Introduction to Blockchain
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The document provides an extensive introduction to blockchain technology, including its structure, definitions, and various use cases such as in healthcare, finance, and supply chains. It explains how blockchain operates as a decentralized distributed ledger and details different types of cryptocurrencies, their functionalities, and the mechanics of cryptocurrency transactions, including mining and wallet types. Additionally, it covers the evolution of blockchain, notable projects like Hyperledger, and the role of private vs. public blockchains.
![What is Bitcoin
Bitcoins Exist as Records of Bitcoin Transactions
We define a [bitcoin] as a chain of digital signatures. Each owner
transfers [bitcoin] to the next by digitally signing a hash of the
previous transaction and the public key of the next owner
and adding these to the end of the coin. A payee can verify the
signatures to verify the chain of ownership.
—Satoshi Nakamoto, Bitcoin Whitepaper](https://image.slidesharecdn.com/blockchain-mohammadal-khalil-190314200850/85/Introduction-to-Blockchain-18-320.jpg)
Introduction to Blockchain
- 1. Introduction to Blockchain Mohammad Al-khalil Al-Quds Open University Shared Ledger Technology “IN US WE TRUST”
- 2. Agenda Introduction, Blockchain structure. What is Blockchain 01 Introduction, Bitcoins, Cryptocurrencies 02 Wallets, Bitcoin Exploerer, Mining Pools, Online mining calculater, Cloud Mining Cryptocurrencies Tools 03 Healthcare, Academic degrees, Election system Blockchain Usecases 04
- 4. Blockchain Definitions Blockchain is public distrebuted ledger (ledger of facts) replicated across several computers assembled in a peer-to-peer network. Distributed Ledger Blockchain is Append only Database across a distributed network of computers. Permission The blockchain is a back-end database that maintains a distributed ledger that can be inspected openly Database Blockchain refers to a type of data structure that enables identifying and tracking transactions digitally and sharing this information across a distributed network of computers, creating in a sense a distributed trust network Data structure The blockchain is an exchange network for moving transactions, value, assets between peers, without the assistance of intermediaries. Business definition
- 5. Blockchain History Set of Blockchain Usecases Different solution based on blockchain technology in Healthcare, Supply Chain and Finance sectors Hyperledger - Linux The Hyperledger project was founded in 2015, when the Linux Foundation announced the creation of the Hyperledger project Bitcoin Satoshi Nakamoto published a white-paper titled “Bitcoin: A Peer to Peer Electronic Cash System” Back to Blockchain Around 2014, attention shifted from Bitcoin to Blockchain, hundreds of cryptocurrencies were issued Timestamp Tampered The first work on a cryptographically secured chain of blocks was described by Stuart Haber 1991 2008 2014 2015 2018
- 6. Blockchain Bitcoin Blockchain is the technology behind Bitcoin. Bitcoin is the digital token, and blockchain is the ledger that keeps track of who owns the digital tokens. Blockchains could not be without the Internet. You can’t have Bitcoin without blockchain, but you can have blockchain without Bitcoin The blockchain is a meta technology because it affects other technologies, and it is made up of several technologies itself What is Blockchain 1 3 4 5 6 2
- 7. The blockchain is a meta technology because it affects other technologies, and it is made up of several technologies itself Blockchain is a decentralized, distributed database that is used to maintain a continuously growing list of records, called blocks. Each block in general contains a timestamp and a link to a previous Block. A blockchain is a distributed database with no central authority and no point of trust (truth). Blockchain could be applied only when there is need to higher security and on specific module 7 9 10 8 What is Blockchain
- 8. What is Blockchain Backup Database Database Blockchain Network Database Security by sharing
- 9. Ledger Digital Asset Network ParticipantsConsensus Mechanism A continually updated, network hosted ‘database’ of all transactions on a blockchain. comprised of blocks of transactions (with metadata) chained together by cryptography Programmed into each blockchain protocol, and responsible for verifying and updating transactions on the network’s digital ledger; not necessary in private blockchains Blockchain Components The good transacted on a blockchain; cryptocurrency provided the initial proof of concept Computing nodes with access to the blockchain, able to manipulate the ledger and view past transactions; may be pre- approved or verified by a Consensus mechanism
- 11. Blockchain vs Traditional Without blockchain Peter would send his bank a request to send $100 of his account to his friends’ account. The bank would check a few things like whether Peter actually has the $100. If everything checks out the bank will send Peters $100 to James’ account. Without Blockchain With blockchain Peter creates a transaction of $100 to James and sends this transaction over the internet. This transaction is included in a block. All miners check whether this is a valid transaction. If it is, James has the $100 of Peter With Blockchain Central Authority
- 12. Node (verification) Proof of Work Block Blockchain Node Blockchain Security
- 13. Blockchain Security A hash, also known in long form as cryptographic hash function, is a mathematical algorithm that maps data of arbitrary size to a bit string of a fixed size. In the case of SHA 256, the result is a string of 32 bytes. The resultant 32 bytes makes it effectively impossible to reverse the output, The function was designed to be a one-way function SHA 256
- 14. Block Header • The previous block hash • Mining competition (timestamp, nonce, difficulty) • Merkle tree root (binary hash tree root). Block identifier • Cryptographic hash Merkle Trees • The transactions in a block are Structure of a Block
- 15. Cryptocurrencies
- 16. Money Function of Money • Medium of exchange. • Store of value • Unit of account. Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another. • Commodity money. • Fiat money. • Bank money. Type of Money
- 17. 01 Storg Cost Have no storage costs. They take up no physical space regardless of amount 02 Pseudonymous Neither transactions or accounts are connected to real world identities. You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters. 03 Secure Bitcoin funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Strong cryptography and the magic of big numbers makes it impossible to break this scheme 04 Permissionless You don‘t have to ask anybody to use cryptocurrency. It‘s just a software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other cryptocurrencies. No one can prevent you. There is no gatekeeper Why Cryptocurruncy
- 18. What is Bitcoin Bitcoins Exist as Records of Bitcoin Transactions We define a [bitcoin] as a chain of digital signatures. Each owner transfers [bitcoin] to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership. —Satoshi Nakamoto, Bitcoin Whitepaper
- 19. What is Bitcoin Peer-to-peer electronic transactions and interactions01 02 03 Without financial institutions Cryptographic proof instead of central trust 04 Put trust in the network instead of in a central institution
- 20. World of Cryptocurrencies Neutral Governments that have not called individual trading into question or that have stopped short of giving any legal or regulatory protection to users of cryptocurrencies. Restricted Governments that have taken steps to curtail virtual currencies, but stopped short of banning individuals from trading or exchanges operating with cryptocurrencies. legal Removing bitcoins from double taxation policies, the government also legalized bitcoin and said it can be used just like money Illegal Nations that have outlawed cryptocurrencies within their borders, some of which threaten punitive sanctions to individuals caught using them
- 22. Transaction Flow The request broadcast to P2P network consisting of computer knows as nodes to MEMPOOL Once verified all transactions grouped into one block Proof Of Work the new block added to blockchain and all transaction inside block marked as confirmed confirmation The network of nodes validate the transaction using known algorthim Transaction Validation Miners starts to solve difficult math problem based on merkle root and nounce Proof Of Work Alice Bob Unconfirmed Transaction
- 23. Bitcoin Mining 01 Miners validate new transactions and record them on the global ledger Miners receive a reward when they solve the complex mathematical problem Miners compete to solve a difficult mathematical problem based on a cryptographic hash algorithm. The solution found is called the Proof-Of-Work. When a block is 'solved', the transactions contained are considered confirmed 02 03 04 Mining is the mechanism that allows the blockchain to be a decentralized security. It secures the system and enable a system without a central authority
- 24. Transaction Verification Verification Verify that the digital signature are sound Verify that the inputs are unspent Verify that the sum of output<= sum of input
- 25. Proof-Of-Work What is Proof of work? It’s method to ensure that the information (the new block) was difficult (costly, time consuming ) to be made It costs processing power Which can be translated to HARDWARE ENERGY TIME
- 26. Unconfirmed Transaction Overloaded Network The Bitcoin network is overloaded. Due to its limited capacity, the network simply cannot process transactions fast enough, especially during high transaction periods.. . Fuel The blockchain fee is too low or absent. The lower the blockchain fee, the lower you transaction's priority in the Bitcoin network. Therefore, the longer the confirmation will take Time You have just made the transfer. The Bitcoin network needs at least 10 minutes, on average, to include the transaction in a block Email confirmation Get a modern PowerPoint Presentation that is beautifully designed. I hope and I believe that this Template will your Time. Canceled Block(Reversed) Transaction returned to unconfirmed pool after the miner lose the race in longest chain rule Unconfirmed Transaction
- 27. Demo Merkle Tree Explorer DEMO Merkle Tree Demo
- 30. CPU (Central Processing Unit) In the beginning, mining with a CPU was the only way to mine bitcoins. Now, you might mine for decades using your laptop without earning a single coin. GPU (Graphical Processing Unit) About a year and a half after the network started, it was discovered that high end graphics cards were much more efficient at bitcoin mining and the landscape changed. While any modern GPU can be used to mine, the AMD line of GPU architecture turned out to be far superior to the nVidia architecture for mining bitcoins FPGA (Field Programmable Gate Array) While the FPGAs didn't enjoy a 50x - 100x increase in mining speed as was seen with the transition from CPUs to GPUs, they provided a benefit through power efficiency and ease of use. A typical 600 MH/s graphics card consumed upwards of 400w of power, whereas a typical FPGA mining device would provide a hashrate of 826 MH/s at 80w of power. ASIC (Application Specific Integrated Circuit) The bitcoin mining world is now solidly in the Application Specific Integrated Circuit (ASIC) era. An ASIC is a chip designed specifically to do one thing and one thing only. Unlike FPGAs, an ASIC cannot be repurposed to perform other tasks. An ASIC designed to mine bitcoins can only mine bitcoins and will only ever mine bitcoins. Bitcoin Mining Hardware
- 31. Bitcoin Mining Hardware ASIC (Application Specific Integrated Circuit)
- 33. A mining pool is the pooling of resources by miners, who share their processing power over a network. Split the reward equally, according to the amount of work they contributed to the probability of finding a block. A "share" is awarded to members of the mining pool who present a valid partial proof-of-work. Mining Pools
- 34. Mining Pools
- 35. Mining Pools vs Cloud Mining Mining pools are for people who have mining hardware to split profits. Cloud mining offers a mechanism to mine a cryptocurrency such as bitcoin without having to install all the hardware and related paraphernalia.
- 36. Private wallet: • You will hold the private key. • Transactions will be issued only by you. • You have to secure your coins/tokens. Exchange Wallet: • You will not hold the private key of the wallet. • Transactions will be issued by the exchange. • The exchange should secure your coins/tokens. Bitcoin Wallet
- 38. DEMO Wallet Demo
- 39. Bitcoin Exchange A crypto-exchange is a digital marketplace where traders can buy and sell coins using different fiat currencies. A currency exchange is an online platform that acts as an intermediary between buyers and sellers of the cryptocurrency. DEMO
- 40. •Both are decentralized peer-to-peer networks, where each participant maintains a replica of a shared append-only ledger of digitally signed transactions. •Both maintain the replicas in sync through a protocol referred to as consensus. Blockchains that are private or permissioned work similarly to public blockchains but with access controls that restrict those that can join the network, meaning it operates like a centralised database system of today that limits access to certain users Private Blockchains The similarities of public and private blockchain
- 41. Private EXAMPLE HYPERLEDGER Hyperledger is an open source collaborative effort created to advance cross- industry blockchain technologies. It is a global collaboration including leaders in banking, finance, Internet of Things, manufacturing, supply chains, and technology. The Linux Foundation hosts Hyperledger under the foundation.
- 42. Thank you