PRESENTATION.pptx
- 1. Cryptocurrency and Blockchain Technology Faizan ,Shiza, Nabgha , Mashal 1 Presented by : Presented to : Prof.Zaman Aslam
- 2. Aug 2008 Oct 2008 Nov 2008 Jan 3 2009 Jan 9 2009 Jan 12 2009 "bitcoin.org“ registered 2 Project registered on SourceForge.net Bitcoin white paper published Genesis block established at 18:15:05 GMT Bitcoin v0.1 released & announced on a mailing list 1st transaction done, in block #170 from Satoshi to Hal Finney How did it start? We had “Hash Chains” in cryptography before. But the notion of blockchain came to surface with Satoshi Nakamoto’s white paper in 2008.
- 3. Satoshi’s White Paper Not even a real name! A Free Email Provider 3
- 4. How did it become famous? 4 • Silk Road was one of the first online black markets that used Bitcoin and TOR technologies for anonymity. • Silk Road was shut down in 2013 and the admin (Ross Ulbricht) was arrested. He was sentenced to life in prison! • Not all the credit for Bitcoin’s fame goes to Silk Road. The 2017’s price surge was also a big shot.
- 5. Silk Road’s Money Flow 5
- 6. • Bitcoin is one of the many cryptocurrencies, in fact, the 1st one. 6 • Bitcoin was built upon the Blockchain technology. • Bitcoin is anonymous. Not all blockchains are like that. • Blockchains have numerous other applications too. Bitcoin’s Relationship with Blockchain (Deloitte)
- 7. Blockchain is a secure transaction ledger database (initially made to facilitate currency exchanges) shared by all the members participating in an established, distributed network of computers. (LSTA) So, what is blockchain? 7
- 8. Bitcoin Example: Centralized vs Decentralized Ledger 8 A bank keeps names and account balances We know how much one can spend based on his balance in the trusted bank. Transaction Alice 2B Bob Bob 1B Frank … Instead of balance, everybody can get a copy of the transaction records. So, everybody can verify if someone has got money and where it has come from.
- 9. Transferring Money (animated) • Alice wants to give Bob 5 bitcoins: Alice Bob 5.0 BTC • She puts this transaction on a file and sends it to everybody she knows, and those will forward the transaction to everybody they know, and so on. 9 Here, we have shown a ledger by balances for simplicity. It is the transactions list in practice. How transactions are flooded (CuriousInvestor)
- 10. How does Alice Prove she has the Money to Spend? 10 • There is no balance! • Instead, she mentions the previous (input) transactions. • Everybody can verify (by signatures) that she has received 5 bitcoins (from Charles and Fred). (CuriousInvestor)
- 11. Transaction Protection 11 • How do the people make sure that it was actually “A” who did the transaction? • By Digital Signature! • When you’re paid, the money is sent to your public key. • You may spend the money by signing another transaction using the private key corresponding to that public key. You don’t send someone the money. You actually send it to his public key! (CuriousInvestor)
- 12. How the Transactions are Protected by Key Pairs and Digital Signature EKprA (H(m)) Alice I give 2 Bitcoins to Bob’s Public key I give 2 Bitcoins to Alice’s Public Key Bob Everyone will know about this transaction then George’s George George’s 12
- 13. Anonymity Anonymity is achieved by not binding the key pairs to their owners’ true identity. From outside, it is as if a bunch of public keys are doing business with each other. Users can have multiple key pairs. 13
- 14. A Real Transaction Commission Previous transactions that prove A has 139.616 BTC Every transaction has a signature to verify 14
- 15. A Security Concern (CuriousInvestor) 15 If you’re here, you receive the 1st (actual) transaction after the second (fraudulent) one. Due to the network topology, a money can be spent twice and the 2nd transaction is accepted first! Therefore, the 1st transaction (which was real) can be deemed fraudulent and double spending.
- 16. Example of Double Spending Fraud • Alice buys a product from Bob. Right after he ships the item, Alice makes another transaction and gives the money back to herself (using another key pair). 16 This node wants to deal with Bob, what does he think? #273A… (CuriousInvestor)
- 17. Blockchain: A way to Find the Right Transactions Order • There will be disagreements in the network whether Alice or Bob owns the money. • We should find a way to figure out the correct transaction order. • That was how blockchain was invented. 17
- 18. 18 (Source: CuriousInvestor) Each block is a set of transactions plus a reference to the previous block. This is where mining happens!
- 19. Who Should Make a Block? 19 A block is made of a set of transactions happened in the same time slot (around 10 mins). In PoW, any node can create a block, and by creating the block, makes the transactions permanent (along the branch). To make a block, the node must solve a hard mathematical puzzle.
- 20. Mining ! To make a block, one has to add a number to the transaction data in a way that the puzzle is solved. 20 … It Bitcoin, the puzzle is hash function finding a value that it is smaller than a target threshold. H(Block)=000000000681FAE1BC0830D8 It’s Difficult !
- 21. Mining (Cont.) Why should people do this? There’s an incentive! That’s how money is created! Initially the reward was 50 Bitcoins. Every 4 years, the reward is divided by 2. Now (2018) if you solve one block, you get 12.5 bitcoins. 21
- 22. 22 (Coman)
- 24. Bitcoin is not Alone • There are plenty of other cryptocurrencies • Monero • Litecoin • Zcash • Ripple • IOTA (based on tangles) • … • But Ethereum opened a new chapter in blockchains in 2013. 24
- 25. Ethereum Ethereum’s idea was conceived by Vitalik Buterin in 2013. But it went live in 2015. He wanted to generalize the idea of blockchains, and mixed it with programming. That’s how “Smart Contract” was born. 25
- 26. What is a Smart Contract? (animated) • It’s a piece of computer program, stored in blockchain. 26
- 27. In Ethereum, you can interact with smart contracts as well as human beings (2 account types). We can write a smart contract (program) that collects money for a project. Programs can have if/then. If the collected money 2: T , then { Transfer money to the team } else { refund the money } Crowdsourcing with Smart Contracts 27
- 28. How are the Blocks Verified? Similar to Bitcoin, everybody receives a copy of the smart contract (program) as well as all the other interactions done with it. Each member can run the code on his/her computer and give it the same interactions to find the current state of the contract. (bitsonblocks.net) 28
- 29. How are the Blocks Verified? Again, we can use the blockchain to ease the processing and make sure the interactions are in the correct order. We can rely on the miners if we want not to do all the work. 29 (Savjee)
- 30. Some Business Domains Affected FINANCIAL Banking & Payments, Loans, Gambling, … INTERNET & CYBERSEC IoT, Domain Name System, Trust Management, … ENERGY Smart Grid P2P Energy Exchange, … OWNERSHIP/COPYRIGHT Music & Film Industries Real Estate SERVICE/GOVERNANCE eVoting, Crowdfunding, Charity, Justice System INDUSTRY Supply Chain, Insurance Blockchain 30
- 31. Blockchain SWOT Analysis S Strengths Decentralized Transparent Versatile O Opportunities Faster Business Process Direct Interaction, Lower Costs, Less IT Infrastructure W Weaknesses Storage Interoperability, Scalability People’s Trust T Threats Regulatory Barriers Political Opponents Crime (Partly from Deutsche Bank Research, Deutsche Bank AG) 31
- 32. Related ITU‐T Activities (SG11 Workshop, 15 November 2017, ITU‐T activities on Blockchain) Focus Groups • FG‐DPM (Data Processing & Management) • FG‐DLT (Distributed Ledger Technology) • FG‐DFC (Digital Currency) SG13 – Future Networks (& Cloud) SG17 – Security SG20 – IoT, Smart Cities & Communities
- 33. Some Deliverables on Blockchain in FG‐DPM 33 WG3: Data Sharing, Interoperability and Blockchain (SG11 Workshop, 15 November 2017, ITU‐T activities on Blockchain)
- 34. Thank you 34