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Chapter Four

The document provides an introduction to blockchain technology, explaining its function as an append-only transaction log and detailing its various types, including public and private blockchains. It covers use cases such as cryptocurrencies and smart contracts, as well as the mechanisms for confirming transactions and adding new blocks. The presentation also highlights the differences in blockchain implementations and features, including the use of cryptographic hash functions and consensus mechanisms.

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izz ananzeh
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4 views36 pages

Chapter Four

The document provides an introduction to blockchain technology, explaining its function as an append-only transaction log and detailing its various types, including public and private blockchains. It covers use cases such as cryptocurrencies and smart contracts, as well as the mechanisms for confirming transactions and adding new blocks. The presentation also highlights the differences in blockchain implementations and features, including the use of cryptographic hash functions and consensus mechanisms.

Uploaded by

izz ananzeh
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Blockchain: An Introduction

Jake van der Laan


Director, Information Technology and Regulatory Informatics,
Chief Information Officer
Financial and Consumer Services Commission
New Brunswick, Canada
[Link]@[Link]
[Link]

1
Any opinions expressed are my own and do not necessarily
reflect the position or perspective of FCNB.

I do not endorse, or otherwise make any claim or statement,


negative or positive, about any of the websites, companies, or
products, if any, referenced in these slides or during this
presentation.

2
Our learning journey today
What a blockchain is and how it works

Types of blockchains

Use case: cryptocurrencies

Blockchain as a “platform”

“Smart contracts”

3
A blockchain in one sentence

An “append only transaction log”

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Recordkeeping

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The cryptographic hash function

Unique for structured data

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How to prevent “re-doing the whole train”?

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Adding “proof of work”
● Think of it as a time cost - in essence impose a 10 minute delay
on the addition of a new block
● Make re-calculation, and thus change, (almost) impossible

The “nonce”

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A sample SHA-256 hash digest:

1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64

(This is really nothing more than a number between 1 and 2^256 in hexadecimal format)

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The type of hash we are looking for:

0000000000000000b42d99c81156d3a17228d6e1eef4139be78e948a9332a7d8

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Retrying with a different nonce: “mining”

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When a winner is found
1. The winning node messages all other nodes: I found a winner!
2. Other nodes verify the hash and if OK accept the new block
3. Once 51% of all nodes have accepted the block, it is “confirmed”
4. The winning node gets a reward (currently 6.75 bitcoin)
5. Start all over again!

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Use case: cryptocurrencies

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● Transactions are authorized by the owner’s private key (can be stored in a digital
wallet)

● Ownership on the blockchain is tracked by the owner’s public key address, e.g.:

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7,408 (as of 14 oct 2020)

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How blockchain implementations differ
● How new transactions are confirmed and added (consensus mechanisms):
○ Proof of Stake (e.g. Peercoin)
○ Byzantine Fault Tolerance (vote based) approaches (e.g. Ripple)
○ Directed Acyclic Graphs (e.g. Iota)
○ Proof of Elapsed Time
○ etc.

● Who can use the blockchain:


○ public (permissionless) blockchains
○ private (permissioned) blockchains

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Blockchain as a platform

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Features
● Tracks transactions
● Is also able to store small bits of computer code (“smart contracts”)
● Code runs within the Ethereum platform and changes the state of
variables (think entitlements) stored on the blockchain
● Uses the ether cryptocurrency
● Also uses gas to pay for running the computer code
● Has a much shorter confirmation time (about 15 seconds)
● “DApps” are built on top of these platforms

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“Smart” contracts

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Use case: Tokens

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Use case: CryptoKitties

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End of the technical intro

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