Smart Contract

Dr. Ditipriya Sinha

C.S.E Department, NIT Patna
Cryptocurrency vs conventional
currency
Conventional Cryptocurrency
currency
Secure Moderate High

Scarce Low High

Sovereign Yes No

Decentralized No yes

Smart No yes
Why we use crypto currency ?
 Fast and cheap
 Easy to use
 Free to transfer and hold
 Decentralized control
 Privacy and Security
 Transparency is maintained through public

ledger system.
 Reduced Fraud
 Some crypto currencies
Year Name Description

2009 Bitcoin First c.c. used SHA-

256 as hashing
function
April 2011 Name coin Decentralized DNS

Oct 2011 Litecoin First successful script

cryptocurrency
2012 Peercoin First use of POW and
POS functions
Early 2014 Monero Uses CryptoNote
Protocol ,
Wha is Bitcoin?
Bitcoin Value Proposition
The technology behind the Bitcoin-
The Blockchain
The Bitcoin Transaction Life Cycle –
The Sender
The Bitcoin Transaction Life Cycle –
The Network
The technology behind the Bitcoin-
The Blockchain
The Bitcoin Transaction Life Cycle –
The Receiver
Blockchain 2.0
Blockchain 2.0 and Smart Contracts
Cryptocurrency: Bitcoin
 A Bitcoin transaction:
Block Header (Bitcoin)
Block Header (Bitcoin)
Transactions in a Block (Bitcoin)
Transactions in a Block (Bitcoin)
Cryptocurrency: Bitcoin
 Average Bitcoin Block size Vs Time:
 Smart Contracts

 The term was coined by Nick Szabo a

computer scientist and cryptographer in 1996

 Szabo claimed that smart contracts can be

realized with the help of a public ledger.

 Block chain can be a pioneering technology to

realize smart contracts
Contracts in a Centralized Platform -
Crowdfunding
The Crowdfunding Platform
 Both the product team and
the supporters need to trust
the crowd funding platform
 The product team expects the
money to be get paid based
on the project progress
 The supporters expect the
money to go to the project
 However, the crowd funding
platform, the middleman,
takes significant charge to
manage the entire process
Crowd funding Platform using Smart
Contracts

The contract is written in a code which is available to all the

stakeholders
- The supporters and the product team –
- Do you see an application of Blockchain here
Crowd funding Platform using Smart
Contracts

 If certain goals of the project are reached, then the code

automatically transfers the money from supporters to the
production team
Smart Contracts – The Advantage

 Immutable: No party will be able to change the

contract once it is fixed and written to the
public ledger(the Blockchain)
 Diatributed: All the steps of the contract can be
validated by every participating party –no one
claim later that the contract was not validated
 Why Blockchain?
 -The blocks are immutable
 -The information is open –Every one can check
and validate.
Smart Contracts Platforms
Cryptocurrency: Ethereum
 What is Ethereum?

◦ Ethereum is an open platform that enables developers to build and

deploy decentralized applications such as smart contracts and other
complex legal and financial applications.

◦ Ethereum is now currently the cryptocurrency with the second highest

coin market cap and is expected by some to surpass Bitcoin as both a
valued investment and as the world’s most popular cryptocurrency
Cryptocurrency: Ethereum
 Why Ethereum?
◦ Uptime , Security , Almost Free , Transparency , Micro payments,
DAOs, Consensus applications, governance Identity / Reputation
Services.
 There are several popular clients to work with the Ethereum blockchain.
They are:
◦ eth – a client written in C++
◦ geth – a client written in Go
◦ pyethapp – a client written in Python
◦ Parity – a client written in Rust
◦ Mantis – a client written in Scala
◦ Harmony – a client written in Java
Cryptocurrency: Ethereum
 What is Geth?

◦ Geth is a go-ethereum client multipurpose command line tool that runs a

full Ethereum node implemented in Go.
◦ It offers three interfaces: the command line subcommands and options, a
Json-rpc server and an interactive console.
◦ It will connect to the existing live blockchain or create its own,
depending on provided settings.
◦ By installing and running geth, we can take part in the ethereum frontier
live network and we can participating in making the Ethereum network
better and stronger.
HOW SMART CONTRACT WORKS?
Ethereum Blockchain
Components
Front-end Back-end Contracts SW language
(HTML-CSS) (Java script) (Solidity, Serpent)

Ethereum Swarm Whisper

(Decentralized (Decentralized (Decentralized
Computation Storage) Messaging)

Ethereum Networking
Peer reputation Peer
Encrypted Handshake
preference
Encrypt transport
Node discovery P2P networking

Ethereum Protocol

EVM Blockchain Accounts

Contracts
Mining
Transactions
Decentralized Application
(Dapp)
• Dapp is an application that uses smart contracts.
• Dapp provides a user-friendly interface to smart contracts
• Dapp main components are smart contract and files for web user interface front-end/back-end

• Implement smart contract in a high-level language

Step 1

• Compile the contracts in a high-level language

Step 2

• Deploy the contracts on Ethereum Blockchain network

Step 3 using Ethereum clients

• Build web applications that interact with the smart

Step 4 contracts
Dapp Creation
Workflow
1. Send smart contract
for compilation
Compiler
Smart Contract

2. Contract binary
Front end
HTML/CSS
(index. html)
3. Deploy Contract

Front end
App.(js)
4. Contract address and
ABI sent back to Dapp Ethereum Client
Back-end
-Geth
(Javascript) -PyEthApp

5. Send transaction to Ethereum Node

Dapp contract
Cryptocurrency: Ethereum
 Setting Up A Private Blockchain(Geth Client):

◦ Go the Go Ethereum (geth) site and download the binary for your
operating system.

 Environment Setup:

◦ Links for Geth Installation :

 Website: [Link]
 GitHub: [Link]
 Wiki: [Link]
Cryptocurrency: Ethereum
 Geth Installation:
Cryptocurrency: Ethereum
 Create Custom Ethereum Blockchain:

◦ Create a working folder/directory for this exercise. It will be used to

hold binaries and configuration files.

◦ Create the genesis block

◦ Create storage of the blockchain

◦ Deploy blockchain nodes

Genesis block
 This block is the first block in the chain and a json file that stores the
configuration of the chain and the only one without a predecessor.
 Create a new project directory. Within it create the [Link] file.
Genesis block
 Contents of the Genesis file:
◦ chainId – This is the chain identification number that is used to
distinguish between Blockchains.
◦ homesteadBlock, eip155Block, eip158Block, byzantiumBlock –
These properties are related to chain forking and versioning.
We don’t need these for now, so let’s set them to 0.
◦ difficulty – This number decides how difficult the blocks will be
to mine. For Private networks, it’s good to set a lower number
as it lets you mine blocks quickly, which results in fast
transactions.
◦ gasLimit – This number is the total amount of gas that can be
used in each block. We don’t want our network to hit the limit,
so we have set this high.
◦ alloc – This part is used to allocate ethers to already created
accounts.
Cryptocurrency: Ethereum
 Create the storage of the blockchain:
◦ Once the [Link] file is saved, you are ready to create your first
node. To create your first node, open a new terminal window and
navigate to your project folder, and type in the following command.

geth –datadir firstBC init [Link]

Cryptocurrency: Ethereum

 Inside the Blockchain Folder:

◦ gethfolder: Store your database.
◦ keystore: Store your Ethereum accounts.
Cryptocurrency: Ethereum
 Start the Ethereum peer node:
◦ Start the blockchain through geth console.
◦ The geth console offers a command line interface with a
javascript runtime.

geth --datadir "firstBC" --networkid 1234 --port 11111 "--

allow-insecureunlock“ --nodiscover --ipcdisable console

◦ Networkid provides privacy for your network.

◦ Other peers joining your network must use the same
networkid but port number should be different.
◦ The console is a Javascript console that lets we send
commands to Geth.
Cryptocurrency: Ethereum
 Create an account:

◦ Type [Link](‘Type your password here’) to

create as many accounts as we need

◦ See the created account(s) by type command [Link].

Cryptocurrency: Ethereum
 Mining:
◦ Before start mining — we have checked current blocks in
our private blockchain.
> [Link]
0
> [Link]([Link][0])
0
Cryptocurrency: Ethereum

 Lets start mining :

◦ Type [Link]() to start mining .

◦ [Link] takes an optional parameter for the number of miner
threads.
◦ Once mining is started, let’s check balance ether for the number of
miner threads.
◦ >acc1 = [Link][0]
◦ >[Link](acc1)
Cryptocurrency: Ethereum
 This will generate the new DAG structure used in ETHash mining, and
then start mining blocks.

 Type [Link]() to stop mining.

Cryptocurrency: Ethereum
 Now check again blocknumber and account balance

> [Link]
1472
> [Link]([Link][0])
7.36e+21
Cryptocurrency: Ethereum

 Balance is showing in wei. We can convert it to ether:

> [Link]([Link]([Link][0]))
385
Cryptocurrency: Ethereum
 Trying to list all accounts :
> [Link] []

> [Link]({from:[Link][0], to:[Link][1],

value: [Link](10, "ether")})

Now we send ether from one account to other accounts.

Cryptocurrency: Ethereum
> [Link]([Link][0])
Unlock account 0x4d7287b92bde40e93b0e069d95a2fb829bbd37ef Passphrase:
true

> [Link]({from:[Link][0], to:[Link][1], value:

[Link](10, "ether")})

Lets check balance of the receiver ->

> [Link](to:[Link][1])
0
Cryptocurrency: Ethereum
 It is marked as a pending transaction :
Cryptocurrency: Ethereum
Cryptocurrency: Ethereum
 Adding More Peers/Nodes in one system:
◦ Now let’s setup a second node in the blockchain network.
The process will be similar to setting up Node1.
◦ Open a new terminal window and navigate to the project
folder that contains the [Link] file.
◦ Initialize the new node with the following command:

geth --datadir “secondBC" --networkid 1234 --port 11112

"--allowinsecure-unlock" --nodiscover --ipcdisable console

◦ Three important things to note here.

 You must use the same [Link] file.
 You must use a different datadir folder.
 Ensure you use the same network id and port should be different
Cryptocurrency: Ethereum
 In the console of the second node (you can use either), run
[Link] . You should get something similar to this.
Cryptocurrency: Ethereum
 Initialize the data directory on a new system with the same [Link]
file (because the default is to use the mainnet).
 On the first system, look up its "enode" discovery address in the console
by inspecting this variable:
[Link]
Cryptocurrency: Ethereum

 In the console, peer it with the first node by using the "enode" variable
where the host part is replaced with the IP address:
[Link]("enode://
6fc14916cefae9082d017a9266a4eed4360719838ba656f59c7bbfdeffc7d9
33bfeceeae0d7cbdc2f82da2129a6524828ac00afa6778413f0cb
2633427745d83@[Link]:30303")
Cryptocurrency: Ethereum
Cryptocurrency: Ethereum
 Application Template: Many-to-one for
IoT
Account

Account Address State Variables

Creates/
Call/Transactions
Owns Account Keys
(Private &Public)
Contract Functions
Owner
Call/Transactions
Account Balance
(Ether)

Modifiers
IoT
Device

Call/Transactions
Account
Events

User

Call/Transactions Smart Contract

Account
Examples: IoT apps Energy meters,
Solar switch
User
 Account

State Variables
Account Address . address public owner
.mapping (address=>unit) public usersPaid
Creates Creat .unit public numUsers
/ Owns Transaction: e
Create Contract
Contract
Account Keys Contract
Owner
(Private & Public)
Functions
.SmartSwitch()
Account Balance .payToSwitch()
(Ether) .refundUser(address recipeint, unit amount)
Refund a User .withdrawFunds()
Transaction:
.kill()
refundUser()

Withdraw funds in
Transaction:
withdrawFunds(
) Modifiers
Contract account
.onlyOwner()

Users
Events
Send Ether to .Deposit(address_from, unit_amount)
sends Transaction: smart Switch .Refund(address_to, unit_amount)
transactions contract
Accounts paytoSwitch(
)
.value
Smart Contract

Check balance and turn

Switch on/off

IoT Device

Smart switch Controller Service

Smart Cities
Smart City
It is not only Technology, it is an
ecosystem.

Economic Social

Technolog
y

Environmental Legal
Smart Cities Ecosystem
Citizens applications portal (Smart Apps Center) Digital signage

Command center
To aggregate and share urban data

Vertical applications

Security
Public Mobility Urban/ Smart retail Smart Smar
City infrastructure management safety services services home
environ services t
Lights Traffic Parking Waste ment buildi
monitori ng
ng servic
es

Application tools (authentication, payment, monetization, NFC,

IoT platform,
geolocalization, etc.)big data, open data (live objects manage/flexible data)
IT infrastructure: VPN, LAN, WAN, Flexible Computing (Cloud), Cybesecurity

Network: fiber*, 4G.5G, Wi-Fi, LoRa IoT 5G

network

City objects/sensors/actuators
How we can think Blockchain for Smart
City?

Anything that is capable of being owned or controlled to

produce value, is considered an asset can be tangible or
intangible value can be converted into cash.

A participant is a member of a business network Customer,

Supplier, Government, Regulator. Usually reside in an
organization. Have specific identities and roles.

A transaction is an asset transfer between two or

more participants

A contract is set of conditions under which transactions

occur
Blockchain Technology Stack
for Smart
City

Application Layer Application Layer

Safe City Smart Living Smart People dApp dApp

dApp dApp
Smart Environment Smart Government Smart Mobility
dApp
dApp

Smart City Enabling Platforms Platform Layer Blockchain

Internet
Smart City Infrastructure

Systems P2P network

Data Center

Passive Infrastructure Data Center- Power Computing

Active Infrastructure

Storage and Content

Infrastructure Layer Infrastructure Layer

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Thank you

Questions?