ThynkBlynk: Understanding the Blockchain - A workshop for Students

BLOCKCHAIN WORKSHOP10th March 2017

Visakhapatnam, Andhra Pradesh

Introduction and Today’s Agenda

Session Time

Introduction to Blockchain 1pm – 1:20pm

Brief History of Distributed Systems

Blockchain & Cryptocurrency – Platform and Use Case Distinction

Basic Technical Concepts 1:20pm – 2:30pm

Cryptography & Blockchain

Digital Signatures

Mining

Merkel Tree

Consensus Mechanisms

Blockchain Application 2:30pm – 3:15pm

Public Vs Permissioned (Private) Blockchain

A few In-Play Use Cases

How to Get Started with Blockchain - Ethereum

Q & A 3:15pm – 3:45pm

Hand Over Self Starter Exercise & Close Session 4pm

Parag Jain, Co-Founder & CEO, ThynkBlynkRetail Banker, Payments Expert, BPO Experience, Business P&L Management, International Business Growth, Alumni of London Business School, Lived & Worked Across the Globe

Devendar, Co-Founder, ThynkBlynkBanking Technology Leader, ex-CIO & Payments Expert with experience working across the Globe. Has run bank mergers and complex enterprise implementations in a multi-party and cross border environment.

About ThynkBlynk

◉ IncorporatedinIndiaandUS,ThynkBlynkiscreatingChainTrail.Com,asubscriptionbasedonlineserviceontheBlockchainthatenablesidentityattributes basedtransactionstobeexecutedSecurely,EfficientlyandDigitally

◉ Co-Foundedbyateamofexecutiveswithcombinedinternational&cross-industryexperienceofover60yearswithbusinessrelationshipsinover20countries,ourserviceisfortheGlobalMarketplace,offeringLocalSolutions

INTRODUCTION TO BLOCKCHAIN

What is Blockchain?

“Theblockchainisanincorruptibledistributed digitalledgerofeconomictransactionsthatcanbeprogrammedtorecordnotjustfinancialtransactionsbutvirtuallyeverythingofvalue.”Don&AlexTapscott,authorsBlockchainRevolution

AccordingtoSunnyRay,Co-founderandPresidentofIndia'sleadingbitcoinblockchaincompany,Unicoin,"blockchainenablestwoentitiesthatdonotknoweachothertoagreethatsomethingistruewithouttheneedofathirdparty.

IMMUTABLE VERIFIABLE

Distributed Ledgers, Systems

TRUST = EMPOWERMENT

Credit:https://www2.deloitte.com/content/dam/Deloitte/au/Images/infographics/au-deloitte-technology-bitcoin-blockchain-distributed-ledgers-180416.pdf

Distributed Ledgers’ Landscape

Credit:https://assets.kpmg.com/content/dam/kpmg/pdf/2016/06/kpmg-blockchain-consensus-mechanism.pdf

Cryptocurrency & Blockchain Distinction

Irreversible Pseudonymous Fast&Global Secure Permissionless

BLOCKCHAIN: BASIC CONCEPTS

Cryptography

Cryptography isthescienceofusingmathematicstoencryptanddecryptdata.

ConventionalCryptography

PublicKeyCryptography

Credit:‘TheBasicsofCryptography’,PhilZimmermann

DigitalSignaturesOneWayHashFunction

Cryptography

Cryptography isthescienceofusingmathematicstoencryptanddecryptdata.

Anextremelysimpleexampleofconventionalcryptographyisasubstitutioncipher.Asubstitutionciphersubstitutesonepieceofinformationforanother.Inconventionalcryptography,alsocalledsecret-keyorsymmetric-keyencryption,onekeyisusedbothforencryptionanddecryption.

Publickeycryptographyisanasymmetricschemethatusesapairofkeysforencryption:apublickey,whichencryptsdata,andacorrespondingprivate,orsecretkeyfordecryption.Youpublishyourpublickeytotheworldwhilekeepingyourprivatekeysecret.Anyonewithacopyofyourpublickeycanthenencryptinformationthatonlyyoucanread.Evenpeopleyouhavenevermet.


Digital Signatures & One way Hashes

Amajorbenefitofpublickeycryptographyisthatitprovidesamethodforemployingdigitalsignatures.Digitalsignaturesenabletherecipientofinformationtoverifytheauthenticityoftheinformation’sorigin,andalsoverifythattheinformationisintact.Thus,publickeydigitalsignaturesprovideauthenticationanddataintegrity.Adigitalsignaturealsoprovidesnon-repudiation,whichmeansthatitpreventsthesenderfromclaimingthatheorshedidnotactuallysendtheinformation.

Thesystemdescribedabovehassomeproblems.Itisslow,anditproducesanenormousvolumeofdata—atleastdoublethesizeoftheoriginalinformation.Animprovementontheaboveschemeistheadditionofaone-wayhashfunctionintheprocess.Aone-wayhashfunctiontakesvariable-lengthinput—inthiscase,amessageofanylength,eventhousandsormillionsofbits—andproducesafixed-lengthoutput;say,160-bits.Thehashfunctionensuresthat,iftheinformationischangedinanyway—evenbyjustonebit—anentirelydifferentoutputvalueisproduced.


Merkel Tree

AMerkletreeisa hashbaseddatastructure thatisageneralizationofthe hashlist.Itisa tree structureinwhicheachleafnodeisahashofablockofdata,andeachnon-leafnodeisahashofitschildren. Merkletreesareusedindistributedsystemsforefficientdataverification– MerkelProofs

In thefigurealongside,anodecanprovethatatransactionKisincludedintheblockbyproducingamerklepaththatisonlyfour32-bytehasheslong(128bytestotal).Thepathconsistsofthefourhashes(notedinblue)HL,HIJ,HMNOP andHABCDEFGH.Withthosefourhashesprovidedasanauthenticationpath,anynodecanprovethatHK (notedingreeninthediagram)isincludedinthemerklerootbycomputingfouradditionalpair-wisehashesHKL,HIJKL,HIJKLMNOP,andthemerkletreeroot(outlinedinadottedlineinthediagram).

RootHash:Public&Trusted

Credit:https://www.weusecoins.com/what-is-a-merkle-tree/,http://www.blockchaintechnologies.com/blockchain-mining

Consensus Mechanism

Indistributedledgers,aconsensusmechanismisthewayinwhichamajority(or,insomemechanisms,all)ofnetworkmembersagreeonthevalueofapieceofdataoraproposedtransaction,whichthenupdatestheledger.Inotherwords,aconsensusmechanismisasetofrulesandproceduresthatmaintainsacoherentsetoffactsamongtheparticipatingnodes.

Howconsensusmechanismswork

Basicparametersthatdefineaconsensusmechanism:Decentralizedgovernance:Asinglecentralauthoritycannotprovidetransactionnality.Quorumstructure:Nodesexchangemessagesinprede ned ways,whichmayincludestagesortiers.Authentication:Thisprocessprovidesmeanstoverifytheparticipants’identities.Integrity:Itenforcesthevalidationofthetransactionintegrity(e.g.,mathematicallythroughcryptography).Nonrepudiation:Thisprovidesmeanstoverifythatthesupposedsenderreallysentthemessage.Privacy:Ithelpsensurethatonlytheintendedrecipientcanreadthemessage.Faulttolerance:Thenetworkoperatesefficientlyandquickly,evenifsomenodesorserversfailorareslow.Performance:Itconsidersthroughput,liveness,scalability,andlatency

Credit:KPMGPaperonConsensusMechanism

Consensus Mechanisms’ Landscape

Credit:KPMGPaperonConsensusMechanism

Transactions & Mining

Mining referstothedistributedcomputationalreviewprocessperformedoneach"block"ofdataina"block-chain".Thisallowsforachievementof consensus inanenvironmentwhereneitherpartyknowsortrustseachother.TheprocessiscarriedoutbyMiners

Credit:http://www.blockchaintechnologies.com/blockchain-mining#sthash.cc3W9Ie1.dpuf,http://www.coindesk.com/information/how-bitcoin-mining-works/

Whenablockoftransactionsiscreated,minersputitthroughaprocess.Theytaketheinformationintheblock,andapplyamathematicalformulatoit,turningitintoaHash.Thebitcoinprotocolwon’tjustacceptanyoldhash.Itdemandsthatablock’shashhastolookacertainway;itmusthaveacertainnumberofzeroesatthestart.Minerscontinuallychangethedatathey’reusingtocreateadifferenthashwithoutmeddlingwithtransactiondata.Theydothisusinganother,randompieceofdatacalleda‘nonce’.Thisisusedwiththetransactiondatatocreateahash.Ifthehashdoesn’tfittherequiredformat,thenonceischanged,andthewholethingishashedagain.

BLOCKCHAIN APPLICATION

Smart Contracts

Credit:http://www.kwm.com/en/au/knowledge/insights/10-things-you-need-to-know-smart-contracts-20160630,http://www.blockchaintechnologies.com/blockchain-smart-contracts

Asmartcontractisanagreementthatisfullyorpartiallyautomatedusingsoftwaretofacilitateexecution,enforcementandperformanceunderlyingthatcontract.KeyBenefits• ContractsbecomeEfficient,FasterandImproveUnderlyingPerformance• Anagreementdoesnotneedtobecompletelyautomatedtobeasmartcontract.• CombinedwithothertechnologylikeBlockchain,smartcontractshavetransformativepotential• Itisstillearlydays.Reallyearlydays.

Smartcontractsforthemusicindustry - Inthisusecase,apublicblockchaincouldkeeptrackofownershiprights.Theserights&usageconditionscouldbepubliclyaccessibletoall.Furthermore,thetransferofroyaltypaymentscouldberealtimeandthesmartcontractcouldensurethateachtimeapaymentisgeneratedforagivenwork,themoneywouldbeautomaticallysplitaccordingtothesetterms,andeachparty’saccountwouldinstantlyreflecttheadditionalrevenue.

Public Vs Permissioned (Private) Blockchain

Publicblockchains:apublicblockchainisablockchainthatanyoneintheworldcanread,anyoneintheworldcansendtransactionstoandexpecttoseethemincludediftheyarevalid,andanyoneintheworldcanparticipateinthe consensusprocess

Consortiumblockchains:aconsortiumblockchainisablockchainwheretheconsensusprocessiscontrolledbyapre-selectedsetofnodes;forexample,onemightimagineaconsortiumof15financialinstitutions,eachofwhichoperatesanodeandofwhich10mustsigneveryblockinorderfortheblocktobevalid.

Fullyprivateblockchains:afullyprivateblockchainisablockchainwherewritepermissionsarekeptcentralizedtooneorganization.Readpermissionsmaybepublicorrestrictedtoanarbitraryextent.

Privacyisauniversalhumanright&dataconfidentialitystandardsarewelldefinedlawsinmostjurisdictions

https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/

Use-Cases: Government

• Blockchain Notarization Services to e-Residents• Estonian settling and clearing business by Nasdaq

• Land Registry on Blockchain

• UK Gov’t is Trialing the Blockchain for Welfare & Pensions• Identity - Immigration

• Australian Securities Exchange (ASX) considering migration to a Blockchain-based settlement system by the end of 2017

• Dubai Wants All Government Documents on Blockchain By 2020

Use-Cases: Private Sector

• First Real Property Ownership Transfer Recorded on the Blockchain with Ubitquity

• ICICI Bank executes India’s first banking transactions on blockchain in partnership with Emirates NBD

• Santander Becomes First U.K. Bank to Introduce Blockchain Technology for International Payments

• Everledger: blockchain-based diamond fraud detection

• Blockchain for Open Sharing of Academic Proficiency and Progress Records

Ready to Launch?!

So lets Get Going: Self Starter Exercise

http://www.ibm.com/developerworks/cloud/library/cl-ibm-blockchain-101-quick-start-guide-for-developers-bluemix-trs/index.html

https://dappsforbeginners.wordpress.com/

1. TakeafewminutestogatheryourthoughtsaboutBlockchainandDistributedSystems.

2. Howdoyoubelievethisemergingtechnologycancreatevisibleimpact? Listdown3real-lifeusecasesthatyoubelieveareviablein2areas:

a.CommunityorCitizenServicesb.Business

3. Pick1or2simpleusecasesthatyouwillcreateaPoC for

Any questions ?You can find us at◉ www.thynkblynk.com◉ [email protected]◉ [email protected]

Thanks!

ThynkBlynk: Understanding the Blockchain - A workshop for Students

Education

Transcript of ThynkBlynk: Understanding the Blockchain - A workshop for Students