Spartan Blockchain - Women in Blockchain Workshop Presentation

1. Women in Blockchain
Workshop
a
Partnered with:

2. Our Mission
Spartan Blockchain is a registered student organization on Michigan
State University’s campus that provides extra-curricular education to
students who are interested in blockchain technologies. By leveraging
prominent blockchain educational resources, strategic partnerships,
corporate advisory services and bi-weekly meeting events Spartan
Blockchain will help jumpstart Michigan State University’s ecosystem to
become a leading academic institution in the Blockchain space.

3. Our Core Principles MOTIVATE
EDUCATE
INNOVATE
COLLABORATE
• To educate students and community
members about blockchain technology.
• To elevate Michigan State University into a
leading institution of blockchain education
through collaborative classroom activities
and hands-on learning.
• To prepare our members for a prominent
career in the blockchain space.
• To foster diversity and inclusion in our
community and organization

4. Agenda
Blockchain and Bitcoin
Protocol and Consensus
Ethereum, Smart Contracts, PoW vs. PoS
Enterprise Blockchain: Real-World Applications
Blockchain’s Challenges and Limitations
Carla Reyes – Assistant Professor of Law and Director of LegalRnD
Closing Remarks and Questions

5. Blockchain and
Bitcoin

6. Blockchain Defined
• Blockchain – A decentralized, distributed and public digital ledger that is used
to record transactions across many computers so that the records cannot be
altered without the alteration of all subsequent blocks and the consensus of the
network
Immutable
A write-only database that preserves an
immutable record of all transactions
Decentralized
A peer-to-peer platform distributing
the same replica of data Cryptographically Secure
Public / private key to secure identity,
allowing only verifiable transactions

7. Blockchain’s Add Value Proposition
Reduces Cost
Increases
Revenue
Reduces Risk
Increases
speed and
transparency
• Removes the cost of intermediaries
• Reduces process re-work, manual
errors, and waste
• Creates new products and services
• Captures value lost in transit
• No single point of failure
• No unauthorized alterations
• Resistant to collusion
• Verifies provenance
• Preserves complete audit trail

8. Cryptocurrencies vs. Blockchain Technology
Cryptocurrency - A digital currency in which encryption techniques are used to regulate the generation of
units of currency and verify the transfer of funds, operating independently of a central authority
Bitcoin and Cryptocurrencies
• Electronic money protected through
cryptographic mechanism instead of a
central repository
• Issued by a decentralized network / protocol
with no single point of failure
• Intrinsic value dependent on utility
Blockchain Technology
• Technology protocols that group
cryptographically signed transactions into
blocks, validates and link blocks according
to a consensus decision
• All transactions are publicly observable
• Allowed the emergence of cryptocurrencies
by solving the double spending problem
Input

9. What is Bitcoin? Basic Concepts
• Bitcoin was the first use case of blockchain technology solving the challenges of
digital cash in a decentralized manner.
• Build upon a combination of computer science, cryptography and economic
concepts
• Bitcoin is a cryptocurrency
• ”Bitcoin” can refer to:
o Bitcoin (uppercase) – The protocol, software and community
o bitcoins (lowercase) – the unit of currency

10. What is Bitcoin? Basic Concepts
• Basic jargon:
o Transactions – Transfers of bitcoin from input to output addresses
o Blocks – Timestamped collection of transactions
o Miner – Validates transactions and puts them into blocks
o Blockchain – Entire series of blocks ‘chained’ together
o Addresses – Think of them as accounts for now
• Where does Bitcoin get its value?
o Bitcoin has value because people believe it has value

11. Use cases of Bitcoin
• Remittances – Sending money
cheaply and efficiently across borders
• Digital goods – Irreversible trades
• Machine to machine payments – IoT
• FIAT Currency – ‘Government’ backed
currency
• Micropayments
• Digital Gold – A store of value

12. Bitcoin’s History
2009 – 2010: The early development of Bitcoin

13. Satoshi Nakamoto and Bitcoin
• Satoshi Nakamoto is the anonymous creator
of Bitcoin who wrote a nine-page white
paper that combines all previous efforts to
create a self-sustaining digital currency
• First block mined January 3, 2009
o Referenced a story in the Times of
London newspaper involving the
Chancellor bailing out banks

14. The 70 Million Dollar Pizza
• On May 21, 2010, Laslo Hanyecz purchased $25 worth of pizza for 10,000 BTC
• This was the world’s first ever Bitcoin transaction interchange for a tangible
asset
• 10,000 BTC is now equivalent to ≈$65,000,000

15. Bitcoin’s History
2010 – 2012: Scandals, Hacks, Illegal Activity

16. Mt. Gox
• In 2010 Mt. Gox was established and consolidated itself as the biggest bitcoin
exchange during the beginning states of bitcoin
• At its peak Mt. Gox handled ~80% of bitcoin’s daily trading volume
• On 6/19/11 Mt. Gox suffered a significant breach of security that resulted in
fraudulent trading and required the site to be shut down for seven days
• Lost 744,408 bitcoins in a theft that went unnoticed for years
• In February 2014 Mt. Gox filed for bankruptcy

17. Bitcoin’s History
2013 – 2014: Bitcoin attracts Investment & Attention

18. Merchant Acceptance & Attention
• 2014 March – Bitcoin Inventor Satoshi Nakamoto ‘Found’ in California
• 2014 September – Tim Draper: Bitcoin’s Price still heading to $10k
• 2014 January – Overstock.com becomes first major retailer to accept Bitcoin
• 2014 April – Colorado Marijuana vending machines will accept Bitcoin
• 2014 September – PayPal partners with Coinbase, BitPay
• 2014 December – Microsoft accepts Bitcoin payments

19. Venture funded Bitcoin Startups
Coinbase – Digital currency exchange brokering a variety of currencies while
offering wallet storage capabilities
• Founded in June 2012 after enrolling in Y Combinator
• May 2013: $5 mil. Series A
• December 2013: $25 mil. Series B
• May 2014: $75 mil. Series C

20. Bitcoin’s History
2015 – Present: Ethereum and Enterprise Blockchain

21. Ethereum
• Open-source public blockchain platform and operation system
featuring smart contract (scripting) functionality
• First described in a whitepaper by Vitalik Buterin in 2013
• Ethereum crowdsale in July 2014, blockchain launched in 2015
• Huge potential for new governance models, broadens definitions of
blockchain and cryptocurrencies

22. Enterprise Blockchains

23. Protocol and
Consensus

24. Satoshi Nakamoto’s Innovation
Bitcoin was anonymously created by Satoshi Nakamoto in 2009
• First block mined January 3rd, 2009
• Decentralized, trustless system for transactions
o A low cost financial system that only requires internet access
• Nakamoto solved the Double Spending problem
o Prevented someone from spending the same asset twice
o Solution? The blockchain + Proof-of-Work

25. Bitcoin’s Transaction Model
1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy
Alice wants to send one bitcoin to Bob

26. Current State Transaction Model

27. Bitcoin’s Transaction Model
Alice signs her message and announces it to the network

28. Bitcoin’s Transaction Model

29. Bitcoin’s Transaction Model
Transaction Pool
1. Transaction G
2. Transaction H
3. Transaction Y
4. Transaction R
5. Transaction A
6. Alice’s transaction
7. Transaction E

30. Bitcoin’s Transaction Model
Proof-of-Work
Input: 01000000017a06ea98cd40ba2e3288262b28638cec5337c1456aaf5eedc8e38cec5
Output: 000000000000002e9067f1cf7252333f7aeb619c89d220985a70ac0e015248e0

31. Bitcoin’s Transaction Model

32. Bitcoin’s Transaction Model
Block #996 Block #997 Block #998 Block #999

33. Bitcoin’s Transaction Model
Version Major Feature Value Added
1
Signed messages announced to
the network
Basis of entire system
2 The blockchain Shared record of transactions
3 Everyone verifies transactions Increased security
4 Proof-of-Work Prevents double spending

34. Identity in Bitcoin
• Send money between pseudonyms
o Pseudonym == address == public key
• Cryptographic primitives
o Digital signature scheme (ECDSA: Elliptic Curve Digital Signature Algorithm)
 Like email address + password
o One-way hash function (SHA-256)

35. Bitcoin Transactions
• Bitcoin exists purely as a software
o Transactions are conducted through wallet
software
o Wallet creation generates a Bitcoin address
• To receive money, you share your address
o Sender specifies address and amount
• Transaction is then broadcast to the network,
where ”miners” verify it and add it to the
transaction history

36. Bitcoin Transactions

38. Blocks and Blockchains
Blocks
• Contains an ordered bunch of transactions
o Timestamps transactions, are
immutable
• Each block references a previous block
Blockchain
• The entire series of blocks ‘chained’ together

39. • Each block consists of several components:
o The block header,
o Previous block hash
o Merkle Root
o Nonce (Solution from mining)
Block Structure

40. Bitcoin Mining
Proof-of-work (PoW)
• Proof-of-work is the solution to the mining problem
• Proof-of-work is an example of a “Byzantine consensus algorithm”
• One of many consensus algorithms
Mining functions as:
• Assurance that coins are distributed in a fair way
• An incentive for people to help secure the network
• Key component that enables you to reach consensus in a decentralized manner

41. Ethereum and
Smart Contracts

42. Ethereum
• Open-source public blockchain platform and operation system
featuring smart contract (scripting) functionality
• First described in a whitepaper by Vitalik Buterin in 2013
• Ethereum crowdsale in July 2014, blockchain launched in 2015
• Huge potential for new governance models, broadens definitions of
blockchain and cryptocurrencies

43. Ethereum
• High-level Overview:
o Ethereum is a decentralized platform designed to run Smart Contracts
 No single point of control / failure
 Censorship resistant
o Account-based blockchain

44. Ethereum
• Ethereum has a native asset called Ether
o Basis of value in the Ethereum ecosystem
o Needed to align incentives
o Given to miners as reward for finding blocks

45. Ethereum vs. Bitcoin
• Ethereum vs. Bitcoin:
o Ethereum: Smart Contract Platform
 Complex and feature-rich
 Turing complete scripting language
o Bitcoin: Decentralized Asset
 Simple and robust
 Simple stack-based language; not Turing complete

46. Ethereum vs. Bitcoin
• Account-based instead of UTXO-based
• Turing complete scripting language
o Significantly more powerful than Bitcoin Script
o Enable Smart Contracts
• The Ether asset is not the primary goal
o Almost side effect of incentive-aligned smart contract platform
• Ethereum Plans to move to Proof-of-Stake in the near future
o Bitcoin likely remains Proof-of-Work

47. Smart Contracts

48. Smart Contracts
Contracts in Ethereum are like autonomous agents that live inside of Ethereum
Network
• React to external world when “poked” by transactions
• Have direct control over:
o Internal Ether balance
o Internal contract state
o Permanent storage

49. Smart Contracts
• Ethereum Contracts generally serve four purposes:
1. Store and maintain data
o Representing something useful to users or other contracts
o Ex: a token currency or organization’s membership
2. Manage contract or relationship between untrusting users
o Ex: Financial contracts, escrow, insurance
3. Provide functions to other contracts, serving as a software library
4. Complex Authentication
o Ex: M-of-N multisignature access

50. Proof-of-Work vs.
Proof-of-Stake(Link)

51. Proof of Work vs. Proof of Stake

52. Proof of Work vs. Proof of Stake

53. Proof of Work vs. Proof of Stake

54. Proof of Work vs. Proof of Stake

55. Enterprise
Blockchain: Real-
World Applications

56. Preface

57. Perspectives
Depending on the audience that you’re speaking to, there are
many differing perspectives on this technology (enterprise
blockchain):
• Bitcoin Maximalism
• Enterprise Blockchain are worthless
• Cryptocurrencies will replace the USD
• Cryptocurrencies hold no value and blockchains are useful
• Blockchains are very limited in the real world

58. Misconceptions
• Enterprise blockchains are always useful
• Some uses cases have fundamental flaws, some don’t even need to use a
blockchain
• Blockchains are always more efficient
• Tradeoff between decentralization vs. scalability
• Blockchains are always cheap
• Blockchains are costly to maintain and develop (mainly a community effort)
• Just build your own blockchain (rather than use existing
infrastructure)
• Not as simple as one might expect
• Existing frameworks have proven success and security

59. Industry Use-Cases

60. Energy
• Brooklyn Microgrid Project
• https://www.nytimes.com/2017/03/13/business/energy-
environment/brooklyn-solar-grid-energy-trading.html
• Enerchain
• Eastern-European energy firms testing peer-to-peer
energy trading over the Blockchain
• Volt Markets
• Energy origination, tracking, and trading platform
• Driven by smart contracts on the Ethereum blockchain

61. Elections
• Public blockchain allowing for free and fair elections
• Voter ID verification
• One voice, one vote
• Based on technical logic, very secure
• Election Results updated in real-time
• If scalable, can be used to count popular vote

62. Healthcare
• Storing confidential medical records on a private
blockchain
• Applications to increase efficiency of the
Prescription process
• Allows for opportunities to fight prescription misuse
• Payment plan/processing solutions
• Insurance
• Medicare/Medicaid user tracking (private
blockchain)

63. Supply Chain
• Supply chain visibility solutions
• Verification
• Better vendor management practices
• INCREASED SUPPLY CHAIN EFFICIENCY
• Vechain
• Project dedicated to implement Blockchain
Technology into existing supply chains (partnered
with MSU)
• WaltonChain, Maersk R&D

64. Industry Leaders

65. Hyperledger
• Led by Linux Foundation, IBM
• 20+ corporate members, 120+ start-up & ecosystem participants,
20+ institutions
• Consortium to advance blockchain technologies through open-
source, collaborative development
• Focus: finance, healthcare, supply chain
• Produces enterprise-focused software solutions & tools for
implementing blockchain applications, PoCs, solutions, etc.
• Hyperledger Fabric
• Private network, modular plug-and-play solutions
• Still in “beta” phase

66. ConsenSys
• Incubator for Ethereum-focused applications,
startups, and developer tools
• Founded in 2015 by Joe Lubin (co-founder of
Ethereum)
• “Hub-and-spoke” model with shared, central
resources and “spoke” ventures
• Supports adoption, ecosystem expansion, network
effects for Ethereum
• Multiple divisions & efforts
• E.g., $50M venture fund launched Sept. 2017
(ConsenSys Ventures)
• Ethereal conference & hackathon

67. R3CEV
• Tech company & banking consortium with 70+
members
• Banks, other financial institutions, regulators, trade
associations, etc.
• Focused on developing Corda, private open-source
distributed ledger platform designed specifically for
banks
• Designed for banks to record, manage, synchronize,
support financial transactions and agreements
• Frictionless transactions between banks, supplant current
non-interoperable legacy systems
• Launched Sept. 2015, continuously in development
• May 2017: $107M Series A funding from 40+ institutions

68. Enterprise Ethereum Alliance
• Consortium of 150+ Fortune 500 companies,
startups, academic institutions, governments
• Organized to innovate and align around enterprise
applications of the Ethereum blockchain
• Provide resources for businesses to learn about Ethereum
• Provide roadmap for enterprise features & deployment
requirements
• Evolve in tandem with advances in the public Ethereum
blockchain
• Standards, clarity around IP & licensing models for
Ethereum open-source code

70. Challenges &
Network
Limitations

71. Blockchain in the Public Sector
Challenges & Limitations
Blockchain is not a cure-all
0 1
IMMUTABILITY
A Blockchain is an add-only list. Once data is
added, it can’t be removed. Perhaps not a good
fit when updating/deleting data is a regular
occurrence.
0 2
DATA STORAGE
Databases are often used to store large
amounts of data (images, docs, apps, etc.).
However, Blockchain is designed for small
pockets of data. If data storage is needed,
Blockchain may not be a good fit, or a hybrid
solution may ne needed.
0 3
COSTS
Higher short-term costs associated with a still-emerging
technology prevent its widespread use. Blockchain-as-a-
service products are starting to be offered that can allow
for experimentation.
0 4
CODING & GOVERNANCE MODELS
Blockchains are known for eliminating the need for
central authority, but this is not entirely true. They must
be coded and governed by those entrusted with key roles.
Governments must build a technical knowledge base to
ensure these decisions are made well (even if the actual
coding is outsourced).

75. Jamie Dimon Quotes on Bitcoin / Blockchain

76. Jamie Dimon Quotes on Bitcoin / Blockchain

77. Blockchain Summary:
1. Blockchain technology is a shared, replicated ledger
2. Cryptocurrencies are a single use case for
blockchain technology
3. Blockchain technology addresses an exciting and
topical set of business challenges improving
efficiencies and increasing accessibility for all
industries
4. Students educated and familiar with blockchain
technology will have a competitive advantage once
they enter the workforce

78. Carla Reyes
Assistant Professor of Law and Director of
LegalRnD

79. Closing Remarks
• Thank you WIC, SWE, WE, and MSUEA
• SB is working to develop a permissible blockchain
application for Land Grant Goods to track their products
throughout their supply chains
• Applications for development are open on our website!
• Next Meeting: Next Semester!
• Come to our IBM Hyperledger and Ethereum ICO
Development Workshops!
• Any questions, comments or suggestions?
msublockchain.org