Blockchain and

Decentralized Applications
Understanding and making your first decentralized transaction

Dr. Red Boumghar

red@parametry.ai
Ex-ESA / NASA / ECB
CEO of Parametry.ai
AI, Blockchain and Cloud Intelligence
https://linkedin.com/in/boumghar
@redotics
#BADAUAMYFDT
Disclaimer

All views exposed here are my own, they do not reflect

those of my past, present or future employers,
employees or stakeholders.

Everything presented here is meant for information and

education purposes, there is no financial or investment
advice.

Do your own research and act at your own.

Warnings

I use standard ISO datetime format

YYYY-MM-DD hh:mm:ss

2021-11-30 12:00:00

You can interrupt me anytime!

●
Why Blockchain – review
●
Bitcoin – Generation 1
Decentralization and PoW
●
Ethereum – Generation 2
Smart Contracts
●
Cardano/Algorand – Generation 3
Scalable and PoS
●
Hands-On / Let’s do it

Outline
 Why Blockchain ?
for Equality
Because Crypto is Cool
Digitalize Finance Fast Transactions (yes/no)
!
yet
, not
Intermediaries
o
N Buy a house in Bali

Interplanetary Economy
Build on newtech
Transparency Trustless environment
Creating new asset classes
because the banker’s manifesto
is all but believing in Humanity

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 Pillars of finance
Euro
USDT
€ Designed by macrovector / Freepik

US$ DAI Lending & Borrowing

Stable Coins Derivatives

Decentralized Exchanges Margin Trading

Insurance

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 Pillars of finance
Centralized Finance Decentralized Finance

CeFi
https://sdw.ecb.europa.eu
vs DeFi
https://defipulse.com

(in kEuros)

200.0B Euros US$ 105.0B

https://coinmarketcap.com
https://app.santiment.net
...
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-------------------
 Bitcoin – Generation 1
2009-01-03
The First 50 bitcoins

2010-05-22
The First Exchange
10000 Bitcoins for 2 Pizzas (US$41)

“Bitcoin’s academic pedigree”

Naraynan & Clark
https://dl.acm.org/doi/10.1145/3132259

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 Bitcoin – Generation 1
UTxO Proof of Work
Unspent Transaction Output with dynamic difficulty
Transaction-Based Ledger via Hash Key ‘brute force’

Foundation of many other projects

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 BITCOIN Decentralization

NODE Relay Network

NODE Information

●
Block metadata
●
Transactions Database
Miner NODE
NODE
Get Work To Be Done
getblocktemplate → NODE

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NODE
BITCOIN network Node

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 https://blockchair.com/bitcoin/block/708800
BITCOIN EXPLORERS

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 BITCOIN MINING - WORK TO BE DONE
bitcoin-cli getblocktemplate '{"rules": ["segwit"]}'

JSON Format

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 Bitcoin mining - work to be done

2021-11-08T18:38:47

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 Bitcoin mining - work to be done

19 Zeros
~ Network Difficulty

The algorithm wants to maintain one block

creation every 10 mins. And adjust this difficulty every 2016 blocks

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 Bitcoin mining - DIFFICULTY

https://www.coinwarz.com/mining/bitcoin/difficulty-chart

Goal is to keep ?!
a constant 10 mins
work per block

People’s Bank of China (PBOC)

issued a notice to a number of
financial institutions concerning
crypto transactions
https://news.bitcoin.com/pboc-instructs-chinas-banks-forbid-all-cryptocurrency-related-activities-immediately/

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 Bitcoin mining

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 BITCOIN MINING – MUTABLE INFORMATION
Header = version + PreviousHash + MerkleRootHash + time + DifficultyBits + Nonce
000000016fe28c0ab6f1b372c1a6a246ae63f74f931e8365e15a089c68d61900000000003ba3edfd7a7b12b27ac72c3e67768f617fc81bc3888a51323a9fb8aa4b1e5e4a29ab5f499790466481dac2b7c

Header to be HASHED Integer

Must satisfy the difficulty 4.29B possibilities
n Zeros-starting-hash Few would satisfy the difficulty
Miner must had her/his own
Current mining centers do that
Coinbase transaction
in few seconds
changing the whole merkle tree

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 100%

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 BITCOIN ECONOMICS

●
Store of Value
●
Medium of exchange
●
Unit of account (?)
●
Scarcity
●
Producing 6.25 bitcoins
reward every 10 minutes.

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 BITCOIN WRAP-UP
New technology implementations:
●
UTXO: Unspent Transaction Output
●
Solving the hash problem
●
Network difficulty and stakeholders
●
Not static the protocol evolves by BIP – Bitcoin Improvement Proposals

Requirement for nowadays financial system == 100 000 transactions/second

●
VISA processes about 24k tx/s, settles 2k tx/s
●
UNIONPAY processes about 1-k tx/s, settles --k tx/s
●
MASTERCARD processes about --k tx/s, settles 5k tx/s
●
Bitcoins makes 1 to 7 tx/s + no need for counterparty risk

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-------------------
 Ethereum – GENERATION 2
https://ethereum.org

Ecosystem for:

Digital currencies

Global payments

Applications

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 ETHEREUM – Generation 2
UTxO Proof of Work
Account/Balance-Based Ledger started moving to
State management Proof of Stake

Foundation of many many many other projects

~ 7000

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 ETHEREUM vs BITCOIN
Points of comparison
Bitcoin Ethereum
Transaction based Ledger Balance based Ledger

1 merkle tree of transactions 4 merkle trees

T CTS
R
1 Turing incomple language 1 native Turing complete language SMANTRA
+ 8 alternative common programming languages
CO
10 mins work / block 14 seconds validation

Proof of Work Proof of Work → Proof of Stake

Nobody had anything Started with a pre-sale

No requirements to participate 32 ETH are necessary

(today about $128 000)
Can be mined Won’t be “mineable” with EIP-3554
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 Proof of stake
Validators (not miners) are randomly selected

… among stakeholders who “locked” at least 32ETH in a stake

Step 1 – Beacon Chain

Step 2 – The merge [difficulty bomb(s)]
Step 3 – The Shard chains

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 SMART CONTRACTS

Not always Smart

And actually just
Digital
Not always really
Smart is the “other name” for
Automation contracts
Promise or Performance
In exchange of a
Promise or performance

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 SMART CONTRACT in REAL

Test and try at home on

https://remix.ethereum.org

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 THE erc20 standard: FUNGIBLE TOKENS
ERC20 is the implementation of EIP20
Ethereum Improvement Proposal >> Ethereum Request for Comments

ERC20 is a Standard to represent any kind of fungible tokens

- divisible
- and all the same in type and value

https://ethereum.org/en/developers/docs/standards/tokens/erc-20/
Example to create your own token: www.tokenmaker.org
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 ERC721: Non-FUNGIBLE TOKENS
ERC721 is the implementation of EIP721
Ethereum Improvement Proposal >> Ethereum Request for Comments

ERC721 is a Standard to represent non-fungible tokens

- Non-divisible
- Unique type and value
- Static Metadata
- Transferrable one at a time
ERC1155 is a Standard to represent non-fungible and fungible tokens
- Metadata is stored off-chain: it is dynamic
- Metadata must be managed by the smart contract
- Can be transferred several at a time

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 PRojects
Euro
USDT
€ Designed by macrovector / Freepik

US$ DAI Lending & Borrowing

Stable Coins Derivatives

Decentralized Exchanges Margin Trading

Insurance

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 Stable coins
Euro
USDT
€

US$ DAI DAI : Algorithmic stable coin

You mint DAI against you deposits
Stable Coins

USDT: dollar backed stable coin

By Tether company

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 Projects for a new Finance

UNISWAP.org

Autonomous Market Maker

Non-Custodial

KYBER 1 INCH
Decentralized Exchanges Connect liquidity from
different sources to enable
trades at the best rates
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 Lending and borrowing

Designed by macrovector / Freepik

Aave
Lending & Borrowing
Non-Custodial and
Stater.co Open Source
Maker Deposit & Borrow

Borrow ETH by using your NFTS Get/Use/Hold/Accept/Govern

as collaterals DAI

Lend ETH and earn rewards/interest

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 DErivatives

Synthetix
Derivatives

Creation of synthetic assets

(e.g. the sum of bitcoin and ethereum)

Exposure to real world assets

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 Enabling key functions

Smart contracts New applications


Identification The Decentralized

Authorizations Autonomous

Voting Organization

... [DAO]

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 For CUriosity

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-------------------
 GENERATION 3

Ecosystems for: https://cardano.org

Ouroboros Consensus

Native Scalability Capabilities

Native interoperability

Native security and privacy

Complete transaction finality Algorand
https://algorand.com
Pure Proof of Stake™

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 Accessible participation
Built on existing programming language

Cardano Algorand
Haskell Python

500 ADA
for becoming network operator

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-------------------
 Making your own decentralized transaction

1 2 3

Install a wallet Create a key Connect to

a blockchain

Take Actions

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 PRE-REQ – what is a browser

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 Pre-Req Cyber Awareness

Money and assets in your pocket

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 WEB3
Web3
Access to the decentralized web
!=

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 1
INStall a wallet
Wallets are used to send, receive, and store
What’s a wallet ? digital assets like Ether. Wallets come in many
forms. They are either built into your browser,
an extension added to your browser, a piece of
hardware plugged into your computer or even
an app on your phone.
(credits: https://rarible.com)

They are the door to access your assets and

rights on the blockchain. The managers of your
private key and portfolio manager of your
blockchain addresses.
Some wallets are multiblockchain, some are
ERC20 compatible only.

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 1
INStall a wallet
You can your mind later,
your wallet is not attached to the technology
Your private key is.

rarible.com uniswap.org kyber.org

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 Install a wallet

https://metamask.io

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 2
Create a key

https://metamask.io/

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 2
Create a key

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 2
Create a key

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 2
Create a key

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 2
Create a key

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 2
Create a key

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 3
Connect/Switch blockchain

Accounts
List

Connected
Blockchain

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 3
Connect/Switch blockchain

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 4
Take actions
Create an additional account
Externally Owned Address (vs Contract Addresses)

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 4
Take actions

Faucet concept of TestNets

https://faucet.ropsten.be/

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 4
LET’s INTERACT

COPY/PASTE YOUR ETHEREUM ADDRESSES HERE:

https://hackmd.io/@redotics/a/edit

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 4
GO TO UNISWAP.ORG

www.uniswap.org
is a Dapp
A Decentralized Application

Can you receive/send bitcoins to your adresses ?

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-------------------
 Dr. Red Boumghar
red@parametry.ai
https://linkedin.com/in/boumghar
SUMMARY
@redotics

Generation 1 Generation 2

Bitcoin Proof of Work 
Proof of Stake

Hash challenge 
Protocol standards for

Network Difficulty Tokens and NFTs

Smart Contracts

Many projects
Generation 3

Native Proof of Stake Managing your wallet

Scalibity 
Initialization

Security and Privacy 
Using DApps

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