Blockchain Technology

20BIS391
 Course Objective & Outcome

COB1 COB2 COB3 CO1 CO2 CO3

impart strong learn how the discuss a few of Blockchain how Bitcoins how to build &
technical individual the many best Technology works in practice test compelling
understanding components of practices exclusive landscape blockchain
to smart contracts applications using
of Blockchain the Bitcoin
and Dapps the Ethereum
technologies protocol

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Learning Outcomes

1 2 3
Concep Use Crypt
t of cases
ograp
of
decent Smart hic
ralizati contra found
on ct ation

Items to be covered
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Imran Bashir, "Mastering Blockchain: Distributed Ledger Technology, decentralization, and smart contracts
explained", Packt Publishing, 2018.

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 Roadmap

Analogy

Blockchain Introduction

Describe components of an individual block

Elements of a blockchain and how they function together

Benefits of blockchain technology

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 Analogy

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 Analogy

bank uses a network

bank maintains a
to process wire
database ledger
transfers so that
of all Alice's
funds can be sent
transactions to
from her account to
determine her
Bob's. It also gives
account balance
her an online portal
and transaction
that she can connect
history.
to in order to do this.

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 Analogy

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 Analogy

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Blockchain

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Blockchain

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 What is Blockchain?
Once transaction is
Constantly growing made, it becomes
file permanent in ledger

A blockchain is a constantly growing ledger which keeps a permanent record of all the transactions that have
taken place in a secure, chronological, and immutable way. *source: Wikipedia

every transaction
happens after the Once all transactions
Blockchain placed previous one are build onto
information in a blockchain, this
secure way ledger can never be
removed.

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How Blockchain works?

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How Blockchain works?

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How Blockchain works?

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Krishnendu Rarhi [E9621]]©
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How Blockchain works?

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Why do we need Blockchain?

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Pillars of Blockchain

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 What makes Blockchain Unique?
• Decentralized: Because blockchains are managed by a network of nodes rather
than a central authority, they are fully decentralized. This prevents any one entity
from having any control over the network.
• Transparent: Transactions on a blockchain are constantly being recorded and
stored on the blockchain across nodes. This means that all participants can view all
transactions on the network in real-time.
• Immutable: Blockchains are designed to enable permanent record keeping so that
stored data cannot be altered after being added. This makes it an extremely stable
and reliable record-keeping system.
• Secure: It is hard to change or destroy blockchains because of its distributed
nature. For example, if someone hacked into one of the computers on the network
and altered information there, the network would remain unaffected.
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Decentralized vs Centralized

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Decentralized vs Centralized

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 Blockchain Timeline
Blockchain 1.0:
Moni Naor, Bitcoin Emergence Blockchain 3.0: The
"Untraceable [Phase 1- Future [Phase 3-
Electronic Cash" Transactions] Applications]

1988 1991-2008 2008 2013 2015 2018

Blockchain 2.0: Hyperledger

Ethereum
Early Years of Development
Blockchain [Phase 2- Contracts]
Technology

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 Blockchain Technical Definitions
• Peer-to-peer: No central controller in the network, and all participants communicate
directly
• Distributed ledger: A ledger is spread across the network among all peers; each user
holds a copy of the complete ledger
• Cryptographically secure: Cryptography has been used to provide security services
that protect it against tampering and misuse
• Append only: Data can only be added to a blockchain in a time-ordered sequence
• Immutable: Once data is added to a blockchain, it is almost impossible to change it
• Updateable via consensus: Any update is validated against a strict criteria defined by
the blockchain protocol and added to a blockchain only after a consensus has been
reached among all participating peers/nodes
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 Generic Block Structure
• Block Header: It consists of the following elements:
• Pointer to previous block’s hash: A reference to the
previous block is added (except in case of the first block)
• Nonce: A number that is generated and used only once to
provide replay protection, authentication, and encryption
• Time stamp: A field indicating the time when the block is From
generated
• Merkle root: A hash of all of the nodes of a Merkle tree
used to allow efficient verification of transactions Amount (Tx)
To
• Block Body: Contains a number of different transactions that
have been verified, ordered, and included in the block

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 Blockchain Architecture

The data which is stored inside a block depends on the type of blockchain. For
Example, A Bitcoin Block contains information about the Sender, Receiver,
number of bitcoins to be transferred.
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 Blockchain Ecosystem
• Internet: Provides a basic communication layer for
any network
• Peer-to-peer network: Runs on top of the internet,
which hosts another layer of blockchain
• It contains transactions, blocks, consensus
mechanisms, state machines, and smart
contracts
• Users/nodes: Connect to blockchain and perform
various operations such as participation in consensus
mechanism, transaction verification and processing

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 Generic Structure of a Blockchain
Network
• The structure of a generic blockchain can be visualized with the
help of the following diagram:
• This is a P2P network with four nodes connected to each other via a
communication link
• Each node contains addresses, Virtual Machine (VM), state, and a
blockchain that is replicated on each node.

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 Elements of a Generic Blockchain
Unique identifiers used in a blockchain transaction to denote senders and
Address recipients

Composed of multiple transactions and other elements, such as the

Block previous block’s header’s hash (hash pointer), timestamp, and nonce

Genesis Block The first block in a blockchain

Peer-to-peer network Network topology where all peers communicate with each other

Scripting or Scripts or programs perform various operations on a transaction to

programming language facilitate various functions

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 Elements of a Generic Blockchain

Virtual machine A virtual machine allows turing complete code to be run on a blockchain

A state is modified from initial to final form by nodes on the network as a

State machine result of transaction execution, validation, and finalization

Performs various functions such as proposing and validating transactions,

Node
mining to facilitate consensus, and securing the blockchain

Encapsulates the business logic to be executed when certain conditions

Smart contract are met

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 The Benefits of Blockchain

Decentralization Transparency Trust Immutability

Simplification of
High availability Highly secure Faster dealings
current paradigms

Cost saving

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 The Features of a Blockchain
Distributed Transaction Platform for smart
Smart Contracts
consensus verification contracts

Transferring value Generation of Provider of

Smart property
between peers cryptocurrency security

Immutability Uniqueness

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Types of Blockchain

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 Discussion
Can you think of a system (network) that implemented peer-to-peer
network long before the advent of blockchain?

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 Summary
In this lesson, we have:
 Defined blockchain as a peer-to-peer, distributed ledger
 Explained the design and faults of a distributed system
 Discussed precursors to blockchain technology such as hash functions,
consensus mechanisms, hashcash, and e-cash schemes
 Explained various elements of a blockchain such as addresses, peer-
to-peer networks, blocks, and transactions
 Covered the tiers of blockchain technology based on their usage and
applications
 Discussed benefits and features of blockchain technology

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1. https://medium.com/@VitalikButerin/the-meaning-of-decentralization
-a0c92b76a274
2. https://hackernoon.com/data-privacy-decentralization-2f894c5d9a25
3. https://cointelegraph.com/explained/decentralized-and-distributed-dat
abases-explained

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 Practice Questions
1.Blockchain is a system which is: 3.Blocks are linked with using a:
a. Peer-to-peer a. Hash of previous block’s header
b.Updateable only via consensus b.Hash of the next block
c. Cryptographically secure c. Hash of the previous block
d.All of the above d.None of the above
2.Blockchain implementations can 4. Smart contracts are:
result in: a. Automatically enforceable
a. Cost saving b.Supported by all blockchain platforms
b.Transparency c. Automatically executable
c. High availability d.Only a and b
d.All of the above

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APEX Institute of Technology
 Practice Questions
1.Blockchain is a system which is: 3.Blocks are linked with using a:
a. Peer-to-peer a. Hash of previous block’s header
b.Updateable only via consensus b.Hash of the next block
c. Cryptographically secure c. Hash of the previous block
d.All of the above d.None of the above
2.Blockchain implementations can 4. Smart contracts are:
result in: a. Automatically enforceable
a. Cost saving b.Supported by all blockchain platforms
b.Transparency c. Automatically executable
c. High availability d.Only a and b
d.All of the above

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APEX Institute of Technology
 Practice Questions
5. Transactions are signed using:
a. Public keys
b.Hash functions
c. Private keys
d.Encryption algorithms
6.Distributed ledger is a:
a. a database
b.distributed
c. shared
d.All of the above

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 Practice Questions
5. Transactions are signed using:
a. Public keys
b.Hash functions
c. Private keys
d.Encryption algorithms
6.Distributed ledger is a:
a. a database
b.distributed
c. shared
d.All of the above

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APEX Institute of Technology
Thank You