Chapter 3 - Blockchain Technologies.pptx

Blockchain technology, emerging technologies

1. Blockchain technology Lesson 3

2. Learning objectives Define Blockchain Technology Understand the concepts of blockchain technology Understand how blockchain works

3. What is blockchain blockchain is a shared digital ledger . is a decentralized and distributed global ledger - it stores the data on multiple computers is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.

4. IMMUTABLE AND DISTRIBUTED The immutability of the ledger means you can always trust it to be accurate. Being distributed protects the blockchain from network attacks.

5. Distributed Ledger Technology (DLT) The decentralized database managed by multiple participants is known as Distributed Ledger Technology (DLT). Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash .

6. Blocks + chain BLOCK a collection of data (a block) linked to the previous block. The data that is stored is a block, and the blocks are linked (chained) together to form a blockchain. Each block contains records and transactions; these blocks are shared across multiple computers and should not be altered absent an agreement (consensus) of the entire network. CHAIN A block contains data, and each block references the block preceding it, so they are linked just as a chain link would be connected to the chain link before it.

7. BLOCKS Each block contains a header and a body Block Number Every block in a blockchain have a number that represents your position in the chain. The 1st block added to the chain has a special name, they are called genesis block. PrevBlockHash a reference of the previous block hash number.

8. BLOCKS MerkleRoot is the hashing result of all transactions inside the block. If anything is changed inside the block, this hash also changes and invalidate the changed block and the next ones also. Nonce This is a 32-bit number that is related with the mining process of a block.

9. BLOCKS CreationTimestamp This is the timestamp of the block creation. Data Here is where all the transactions data remains.

10. blockchain

11. Three pillars of blockchain Decentralization the information is not stored by one single entity. i.e. if you wanted to interact with your friend then you can do so directly without going through a third party. it has no central authority to control the network as there is in the client server model.

12. Three pillars of blockchain

13. Three pillars of blockchain Transparency Every blockchain user is assigned a public address that in no way identifies them. These public addresses are completely open, so anyone can view these holdings and transactions at will. i.e. -> while the person’s real identity is secure, you will still see all the transactions that were done by their public address.

14. Three pillars of blockchain Immutability in the context of the blockchain, means that once something has been entered into the blockchain, it cannot be tampered with. Since in a Blockchain, every block has the hash of its previous block, therefore if anyone tries to temper with the data in some block then the hash of the block will be changed.

15. How blockchain works

16. How blockchain works Transaction A wants to send money to B (some kind of digital currency or a digital form of some other possession, such as a property title, birth certificate or educational degree) and registers the transaction. Block This transaction is represented as a block in the shared ledger that is packaged with other pending transactions. The block is broadcast to the blockchain systems network of participating computers for solving complex calculations. Verification At this stage the network of participating computers verifies the block. The participating computers ( also called “miners” in the Bitcoin blockchain) evaluate the transactions and through complex mathematical calculations, to determine whether they are valid, based on agreed-upon rules. When “consensus” has been achieved, typically among 51% of participating computers, the transactions are considered verified.

17. How blockchain works Hash After verification, each block of transactions then gets added to the ledger with a time-stamp and a cryptographic hash for security. Each block also contains a reference to the previous block’s hash, thus it creates a “chain” of records that cannot be manipulated except by convincing participating computers that the manipulated data in one block and in all prior blocks is true. Such an instance is considered impossible. Execution The money moves from the account of a party A to the account of party B. transaction completes.

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19. Application of blockchain technology Cryptocurrencies Smart Contracts Decentralized Banking Video Games/Art Peer-to-peer Energy Trading Supply chain and logistics tracking Healthcare process optimization Real estate processing platform NFT (nonfungible tokens) marketplaces Music royalties tracking Anti-money laundering tracking system Personal identity security New insurance distribution methods Automated Advertising Campaigns Blockchain technology is currently used across various industries like supply chain, healthcare, retail, media and advertising, financial services, insurance, travel and transportation, oil and gas, and gaming.

20. Disruptive Blockchain Technology Use Cases How can they be used in the real world? How can we apply them? What problems can they solve? Banking; The we.trade consortium developed the blockchain trading platform together with IBM. Smart contracts allow buyers and sellers to make business deals through generic and binding contracts that don’t require a third party to act as an intermediary. All documents are transparent and traceable, and the payments are secured by the partner banks in the we.trade consortium. Crowd Funding Crowdfunding initiatives like Kickstarter and GoFundMe are doing the advance work for the emerging peer-to-peer economy

21. Disruptive Blockchain Technology Use Cases Governance; projects that are being developed for streamlining government services in order to enhance efficiency and cut out bureaucratic time waste. Example: The e-Estonia program allows Estonians to access a number of public services without jumping bureaucratic hoops and reduces the workload of public servants. Supply chain auditing; Users can take advantage of the service to track products along the supply chain. Blockchain technology offers an alternative to traditional supply chain management systems that benefits both the producers and the consumers. Tracking -> from production to distribution Examples: IBM’s Food Trust -> https://www.ibm.com/blockchain/solutions/food-trust

22. Application of blockchain technology How can they be used in the real world? How can we apply them? What problems can they solve? Healthcare it helps the industry fight back against the counterfeit medication market through the service’s aforementioned ability to track products. migrating a patient’s medical record onto a blockchain, it is assured that everyone can access their medical records whenever they want them. Example: One blockchain healthcare use case that is already implemented is Excelsior Pass , a Covid-19 vaccine passport developed by IBM for the state of New York. Excelsior Pass is a mobile app that connects with a healthcare provider to verify you have been vaccinated, once you identify yourself on the app. https://covid19vaccine.health.ny.gov/excelsior-pass File storage;

23. Application of blockchain technology

24. Blockchain Applications | Top 5 Decentralized Applications

25. DISADVANTAGE

26. DISADVANTAGE 1. Environmental Impact Blockchain networks like Bitcoin use a lot of electricity to validate transactions, leading to environmental concerns. 2. Personal Responsibility One of blockchains and cryptocurrencies’ most significant advantages is also its biggest weakness. When you invest in public open-source blockchains by mining or buying cryptocurrencies and store it in your cryptocurrency wallet (your wallet is like your bank account, except only you can access it and have the passwords), only you control your money.

27. DISADVANTAGE 3. Growing Pains Even though public blockchains remain more efficient than traditional banking systems, decentralization comes at the cost of scalability. Trying to grow blockchain networks to global capacity, in turn, is the root cause of speed inefficiencies. 4. False Narratives Some cryptocurrencies are undoubtedly used in unlawful activity. The most famous example is Silk Road: people laundered money and bought drugs on the platform using Bitcoin.

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