AN INTRODUCTION TO

BLOCKCHAIN

Christos Profentzas

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 TODAY’S OUTLINE

• Background (Cryptography Basics)

• Blockchain
• Cryptocurrencies
• Distributed Ledger Technology (DLT)
• Smart contracts
• General applications

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 CRYPTOGRAPHY BASICS

• Public key cryptography

• Digital signatures
• Hash functions
• Merkle Tree
• More at cryptography course: TDA 352 - DIT 250

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 PUBLIC KEY CRYPTOGRAPHY

• The public key is known to everyone

• The private key is secret and only the owner can use it
• Anyone can use the public key
• Only the owner can use the private key

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 DIGITAL SIGNATURES

• Only the owner of the private key can sign a message

• The sender sign the message using the private key
• Anyone can verify the signature using the public key
• Remember public key is public

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 CRYPTOGRAPHIC HASH FUNCTIONS

• Take big or small messages as input

• The output is fix e.g., 256 bits
• Is hard* to find the input of a given output
• Is hard* to find two inputs with the same
outputs, even though there exist

*Hard: Computational infeasible

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 MERKLE TREE

Root Hash

Crypto
Hash Hash CD
Hash AB
pointers
Digital
Signatures
Hash A Hash B Hash C Hash D

A B C D

Signed Transactions
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 BLOCKCHAIN

Linked-List using crypto hash pointers

Genesis Block Block 1 Block 2

Previous Block: Previous Block :

“Generate
000000abcd 000000efgh
10 billion
Bitcoins” Merkle root Merkle root
Hash of
the whole
H( ) H( ) H( ) Block

000000abcd 000000efgh 000000jklm

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TIME
 THE BIG PICTURE
Block 1 Block 2 Block 3

Previous Block:
Previous Block: Previous Block:
H( ) 000000efgh
000000xxxx 000000abcd
v
Merkle root
Merkle root Merkle root 000000efgh

Root Hash Tampering just one transaction

change the hash of the whole block
Crypto
Hash Hash AB Hash CD
pointers
Digital
Signatures
Hash A Hash B Hash C Hash D

A B C D
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Signed Transactions
 BLOCKCHAIN TAMPERING

Computational feasible to tamper

and
Forks may appear here

BLOCK BLOCK BLOCK BLOCK BLOCK BLOCK

More Secure Less Secure

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TIME
 BLOCKCHAIN FORKS

Consensus rule: continue with the longer available Chain

Original Chain

Forked Chain

s is tenc y
ua l con
Forked Chain Event
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 BLOCKCHAIN CONSESNUS

Two types of blockchain Public & Private

• Public blockchain: Anyone with a public key can participate

• Miners: try to find the hash pointer of the next block - Proof of Work (PoW)
• Golden rule: mining the longest chain

• Private blockchain: Access list of participants, no need of PoW

• Consensus is a typical byzantine failure problem

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PEER TO PEER NETWORK

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 CRYPTOCURRENCIES

• Blockchain as money
• Public blockchain
• No Central Authority
(Distributed!)
• Primely depends on PoW

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 DISTRIBUTED LEDGER TECHNOLOGY

• Multiple parties keep a global log of records

• Multiple copies of the log
• Multiple writers not fully trust each other
• Avoid to use the central authority but we need consensus mechanism

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BLOCKCHAIN FLOWCHART

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 SMART CONTRACTS

• Storing programming script in the blockchain

• When the conditions fulfilled miners execute the code
• Miners get a reward according the code size

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 GENERAL APPLICATIONS

• Financial contracts and derivates

• Decentralized governance
• Decentralized digital voting systems
• Distributed record keeping
• Electricity consumption
• Healthcare records
• Intellectual property

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THANK YOU FOR THE ATTENTION!

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