Introduction to Blockchain
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Blockchain is a distributed database that maintains a growing list of transaction records organized in blocks. Each block contains a cryptographic hash of the previous block, transaction data, and a timestamp. This creates a permanent, unalterable record of transactions that is distributed across a peer-to-peer network of nodes. Blockchain technology enables a decentralized system of recordkeeping that does not require a central authority and allows digital transactions to be validated and recorded in a transparent yet secure manner. It has applications in finance, healthcare, supply chain management, and more.
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Introduction to Blockchain
- 1. Introduction to Blockchain By: Malak Abu Hammad Supervised by: Dr. Abdullah Alfarrarjeh Data Communications course GJU
- 2. What is Blockchain? ● Blockchain is a distributed database which maintains a continuously growing list of records (here list of records could be understood as a LinkedList), known as 'Blocks'; (a Block is the same as a Node in LinkedList). Each block has two parts (just as a Node in a LinkedList has two parts - the data and the address of the next Node); a timestamp with transaction data, and a link (a hash pointer) to the previous block.
- 3. Moreover Blockchains are not meant for modification and deletion of data. Hence, once recorded, the data in any given block cannot be modified/erased without the modification of all subsequent blocks and the collusion of the network. It means they can be sequentially updated whenever a modification is needed.
- 4. Where it can be used? Blockchain is a great help when historical occurrence of events is critical and needs to be maintained accurately, like the fields below: ● Money Transactions & Crypto Currencies ● Healthcare ● Medicines ● Insurance ● Smart Properties ● Automobiles ● Governments ● Smart contracts
- 5. How nodes are connected? ● A blockchain is connected by a P2P network ( a network of nodes/computers where each node is an Admin), which enables a protocol for validating new blocks (below diagram) and relaying transactions. ● A new node gets a copy of the blockchain after joining the network. The distributed ledger has the capability to be programmed, hence the transactions can be triggered automatically.
- 6. WHAT IS A DISTRIBUTED LEDGER? Centralized Ledger ● 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 arise Distributed Ledger ● 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.” Bank Client A Client B Client C Client D Node A Node B Node C Node D Node E
- 7. Distributed Ledger Technology ● Helps transactions to have public witnesses and hence minimize cyber crime and fraud. ● This serves as an open, distributed ledger to record transactions between two parties in a verifiable and lasting way.
- 8. Blockchain transaction life cycle example
- 9. Blockchain vs Linked List
- 10. Block structure
- 11. What is mining? ● Mining is NOT about creating new blocks (bitcoins). ● Mining is the mechanism that allows the blockchain to be a decentralized security. ● It secures the bitcoin system and enable a system without a central authority. Do not confuse the rewards given to miners ( new bitcoin ) with the process itself.
- 14. Types of blockchain; continued .. As shown in the previous figure there are three types of blockchain based on access mode, these types are: 1. Public; public blockchains are available for anyone over the internet to join, like Bitcoin and Ethereum. 2. Private; private blockchains are available only for members of an organisation to join, like R3 and Corda. 3. Consortium; consortium blockchains are available only for a group of an organisations (like hospitals) to join. Monax and Multichain are examples of consortium blockchains.
- 15. Advantages of Blockchain ● Security; digital signature and encryption. The system is specially designed to be secure, convenient, and tamper-proof. ● Fraud control; A system that is based on data stored in a number of places is immune to hackers; it’s not that easy to get access to it, and if so, any piece of information can be easily recovered ● Transparency; immediate notifications about the completion of transactions, which is both convenient and trustworthy. ● No hidden fees. ● Access levels; public and private blockchain netwroks. ● Speed; transactions are processed way faster than usual as there is no need to include payment systems, which reduce the cost and increases the processing speed. ● Account reconciliation; the validity of transactions is checked and confirmed by participants, thus, they also confirm their own authenticity. ● Trustless system; cutting out intermediaries and third parties.
- 16. Disadvantages of Blockchain ● Scalability. ● Hidden identities. ● Network usage.
- 17. Thank you