Blockchain

Overview

• distributed and decentralized legder
• store data
• publicly shared access all nodes of its network
• block
  • data: [A -> B $30, B -> C $10]
  • metadata: create time, position
  • hash: current block data + meta data + previous hash
  • reference from current block to previous block
• ledger
  • record-keeping book store all transactions of an organization
  • distributed ledger for all nodes
  • update the ledger boardcast to block chain network
• centralized vs decentralized
  • centralized
    • powers
    • full authority to fine or reward
    • complete trust with entity
  • decentralized
    • every records data
    • fair and transparent system
    • trustless
• why blockchain
  • lead to trustless system
  • no middle men
  • no central point of failure

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Cryptocurrency

• digital medium of exchange

• use cryptography to generate digital signature

• digital signature

  • private key <- owner
    • encrypt (original data + new data) = signature
  • public key <- every one
    • decrypt signature = (original data' + new data')
    • compare original data to original data'

• wallets

  • store private and public key
  • public key is address of wallet, others send cryptocurrency to owner
  • sign the transaction

• Mining

  • transaction are temporarily "unconfirmed"
  • include blocks of transactions by solving a "proof of work" algorithm
    • difficult to solve, computationally expensive
    • once solved, miner can add block and miners will verify
    • miners are rewarded for adding block to chain
    • difficulty can adjust to control the rate of new blocks coming in
  • longer blocks
  • hash validation

• Bitcoin

  • decentralized cryptocurrency in 2009
  • growth, widespread adoption
  • white paper

• Use Case

  • voting
  • documentation and identification system

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Block

• timestamp
• lastHash - the hash of block before
• hash - based on its own data
• the data to store
• genesis block
  • first block with dummy value
• Hash Algo: SHA-256
  • 32 byte (256bit) for unique data input
  • one-way hash
  • block verification

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Proof of Work System

• do computional work to add block
• Hashcash was a proof-of-work
• expensive to generate corrupt block
• difficulty = 6, Hash with leading 6 '0'
• nonce value adjusts in order to generate new hashes
• 51% Attack a dishonest miner has more than at least 51% of the network's power

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Wallet

• store the balance of an individual
• store
  • private key: sign the private signature
  • public key: verify the signature and public address
• transactions
  • input: sender's balance and public key
  • output:
    • receipt address, amount received
    • sender address, balance
• digital signatures
  • private key + transaction data = signature
  • public key decrypt signature and verify data
• components
  • wallet
  • digital signature and verification
  • transaction object
• node
  • sync chain
  • broadcast transaction

Miners of Transaction

• take transaction from pool and store into block
• miner received rewards for mining
• transaction go from "unconfirmed" in the pool to "confirmed" in the chain