INTRODUCTION TO

BLOCKCHAIN TECHNOLOGY
Blockchains in the news
Pentagon Thinks Blockchain Technology Can be Used as Cybersecurity Shield
https://cointelegraph.com/news/pentagon-thinks-blockchain-technology-can-be-used-as-cybersecurity-
shield

Xerox Files Patent for Blockchain-Based Records System

https://cointelegraph.com/news/xerox-files-patent-for-blockchain-based-records-system

Australian Government Moves to Regulate Cryptocurrency Exchanges

https://cointelegraph.com/news/australian-government-moves-to-regulate-cryptocurrency-exchanges

OCBC debuts use of blockchain technology for faster, more secure and cheaper inter-bank fund transfers
http://www.straitstimes.com/business/banking/ocbc-debuts-use-of-blockchain-technology-for-faster-more-
secure-and-cheaper-inter

Nestle, Unilever, Tyson and others team with IBM on blockchain

http://www.businesstimes.com.sg/consumer/nestle-unilever-tyson-and-others-team-with-ibm-on-blockchain
Blockchain Background

Blockchains have their origins in cryptocurrency

platforms, in particular Bitcoin, where they represent
historical records of verifiable monetary stake.
TRANSACTIONS WITH AND WITHOUT AN INTERMEDIARY

Centralized Trust

Decentralized Trust.
Trust is established through mass collaboration and clever code rather than by powerful
intermediaries like governments and banks.
 Blockchain Concept Defined
Blockchain, regardless of the Bitcoin ecosystem:
 Is a storage (database) which forms a distributed ledger of blocks of facts

 This ledger is replicated across all computers connected in a peer-to-peer network

 Members of the network are anonymous non-trusted individuals called nodes

 Public Key Infrastructure cryptography is extensively used to securely identify the

members (Private Key and Public Key)

 A consensus in the network is required to verified a new block before being added
to the ledger

 Once included in blocks, facts are permanent records

 Facts within the blockchain are transparent and can be traced to the authorized
originator
Public/Private Implementation Models

Public blockchains Private blockchains

(un-permissioned) ( permissioned)
• Anyone can read • Participants are
or write data known and some
from or to the have permission
ledger. to update the
• Example: The ledger.
Bitcoin network
Block of Fact(s)
A block is a storage to place one or more facts.

Facts could be:

 Transactions (financial, asset transfer, etc)

 Private Identity

 Work History

 Health Care Records

 Computer Programs (Smart Contract), etc.

Block #35 Block #75 Block #101

1. Transaction A Origin of Goods Health Records

2. Transaction B
3. Transaction C
Chain of Blocks
Each “confirmed” block references the previous one, forming a
chain of blocks.

30 31 32 33 34

Before being added to a block, new facts (transactions) are

pending (unconfirmed).
Unconfirmed
1. Transaction A
2. Transaction B
3. Transaction C

New Transactions
Details of ‘unconfirmed’ transactions are distributed
throughout the entire distributed peer-to-peer
network.
Node

Node

Unconfirmed
Node 1. Transaction A
2. Transaction B
3. Transaction C Node

Node Node
Some nodes in the chain create a new local block with pending facts. They
compete to see if their local block is going to become the next block in the chain
for the entire network. In cryptocurrency, this is called “Mining” or Proof-of-Work
(PoW)

Local
33 34 35
33 34
n n
Pending
A Y,Z

Node 100 Node 100

Local
33 34 35
Pending 33 34
A,B,C Y,Z

Node 101 Node 101


Local
33 34 35
Pending 33 34 Y,Z
Y, Z

Node 102 Node 102

If a node ‘wins’, then it earns the ability to publish their local block, and all
facts in this block become confirmed.
This block is sent to all other nodes in the network. All nodes check
and verified that the block is correct, and by consensus, add it to their


copy of the chain.

 Node

Node


Block 35 No Single Point of Failure


1. Transaction Y Each computer in the
Node 2. Transaction Z
network carries the full
Node blockchain ledger.

 
Node
Node

All Nodes 31 32 33 34 35
Blockchain Programmability — Smart Contracts
 Besides storing facts, a blockchain can also execute
programs written as programming code in a block
 This can be used to make a transaction conditional:
 Bob will receive 10 BTC from Alice if and only if today is 1
January AND a Sunday.

 The individuals involved are anonymous, but the contract

is in the public ledger.
 This removes the need for a lawyer, judge, or any
authority acknowledged by both parties
Public/Private Implementation Models

Public blockchains Private blockchains

(un-permissioned) ( permissioned)
• Anyone can read • Participants are
or write data from known and some
or to the ledger. have permission
• Example: The to update the
Bitcoin network ledger.
Private / Permissioned Blockchain

Has a built in Access Control layer in the

blockchain nodes to Authenticate and Authorize
members of the network

Members have an ability to restrict who can

participate in the consensus mechanism of the
blockchain’s network.

Members have an ability to restrict who can

create smart contracts (if the blockchain node is
logic optimized) and/or transact on the blockchain
network
Regulation and System Governance
 Technologies like the Bitcoin blockchain bypass regulation completely to
address inefficiencies in conventional intermediated payment networks.
 Regulating an unpermissioned system like Bitcoin via legal code is
complicated, as there is no single legal entity in control of the system.
 In permissioned blockchain, governance of the software is made simpler by
the fact that there is usually a proprietor with clear legal and technical
authority over the code.
 Regulating a permissioned blockchain is just a matter of imposing legal
obligations on its proprietor.
 Organizations using permissioned blockchain could be more transparent
because it could enable the disclosure of a fully traceable and timestamped
record of all decisions and actions by management and the board of directors.
http://www.businesstimes.com.sg/banking-finance/mas-to-regulate-
crowdfunding-involving-digital-tokens
Implementing Your Own Blockchain (?)
 The technology behind the blockchain uses advanced
cryptography, custom network protocols, and performance
optimizations.
 This is all too sophisticated to be redeveloped each time a
project needs a blockchain.
 Fortunately, aside of Bitcoin, there are several open-source
blockchain implementations:
 Ethereum, an open-source, crowdfunded project, much like the Bitcoin blockchain
but which allows a network of peers to administer their own ‘smart contracts’.
 Hyperledger, another open-source implementation by the Linux Foundation and
IBM’s Bluemix.
 Coco Framework, open source blockchain from Microsoft
 The Ripple Transaction Protocol, a blockchain providing instant, certified and low
cost international payments targeted at banks and non-bank financial services
Challenges and Risks
Risks of hacking of the blockchain and its applications, especially as the power of
new computing techniques are introduced.

The blockchain stores data but does not store the underlying supporting documents.

The accuracy of the data underlying the digital record is not guaranteed.

Concerns over the privacy and accessibility of data on public blockchains.

Blockchains are not yet as scalable as existing commercial transaction systems,

concerns over costs and computing power needed to maintain blockchains.
Concerns that blockchains with its advanced encryption system, could facilitate
fraudulent or illegal activities due to the anonymity of blockchain participants.

Could be integration issues among blockchain applications and existing systems

Upgrades could be challenging for obsolete early blockchain versions.

Case Studies and Demo
https://www.youtube.com/watch?v=r43LhSUUGTQ
IBM BLOCKCHAIN CAR LEASE https://www.youtube.com/
watch?v=IgNfoQQ5Reg
DEMO
BLOCKCHAIN IN HIGHER http://blockchain.open.ac.
uk/
EDUCATION
 SECURING THE DIAMOND https://www.youtube.com/
watch?v=hHkc-DH0ep4
TRADE WITH BLOCKCHAIN
 BEYOND BITCOIN -
4 SURPRISING USES FOR BLOCKCHAIN
https://www.weforum.org/agenda/2016/12/fighting-human-
trafficking-tracing-blood-diamonds-and-other-surprising-uses-for-
blockchain/
Food For Thought
Blockchain + Grab/Uber/Didi/Ola + Self-driving Car
Blockchain + GRAB/UBER + Self-driving Car = ?

THANK YOU!