:
example RSA algorithm
 The RSA (Rivest-Shamir-Adleman) cryptosystem is based on the
fact that it is:
Easy to find three very large positive integers e, d and n such
that:
Message to
encrypt
Private
key
Public
key
1) Difficult to find the factorization of the product of two large prime numbers

12
Hash Functions
How to Manipulate Large Files: Cryptographic Hash
Functions
o Algorithm that maps an arbitrary size input to a fixed
size output.
o Used to uniquely identify data (fingerprint) and ensure
integrity.
Deterministic Distributed Efficient Pre-image resistant Collision-resistant
Hash
function
(e.g MD5)

13
Digital Signatures
 A digital signature needs to have the following properties :
 Unduplicable: no other document can be signed by it
 Sender binding: associated with one sender only
 Document binding: the original document can not be changed
Hash the document
Encrypt hash
with private key
Receiver decrypts hash
To verify both validity
and origin
1 2 3

14
Digital Signatures
Alice
Bob
E(H(Alice)(M))
D(E(H(M))) =
H(Alice)(M)
M
Hash M
locally and
compare with
H(Alice)(M)
 Let M be the message Alice wants to send
 H() be a hash function
 E() be a asymmetric encryption function
 D() be the associated decryption function

15
Recap of a Blockchain
Architecture
Broadcast
transactions
Using address and
sign using private
key
Verify
signature
using public
key
...What about
consensus?
Alice
Bob
Charlie
Dave
Transactions and
ledgers are
fingerprinted
using CHF

17
Bitcoin : A first working example
 Based on established work in cryptography Satoshi Nakamoto published
a paper in 2008 [Nakamoto2008] that contributed with the following :
 A fully functional trustless digital currency system
 An algorithm which prevents the “double spend” problem. The intuition is that
transactions have to be timestamps and trust based on the entire network.
 Security is guaranteed is the number of honest nodes is larger than the number
of malicious nodes

18
Bitcoin: A chain of blocks
List of TXs A hash of previous TX POW
(consensus)
1 2 3

19
Bitcoin: Proof of Work (POW)
High level idea:
Proof of CPU effort (solving a puzzle) is attached to the block
The block cannot be changed without redoing the work
After chaining other blocks, it becomes even more difficult
o
TX history
Sha256
Nonce
0000...00000101
01011011010010
10100010100101
10001001101011
30 leading zeros

20
Bitcoin: Proof of Work (POW) ctd.

So what incentivize the network to perform these computations (expending
computational power)?

One answer is simple to be able to use a secure network of value exchange

Another (less idealistic) reason is that nodes that verify transactions (i.e
miners) are rewarded with bitcoins when validating a block

21
Bitcoins : The Network
Transactions are broadcast to the entire netwok in the
following way:
1) Every node (participant) gather new transactions in “blocks”
2) Every node tries to find the POW for its block
3) When a node finds the solution to the POW, it transmits its
block to other nodes
4) Nodes accept a bloc if all the TX are valid and not already
spent
5) Nodes express their approval of the bloc by using its hash as
part of the later TX they process
In case of conflict, temporary branches can be created
locally

22
Bitcoins : Reclaiming disk Space

To save up disk space, old transaction can be discarded.

A Merkle Tree structure is used so that the hash of the history is not
changed
Pruning old
transactions

23
Bitcoins : Privacy in the blockchain

Because of consensus requirements, all transactions should be made public

Asymmetric encryption protocols (along with a firewall) can protect the
identity of users

24
Recap of a Blockchain
Architecture with Bitcoin
Broadcast
Verify
signature
using public
key pk_alice
New Block
PoW
Merkle
Root
Previous
Hash
... New TX

28
Ethereum: Smart Contracts

Bitcoin: Consensus in a network without the need for a trusted third
party

But consensus is limited to simple transactions

More complicated rules such as conditional money transfers or online
voting can not be implemented

Ethereum: develop the idea further to allow consensus on code
[Buterin2014]
Bitcoin Ethereum
Private keys own simple values
(UTXO)
All values are owned by a private key
Private keys own Accounts
There are externally owned accounts
and internal accounts (can not be
called directly)

29
Ethereum: Smart Contracts (ctd.)

Let’s think of the bitcoin as a state transition system

32

In PoW, the algorithm rewards participants who solve puzzles to
validate transactions and create new blocks → mining

There are only 21 million bitcoins that can be mined in total.

Miners will still be incentivized to validate the bitcoin blockchain
because they will collect transaction fees from users

The fact that bitcoin is capped means it was thought as a deflationary
economy

PoW consumes large quantities of electricity
What is wrong with PoW

33
Instead of relying on computational work, POS
chooses the validator randomly but with probability
associated to with wealth or age (i.e., the stake) →
the more you own the more incentive you have of
keeping the blockchain active
Proof of Work Proof of Stake
Participating nodes are called
miners.
Participating nodes are called
validators
Mining capacity depends on
computational power
Validating capacity depends
on the stake in the network
Mining produces new coins No new coins are formed
Miners receive block rewards Validators receive transaction
fees
Massive energy consumption Low to moderate energy
consumption.
Significantly prone to 51%
attacks
51% attacks are virtually
impossible
Proof of stake: the future?

35
Properties of the Blockchain that make it
desirable for different use cases
Decentralization Distributed stakeholders require a decentralized
management system. Decentralization means
no central authority can unilaterally take
decisions
Improved data
security and privacy
Data, once saved on the blockchain, can not be
corrupted, alterated or erarased. All the data
are timestamped and saved in chronological
order. Cryptographic keys help protect the
identities of users
Data Ownership Proof of ownership and access control
mechanisms through Scs
Availability/
Robustness
Replication of records on all nodes removes the
single point of failure problems
Transparency and
Trust
All the records and transactions are visible by
everyone. This makes audit operations simple
and efficient

36
Different areas of Application
Blockchain
Applications
Internet
of
Things
Health
Governance
Education
Privacy
and
Security
Business
and
Industry
Data
Management
Financial
Energy

37
Financial Applications

Besides crypto-currencies, a
host of financial applications
have been developed Example
applications include:

Loan management

Financial auditing

Commercial property
registration

Prediction Market Place
Systems

….
Blockchain
Applications
Internet
of
Things
Health
Governance
Education
Privacy
and
Security
Business
and
Industry
Data
Management
Financial
Energy

38
Business and Industry Applications

Supply chain auditing using the
inherent transparency and
immutability properties of the
blockchain

Intellectual property
management (musicians can
store a hash of their creations
on the blockchain and be
remunerated accordingly)

Decentralized Insurance
Policies with smart contracts
automatically reimbursing if an
accident were to happen
Blockchain
Applications
Internet
of
Things
Health
Governance
Education
Privacy
and
Security
Business
and
Industry
Data
Management
Financial
Energy

39
Data Management Applications

Data can not be stored
directly because of
privacy issues and
scalability issues.

An encryption method
called “zero knowledge
Proof” (ZKP) is being
studied for increasing the
privacy (Zcash)

Some efforts in the
direction of homomorphic
encryption are also being
done
Blockchain
Applications
Internet
of
Things
Health
Governance
Education
Privacy
and
Security
Business
and
Industry
Data
Management
Financial
Energy

40
Governance Applications

Citizenship / legal
documents

Marriage, divorce,
taxes

Voting

Namecoin for DNS
service
Blockchain
Applications
Internet
of
Things
Health
Governance
Education
Privacy
and
Security
Business
and
Industry
Data
Management
Financial
Energy

41
Education Applications
Blockchain
Applications
Internet
of
Things
Health
Governance
Education
Privacy
and
Security
Business
and
Industry
Data
Management
Financial
Energy

Education certificates

Credit management

Securely Timestamped
Manuscript Submission and
Peer Review Feedback using
the Blockchain

42
Energy Sector Applications
Blockchain
Applications
Internet
of
Things
Health
Governance
Education
Privacy
and
Security
Business
and
Industry
Data
Management
Financial
Energy

43
Health Care Applications

Many applications (medical
insurance, medical supply, iot
related etc...)

The most prominent use case
in health-care applications are
Electronic Health Records
(EHR)

As the data are sensitive and
patient specific some
ownership and control issues
arise

The blockchain has been used
in several studies to guarantee
data ownership and access
control mechanisms for
patients
Blockchain
Applications
Internet
of
Things
Health
Governance
Education
Privacy
and
Security
Business
and
Industry
Data
Management
Financial
Energy

44
Health Care Applications
Traditional architecture for EHR
Blockchain-based architecture
Hashes of data are
stored on-chain:

Ownership can be
proved

Access control can
be managed

Data modification
can be detected

45
Blockchain-based EHR literature

46
The French Use Case
“Blockchain-Based Personal Health Records for Patients’ Empowerment” EL
RIFAI O., Bioteau M., MEGDICHE I., RAVAT F, TESTE O. (Submitted RCIS2020)
Without blockchain
Without blockchain With blockchain
●
Access and control mechanisms
unilateral
●
All identities hosted on server
●
Records security and immutability can
be compromised just attacking the
CNAM server
Identity Management:
CNAM registerand maintain a list of registered
patients.
1) Democratize the governance of the registration
process
2) Automatize the rules for registration clear and
transparent.
Access Management:
The blockchain can host data hashes and user-
defined access control policies. Data hashes
fingerprint their medical records guaranteeing that
the original copy is never tampered with.
Access control policies stored on the blockchain
would serve as immutable reference for the access
rights
Data Audit:
Transactions are natively immutable on the
bockchain, patients are guaranteed that the
logs are not tampered with.

47
https://xkcd.com/

48
[Chaum1988] Chaum, David, Amos Fiat, and Moni Naor. "Untraceable electronic
cash." Conference on the Theory and Application of Cryptography. Springer, New
York, NY, 1988.
[Nakamoto2008] Nakamoto, Satoshi. Bitcoin: A peer-to-peer electronic cash
system. Manubot, 2019.
[Buterin2014] Buterin, Vitalik. "A next-generation smart contract and decentralized
application platform." white paper 3.37 (2014).
[Casino2019] Casino, Fran, Thomas K. Dasaklis, and Constantinos Patsakis. "A
systematic literature review of blockchain-based applications: current status,
classification and open issues." Telematics and Informatics 36 (2019): 55-81
[Fan et al., 2018] Fan, K., Wang, S., Ren, Y., Li, H., and Yang, Y. (2018).
MedBlock:Efficient and Secure Medical Data Sharing Via Blockchain. Journal of
Medical Systems, 42(8):1–11.
References

49
[Liu et al., 2018] Liu, J., Li, X., Ye, L., Zhang, H., Du, X., and Guizani, M.
(2018).BPDS: A Blockchain Based Privacy-Preserving Data Sharing for
Electronic Medical Records. 2018 IEEE Global Communications Conference,
GLOBECOM 2018 Proceedings
[Xia et al., 2017] Xia, Q., Sifah, E. B., Asamoah, K. O., Gao, J., Du, X., and Guizani,
M. (2017). MeDShare: Trust-Less Medical Data Sharing among Cloud
Service Providers via Blockchain. IEEE Access, 5:14757–14767.
[Zhang et al., 2018] Zhang, P., White, J., Schmidt, D. C., Lenz, G., and
Rosenbloom,S. T. (2018). FHIRChain: Applying Blockchain to Securely and Scalably
Share Clinical Data.Computational and Structural Biotechnology Journal, 16:267–
278.
[Zyskind et al., 2015] Zyskind, G., Nathan, O., and Pentland, A. S. (2015).
Decentralizing privacy: Using blockchain to protect personal data. In Proceedings -
2015 IEEE Security and Privacy Workshops, SPW 2015, pages 180–184
References (ctd.)

Introduction To Blockchain Technology For Beginners

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