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The Curious Case of Blockchain

- Sugnyan Bettadapura- Ritesh Mehrotra

© TeckTalks, 2016

W HAT W E’ LL BE TALKI NG ABOUT

01 Blockchain basics

02 Blockchain in Cryptocurrency ecosystem

03 Blockchain in Government services

04 Blockchain in Supply Chain Management

05 Blockchain for Fraud control

06 Blockchain for Internet of Things (IoT)

END

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What is Blockchain? …. Common themes discussed in the context of Blockchain

Stores transactions

Replication across a number of systems

Decentralized/Distributed Ledger

Peer to Peer replication

Enforce read/write access rightsto prove identity, authenticity

Cryptography and Digital Signatures

Difficult to change Historical recordsEasy to detect attempts to modify

records

Longest chainProof of Work

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Decentralized ledger ….How different are they ??

Traditional Centralized Ledger

› Trusted Counterparties

› Proprietary: Licencing requirements

› Gate Keepers Extract Tolls

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Decentralized ledger ….Central authority eliminated

Decentralized Ledger

› Peer 2 Peer

› Cryptographically secure

› Open Source

› Blockchain protocol is available to any asset

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How Blockchain relationships work (Process view)?

A transaction is reported

Broadcasted to a P2P network

Validation of the transaction & user’s status using known algorithms by the network of nodes

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Transaction marked as Verified

Post verification, the transaction is combined with other transactions to create a new Block of data for the ledger

Add new block to the existing Blockchain

The transaction is marked complete

Transaction reported

Transaction Authorized

Transaction Recorded

Transaction Executed

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Transactions – How they look?

Reference: https://bitcoin.org/bitcoin.pdf

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Building Blocks

Block A

• Transactions• Hash Address• Nonce

Block B

• List of Transaction – Hashed

• Previous Block Address

• Nonce

Block C

• List of Transaction – Hashed

• Previous Block Address

• Nonce

Blocks – How are they structured?

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Validating Transactions - Proof of Work

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Hash function {Root Hash

Previous Block Hash

Nonce

HashedTransactions

A+B Hash

C+D Hash

Transaction A

Transaction B

Transaction C

Transaction D

Arbitrary value incremented for each

check

Each potential block needs to generate a hash value such that it has a series of pre-defined zero bits.

The hash is generated with these inputs• Previous block’s hash address• Hash of hashes: All transactions

in a potential block are hashed to a Merkle Tree to generate a Root Hash

• A randomly generated arbitrary value

The nonce is incremented and applied and hash function till the zero bits condition is met

How it works?

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Generated with 20 zero bits

References to previous and next blocks

Root Hash of transactions in a block

Try it out here• http://www.xorbin.com/tools/sha256-hash-calculator • Live Blockchain Transactions: https://blockchain.info/

Sample Block

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How should conflicts be resolved?

Consensus achieved by using Longest Chain rule

If there are multiple competing valid chains, believe the one with more blocks.

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What’s in it for me ?? … Incentives

Block Rewards

Block Makers

Block Data storage

Transaction validators

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Upgrades?

Blockchain Improvement Proposal (BIP)

Submit New features Suggestions Design changes

Build consensus within the community

Document dissenting opinions

Responsibilities of BIP author

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Case study: Blockchain in Cryptocurrency ecosystem

Code’s resistance to counterfeiting

Network’s ability to prevent double spending

Network security and transaction verification

Embedded Incentives to miners

Personal data security enabled by public-private key cryptography

Dedicated core team of developers and miners who support & improve the code

Electronic currency that uses cryptography for security, mostly anonymous and not issued by any central authority600+ Cryptocurrencies exist today

Differences between various cryptocurrencies

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Case study: Blockchain in Government Services

Reduce risk of manual errors

Create Secure process for transferring

documents

Verify identity of users

Registering and recording land titles

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Case study: Blockchain in Supply Chain Management Letter of Credit management

Improve security by reducing errors

Predictable working capital for companies

Simplify transaction processing

Bring Transparency in transactions

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Case study: Blockchain in Internet of Things (IoT)

Distributed Transaction ledger for IoT transactions Peer-to-peer messaging

Distributed file sharing

Autonomous device coordination

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Case study: Blockchain in Healthcare

Electronic Medical Record (EMR)Pseudonymous

(Personal health record encoded as digital asset)

Private Key(Only permissioned

personnel can access)

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