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© TeckTalks, 2016
The Curious Case of Blockchain
- Sugnyan Bettadapura- Ritesh Mehrotra
© TeckTalks, 2016
W HAT W E’ LL BE TALKI NG ABOUT
01 Blockchain basics
02 Blockchain in Cryptocurrency ecosystem
03 Blockchain in Government services
04 Blockchain in Supply Chain Management
05 Blockchain for Fraud control
06 Blockchain for Internet of Things (IoT)
END
© TeckTalks, 2016
What is Blockchain? …. Common themes discussed in the context of Blockchain
Stores transactions
Replication across a number of systems
Decentralized/Distributed Ledger
Peer to Peer replication
Enforce read/write access rightsto prove identity, authenticity
Cryptography and Digital Signatures
Difficult to change Historical recordsEasy to detect attempts to modify
records
Longest chainProof of Work
© TeckTalks, 2016
Decentralized ledger ….How different are they ??
Traditional Centralized Ledger
› Trusted Counterparties
› Proprietary: Licencing requirements
› Gate Keepers Extract Tolls
© TeckTalks, 2016
Decentralized ledger ….Central authority eliminated
Decentralized Ledger
› Peer 2 Peer
› Cryptographically secure
› Open Source
› Blockchain protocol is available to any asset
© TeckTalks, 2016
How Blockchain relationships work (Process view)?
A transaction is reported
Broadcasted to a P2P network
Validation of the transaction & user’s status using known algorithms by the network of nodes
1
2
3
4
5
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Transaction marked as Verified
Post verification, the transaction is combined with other transactions to create a new Block of data for the ledger
Add new block to the existing Blockchain
The transaction is marked complete
Transaction reported
Transaction Authorized
Transaction Recorded
Transaction Executed
© TeckTalks, 2016
Transactions – How they look?
Reference: https://bitcoin.org/bitcoin.pdf
© TeckTalks, 2016
Building Blocks
Block A
• Transactions• Hash Address• Nonce
Block B
• List of Transaction – Hashed
• Previous Block Address
• Nonce
Block C
• List of Transaction – Hashed
• Previous Block Address
• Nonce
Blocks – How are they structured?
© TeckTalks, 2016
Validating Transactions - Proof of Work
© TeckTalks, 2016
Hash function {Root Hash
Previous Block Hash
Nonce
HashedTransactions
A+B Hash
C+D Hash
Transaction A
Transaction B
Transaction C
Transaction D
Arbitrary value incremented for each
check
Each potential block needs to generate a hash value such that it has a series of pre-defined zero bits.
The hash is generated with these inputs• Previous block’s hash address• Hash of hashes: All transactions
in a potential block are hashed to a Merkle Tree to generate a Root Hash
• A randomly generated arbitrary value
The nonce is incremented and applied and hash function till the zero bits condition is met
How it works?
© TeckTalks, 2016
Generated with 20 zero bits
References to previous and next blocks
Root Hash of transactions in a block
Try it out here• http://www.xorbin.com/tools/sha256-hash-calculator • Live Blockchain Transactions: https://blockchain.info/
Sample Block
© TeckTalks, 2016
How should conflicts be resolved?
Consensus achieved by using Longest Chain rule
If there are multiple competing valid chains, believe the one with more blocks.
© TeckTalks, 2016
What’s in it for me ?? … Incentives
Block Rewards
Block Makers
Block Data storage
Transaction validators
© TeckTalks, 2016
Upgrades?
Blockchain Improvement Proposal (BIP)
Submit New features Suggestions Design changes
Build consensus within the community
Document dissenting opinions
Responsibilities of BIP author
© TeckTalks, 2016
Case study: Blockchain in Cryptocurrency ecosystem
Code’s resistance to counterfeiting
Network’s ability to prevent double spending
Network security and transaction verification
Embedded Incentives to miners
Personal data security enabled by public-private key cryptography
Dedicated core team of developers and miners who support & improve the code
Electronic currency that uses cryptography for security, mostly anonymous and not issued by any central authority600+ Cryptocurrencies exist today
Differences between various cryptocurrencies
© TeckTalks, 2016
Case study: Blockchain in Government Services
Reduce risk of manual errors
Create Secure process for transferring
documents
Verify identity of users
Registering and recording land titles
© TeckTalks, 2016
Case study: Blockchain in Supply Chain Management Letter of Credit management
Improve security by reducing errors
Predictable working capital for companies
Simplify transaction processing
Bring Transparency in transactions
© TeckTalks, 2016
Case study: Blockchain in Internet of Things (IoT)
Distributed Transaction ledger for IoT transactions Peer-to-peer messaging
Distributed file sharing
Autonomous device coordination
© TeckTalks, 2016
Case study: Blockchain in Healthcare
Electronic Medical Record (EMR)Pseudonymous
(Personal health record encoded as digital asset)
Private Key(Only permissioned
personnel can access)
© TeckTalks, 2016