www.chain-expert.

com

Understanding Blockchain

- Rahul Bagal
Bitcoin Satoshi Nakamoto 2009
Blockchain
Distributed shared
ledger
Cryptography & PKI
Smart contracts
Many Alternate Coins -
Litecoin, Ripple, Zerocoin
 Asset Linked Physical Currency ( Backed by Gold )
 Fiat currency is legal tender whose value is backed by the government that
issued it
 Problems with Virtual Currency
 Copying /duplicating virtual currency
 Double Spending Problem in virtual currency.
  Rai stones - Yap Currency
on the islands of
Micronesia near
Philippines – This is
currency of native tribal
people.

Image Source : http://bitcoinsandeconomy.blogspot.in/2014/04/bitcoins-stone-money.html

  Cryptographic Hash is a
function which generates a
fixed length string ( Digest )
for a string. It is called hash.
 Any change to original string
changes hash completely
 Computationally hard or
impossible to decrypt
 Bitcoin Wallet address is
SHA256 hash value.

Image Source : https://en.wikipedia.org/wiki/Cryptographic_hash_function

1. Cryptography – Use of public key Cryptography ( Digital Signature )
and Cryptographic hash functions.

2. P2P Network – Every node of network is a client as well as Server.

This is similar technology that is used in Bit Torrent network .

3. Game Theory – Node of P2P network validate transaction by

Consensus with economic incentive ( Proof of Work & Proof of Stake
etc. )
1. No Single entity controls it.
2. Shared & Public ledger of transactions
3. Anyone can inspect the transactions.
4. The transactions are added to ledger on Consensus from nodes.
https://www.chain-expert.com/
@rahulbagal
https://chain-expert.com/feedback/
1. Network Stores information in Cryptographically secured data
pieces. It is called block.
2. Each block has limited storage size.
3. Block store information about previous block ( hash ) as well as
transaction data of current block . Thus all blocks are chained.
4. Each full node stores entire copy of Blockchain.
5. New blocks of transactions get added to Blockchain by consensus of
network miners at even time intervals.
6. Miners are rewarded with native token ( Bitcoins in case of bitcoin
blockchain ) for validating transactions according to rules.
Image Source : https://ajithp.com/tag/block-chain/
Image Source : https://ajithp.com/tag/block-chain/
Image Source : https://ajithp.com/tag/block-chain/
Mining – Poof of work
Solves problem of double spend
 Bitcoin mining is the
processing of transactions
on the Bitcoin network and
securing them into the
Blockchain.
 As reward for doing
mining for every block
payout bitcoins for given
to miners.
 Proof-of-Work
 - Requires lot of Electricity
 - Works on brut force on hashes.
 - Works with Anonymous nodes
 - Used in permission less Blockchain

 Proof-of-Stake Model (PoS)

 -Creator of a new block is chosen in a deterministic way
 -No block reward
 -Miners take the transaction fees

 Proof of Elapsed Time (PoET)

 - Designed By Intel
 -Works on Trusted Execution Environment on Intel SGX
 - Nodes are required to have this specific hardware
 Permissionless Blockchain
 Public Blockchain
 Example : Bitcoin Blockchain , Ethereum

 Permissioned Blockchain
 Known entities/nodes operate chain
 Mining and token is not required.
 Example: Ripple, Stellar , HyperLedger Fabric
 Audit-ability and transparency-Any node in the future can verify a transaction but
no node in the network can change it.
 Immutability
 Cryptographic Guarantees: Authenticity, Integrity , and non-repudiation
 Psudonamity
 Shared read and write
 Distributed Ownership
 Blockchain can Serve as a platform.
 Ethereum smart contracts. These are programs which control blockchain assets,
executed over interactions on the ethereum blockchain.
 Solidity - Contracts are designed using a Programming language called Solidity. It
is a JavaScript like language
 It is blockchain based replacement of Crowdfunding like Kickstarter.
 A tech start-up team creates an ICO using a blockchain-enabled software platform,
such as Ethereum
 The team produces a white paper to describe its idea in greater technical depth for
the cryptocurrency community to review, ideally supported by a prototype.
 These tokens are then used as the shares can can be traded in secondary market.
 As a system of record
 For Audits
 For Tokenization
 For financial institutions
 For governments

 As a platform
 For automating regulatory compliance
 For streamlining of clearing and settlement ( Finance )
 For smart contracting
 For automated governance DAO (decentralized autonomous organization)
 Prediction Market
 Voting
 Smooth the shipping process ( Proof of delivery & every stage of shipping )
 Prove ownership of an asset
 Lending - Peer to Peer Lending
 Transfer Money / Micro Payments
 Issue shares
 Music Copyright
 Certify a supply chain ( Ex- Organic Food Delivery & Certification )
https://www.chain-expert.com/
@rahulbagal
https://chain-expert.com/feedback/