This presentation gives you the sense on what is Blockchain and how does work
Blockchain is the technology that can disrupt economies by decentralizing , democratizing trust and eliminating unnecessary intermediaries using the TRUST protocol!
(Note: All numbers / brands / currencies used in these slides are for demonstration purposes)
2. 2
Agenda
• Setting the Stage
– Internet Revolution
– Security Concepts
– Centralized Solutions
• What is Blockchain (and what is not)
• How Blockchain works
• CryptoCurrency Example on Blockchain (฿itcoin)
• Blockchain evolution (Blockchain 2) SC
• Other Blockchain / De-Centralized apps
• Blockchain potential for travel
• Q&A
• References
6. 6
Internet Revolution
Internet is GOOD for information but BAD for
digital assets !
A digital asset, in essence, is anything
that exists in a binary format and comes
with the right to use
7. 7
Internet Revolution
Internet GOOD for information but BAD for
digital assets !
A digital asset, in essence, is anything
that exists in a binary format and comes
with the right to use
12. 12
Ledger
Centralized
Ledger in title company
# Desc When
008 Electric fire 2005
006 Sold to z 2003
005 Failed inspection 2002
004 Sold to y 2001
003 Approved extension 2000
002 20k improvement 1990
001 Sold to x 1980
13. 13
Lack of Trust & Transparency
Centralized
Ledger in title company
# Desc When
008 Electric fire 2005
006 Sold to z 2003
004 Sold to y 2001
003 Approved extension 2000
002 20k improvement 1990
001 Sold to x 1980
14. 14
Lack of Trust & Transparency
Centralized
Ledger in title company
Tamper-able
# Desc When
008 Electric fire 2005
006 Sold to z 2003
005 New Chimney 2002
004 Sold to y 2001
003 Approved extension 2000
002 20k improvement 1990
001 Sold to x 1980
15. 15
Lack of Trust & Transparency
Centralized
Ledger in title company
B Owns the car
Full trust in single party
22. 22
Hashing
Modules
• One way mathematical operation
• Generates encrypted result
• It is irreversible
• The only way to hack it is by guessing
• Some hashing mechanisms (SHA-256)
could take TRILLION years to solve it
from a single computer
SHA = Secure Hashing Algorithm
Versions = SHA-1 , SHA-2 , SHA-256
28. 28
Blockchain has Ledger
Decentralized
$10
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
• Distributed Ledger: everyone in the system has a copy (no
centralized copy exist)
• Democratize Trust: No user Trusted more than any other
• Digital Signatures (Security)
• Privacy (anonymous)
• Cheaper Transfer Fees
• Faster Processing
• No Single Party Connection
29. 29
Blockchain Network
Decentralized
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
Miners
Participants (A , B)
Everyone has a copy of the
Same distributed ledger
30. 30
Main Blockchain network properties
• Peer to Peer
• Nothing Centralized (Distributed)
• Everybody trusted equally
• Node not necessarily connected to all
nodes but at least some of them
31. 31
Bitcoin Blockchain Components
Centralized
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
Miners
Participants (A , B)
Everyone has a copy of the
Same distributed ledger
ID = A
Money = $100
Private Key = 3786
ID = B
Money = $20
Private Key = 3786
32. 32
How it works
B A
$20 $100
Miners
Participants (A , B)
name = A
Money = $100
P = 3786
• A (with P) wants to send
Money ($5) to B
(Transaction) = T
(33434468293746484)
• T broadcasted on the
network
• A Makes mathematical
operation on this operation
(i.e. Hash) bitcoin uses
SHA-256 along with the P
• The result makes X (so X
has the user signature and
the transaction )
• Miners add the transaction
(T) to work on
T
Even with a computer it will take really long time to
find P (could reach Trillion Years) and the only way is
by guessing
33. 33
Bitcoin Blockchain Components
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
Miners
Participants (A , B)
Everyone has a copy of the
Same distributed ledger
T sent to all Miners
T T
T
T
T
34. 34
What does a Miner do ?
B A
$20 $100
T sent to all Miners
• Confirms that A really has $100 from the
verified ledger
• Confirms that actually A is sending the $5 and
not someone else (using the user signature)
(verify Identity)
• Tries to guess S using computer power by
using mathematical operation (hashing)
• i.e. for Bitcoin S has to generate a hash with
13 leading zeros (i.e.
000000000000000012232883394) and to be less
than target value G ( Smaller G , More Difficult to Guess)
• Once Guessed , broadcasts S to all miners to
verify
• If verified by more than 50% of Miners
– Transaction takes place (B gets the $5)
– and the ledger gets updated with the hash of the
previous block and redistributed so everybody has
the same updated ledger
• Miner wins a reward (i.e. $0.1) from the
network (this is the only way to generate
money – quantitative easing sort of)
Anyone with
processing power
T
S Proof of Work
35. 35
Mining Example
B A
$20 $100
T sent to all Miners
Hash of latest block
00000000000001adf44c7d69767585
Transaction that is crafted
5572eca4dd4 (A sending B $5)
Guessing S that is generating hash with leading
13 zeros
Try S=1
00000000000001adf44c7d69767585--5572eca4dd4-1
Result
5b7ce5bcc07a2822f227fcae7792fd90 (No Luck)
… (a lot of miners are competing to solve this ..)
Try S=9389238928392893
00000000000001adf44c7d69767585--5572eca4dd4-
9389238928392893
Result
00000000000001adf44c7d69767585 --- horray
36. 36
Bitcoin Blockchain Components
232343 123457
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
B A
$20 $100
Miners
Participants (A , B)
Sent for all miners
to verify
T sent to all Miners
S
S
SS
38. 38
Blockchain Ledger Properties
Over simplified
• Ordered
• Back linked
• Each block computationally impractical to modify because you need to
modify all successor blocks
39. 39
Bitcoin Monetary base
Over simplified
The ID / P has
Access to $100 from
the monetary base
ID = 123457
Money = $100
Private Key = 3786
Mining is controlled
41. 41
Blockchain Evolution
Over simplified
• Used to be for financial application (currency)
• Now can run applications / programs in the same manner (decentralized)
(i.e. Smart Contracts)
• And even more …!
Eg. Etherium has CryptoCurrency and Smart Contract (Program) the has
rules to evaluate any kind of contract that is running on nodes in the
Blockchain network
42. 42
Title company Blockchain-ed !
Over simplified
Who Desc When Key (Crypto)
Insurance Electric fire 2005
Real Estate Sold to z 2003
Gov Failed inspection 2002
Real Estate Sold to y 2001
Architect Approved extension 2000
Owner 20k improvement 1990
Builder Sold to x 1980
43. 43
Title company Blockchain-ed !
Over simplified
Who Desc When Key (Crypto)
Insurance Electric fire 2005
Real Estate Sold to z 2003
Real Estate Sold to y 2001
Architect Approved extension 2000
Owner 20k improvement 1990
Builder Sold to x 1980
44. 44
Blockchain Definitions
Modules
Technology running the bitcoin
Distributed database that maintains continuously
growing list of records called blocks secured from
tampering and revision
Secured protocol enabling peer to peer
exchanges on a distributed network in a secured ,
public and non-repudiable way
TRUST PROTOCOL
https://en.wikipedia.org/wiki/Blockchain
46. 46
Real world Blockchain Applications
Modules
General Speaking .. Any piece of paper
requires proving of an asset that is signed
and dated and held with a trusted central
entity
Piece Central Entity
Land Deed Land Registery
Car Ownership DMV
Music Rights iTunes
Company Shares Min. Of Commerce
Votes Gov.
Real Estate History Title Company
Some assets don’t have central entity yet
48. 48
What about Blockchain-ing Travel !
Modules
• Eliminate Intermediaries … Expedia , Priceline, AirBnB, Amadeus
• Peer to Peer … Hoteliers with Guests, Airlines with Passengers
• Reduce Cost … no rate parity
• Ledger … Chain of distributed Bookings
• CryptoCurrency … Leverage CryptoCurrency to be the fuel of the
network (incentive for miners)