BlockChain Technology
WHAT IS BLOCKCHAIN?
A technology that:
permits transactions to
be gathered into
blocks and recorded;
allows the resulting
ledger to be
accessed by different
servers.
cryptographically
chains blocks in
chronological
order;
and
BlockChain - Introduction
 Blockchain is a system of recording information in a way that
makes it difficult or impossible to change, hack, or cheat the
system.
WHAT IS A DISTRIBUTED LEDGER?
Centralized Ledger
Ledger
Distributed
Client
A
Clie
n
t
B
•
Node
E
Ban Client
C
k
Client
D
•
N ode
A
There are multiple ledgers, but Bank holds the
“golden record”
Client B must reconcile its own ledger against
that of Bank, and must convince Bank of the
“true state” of the Bank ledger if discrepancies
•
•
Node
D
Node
B
Node
C
There is one ledger. All Nodes have some level
of access to that ledger.
All Nodes agree to a protocol that determines
the “true state” of the ledger at any point in time.
The application of this protocol is sometimes
called “achieving consensus.”
 This means if one block in one chain was changed
 it would be immediately apparent it had been tampered with.
If hackers wanted to corrupt a blockchain system, they
would have to change every block in the chain, across all of
the distributed versions of the chain.
HOW MIGHT A DISTRIBUTED LEDGER
WORK?
Users
initiate
transactions
using their
Digital
Signatures
Users
Broadcast
their
transaction
s to Nodes
Nodes
Broadcast
Blocks to
each other
Consensus
protocol used
One or
more
Nodes
begin
validating
each
transactio
Block
n
reflecting
“true state”
is chained
to prior
Block
Nodes
aggregate
validated
transactions
into
Blocks
WHERE MIGHT BLOCKCHAIN USE
CRYPTOGRAPHY?
Initiation and
Broadcasti
ng of
Transactio
Validation
n of
Transaction
Chaining
Blocks
• Digital Signatures
• Private/Public Keys
• Proof ofWork and certain
alternatives
• Hash
Function
THE POWER OF DISTRIBUTED
LEDGERS
It can be used
without a central
authority by
individuals or
entities with no
basis to trust each
other
It can be used
to create
value or issue
assets
It can be used
to transfer
value or the
ownership of
assets
•A human being
or a
Smart
Contract can
initiate the
transfer
It can be
used to
record those
transfers of
value or
ownership of
assets
•These records
may be very
difficult to alter,
such that they
are sometimes
called
effectively
immutable
It can be used
to allow
owners of
assets to
exercise
certain rights
associated
with
ownership,
and to record
the exercise of
those rights.
•Proxy Voting
The degree of trust between users determines the
technological configuration of a
distributed ledger.
 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.
 The decentralised 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.
 This means if one block in one chain was changed
 it would be immediately apparent it had been tampered with.
If hackers wanted to corrupt a blockchain system, they
would have to change every block in the chain, across all of
the distributed versions of the chain.
Why is there so much hype around
blockchain technology?
 There have been many attempts to create digital money in
the past, but they have always failed.
 The prevailing issue is trust. If someone creates a new
currency called the X dollar, how can we trust that they
won't give themselves a million X dollars, or steal your X
dollars for themselves?
 Bitcoin was designed to solve this problem by using a specific
type of database called a blockchain. Most normal databases,
such as an SQL database, have someone in charge who can
change the entries (e.g. giving themselves a million X
dollars).
 Blockchain is different because nobody is in charge; it’s run
by the people who use it. What’s more, bitcoins can’t be
faked, hacked or double spent – so people that own this
money can trust that it has some value.
How money transfer works
Blockchain structure
Consensus components
● Blockchain structure
o
No more client/server architecture with name roles
Image source: Scorechai
Consensus components
● Blockchain structure
o
Peer-to-peer Architecture with pseudonymous client
bearing key pairs. Each node as a database copy.
Image source: Sc
Consensus components
● Blockchain structure
o
Data structure:
Image source: Sc
Consensus components
● Blockchain structure
o
Blocks of data:
Image source: Sc
Consensus components
● Types of blockchain
o

There mainly three types of Blockchains that have
emerged after Bitcoin introduced Blockchain to the
world.
Public Blockchain:
no one in charge, anyone can participate in
reading/writing/auditing the blockchain (i.e. Bitcoin,
Litecoin, etc.)

Private Blockchain:
a private property of an individual or an organization, there
is one in charge of important things such as read/write or
whom to selectively give access to read or vice versa (i.e.
Bankchain)

Consortium or Federated Blockchain:
More than one in charge. A group of companies or
representative individuals come together and make
decisions for the best benefit of the whole network (i.e.
r3, EWF)