Blockchain Tutorial | What Is Blockchain | Intellipaat


Hey guys, welcome to the session on
Blockchain. In a world where digital currencies are slowly overtaking regular
transaction methods, Blockchain has emerged to be the best technology for a
safe and secure digital currency management. In this session, we shall talk
about cryptocurrencies. At first, we’ll be learning what is the Blockchain
technology and how it evolved, and then moving on, we’ll be learning about
transactions in a distributed network, then we’ll be learning about the
security aspects of a distributed crypto network using hash functions and Merkle
trees. After that, we’ll be learning about basic parameters of a consensus
mechanism. After learning that, we’ll be moving on to proof of elapsed time and
side chains. Finally, to conclude with the session, we will be learning about
Bitcoins and Bitcoin Blockchain wallets. That’s all about the agenda, and let us move
on with the session. As we know, the Blockchain term has arrived and has become
very popular in the past few years. What actually is it? So, before moving to
that, we should know how our trading units transformed from the past to the current
modern exchange systems. We are well aware of barter system where
utility things were used to make sale or purchase of items. Then came era
of subjective ledgers, mental accounting where things were recorded on ledgers
for making sale and purchase of items. Then came physical objects
where we started exchanging the things that we have in return of the things
that we do not have from each other without interference of third parties.
Then gold and other assets were part of currency system or trading system for
long-where gold or other assets were used to sell and purchase of items, and
these are also used nowadays. These are used as universal ledgers
and form a basis of currencies of many countries, or you can say, form a basis of
economy of many countries. Then the current era came where paper money or
fiat money system was used primarily to sell or exchange items
among each other. Then we know we advanced in trading systems and we
started using virtual money using online banking, cards, debit cards, ATMs, and other
E-wallets also exist in current days that make our transactions very
much easier. Then corporates also use their inbuilt token system, or you can
say, their own kind of exchange systems inside their organizations for buying,
like meals, there are certain facilities maybe there are shopping cards and other
things that again constitute a trading system where they record their
transactions and their values in the form of corporate tokens that are specifically
allowed and designed for that corporate or organization. Then the future, or you can
say, modern era comes where Bitcoin or decentralized digital money is being
used for transactions, purchases, or sell over the network using virtual money.
Bitcoin in current scenario if we discuss exists equivalent to our dollars, pounds,
and other standard currencies, and is very well recognized to do online
transactions, and it has very much good value as compared to your dollar that
makes the whole currency system workable. So, let’s see what Bitcoin is? Bitcoin was
derived from your computer’s smallest unit, your information system’s smallest
unit, bits. How it was named as a Bitcoin? Because it was a programmable
money or programmable currency, so that’s how it got the name
Bitcoin. When we try to define it, it is a type of cryptocurrency which is
nothing but a digital money, and the underlying technology that enables
moving of digital coins or assets among individuals is Blockchain. Bitcoin
was the first-ever implementation of Blockchain, and that time, people thought
that only cryptocurrencies can be built and run over blockchain, but as the
things moved year by year, people started understanding that
Blockchain can be used as a universal network where all kinds of
information can be stored and exchanged in a distributed manner in the form of
distributed ledgers which are immutable, secure, not hackable, and easily auditable
whenever required, which gives huge level of transparency that our current
system does not have. It removes mediators that are present and impacting badly on our
current financial or other kind of systems. So, all these benefits came when
people started understanding what Blockchain actually is? So, let’s see
what a Blockchain is? As we already discussed, a blockchain is an
incorruptible digital ledger of economic transactions that can be programmed to
record not just financial transactions but virtually everything of value. So,
what does this definition mean? Does this Blockchain stand for only financial
transactions? No. You can store and propagate any kind of information that
you want to store and use on your proxy network. So, a proxy network is not really
limited to financial transactions such as Bitcoin, or maybe other
cryptocurrencies. So, if we say in broader terms, Blockchain is simply a data
structure where each block is linked to another block in a timestamped
chronological manner. Each block has its timestamp of creation and the
transactions that constitute this block. These blocks again are stored in a
chronological manner according to their creation time. Second, it is a distributed digital ledger of an
immutable public record of digital transactions, this means, the information
is stored in multiple distributed digital ledgers which have
same copy of information stored, and immutable, that cannot be changed once
recorded. Every new record is validated across the distributed network before it
is stored in a block. So, when we say a blockchain is a self-sustained, self
validating network, validation becomes an important and integrated part of
any blockchain network. Every block that is going to be written in the existing
blockchain should have gone through a standard validation process before
getting recorded in a block. During this validation process, your validators
decide and record only good blocks. The bad blocks are discarded, and that’s
how your Blockchain is kept safe and secure. All information stored in the ledger
is verifiable and auditable. You can, at anytime,
go and check your Blockchain Network. You can travel through it and verify and
audit any information that is recorded. Each block is identified by its
cryptographic signature. We know that all Blockchains have distributed ledgers
which are owned by different nodes. So the information is not available in a
plain format. Everything in a Blockchain is stored and saved using cryptographic
signature or in another word we can say, in the form of encrypted information only. The
first block in any Blockchain that you develop or produce is called Genesis
block. The Genesis block is the very first block that you have to create, and
at position 0 if we talk about length, and that should be the point where your
whole blockchain starts and other blocks in that Blockchain start following that
Genesis block. So, definition of Blockchain, as we already discussed, Genesis
block will always be your first block in any Blockchain network when you are
designing it, developing it, and start using it. So, the other blocks in the
network follow this Genesis block, and every block in the chain
identifies the previous block using its block ID, or you can say hash of that
block. So, this way, every next block is aware which block to follow or which
block is following itself. So, to access data of the very first block created, you
have decussate from the last block created to the first block. So, at any
point of time, if you want to traverse the Blockchain network, you can start
from the last block, and if you follow that, you will be successfully
able to get your Genesis block and the length of the Blockchain, sounds good.
So, this is one of the interesting feature of Blockchain, so every block knows which is their ancestor
following it, then how is blockchain techtonic shift or roadmap, we can assume from now. The 2017 started as a
golden period of Blockchain where venture capital flows and $10 billion
has been invested into Bitcoin. Everyone started recognizing the power of the
Blockchain. They started using it and now everyone is thinking on how they can utilize
the features imitability, securability, and other features
like removal of mediators, peer-to-peer transactions. These are very good
features because of which everyone in industry wants to use Blockchain for their businesses. Then everyone started investing into the Bitcoin and Blockchain and the
amount invested in the Bitcoin in 2017 was
$10 billions that started moving it at a very faster pace in the market. If
Blockchain grows with this pace, then we are really sure that by 2023, we can say a development phase of Blockchain, age of consortium, Alliance,
and governance, Gen-next platforms can come on the Blockchain network and
you start leveraging the features and services of Blockchain.
Again, by 2024, the Blockchain inflection point can attain critical masses. It can
become integral part of many organization. By 2025, point of no return.
We see that most of the organizations have already moved to the Blockchain and they are not in mood to return from the
Blockchain. Just to summarize, you can take scenarios like, by 2023, your
government may start collecting tax on Blockchains. One trillion IOT censors
could be connected to the Internet. Digital transformation outreach of
80% of population. The masses and population
shall start receiving things digitally; 80% of the population should start
leveraging the features of digital technologies. By
2025, sharing economy 2.0, p2p economy can become
very famous and can become integrated part of the sharing. You may have smart
city fully operational based on the Blockchains by 2026. By 2027, 10% of
the world’s GDP will be on Blockchain technology. So, this is the assumption
based on the current growth rate of Blockchain and awareness that people are
trying to invest and make block to utilize that features of Blockchain in
their businesses and to make the world and their countries a good place to live.
Before we know how Blockchain benefits us, we should know the current system, and why
we need blockchain when we already have successfully running current system behind
all required needs and services. The current system that we use in our
day-to-day life is for trading, for selling and buying items that are
recorded in offline ledgers where transaction details are stored.
Bookkeeping is isolated and closed to public. The public do not have direct
access to the books, and for this reason, we need trusted third parties or
middlemen who help facilitating the
services whether it is library, whether it is trading, whether it is shopping, or
buying over networks maybe Amazon, maybe Flipkart, maybe other
shopping sites that really required some middlemen to shop and purchase over the
network in current scenario. So, if we see, most of our services require a middleman
to be utilized. So on and on, we see the below challenges with the current systems.
Banks and other third parties take fees for
transferring money, nothing is free. If you involve a third party, they will not
work for free. They charge a good amount of
money that is an overhead of the system. Mediating cost, again, increasing the
cost of transactions. Things are becoming costly for us. In any ways, end-users have to pay for any services they are utilizing. It’s not that their
organization is going to pay. So, ultimately things are becoming costlier for us the consumers. Minimum practical transaction size is
limited; cutting off the possibility of a small
casual transaction. Financial exchanges are slow. Checking and
low-cost wire services take days to complete. International cross-border
transactions really require good amount of time for any transaction to complete
because of current existing systems of middlemen or mediators. System is opaque and lacks transparency and fairness. We don’t know what is happening
behind us? What is happening with our money that we are investing in banks, shares, and stock markets, and
that’s how the system is completely non-transparent to us. Also, the central
authorities that are controlling the system currencies, maybe from banking maybe
from stock markets, maybe from other institutions, completely have
chances to overuse the power they have and can’t create money as per their own
will. Even every country’s currency system is being managed by its own
head banking Institute. These are some of the
current problems, but these are a few major issues with the current
systems that are motivational factor behind use and utilization of
Blockchain because your Blockchain helps overcoming all these problems. What could be the possible solutions within a system which
eliminates the need of middleman or third parties, thereby making transactions
cost nil or negligible. If there is no middleman, we don’t need to pay him. We
can save that money and make things cheaper, enhance transaction
execution speeds, and can facilitate instant reconciliation. Again it is
transparent and tamper resistant in order to avoid manipulation or misuse. If
things are transparent, no one with or without authority can tamper the
information and do false transactions for their own benefits. Currency creation
is not in control of any central authority. If you see, we are on a
Blockchain or similar networks. There is no central authority who can impact the
system, example, currency generation for their own benefits. This
can also help regulating them and regulating and maintaining the value of
currency. Things in current system sometimes go beyond
control Inflation cost may go very high, that is
something unexpected with the current system. Things are not predictable as
they should be. So, using a system like blockchain will help regulating the
currency, money, economy in a very expected and time-bound manner.
So, how distributed system solves this problem. Distributed system enables a
network of computers to maintain a collective bookkeeping via the Internet.
This is open and it is not in control of one party. It is available in one ledger
which is fully distributed across the network. So, there will not be any single
authority controlling the information and things are available in distributed
ledger, say computers or nodes. So, how distributed system looks like you see it
is a environment or you can say network of connected nodes say computers servers
peers or you can use any term that have their own computational power storage
and logic to do transaction in a distributed system so on and all we can
say a system where two or more nodes work with each other in a coordinated
fashion in order to achieve a common outcome is called distributed system all
nodes all computers in the network should be serving a common goal if their
financials is blockchain system cryptography system they have to be
meant for financial transactions it’s modeled in such a way that end-users see
it a single logical platform for end users the what matters will be the
outcome from the network what they want to do they should be able to do without
any middlemen what is the node in the distributed system a node can be defined
as an individual processing unit in a distributed system all nodes are capable
of sending and receiving messages to and from each other nodes in a distributed
system need to be connected with each other some may be directly connected
some may be connected through other nodes so the whole purpose is the
whatever information is flowing in a network should be able to propagate to
every node without any specific delay or any tampering so let’s start with our
third part of the video on the topic cryptocurrencies and prop chain so
during the last session with this out what blockchain is or distributed
Slayer is distributed system and the basic idea on Bitcoin so let’s see what
kind of distributed Lydia technologies are available nowadays the picture on
the screen elaborate many things about the platform used the technologies the
consensus mechanisms the application use cases industry outcomes consortiums
about the distributed ledger ledger technologies available nowadays so major
player in as part of infrastructure and technology providers are clouds trout
vendors like AWS as your Google IBM bluemix etc play important role in
providing infrastructure to distributed ledger technologies then they are needed
to run blockchain infrastructure providing sufficient and good amount of
resources to run your blockchain transactions with a good speed and high
accuracy platform technologies and providers are or can be divided into
private and proprietary private consortium and open sources few are open
to the market and can be utilized for as per the individual needs example of
private and proprietary providers are digital asset Nasdaq chain tender mint
cash port etc etc then your private consortium constitutes corridor r3 CV
sentinel and then comes your open source available proxy networks or distributed
Ledger’s you can say called multi chain and hyper laser v 1.0 then there are
multiple open providers like aetherium stellar
pbft bitcoin consensus faxes cetera so on the top of the platform technologies
and providers their runs consists mechanism to finally run your
transactions and commit them into a new block so there are various kind of
consensus mechanism evolved with the evolution of blockchain technologies few
are leader based few are proprietary distributed ledger
consensus-based few are refrigerated concerns
few are you require your very genetic algorithms like proof of work proof of
stake proof of elapsed time and other mechanism to allow your validators or
miners to create new blocks and give them chances equally to commit their
transactions and write them into your new blocks so Halderman consists
mechanism you see here some other way helping validators to violate their
transaction record their new blocks in fair manner to the blockchain network
what actually consists mechanism is and we’ll be learning in coming slides
then what could be the application and use cases of blockchain networks you can
use them in trading finances cross-border payments commercial paper
trading digital identities asset security tracking document digitization
account accounting insurances cryptocurrency is tokenization SAP
reporting smart contracts bla bla bla so there are ample of use cases where
people are doing their blockchain involvements and writing their programs
to use them to use their use cases and props in network that can inherit all
the said features of blockchain there are various industry industry consortium
supporting this all development one is hyper laser v 1.0 there is r3 c AV p to
deal group these are some example of consortium supporting this whole
development and taking the blockchain to the industries and other required
destinations now let’s discuss about transaction in
distributed network how our transaction happens so suppose James wants to
transfer some money to his friend giving how it will go now now since there is no
central authority in the system there can be certain questions that might come
your mind like who will be validating the trans-lux transaction who will
validate if James already has sufficient money if during the transaction on the
fly the money coming further the money was not lost the transaction initiated
was from James only there should not be any chance of repetition when Kevin
receives the money it actually received the money he cannot repudiate that he
did not receive the money so how these kind of scenarios you going to manage
in distributed transactions so as we already told the term that consensus and
you can simple say the validation algorithms help maintaining the
consistency and the validity of any transaction that are happening inside a
distributed network so when James start any transaction to send money to cave in
it goes through various validator notes they see they run the logic and check
the recipient and senders address using their public key or other methods
available that the sender is genuine he has the required balance and the
recipient where the money is going to is existing in the network and is able to
receive the money successfully also there is no any duplication or loss of
transaction while come while or before committing it inside the network and
while committing all these transactions and validating them each participant
will record the transactions once it is successfully published inside the
network so whenever you go to a proxy network and validate or audit the net
Ledger’s you will find same copy of information stored at every node and if
if any node differs from other nodes inside the network that it will not be
allowed to be part of the network anymore until it recovers and becomes in
sync with the other nodes now there will be certain questions in your mind how to
verify from like how to verify from where the transaction is initiated and
what to and to whom it is sent how is the transaction faster than the present
system who validates the transaction as there is no central authority and how
its currency generated there is no there is no one funding the network so how the
new currencies are generated and how people are increasing their balances so
to assess it to satisfy your curiosities first let’s see how our transaction is
initiated in a distributed network every Network every participant in the network
has their two piece of information called public and private key and those
who are aware of public and private key know well that these are route items or
route contributors of any cryptography mechanism or system so while sending the
money JME will encrypt or sign the information
that he is paying money $2 500 to Kevin will encrypt the information and sign it
using his private key that will go in form of up to cryptographic information
encrypted information over the network and then when Kevin receives the money
he will use the public key of James and decrypt the money and have them out so
this is how a transaction initiated there are multiple steps and say this
through which our transaction is successfully committed to the network
that we will be learning when we will see and discuss in more details so just
because we are discussing about calligraphy and public and private key I
would just like to elaborate here on public key cryptography mechanisms that
we use and the Delta those have become industry standard nowadays to keep our
information secure over the open Internet because everything is online
and we v– and programmers are continuously starving to derive tit
today in Diamond ale on daily basis they are continuously fighting and trying to
derive new technologies that can cryptographic technologies that can help
keeping your information more secure because hackers again trying to break
your network and user information without your authority and their game
try to weaken the network and the weaken the security system of any organization
for their own benefits and own needs so where public group key cryptography is
used this can be of two kind symmetric key cryptography or asymmetric key
cryptography so symmetric cryptography is not where very much secure so
everyone uses asymmetric key where you will be given where every user will be
given two keys pair of keys are in terms of private and public key so out of the
both keys one is purposely kept private the other is provided to the other
parties and that is called public if you use private key to encrypt the
information then public key can be used to decrypt it so if you use the public
key to encrypt then you can use public private key to decrypt
vice-versa because two different keys are used for encryption and decryption
this is called a symbol tricky and algorithm so using this
information the person who is having your private key sorry public key and
receiving the information encrypted by your private key will be in a situation
to decrypt the information and ensure that it is you that has sent the
information this helps to maintain and identify the sender you by using and
decrypting the information using their probably key how these keys are stored
these keys are stored in form of wallet these wallets could be a folder on your
system on your drive online or maybe a flat file you are storing then from it
is so what it would be of multiple times multiple types for storing the keys used
for the encryption and decryption so every user or every node in the doctor
network will have their own wallet to store their keys called key store and
this is not with the adoption only this is true for all cases where encryption
and decryption are used your SSL your DSL your digital signatures your
Kerberos mechanisms everywhere you use you need a wallet to store your keys
called Keystone the Bitcoin addresses and wallet how Bitcoin addresses are
maintained along with the wallet so an identifier of 26 to 35 alphanumeric
characters beginning with the number 1 or 3 represents a possible destination
for a Bitcoin payment so if you see any string that is starting from 1 or 3 and
length 26:35 will specify a Bitcoin address any
user that is holding a node in a Bitcoin network will have a Bitcoin address
where from where or 2 he will start any transaction and participate in the
Bitcoin network to earn coin and do transactions Bitcoin wallet about it is
basically the Bitcoin equivalent of a balance a bank account so when we talk
about wallet in Bitcoin it is equivalent to your bank account where you keep your
whole money so it allows you to receive bitcoins to store them and then send to
him to others so like your normal bank account you can store money and send the
money whenever required to the other person once a Bitcoin is while it is
installed on your computer or mobile device it will generate your bid
between address that you need to remember each address has its own
balance of bitcoins that it maintains and updates along with the transactions
occurring however the trans addresses can be
changed whenever you want to these addresses cannot need to be in unique
you can changed when you want to change your system or place there are ways kind
of Bitcoin wallets available in the market there are software wallets
available like Bitcoin armory is the most popular stable and secure software
wallet that is used nowadays they have evolved sub-label
their wallets add a level of convenience that software wallets can’t such as
being able to access your funds from any device using web wallets you can access
your funds anywhere and do transactions inside the Bitcoin cold wallets cold
wallets are simply any kind of Bitcoin wallets that isn’t connect to the
internet and that can be used to do the transactions then comes your paper
wallet USB Drive that can be used again on the go you can take them with you and
participate in the network whenever needed
then there are plain wallets available we don’t want to keep any wallet and
keep the pathways in your brain you can use them and remember in your memory to
do the Bitcoin transactions then comes hardware wallets that can only be
accessible with the physical contact to the wallet and have hit the scene this
year only so considering the requirements Bitcoin have given the
facility of hardware wallets that can be used and kept with you like physical and
identity like cards and then can be used to do the transaction inside the network
so till now we have discuss about basics of Bitcoin blockchain distribute
distributed ledger and about a transaction initiation now let’s know
what transaction is our transition is a piece of information that you want to
share in order to update the existing items or generate a new items in form of
transactions and block inside the network so by sending a transaction you
follow your system or network follower mechanism of modifying the information
or generating our encrypted entities in order to keep your information safe the
transaction is broadcasted in the form of a digital message as you can see in
the picture and just like your signatures provide the proof of
ownership on the document similarly digital signatures
the proof that is transition is genuine unlike one hand written password digital
signature is used sorry this show signature is unique for every
transaction so what it means actually whenever you are sending an information
transaction details are hashed using your private key and these are treated
as a scientist authorized by you and sent over the network the recipient
knows your public key uses your theory gets your message uses your public key
and decrypt it further to get the hash value of the data information sent over
the network now this hash value is regenerated at
the receiver end using your key and checked if it is same for the data or
hash value that you already send with your information this is how sender and
receiver maintains the integrity of message by hashing the data they are
sending over the network by signing if they are private and and deciphering
with their does pop up the public key and then guaranteeing the information by
using the hash of information because hash is has the property that for any
certain given string it will chen always generate a unique value that can never
be change until priority string is changed this is how hash is used to
guarantee to guarantee that information is not tampered or changed while
transmission even a dot in the if a dot is changing the information your hash
value will change completely so how transactions are propagated over
the distributed network how are the transactions are faster than the
processing system inside distributed ones what happens when you do
transaction income system you are you may be connected at a significant
distance with your recipient so the network delay will cause the whole delay
on on your transaction and that can be a significant amount of time but when you
transact in a distributed network in a distributed architecture trance
transition is transmitted peer-to-peer transmission of the transaction across a
network takes around one and two second only so every peer node helps you
propagating the transaction over the whole network and collectively help
passing the information to each and every node inside the network so that
everywhere every No has updated information inside the
ledger this way information travels faster than the current existing system
for example take a scenario where a a node in the network finds a transaction
that caving phase 5.2 James so now what it does it passes that information to
the nearby very nearby P and C nodes that are connected to it now B and C
will pass information further to other nodes that are connected to it directly
and similarly others nodes will do until all nodes are covered
hence this way it is faster and cost efficient as there is no middleman and
the propagation takes less time than the existing system now when our transaction
is submitted who takes the responsibility of
validation of the transaction because there is no middleman so now the
question will arise in your mind when there is no middleman there is no
authority to validate your transactions how transitions are being committed in
the blockchain who will take the responsibility or if there is no one how
developers block changes are writing the codes to make it automatically done
let’s see there are some special nodes in the network who verify the
transactions and maintain the ledgers they are called miners so my research
basically responsible for keeping your data validated before recording into
other into them in a new block so these validators helps creating new
blocks based on all the conditions made as per the logic written so they also
helps to find good transactions and bad transactions they have they remove
immediately whenever they find a transition is bad and not following the
standard since there are multiple nodes participating inside a network there
will be multiple transactions to be validated every time so what validators
do they keep checking for the transactions they cook them in the new
block and then validate all the transactions and then try to generate a
new block and put into the network and that increases every time they do that
increases the length of the blockchain by one block so very right logic for
your blockchain validation new block validation you need to be careful that
it should include all logics that you want your validators to perform during
the validation check automatically so your algorithm or your code should be
smart enough to do this all without any human or physical intervention so minors
are what – are called – are especially nodes which holds the copy of the ledger
and verify the transaction happening in the network using state-of-art
cryptographic algorithm – validate their transaction across the network their
responsibility they are responsible for creating and committing new blocks in
the existing blockchain in order for our digital monetary system to work the
miners must be able to confirm that the originator of the transaction bus is the
fund being transferred the originator of the transaction has obtained the funds
by one of the means commonly recognized as valid so they perform all the
required check if this is a financial transaction they responsible to validate
if the requester is coming from a genuine node which is actually part of
the network and how they do they use a public key to validate the sender same
way they do for the recipient is the recipient exists by using the
information shared by the each node inside the network so they also inquire
about the find funds that to be transferred that they are sufficient and
available in the wallet of the cinder node once defined all situations
satisfactory they run to create a new block inside the network verification
how to verify whether transaction is initiated and to whom it is sent so as
already told that digital signature is used in transaction verification every
node that is initiating the transaction uses his private key to encrypt the
information he is sending over the network and that information majorly
includes the details of the transaction what he is doing to whom he is if he is
sending a money at bitcoins to whom is sending and that those all information
are kept in block sorry in form of data and that is being signed by the sender
with his private key to make a digitally signed signature then this information
is propagated from the center node to other
peer nodes and then the validators use the public key of the sender James say
to decrypt the information and if I if it is being sent from James only this
way they authenticate the transaction at the sender and recipient of the
corresponding transactions so once transition is validated how it is stored
onto the network let’s see once the transition is
verified it is stored in a shared ledger across the network how it does that it
keeps appending the informations to the existing network in the form of blocks
and if you see from the figure each node should have same copy of the information
and any node that is having different information and not should not
concurrent with the existing blocks nodes will be removed from the network
so each block of information is appended and replicated across each node inside
the distributed ledger here in the example you can see James there are
three transactions James sends $5 to Kevin and that is be recorded in the
ledger of each node row James Kevin Robert and Paul then Kevin transfer $3
to fall that is also you can see recorded and then similarly other
transactions will also be recorded in each ledger or you can say nodes ledger
now ordering of transactions since transactions are passed from node to
node there is no guarantee that the order in which you receive them
represents the order in which they are created quite possible because there are
multiple nodes participating in the Prok chain and there may be any number of
node initiating the transaction in the network then no one can guarantee that
they are maintaining the order while being recipient up while being received
by the validators without creating a strong logic to agree about the
transactions order is a challenge in a decentralized system therefore the
cryptocurrency system orders transaction by placing them in groups called blocks
and then links them in a chain how they do it the group the transactions on the
basis of their timestamp of generation in a group a call it a block and then
they create a new block and commit it into the blockchain networks
so since we know now how transaction is initiated how it is recorded validated
and then stored in each nodes register we need to understand how miners grow
the transaction into a block and how they commit them into the existing
blockchain from the figure you can see that there are multiple unconfirmed
transactions you can see new transactions that are not already
committed to the block or blockchain that constitutes for example here leaves
our sins Sandra seven Bitcoin Mary st. John ten Bitcoin James sends five
Bitcoin to Kevin now there comes a validator nodes which picks all these
transaction in a group he writes a block like you can see here and then they form
a new block with the information of previous block creating the new ID for
this current block and then start committing them into the Bitcoin network
one more important thing is that you should observe from the diagram is every
block has a number attached to it that Chris pons the length of the blockchain
and block ID of every block created in the network and most important the
relational thing is every block has is maintaining the hash of the or ID of the
previous block in it and this way it really helps to maintaining the
integrity of the blockchain and since every block remembers the address of the
previous block no one can inject a new block between
any Prague in the network this helps keeping your blockchain immutable and
unhackable you can say now there is a chance
and this happens practically like when you’re – are creating a block in the
network they will not be alone participating for creation of or mining
of a new block there will be multiple miners working to create a new block and
that is where you need to write logic or you should need to have mechanism where
various miners are constructing blocks there could be several options to choose
from how does the network decides which block should be the next in the chain
how you’ll be deciding which the which validators block the network should
choose so again there is a logic and Quine existing one and while you are
writing your hyper ledger you need to be when you are adding a logic for your
blockchain you need to be very conscious by writing this logic like how miners
will behave and how their work will be picked against others while writing new
blocks so there can be number of miners constructing a block that we already
know now we need to see which miners block rock scene should pick and write
so for the sake of this for this for the sake of the integrity and the selection
of a new block there are certain mechanisms defined by every blockchain
technology provider whether it is the etherium that is hyper laser whether it
is sawtooth or any available block chain network abduction bits platform nowadays
so few are like proof of work proof of stake proof of elapsed time and pbft
there are these these are certain mechanism or you can say algorithm that
helps the blockchain deciding new block new upcoming block in the network so
let’s see let’s see one example of proof of work how it helps deciding the and
selecting the work of a validator in form of a new block proof of work is a
piece of data which is difficult costly time-consuming to produce but easy for
others to verify and which satisfies certain requirements to keep the coin
distribution predictable puzzles become increasingly difficult to solve when
more people work on them part of Bitcoin solution is that each block must contain
the answer to a space fill a specific math solution so since we are concerned
about how new blocks is walk dogs are picked so proof of work is an example of
doing so now we’ll be discussing how out of multiple validators blocks will be
selected and add it as a new blocks in the blockchain so in our last lecture we
saw that proof of word is one mechanism using which Bitcoin and some other dog
chain platforms decide out of multiple validators fish no 2 selects for new
procreation so let’s discuss proof of work in detail now what proof of work is
every node every validator node must say given a task you
work to find some value said knowns in order to calculate and solve the problem
or algorithm given by the proxy Network the winner node is given a chance to
create his own block and add it to the existing network and then publish to all
of the nodes that the block creation has been done successfully by him so every
node has given has been given the same problem to solve and then they are they
start munching on the solution of the problem and depending on their resources
and processing power they tried to solve the problem first the winner node gets a
chance to add his block to the blockchain and becomes the winner and
get awarded by the Bitcoin or other mechanism in the different blocks in
networks so how it works actually this algorithm are you must say a puzzle that
has been given to the nodes varies in terms of complexity depending on the
size of the blockchain if there are more validators compute competing to perform
the calculation and solve the problem then the puzzle becomes more complicated
and it becomes increasingly difficult to solve when more people work on them to
describe in more detail we will take an example of some sort of problem that may
be given to the nodes query return nodes in order to solve and create their node
suppose the problem is to solve is there is a string face hello in spring and how
it works each validator need to calculate a nonce
say n that should generate a string where the hash value of it should become
should be less or equal to 2 to the power 240 this is just a number we are
just trying to analyze a problem that can be given and how proof-of-work
actually works in order to decide the winning node so the string and other
things may is simply vary but the problem lies similar to this each node
now need to get the N value in order to win the puzzle and for which the value
of hash of this hole hello plus n should be lesser than 240 they start
calculating it say from zero and it’s again integer so they should be starting
from zero so the whole string becomes hello zero and the hash of it may come
around two to the power two fifty to say so this is not the right choice we need
a value less than 2 to the power to 40 so now the node will do they what they
will do they will try on value 1 of n so they do the hash of it and that may
become maybe 2 to the power 2 7 to some work this is again not true we need a
value less than 2 to the power 240 suppose it goes on now and at certain
point they get a value n say 98 by hashing to that we get a value say 2 to
the power 239 now this satisfies this situation where the N is equal to 98
gives you a value that is less than the required condition given ok so this is
how the another node that gets the value and first will be the winning node and
will be allowed to create that new Block in the blockchain this is how this is an
example of proof of flow there may be other puzzle puzzles complicated results
might be given to validators in order to solve the puzzle and become winner so as
we discussed and we saw in the example there are three components which have
been achieving the proof-of-work solution one was nonce that that was the
value that we had to guess in order to get the required solution
in technical terms this is say a random numbers whose value said so that the
hash of the block will contain a runoff leading zeros the rest of the fields may
not be changed as they have a defined meaning right so the fields or the
string was given hello in our example and we kept calculating the value for
which a given criteria is met second important thing is hash a fixed length
number which result in large unchanged data when read okay so that was the
value of the nonce plus string that we calculated a hash upon and tried to find
the result third is transaction authentic transfer
of Bitcoin ownership collected and recorded in the blockchain so this is
how proof of work actually helped creation of new blocks by deciding the
winner out of the multiple nodes validator notes insurance now how a
proxy network decides on the puzzle why is it hard the moment you keep
increasing your network you’re well later nodes keep increasing so how you
do it the sha-256 is a one-way function hence the brute force is the only way to
a particular output value meaning it is having combination of 256 keys where it
becomes really very difficult for a attacker to find a solution or find or
encrypt the function value and contractual data on an average it makes
many random guesses to find the solution and the search allenge is tough it takes
around 10 minutes on an average for someone to find the special key for the
solution so since it is having strength 256 key combination so it takes much
time resource computation power in order to find the result hence a new block in
Bitcoin example generated every ten minutes not before that so this is how
your proof of work actually helps but if we analyze in detail the proof of work
becomes a very resource extensive and time consuming problem process and in
this way this really requires huge computing power and obviously our note
which with high computing power we’ll get a chance win again and again over
other low computing nodes that are available in the network
this can be overcome we will see later on but this is again despite of few
limitations this is again a strong solution that exists in blockchain like
Bitcoin and others to be used to decide the new procreation security problems of
hash functions now how hash functions functions help
deciding the security of the data first of all it is collision free what it
means if you are given a string even a character a suppose then hash of a will
always be unique means if you have been given a hash of value a then you cannot
get another value B or C or anything which can generate the same hash value
that means to generate the same hash value of anything it has to be that
thing only that means hash of fee can be equal to hash of a only it cannot be
hash of B second hiding a hash function is hiding if when a secret value R is
chosen from a probability distribution that is high entropy then high rx so it
becomes infeasible to find X means concatenation of two strings means if
you’re concatenating two strings then the value again the hash hashing value
becomes different and it is really difficult to find the value of x that is
changing that string third it is puzzle puzzle friendly for all probable value
output value B if M is chosen from a very highest period probability
distribution then it is not feasible to find the hash value of any given
function say W plus T is it equal to a so hash is very frequently used for
creating puzzles and to solve them it blocks should networks not the bigger
question comes why when validated nodes required to invest high amount of energy
computation power and time then why do they participate in mining of the new
blocks this is why because they are given incentive and return to the
creation of successful block so example in Bitcoin every winner block is a
winner block node is given is awarded with the Bitcoin another blockchain also
there are mechanism to award the well data nodes
and result through the creation of new blocks – reward what do they get to do
what do they do to get this – dad tries to find the key to the complex puzzle
and as we have already seen right search for this key is random and the miner
needs to invest huge computational power and energy the – are repeatedly guessing
new keys until the first case found that matches the puzzle that is the nonce the
miner who find the key publishes the block to the network all this happens
and we have seen already other – stop creating the blocks and we’ll take the
published block validate it and add it to the ledger so the published new block
will be added to all will be published first to the network and all nodes will
take it validate it and add to their Ledger’s in the diagram you can clearly
see new block new blocks are appended at the end of the blockchain network now
the reward since miners use their valuable
resources to merit the block they are given monetary award in case of Bitcoin
they get some newly created bitcoins as a word so every new generation of block
creates Bitcoin and the validators of the nodes gets rewarded in terms of
Bitcoin and this is the reason to take interest and help and participate in
creating new blocks exhausted resources to solve the puzzle means the miner has
actually solved the puzzle proof of work that is why it is called proof of work
they’re spending time they’re spending resources and getting the solution that
proves their work diagram you can say the amount of electricity and capitation
work they do is equal to the monetary award they’ll receive now we will see
how new currencies are generated in a new in a blockchain network say Bitcoin
so we know the generation of transaction inside and adoption networks and their
validation by the validators and the winning blocks this whole process helps
crazed creating new blocks and in return the new currency or new coin is
generated and awarded to the winning node so how this all happens currency
generation has a result of incentive to miners new bitcoins are generated and
sent to the – address that is their wallet a predefined schedule limits
the number of Bitcoin so that they gradually approach a total of 21
Millions so if you talk about Bitcoin only 21 million bitcoins can be
generated as per this current hard-coded value in the Bitcoin blockchain network
so this value is hardwired in the protocol and in current scenario it
cannot reach above 21 millions until the values changed by the in the protocol
itself so currencies are generated as a result of winning and creating a new
Block in the blockchain and in form of reward now we have already seen how
proof of work actually helps creation of new blocks and result of generation of
new reward money so what happens there’s another scenario there may be more than
one validators that may be able to solve the problem at the same time and in this
way more than one block may get solved in the same time so what a problem here
I wonder I have understood that the first miner to provide proof of work
will get the reward what happens in the case when more than one block gets
solved in the same time yes this is possible maybe two nodes have the same
computational power and if luckily they get to solve the problem in the same
time and if the such scenarios result then this can be solved by consensus
rules now what is consensus how it is built now in layman term if you talk
consensus is something where all nodes reach to a point of agreement and agree
to submit only one node as a result of new block generation how can consensus
algorithm should be written consensus algorithms are central to the
functioning of any blockchain because and multiple blocks working this is
becomes very common that multiple nodes may be able to solve the problem at the
same time and you get multiple new blocks to be added to the network now
that time you need to decide which node you give the preference if there is a
contradiction among the nodes about the blocks in the network such a
contradiction is solved by the consensus rules now these could be consensus is
the task of getting all processes in a group to agree on some specific value
based on the votes of each process with a consensus algorithm we need to give an
animal agreement from all loads to submit and
decide of any node any algorithm that relies on multiple processes maintaining
common Street relies on attaining a consensus okay so how it happens every
node have to be agreed on a value by a voting system or bus some similar ways
to reach on a consensus and decide which node will be writing his block to the
new blockchain and if this scenario arises there will be several branches
participating to create the block although the problem is tough however
there are chances that more than one block will be solved several branches in
the browser option are possible in such cases right like if you see in the
picture these three nodes may be solved at the same time and may try to add
their block at the end of the blockchain and if some other nodes are also
generating at the same time so they they may consider the generated new blocks as
the last branch of the last block of the blockchain and they may again start
adding their nodes behind the new and biggest blocks so what happens everyone
should simply build the block on top of the first block that they receive and
that creates branches in the blockchain so other nodes may have received the
blocks in different order they will be building on the fir block they first
received this keeps happening and the blocks may get added to all three
branches now what algorithm will do see from the
example you see Paul received a green green block first hence he builds the
next block on top of the green what Robert does he added orange block first
and then he keeps building his new nodes new blocks behind that orange node then
what Lisa does she got new blue blocks and hence she will start building the
new blocks behind that blue block now what happens if rockstein consensus
tries to solve the problem it will try if it will try to solve the problem by
finding the longest branch what statement says the try gets broken when
someone Falls the next block becomes because it is very rare for this
solution situation to happen multiple times in a row right what it does it
will find the longest branch and then in order to stabilize this situation it
will use the longest chain as the main branch of the blockchain
network and discard other blocks to try again and get added to the network if
you see the front diagram Paul’s Robert and Lisa have to be agreed on the
longest blockchain that Lisa sorry Robert created now blockchain quickly
stabilizes every node is in agreement with the current state of the ledger
everyone writes their ledger with the current blocks details that are newly
added to the system now what happens to the transactions in shorter branches
because they were valid transactions they were form four from the winner
blocks winner nodes so how they will be why they will be kept or discard
discarded Litzy such transactions go back to the pool of uncontrolled
transactions and will be picked later in the block by the – in order to commit
and end hence these won’t be discarded from the network if you see from the
picture say it’s transition in the shorter branch lose its place in the log
and chain and transition then go back to pool of unconfirmed transactions and
will be included later in the block in this way none of the valid transaction
will be lost from the network maintaining the integrity of the system
again now since everything is automated there is no mediator nor thority this is
their chances that some of the miners in order to get avoid rewarded try to cheat
cheat the system now blockchain prevents cheating inside
the network since there is a reward for solving a block there are chances that
minor mind gifts are no solution to the block what happens in such cases after
creating a block minor has to publish the block within the proof of the work
to the network other miners now start validating the block to ensure the
authenticity means the winner blocks block will not be simply submitted to
the chain it will be validated by other miners who were participating and lose
during that time if the proof of work provided is wrong the block is
considered to be invalid as a result of which the miner end up exhausting their
resources without getting any work so if miner tries to do that tries to cheat
the system he will fail and if he fails you will not get any report that will
lose all his effort and energy 30 invested in
cheating the system or creating a new block or wrong solution once he did not
get anything he will never try to work again and give a wrong solution this way
none of the blocks none of the validators try to cheat the system and
therefore the consistence algorithm does not allow anyone to cheat the system
this way you can say your blockchain is cheat proof since now we have learned
how Manning happens this is a just glimpse of whole process take place
during the mining of a new block select the header of the most transaction
recent block and insert into the new block as a hash now what is happening
here comes a minor which bundles all the transaction in a block and then verify
if the transactions are valid once you find the transitions are valid it was
like the header of the most recent block and insert it into the new block as a
hash now it will solve the problem by using the proof of work and if when the
solution is found the new block is added to the blockchain and propagated to the
network to be aware of everyone’s knowledge now second problem
how how blockchain stays from the hacking what if someone tries to alter
the transaction in the block once the block is solved the cryptographic hash
output becomes the identifier of that block and even if someone tries to hack
it will what it will get the block contains actually contains the previous
box previous block ID and transactions random guess this way it will give you a
hash output if someone tries to world trannies transaction any of the block
the hash of the block changes and you already aware now if someone tries to
even a dot is changed in the given string the hash value completely changes
and this way the attempt to change the value of the node of block will be
failed and no one can hack the system and this way if someone tries to have
the system and tries to alter the block he need to change significant number of
blocks in the system and arrive to a consensus of a certain decided amount
say 50 percent in order to commit all his changes to the network and this way
it requires lot of energy and time and this becomes almost impossible by any
hackers or any intruders to change the data of all the nodes or even 50% of the
to reach any consensus and hence fraud can easily be detected the validators
will not allow any hacker intruder to change the data of the nodes or blocks
even if someone tries to do that he needs to have huge computation power
that is not possible in current scenario and needs quant
only quantum calculation can help doing this that is not possible in nowadays
even so if you see by this way since quantum computation power is not yet
available is it under research phase so there is no way to alter the system if
you want to alter any block in the in transitioning a block you have to outrun
the whole network you have to make the changes in the whole Ledger’s whole
nodes and it becomes really difficult impossible actually to change the data
or transaction data inside the proxy Network now question arises is it
possible for someone within with and extremely fast computation computer to
outpace every other nodes it is highly unlikely that someone can do that even
with a thousand of computers why it would require more than fifty percent of
the total computational power of the entire system to have a probability of
solving 50 percent of the blocks fast and faster than someone else and that’s
again as I told not possible in current scenario it is highly unlikely to have a
computing power stronger versus ours and human in order to sum up the blockchain
in a distributed system transaction is encrypted by asymmetric cryptography
propagates peer-to-peer are stored in a public ledger is authenticated by miners
or well later notes is secured by consensus algorithm so these all six
pointers sum up your block chain technology and are significant pillars
of any block chain design and network making it unhackable immutable secure
transparent and distributed we have already discussed about transactions
validators – proof of work and currency generation and how the system is hack
and cheat proof so these all conditions and properties makes blockchain really
secure in current and meeting the current market needs of security and
trust that only production can maintain we already discussed these six pillars
of blockchain that summer and constitute blocks in
technology that asymmetric cryptography peer-to-peer propagation consensus
algorithm – authentication and validation and
public ledger distributed ledger you must say now what are the benefits of
blockchain for now we should be able to understand why we need blockchain to
implement our solutions and kids and overcome the problems is the current
setup and current system of the problems that we already discussed like middleman
like caused like latency like cost boundary problems cross boundary
problems and other things that we really want to avoid by using block chains how
it helps what are the benefits remove the reliance on a trusted third party to
maintain a central region has the following benefits settlement in
real-time cost-saving security on our residents immutability users
pseudonymity we will see how these all benefits come
from blockchain a nutshell the use of mathematics to create a secure ledger
enables this enables transaction with other need of a third parties and hence
access to shared single source of truth there is no authority or control person
to manipulate with your data side your organization by using the blockchain
what is anonymity and pseudonymity in cryptocurrency because your
cryptocurrencies do not use their your direct identity here comes the way they
utilizes your identity in form of anonymity and so Don enmity and how they
do it let’s see there are two kind of rip recurrences by going these identity
terms anonymous and pseudonymous when we say anonymous the state of is state or
quality of being anonymous lacking a name like nad ydynt agility an anonymous
person is non-identifiable unreachable and untraceable you don’t know who the
person is where he resides what’s his address and from where his doing his
transactions so this whole property makes him anonymous to the whole network
so again he will not bound to or linked to any entity now example but anonymous
dealings unidentified individual telephonic and a PP entity to int
inquired generally about its goods or services
an individual completing a retail transaction in paying for goods in cash
means a person using telephoning using an APB entity to inquire generally about
goods and services and then an individual completing a retail
transaction and paying for goods in cash so the person using telephoning will you
not be able to identify he will just order and get the services there are
some example of anonymous Rob chains or identities from Spring and others omegle
bogging and other applications you can see from the rights and how it happens
how it helps being anonymous on cryptographic cryptocurrency network
being anonymous has its own rewards it’s also adds value but invisible exchange
of values is a double-edged sword because you never know what other person
is doing and who would supposin does that
extremely valuable how example some form of truly anonymous communication such as
political speech are considered valuable electronic harassment into trade and
business this form of anomaly has exceptional potential for illegal acts
because the message senders cannot be held accountable for their actions and
being anonymous makes it harder to trace transactions and giving higher level of
privacy so you can see here being anonymous has advantages and
disadvantages both but for some currencies and some Bitcoin
cryptocurrencies it becomes valuable and like Bitcoin in others Z cash these are
building blocks and used for transactions as anonymous identities so
Z cash is again an example of anonymous cryptocurrency
first totally anonymous to currency it was provides completely anonymity
solution hiding all knowledge about the transaction no one knows who is doing
the transaction and what is the content of the transaction it is a considered
values change provides user with private access controlled to their financial
information and it is an application of Z J’s Knox cryptography that uses an
ominous identity only those with the current correct view key can see the
contents so to view the contents of the transactions you need to have a public
key of the that Sandra users can provide view at their own discretion
z cash is a very interesting technology pride pride to the security is not being
compromised so as an anonymous script again C Z cash
has its own advantages and useful in certain areas and other kind of identity
comes is pseudonymity what’s anonymity is stands for it chooses your identity
but not your real identity but some pseudo identity given to you using a
pseudonym to establish a long-term relationship with some other entity
without disclosing personal identity to that entity example your ID number or
your employee ID in an organization is your sudan pseudo identity hence a
pseudonym is a unique identifier example a nickname credit card number student
number bank account number cetera that can be used to identify yourself using
pseudonym entity links different messages from same person and
pseudonymous are widely used in social networks and
other virtual communication okay like in facebook and other social platforms use
your nicknames to communicate with your friends and your networking peers
importance of pseudonymity in cryptocurrency all the transaction in
pseudonymous network are open and visible towards and thus it is widely
acceptable no one warned no financial organization or no any are none of
organization never want to do transactions and messages exchanged with
anonymous persons so pseudonymity stands very popular in cryptocurrency network
roxy network and the transitions have origin and destination address and hence
the flow of money can be observed transparently illegal reserved illegal
use of cryptocurrency can be tracked by careful analysis of metadata so in this
way if you see pro from the diagram a cents for bitcoins to be using his
address ok it it currently has six Bitcoin and the A’s address is pseudonym
identity for a it is not sending a on the network it is sending his address as
his pseudonym entity and then network verify the transaction using the keys
and other things available them and then once confirmed validated we will receive
the for Bitcoin from a tooth into his payment address
that is again beeves through on him identity so this way holding works
insider siddhanam blockchain cryptocurrency network second thing is
your cryptocurrency is programmable money right all bitcoins are other
cryptocurrencies are generated by programming by the result of transaction
inside the blockchain Network each unit is individually identifiable and
programmable users can assign properties to each unit users can program a unit to
represent a eurocent or a share in a company a kilowatt-hour
of energy or digital certificate of ownership because of which the
replicants is much more than supply such than simple money and payment it can it
has vast application in number of areas that make them more useful than simple
currency or payment system example of how cryptocurrency can be programmed for
single transaction between two parties programmable money can give the pair and
pay a vastly greater range of parameters to use when exchanging value you can
always program your cryptocurrency as you desire and you can add as many
number of features that makes your programmable money or cryptocurrency
more useful as per you need it also enables a huge array of different
valuables to be exchanged for more than a conventional money time contracts
expertise good services and more can all be traded ok so since it is programmable
you can add as number of modules functionalities as you want as an
example say Alice buy a car online from Bob the payment will only be executed
after the car has been delivered and passes animation test the term
verification is completed by shipping agent and the emission test agent when
both are complete then only transition is authorized and the money change hands
it is very clear now right until all the checks all the tests are
passed transfer of fun will not happen so these
all logics this all condition you can write in your currency in order to
propagate with validation and required chicks
so apart from Bitcoin is there any other implementation or cryptocurrency apart
from cryptocurrency is there any other implementation of blockchain yes
affirmative ly there are various ways in which blockchain can
implemented what are these although bitcoin was the first implementation of
prop chained rock scenes was named or was recognized from Bitcoin early the
underlying technology behind Bitcoin was blockchain and everyone recognized it
after the popularity of Bitcoin itself so many people even now understand
bitcoin is a blockchain and auction is a is Bitcoin they those who lack knowledge
in this area consider both thing as the same however if you want to utilize
blockchain they can utilize it anywhere however we need to think the cost
consideration and complexities before choosing blockchain for any
implementation monetary aspect is just a tip of the iceberg of dauphin check new
technology the auction is a groundbreaking technology for which
money is merely one of the possible applications you can use wherever you
want finance stock market education storing qualification data industry
flows smart contracts identity I said anything you want you think you can use
blockchain to implement like for industry flows you can use blockchain
for settlements change of supplier meter data real-time capacity matching etc etc
and for asset management management you have autonomous network configuration
you can use it for self-serve maintenance you can use asset inventory
tracking cross asset interest industry data sharing then 4nt management you can
use it for eligibility of social traffic safety is authorizations for me to work
for detection twenty schemes blah blah blah so whatever you want you can bring
it on drop chain same for goes for smart countries like AV charging peer-to-peer
trading demand-side management network services whatever you think you can
implement as we you need Broxson gives you a platform if it’s keys it’s a
concept actually which you can use to drive the products by any in your own
language known language that you want to develop and design the whole network now
we will move to the next topic delving into blockchain to understand more about
blockchain and Gaussian technologies database overview what if we don’t have
databases databases everyone knows these are whatever transactions we do over the
Internet in our applications offline online some
other way they are getting stored in databases if they need to be stored
databases are being widely used for emails for storing of emails for cashing
reports generating reports exchange email sent and received via MTP hi map
and SMTP response manager then one other way the single source of information
storage is your databases nowadays we have advanced database systems with no
SQL and that is again a own of our calculation in drop chains that we’ll
see how but in later slides what if you don’t have databases did you know there
exists an immutable and non temporal database that is called blockchain and
she is also called distributed ledger distributed database also you can say
whole block chain started in 2008 satoshi nakamoto an anonymous anonymous
person a persons can say group of persons first just rate it and
implemented the first blockchain database as an infrastructure for the
Bitcoin the first cryptocurrency ever created and more successful of all the
time so we already know bitcoin was the first implementation or use case of top
chain how blockchain started Satoshi Nakamoto used block and chain separately
in his paper in 2008 October later with the time it became a single word prop
chain and that was meaningful also how block chains were evolved Dakshina
started in 2008 by Satoshi Nakamoto was the initial stage in 2009 rock chain 1.0
evolved in form of cryptocurrencies and payment network then in 2012 to 12 2014
blockchain 2.0 evolved in form of assets and smart
contract management later in 2016 to 17 blockchain 2.5 and 3.0 evolved version
2.5 evolved as vehicle currencies distributed Ledger’s data layers
blockchain while your 3.0 evolved as programmable smart contract smart
contracts are usable or unable to act is external data or events based on time
or market conditions calling code or data outside of the smart contracts
abduction breaks the general trust barrier and authenticity of transactions
means smart contracts interact with the internal data only they work on and draw
inputs and in order to maintain the trust and authenticity authenticity of
transactions what was more contract this is just a name you have heard now and
later slides will explain you how and what our heart contracts blockchain the
flow diagram you can see from here individual transaction events occur on
blockchain the form of it new block of transactions include a security hash of
previous block that we already know and blockchain new blocks are added
approximately every 10 minutes in Bitcoin and multiple computers mining
servers check the validity of blocks in the chain the cookies to check the
latest dog gets payment that is called proof of work you know that and those
are not attended previous sessions proof of work is a mechanism to allow one of
the nodes validator nodes to win and to solve the problem maybe mathematical
problem or some other kind and if it wants it will be eligible and given a
chance to create the new block in the blockchain system so in return it will
get awarded and and this a new Bitcoin is generated in order to award the
winner node for successful transactions that dock is added at the end of the
block chain and the other blocks that are not passing the transaction checks
will be rejected and will not be stored in the database so this whole diagram
depicts the scenario of new transaction as a part of plow generation block
addition or rejection by the validators and then their application to the peer
systems this slide depicts the blockchain innovations Bitcoin that was
first implementation of adoption application in 2008 and blockchain as
application was the second innovation first was your cryptographic currency
cryptocurrency and then second was as application
force for the second adoption innovation in third was the most smart contract
embodied in abduction 2.0 system with introduction to theorem etherium
help taking the ER and bringing the smart contract system in the blockchain
2.0 system that help computer programs directly built into the blockchain that
allowed financial instruments now developers and users were able to write
logics in smart contracts that were helping them to regulate financial
transaction and use blockchain as financial instrument the fourth critical
innovation was proof of stake current generation is secured by proof of work
the new system replacing them with complex financial instruments for
similar higher degree of securities through proof of a stake now Dakshina
and distributed ledger technology how they differ from traditional databases
let us understand more about blockchain and see how differs from traditional
databases later we will discuss about the distributed ledger technology as
well this whole chart whole table compares the option versus traditional
databases in terms of various properties you can see areas or features first is
data ownership maintained through in blockchain it is maintained through
cryptographic key peers and native cryptographic algorithms using public
and private key pairs for encryption and decryption the information sent over the
network legacy database is how it happens it happens via Center Authority
the database administrator who is responsible for containing the data and
access controls apart from other required activities privacy and security
it’s it is again maintained in dock chain using cryptographic authentication
private and public keys are used to identify the sender the initiator of the
transaction and other properties of the data block in legacy database it is
again contributing each row based on enforcement from a central authority
your again database administrator is responsible for entering the privacy and
security of the databases access control in hence inherently identical for all
permission notes and maintained through permit given permissions information
block chains in databases it is actually centrally administer and applied using
applied by the database administrator again trust native wire multiple records
so this is coming as part of the blockchain concept only since records
are immutable you can trust the chain
Thaksin that no alteration or change to data will happen without valid
transactions in legacy databases you had to trust on central authority only for
your database integrity and security no constant data quality immutable records
in blockchain with automatic conflict resolution through consensus for
transaction doctrine the logics are written in a way that the records become
immutable and while registering new blocks the conflicts are resolved using
consensus through between participating nodes in databases complex conflict
resolution versus requires manual intervention sometimes to resolve the
conflict and maintain data quality database validity in Dakshina
discontinuous all databases Ledger’s remain in sync and stole same copy of
information and always updated for each and every blah new block added in latest
databases provided for single instance in time data propagation creep
propagation across all network nodes and every time a new block added and and a
new transition initiated in legacy databases it is managed through
multi-version concurrency control and through custom synchronization that is
again done by database administrators enforcing data transformations built
into data layer logic only so your data layer logic itself keeps this data
transformation handy in legacy databases there is no provision for enforcing data
transformation currency and synchronization in blockchain we already
seen that consensus always commits only a one block new
block at a time and he maintains identical copies of
data databases it involves complex checking between central DB and uses DB
to ensure agreement reliability and availability peer to peer networking for
distributed replication across all nodes because
peers are and nodes are connected in networked forms so reliability and
availability is already maintained through replication between all Ledger’s
at the same time of new block generation in legacy databases there is always a
chance of single point of failure failure and availability is again always
a question stored procedures are smart contracts while in database not
available transaction creation is of to all permission parties they can start
transaction and help generation generating the new nodes in legacy
database again maintained via Center Authority fraudulent or malicious
changes immutability through reliance on previous block helps ensuring there is
no alteration to data or deletion of data happens inside the proc seen
network in legacy database is not available with where current keys and
check constraints remain insufficient so it’s again a question in current
databases that fraudulent or malicious changes cannot happen there are always a
chance and risk of changing the existing data so that was a brief introduction
about differences between blockchain and legacy databases so now we will see what
distributed ledger technology is and how it helps overcoming the problem of
traditional databases legacy databases people think of blockchain technology
and distributed ledger technology as one and the same interestingly enough that
is not the case let me show you the difference these are the properties of
distributed ledger for a digital technology
programmable distributed when we say distributed or network participants have
a full copy of the ledger for full transparency anonymous the identity of
participant is either synonymous or anonymous tonight identities are never
used in blockchain x turn transaction time stamp is recorded in every block
unanimous all Network participants agree to the well DT of each of the records
whenever a new block is generated each validator participate – well – well did
the block and then had to add into the blockchain
programmable as we already discussed blockchain is programmable you can write
your own logic and conditions to be met to help serving your business logic
using the blockchain platform secure all records are individually encrypted
immutable and evil trade records are irreversible and cannot be changed in
short all block chains are distributed ledger but not all distributed Ledger’s
are blockchain means the auction is a subset of distributed Ledger’s hope it
clarifies the difference between dog chained and distributed Ledger’s so
these are the display repertory presentation represents the various uses
of blockchain this is a globally distributed with almost zero by zero
barrier to transacting goods and services it provides online payments and
digital currencies used cases and that was a first use case in first inform of
a Bitcoin a range of industry use cases across banking automotive insurance
health care life science and fashion retail and telecom are available
possible and under research highly secure cryptographic implementation
makes it truly secure all transactions being encrypted and decrypted using
public key pair provides additional security on how the data being
transmitted the blockchain changes the game in IOT Internet of Things rock
scene has emerged as a game changer in again in other widely being growing area
that is internal Internet of Things and really make it feasible to derive the
application on basis of Internet of Things when used with blockchain
peer-to-peer with no central authority that constitutes a major benefit of
blockchain removing intermediate nodes or mediators from the network completely
transparent and auditability you can come anytime traverse to the blockchain
and you can you will be able to find each and every detail in the form of
consecutive blocks chorded transactions that are really coherent and related to
each other and easily show you that there is no alteration or change happen
to the recorded data returned in the database
this slide depicts comparison between popular blockchain frameworks we are
comparing here ethereum high polished fabric and our recorder before moving
with the comparison must tell you about these three terms these are three kind
of washing platforms available in the market that different characteristics
but can Herot the unite all the properties of Gaussian that make them
part of secure blockchain technology description of platform the first
statistics we’re ethereum uses generic blockchain platform high polish your
fabric uses modular block chain platform and our record I uses a specialized
distributed ledger platform for financial industry governance the
theorem is owned by hand developers while high polish fabric is being
Bellini’s Foundation and our three Koda is being managed by our three mode of
operation permissionless public or private
so aetherium can be permissionless public or private means restriction or
restriction lists both what happened is your fabric is permission and private
only this is meant for enterprise users and hence provide more security while
strict the exes are three code eyes again permission private having more
secure implementation consensus mining based on mining of new blocks is based
on proof of world in etherium and as and at leisure level broad understanding of
consensus that allows multiple approaches and – laser fabric you can
use pbft prefer for proof of time and other approaches as per your requirement
and the way your resources allow then consensus occurs at transaction level in
Appalachia fabric in our recorder is specific understanding of consensus that
you know denotes required to design and the consistence is given on transaction
level smart contracts smart contract codes are written in programming
language mostly called Chow accord called validity that is similar to
JavaScript in hapless fabric smart contract code example go and Java used
to write the programs for smart contracts for healthy coda wherever
Cortland nan Chao WA languages are used and smart legal contract uses legal
prose currency Prado produced by the idiom is
ether and tokens why a smart contract in high polish fabric there is no currency
produced while currency and tokens are generated via
chain code there is no inherit currency in appalachia fabric you can design the
situation’s and tokens as per your business logic in high polish fabric
ostracoda has no currency and this is basically
used for financial industry this pictorial diagram represents centralized
difference between centralized and distributed ledgers the first picture
you can see that in centralized is a pleasure all the clearing of funds is
being done by a central authority while in
distributed ledger fun clearance is being done by each node and they need to
agree on the transactions blockchain structure since we have learned enough
about blockchain theoretically we should know the we should be turning on
Dakshina structure now how a blockchain structure is derived and designed let’s
see what goes inside the block of Bitcoin blockchain what component
constitutes a block of Bitcoin or any their block chain you will be will try
to understand using Bitcoin example a Bitcoin blockchain the structure is
consisting of three components header Merkel and list of Records when we say
header header contains version info ons previous block ID and timestamp while
merkel is a hash built from blocks transaction identifier what is Merkel we
will be looking into detail in coming slides
let’s draw records identification hashes that was included into blocks Merkle
tree so your merkel is built from blocks transaction identifier and those
transactions list of record is contained in the transaction ID list diagram also
depicted clearly the first portion is header which contains version number
cons we wish previous block hash timestamp middle one has merkel that is
the hash of blocks ids transition IDs while the last blog section sees
multiple tree hash of all transactions that is present in the middle block is
contained from this list of transactions so you could see that these various
properties help to identify the relative block in the blockchain and no one can
touch and alter the sequence of blocks or data inside the blocks the structure
of the Bitcoin block head low current continuation of the same we it consists
of three sets of block metadata reference to a previous block hash a
difficulty timestamp and non sand merkel root below is the table that depicts the
size of each item inside the blockchain header your version is 4 bytes that
could be a version number to track software protocol upgrade 32 bytes
previous ash block that is could be of 32
linked our reference to the hash of the previous blog in the chain this is 32
bytes merkel root a hash of the root of the marquetry of this block and four
bytes again timestamp takes and that is equation time of the block then four
bytes difficulty target the proof of work algorithm difficulty target of the
block that is said by these four by four bytes then nonce nonce is the value we
already discussed that was a winning number from proof or while solving the
proof-of-work puzzle by the validators block identifiers block it is hash and
height your blog header hash the prime is the primary identifier of a block is
its cryptographic hash so any blog dedicated block has its cryptographic
hash as a primary identifier of the block then a digital fingerprint made by
hashing the block header twice a result in 32 byte hash the block
hash identify the block uniquely these are the properties of rock header hash
the block hash is not included inside the blocks data structure of also rock
site it is a position of the block in the blockchain so every blockchain first
ever block the Genesis block starts from zero position each block added on the
top has one position high in the blockchain that means n plus one if the
current block chain length was n he broke the chain length was will be n
plus 1 each block added on top has one position higher than the block chain so
it is also not a part of block science data structure iation or dynamically
identifies a block chains height in the rock chains would rock science height is
again a part of every blocks field so this was few items about your block
chain data structure Merkle trees are important part of
blocks in data structure that we have already seen here in previous slides
right Merkle tree Merkle tree comes in the middle of the block chain data
structure block structure which contains hash of all the transitional blocks
transition identifiers listed in the last section of the block structure how
it is calculated now Merkle tree also known as binary hash tree and a data
structure used for summarizing and verifying the internal integrity of
large sets of it contains cryptographic hashes
displayed upside-down with the root at the top and the leaf at the bottom for
the figure you can see all these points listed here can be compared with the
wizard diagram a block of one or more new record is collected and such records
are then hash and the hashes are then paired hashed paired again and hashed
again their single hash remains so what your merkel tree does and how the values
are calculated if you see the diagram you could see these are l1 l2 l3 and l4
these are all our transaction data blocks so while calculating the myrtle
tree top hash you pick transaction in pair and then calculate calculate the
hash of each transaction each data blocks ID and which gives you these
intermediate blocks once these hashes are calculated they are hashed again and
one single hash value is populated against these two items iteratively
these two blocks of hashes hashed again to form a root of Merkle tree so this is
how the hash value of Merkle tree calculated and when l2 transaction then
alpha l3 l4 used in pair to calculate hash of l1 hash of l2 then hash of Anwar
he’ll 1 and L 2 are combined and Cal cached again to produce a combined value
and root of the Merkle tree so the single hash at the top of the root is
called merkel root over Merkle tree what are the advantages of Merkle trees why
these are integrated part of any blocks in data structure
Merkle tree proof and managed mint requires only a very small and terse
amount of information to be transmitted across the network they do not create
any overhead but they again they in return help keeping your blocks data
secure and labelled hashes help to avoid any alteration to a database by ordering
any time of transition at reconstructed by hashing pair data the leaves then
pairing and hashing the result until a single hash
the Merkel route in Bitcoin the leaves are almost always transitioned from a
single block Merkle tree requires little memory and displays and proof of
compatibility computationally easily easy and fast this is how your mark
myrtle tree advantage or helps you keeping your blocks secure and easily
validated so this slide depicts the calculation of Merkle tree root from
transactions suppose we have even number of transactions 0 to 7 and now you are
trying to add next block 7 so we need to see how the structure of this block
chain and Merkle tree value will be calculated the Merkle tree consists of
even number of transactions 1 ABCD for transactions then from these
transactions you get transaction value of a b c and d these transitions values
are hashed combined and hashed for both a B and C D in Pierce then we get 2
values that are hashed again and combined with the hash of block 6 that
is the previous block and value of ABCD hash the time step of creation plus
nonce and this way the structure of block 7 the header of block 7 is created
this clarifies how your block chained header is calculated for new blocks what
if we have odd number of transactions let’s suppose they’re odd number of
transaction in a block in this case the last transaction is hashed with itself
what does this mean it means if we depict the diagram here we have odd
number of transactions and the transitions number 6
do not have any fear to create hash for in this case this number is hashed with
himself and the result generates the number itself the block hash itself this
way in if you have automotive transactions the Merkle tree is
calculated so this diagram actually depicts the transaction route or myrtle
route insider existing blockchain so this can now be easily understood that
turned 8 our data to data tree and data for
our calculated hashed and then hashed again hatched again to form a to
retrieve a value of merkel root blockchain ecosystem what this term
strand 4 that means let’s have a look one of the components required to
implement a blockchain to implement a blockchain you need distributed Ledger’s
node application consensus algorithm so these three are the main components of
blockchain and in order to build up any blockchain ecosystem you require these
three components cryptographic and consists algorithms we know that
cryptography and consensus got some our key constituents of any blockchain
so we learn to see what methods we can use to write our earth can use with our
cryptographic algorithms there are three algorithms available majorly used with
blockchain triple des triple des uses three individual keys with 56 bit each
the total in this way the total key length adds up to one sixty eight bits
second Alice’s public key encryption algorithm and the standard for
encrypting the data sent over the Internet alice is again more most
popular cryptographic cryptographic algorithm that is used to perform the
cryptographic functions third one is Blowfish known for its speed and
effectiveness symmetric ciphers kids and messages into blocks of 64 bits and clip
7 do virtually so Blowfish is again uses symmetric cipher suits and it is more in
speed in order to encrypt and decrypt the messages and into blocks of 64 bits
and then ship them individually honestly algorithm because this is widely used
encryption algorithm in abduction technology so we will be depicting
Dipset functionality from the given diagram how it works when our Center was
to initiate a transaction he uses alice’s in cipher and its private
encryption key to produce a encipher data or you can say encrypted data that
is sent over communication channel as ciphertext
received at the target receiver and this RSA cipher is used to decipher the
information from the Sun the ciphertext and to get the plaintext out of it this
is whole being done using the decryption key of private key of the recipient
how are is it works so we now have a public ham private key and a method of
for encrypting and decrypting using those keys
let’s see example 2 clear details there are different approaches used in
attacking the erase algorithm brute-force it involves all possible
secret keys in order to decrypt the information encrypted by RS a
mathematical it takes are also possible ways in mathematical attacks we are
using different techniques which is similar in effort to the factory the
product of two primes so these are the two kind of waves approach is used for
attacking the Rosella rhythm in order to decrypt the information consensus
algorithms what does this algorithms are used and typically used the consensus
provides the technical infrastructure layer for blockchain this makes it one
of the most critical critical components when assessing real word use cases
consensus are programmable you can write them according to your business need and
your use case in our use consensus is key because without a central authority
the participants have to agree on the rules and have to and know how to apply
them consensus does tube below things ed ensures that the next clock in a
blockchain is the one and only was another truth there is no faulty data or
block available and should be built in the block that is ensured by these
concerns the consensus algorithm second it keeps powerful advisories from really
in the system means that there is no authority Center Authority
controlling the system of blockchain that is again ensured by consensus
algorithms so in this way we can understand that consensus is the heart
of the blockchain the from the picture you can see understand that any multiple
in multi-party transaction any party can initiate the transaction the
transitional record in order to network block and present it then the block is
broadcast with a network validated via the consensus mechanism a
network of nodes validates verify by consensus and confirm the consensus is
recorded and then provides the basis of the trust mechanism was verified
published a translation becomes a part of the new block for the leisure the new
block is then added to the existing blockchain and transition is complete
this way so this is whole cycle of doing consensus and writing a new block to the
system what is needed for the consensus the basic concept acceptance of laws
rules and norms to decide a transaction on which all nodes should agree and
follow the rules the common acceptance of industry and institution that applies
these are all the rules this is very important when you are writing a
consensus you have to abide by the rules of that institution for which you are
adding the consensus and building the blockchain but here it is not consumed
though then the consensus will not produce a result that is expected by the
organisation it is implemented for now we had already discussed like what is
needed for consensus so the basic ATS acceptance of laws rules and norms to
decide a transaction should be part of your consensus mechanism and similarly
the common acceptance of Industry and institution that applies these laws and
rules should also be considered while designing and developing the rules and
algorithms for writing consensus mechanisms so in short in layman term if
I explain so consensus should include your or business business logic you are
all business logic conditions and all scenarios during any financial
transaction or any business that your organization is doing and for which you
are developing the blockchain consensus mechanism so while designing consensus
mechanism what should be basic parameters and how these should be
handled that we will be learning in this slide first parameter should be your
decentralized mechanism so as we know while working on consensus we are
dealing with decentralized Ledger’s say blockchain
so a single central authority must not provide any decision finality it should
be designed and should be decided from consensus itself second parameter should
be your cur architecture notes exchange messages in predefined mechanism which
may include stages or tiers what does this mean this means every
node that is transacting in the blockchain should follow certain
predefined steps and and you know deviating from this should be considered
as a bad note and removed from the transaction third validation it provides
means to verify the participating identities including your validators as
film so suppose your transaction is started from a pure node a and he is
sending trying to send some bitcoins to recipient or peer node B so the
consensus mechanism should be written in a way that it is able to identify the
way the identity of participants participating in sender and receiver
mechanism of Bitcoin and should validate having the information from the
transaction itself without validation none of the node or transition will be
recorded in the blockchain fourth parameter that should be considered by
developing your consensus mechanism is integrity but as you all know it
enforces the authentication of the transaction integrity and validation so
any transaction should be authenticated from the consensus nodes or valuator
nodes and then only they should be recorded in the top chain now fifth
parameter would be non cancellation this provides means to verify that the
supposed sender really sent the message and this we already learned this could
be done using the private so a private public key pair the validator node use
public key of the sender in order to validate the identity by decrypting the
message and using hash mechanisms this parameter is confidentiality your
consensus mechanism should provide means to verify that the suppose sender really
sent the message and whatever he said is not changed and not visible to anyone so
the information shared inside the packet or transaction should be kept
confidential and should not be visible to any other member inside the network
your consensus mechanism should also take care of fault endurance so the
network operator should operate the network efficiently and quickly even
some node fails or are slow so what this mean is even if you’re part of network
of the or blockchain is faulty or slow then the network operation should
complete in quick and man they should not be any delay or loss
of transactions and the last parameter that could be considered that should be
considered by designing your consensus mechanism is fulfillment that means it
considers throughput liveness and latency all should be that means your
considers mechanism should not be complicated enough or should not be
designed in a manner that create unnecessary slowness complexity and
latency while performing the validations inside the proxy network before moving
further we should understand how consensus mechanism came into picture
what was the history behind it so this all the logic came from Byzantine
general problem where Byzantine army has completely encircled the city the army
has many divisions and each division has a general this story we have already
heard some of you already heard many times while learning some mathematical
problems or by learning your algorithms the same idea has been derived from
again by the time general problem here in order to write your considers
mechanisms so the Signet the actual story was like the army has many
divisions and each division has a general when they encircled up a certain
city and the generals were dependent on communicate communicating between each
other between their left in its within their division by exchanging the
messages so they were not able to communicate directly the left mints were
helping within their division to pass the messages to their generals and since
how they were communicating all the generals or commanders have to agree
upon one of the two plans of action that means exact time to attack all at once
or effaced by fierce resistance then the time to retreat all at once so the army
cannot hold on forever if the attack or retreat is without full strength that
means only one thing unacceptable brutal defeat so everyone
had to be trustful and worked in coordinated manner when it was time to
attack they should be attacking in the with the same foe with their full force
and full strength without deviating from the rule decided and if there was time
to hold back then they also should be doing it full of strength so complete
agreement was required and complete action was required from whole force so
results if no in order to succeed 2/3 of the
generals needed to be loyal to the Army if the amount goes less that means if
more than one-third generals are in disagreement then there were likely
chances to get defeated or filled during the war so what was the solution to this
problem how they had to decide that their generals are trustful and
trustworthy they are not going to be deviate from the rules decided in order
to get succeeded during the war the practical Byzantine profile transfer
algorithm pbft which is used to establish consensus in blockchain
systems is only one of those potential solution that were expected to help the
generals and the army to get in more than 2/3 of consensus during any attack
and in get success during the any kind of attack they were moving upon what was
pbft so the solution came in 1999 when Miguel Castro and Barbara Liskov
introduced a pbht algorithm pbft can process an enormous number of direct
peer-to-peer messages with minimal latency how it works
passing asynchronous distributed system where nodes are connected by a network
Byzantine failure model was 40 nodes we have arbitrarily independent nor
failures may happen in that case so cryptographic techniques to prevent
is poofing and replace and to detect corrupted messages were also enforced in
this algorithm and there was a plan to have a very strong advisory in order to
get 2/3 a modern 2/3 of consensus and our in fault and misbehavior of nodes or
you can say generals during the message communication this meant that the method
of establishing consensus required less effort than other method what was
actually happening each node the whole piece of army was arranged in a connect
in form of a connected network they were then the pious nodes were connected in a
manner like they were not connected to only one of the node nodes were
interconnected with each other so if some nodes start misbehaving
while or arbitrarily then other nodes were able to pass the message to the
connected notes so in this way the generals were sure that the information
they are getting is authentic and all the notes are in sync so this way of
transmission was really fast reliable and was helping to get attained a
significant amount of consensus in place amount of time so the propagation was
happening through connected nodes now the other consensus mechanism that
we can use inside blockchain is proof of a straight proof of a straight like
proof of work is a category of consensus algorithm for public table chains that
depend on a validators economic stake in the network newer kind of um consensus
algorithm it was introduced considering the drawbacks of proof of work where
energy consumption and time consumption was very high in order to succeed and
become a winning block a participating validators has has to invest huge amount
of energy as part of solving complicated problems it was pioneered by Pierpoint
in 2011 now due to this many versions exist for this proof of his drink
consensus mechanism out of which some are NXT kinderman flying fox effector
your chance of being picked to create the next block depends on the fraction
of coins in the system you own as the name suggests the more coin you have
more chance of getting a chance to create a new block will be given to you
so that this mechanism helps deciding the winner node on the base of a stake
he already has and this way the nodes do not need to solve complex problem in
order to win the situation and create the new blocks and this really helps
saving the energy and resources during any new block creation which is a
frequent mechanism of frequence frequent step taken in any blockchain a
participant with nothing to lose has no reason not to behave badly this is
called nothing at stake problem that means since it is really transparent
that the node with required amount of stack or higher amount of the stack
so in this way since none of the node required to solve complex problems and
get rewarded so they do not they cannot cheat the system by misbehaving and try
creating the fault results of all solutions to the given problems the
validators or winners are clearly picked from the available stake and in this way
they can help degrading the new blocks so as of now since we already know what
is proof of work and proof of stake so let’s have a glimpse like how the
differs in terms of each other in proof of work the probability of mining a
block depends on the amount of work a minehunters that means you need to find
a solution of for the given problem and all the competing nodes are working to
solve the same problem and find a particular number X or any number that
is the end result of the solution since this requires solving more complex
problems it requires more energy than proof of a straight and one example is
mining where uses which uses computer cycle time to validate new transactions
so mining of new blocks as we already discussed is using computer cycle time
to validate new transactions and every transaction new mining through new
mining is generated sorry every block through new mining is generated every 10
minutes in Bitcoin that we’ve already seen so stake holders in proof of stake
validate new block spiralizing they are share of coins on the network so the
validators nodes actually work on their on the share of the coins they have in
the network and that is called stage in proof of state consensus mechanism the
first example of proof of stake was pure coin a user would need to own a majority
of all coins in order to attack the network for this mean is this mechanism
helps any node behaving badly and retrieving them and because they need to
have they need to have majority of coins of label in the Bitcoin or blockchain
network in order to attack the network since at a single point of time none of
the node can have the majority of coins – alone attack the network and create
their own their own nodes they will not be able to cheat the system or hack the
system at any moment of time so this way we can see the proof of the stake again
a very good algorithm or consensus mechanism that
can utilize less amount of energy than your proof of work and still able to
make system cheat proof and avoid hacking of the system from the bad nodes
inside inside the system till now we have learned about various consensus
mechanisms that are helping well greater nodes in order to become winner and
introduce new blocks inside the blocks network there is another kind of block
consensus algorithm was introduced by Winton basis on the analysis on the
existing block proof-of-work and other mechanisms that were really
time-consuming and resource consuming and resulting loss of energy as part of
new coin strain written inside the bitcoins so what proof proof of elapsed
time does how it is having advantages over existing consensus mechanisms so
proof of elapsed time was introduced by until and developed its own alternative
consensus protocol called prune of less time which was based on waiting time or
idle time of validated nodes proof of elapsed time Nakamoto Stein consensus
algorithm that is designed to be production grade protocol capable of
supporting large network populations it means this was able to give fair chance
to all valid validated nodes in order to create new blocks inside the blockchain
in large Network populations PYD relies on securing written instruction
execution to achieve the scaling benefits of a Nakamoto style consensus
algorithm without the power consumption drawbacks of the proof-of-work algorithm
as you all know that proof of work algorithm requires to solve huge complex
problems in order to become winner that was requiring could hardware
configuration and huge amount of energy to be spent in order to find solution of
the given problem basis on this internalize that this problem this
consensus algorithm is having its own drawbacks and requires lot of energy to
be wasted so they thought of giving time to all the nodes for that time they can
sit idle and wait for their term in order to get the chance to create new
blocks inside the blocks in network so that’s why it is called proof of elapsed
time algorithm because every node Africa Asian of new block was given an idle
time for which they can stay is in sleep mode and then wins when their time
spires then last time spires they are giving a chance to create new blocks and
fair chance is given to every block inside the everywhere welded it a note
inside the blockchain purity example is used by high polish a sawtooth which is
again until blockchain network beauty simulator which provides beauty style
consensus on any type of hardware including a versatile a strong cloud
environment so this unconsciousness algorithm can be used in any including
virtualized cloud environment as well what are the advantages 5v should be
using QED over the proof of work and other existing pbft or other consensus
mechanisms for the purpose of achieving distributed consensus efficiently a good
lord lottery function purity has several several characteristics fairness it
gives the function should distribute leader election across the broad
broadest possible population of participants means all participants
validated nodes participating participating inside the validation and
creation of new block should be given fair chance and equal chance in order to
create a new block inside the prop chain and that is being achieved by proof of
elapsed time algorithm second was investment the cost of controlling the
leader election process should be process should be proportional to the
value gained from it that means or any validator node should not be investing
too much resources too much cost in order to gain a little reward from the
system against new blocks generation verification it should be relatively
simple for all the participant to verify that the leader was legitimately
selected every node should be given a fair chance and that is what this pol
got some insures and helps giving every node of fair chance in order to create
new block inside the proxy network so this was all about consensus algorithms
that we discussed there are many more existing inside the current rock chain
world and every consensus algorithm is picked depending on the requirement and
amount of resources available for creation of blockchain definitely the
low cost and efficient algorithm will be picked and used against other available
on columns while selecting any consensus mechanism moving two types of blockchain
so thereof there are bigger based on the scenarios and based on the
categorization reductions are divided into multiple categories and
differentiation is based on the current scenarios
that are being used rock scenes can be categorized into permissionless or
permission proc scenes simultaneously they can also be categorized as public
and private doctrine they see how this is being done doctrine types public
blockchain a blockchain that is public is a decentralized distributed and
public digital ledger that is used to record transactions across many
computers so that the record cannot be altered productively without the
alteration of all subsequent blocks and the collision of the network example
Bitcoin etherium – factum just to explain blockchain the public blockchain
are accessible to everyone anyone from public can come join the
network and start doing the transactions they do not have restrictions in order
to create new blocks and in order to participate in the blockchain network
obviously the consensus mechanism will be there in order to validate the newly
created blocks and before committing them they should be validated second
type is private blockchains as the name suggests these are private blockchain
network that requires an invitation and must be validated by either the network
starter or by a set of rules put in the place by the network starter so they
have very organized algorithms retain that whenever a new join new join has
come to the blockchain network they are validated they give certain axis that is
again restricted and they need to perform their transaction accordingly
examples block multi chain and block stack there’s a certain example of
private proxy networks the third type all also exists that has
more restrictions than these two that is called consortium controlled by a
consortium of members only predefined set of nodes have access to write and
read the data of clock example ripple r3 and hyper laser 1.0 so these are really
well suited for organizations that want to control their proxy Network and
perform transactions in their own way second type of categorization of
blockchain is permission and permissionless block chains property
permission block chain network differs from and permissioned block C networks
only based on the access control layer built into blocks in nodes so as the
name suggests permission block chains are secure and give limited permissions
to the minor and the joi joining peers inside the
notes every peer participating inside the blockchain network information
blockchain is given certain amount of permissions only in order to perform
certain actions while a nun permission block scenes peer nodes are free to do
any kind of transactions without having any restriction and generate new blocks
mind it that consortium sorry the consensus mechanism will always be there
inside the OP chain for validation and creation of new blocks that is mining so
in permission list since the network is open and even can participate and
contribute in the consensus hence it is called permissionless blockchain versus
the permission blockchain where there is that restricts the actor who can
contribute to the consensus of the system state yes this is called
permission you have any actor need to behave in within the permission assigned
to it and he can result in actions according to that only based on these
public and private blockchains can be differentiated and categorized or
bifurcated into as per the below chart and against below properties like if we
talk about exes then public block chains are always available publicly and anyone
from public peer can read and write the data inside the distributed laysurs in
private only nodes having acces can write array to the ledgers distributed
Ledger’s feed since in public networks multiple nodes can join at any time and
the number of nodes inside the public proxy network are always high because of
its openness so transaction amount is also again high and in turn this lowers
the performance and efficiency of the blockchain the overall blocks in network
against to this private blockchain networks are faster and because they
have low number of nodes and peers participating inside the proxy networks
security if you talk about security blockchain private blockchains security
is provided by proof of work and proof of mistakes that we have already
discussed while in private it is provided by the pre-approved
participants next comes identity so in public blockchain rather using direct
identity anonymous or pseudo norman’s so dominus identities are used we have
already discussed what anonymous and pseudonymous
identities are anonymous identities where he will never be identifying who
is the sender who is the participant participating in the transactions while
in pseudonymous pseudo identities are used for other using direct identities
like your priority is your pseudo identity or your candidate ID voter ID
or these are all pseudo identities using which someone identifies you in public
option networks despite of this in private blockchains pre-approved
identities are used any participant that is participating or created inside
private blockchain is given an unique identity and that is already approved
and used in all transactions initiated by him and to validate him by the
validators assets native assets are used in public blocks blocks and in private
blockchains any asset can be used as native asset in order to store the
transactions so this was all comparison about between public and private
blockchains so based on the four criterias we
divided the prop chains into public private and permission and firm
permissionless prop scenes these can be again summed up in order to create four
categories of block chains that is permissionless public permission public
permission dis private and permission private out of which permission dis
public prog chain is very much open and most accessible to the any member or any
outsiders that can participate inside the block chain and rule start
transactions anyone can download the protocol and validate the transaction
and create new blocks example of this kind of block chains are Bitcoin theory
amends e cash while in permission blockchain permissions are included for
the peers that are participating in the network and it works on the proof of a
state consensus algorithm ethereum after Gasper is an example of permission
blockchain and anyone who meets the certain predefined criteria can only
download the protocol and validate transactions that means you have to give
explicit permission to the members that are contesting or participating in
blockchain creation then comes permission list private that has subtle
restrictions but there is no specific permission granted all the nodes are
given public access and that are private to the organization itself so in short
we can say all nodes that are part of the blockchain are interacting inside
the private blockchain and all have all the permissions
acquired to initiate and translate inside the Proctor then comes most
secure blockchain that is permission private adoption
this is private to an organization consortium and has different different
permissions according to which all actors interact within the blockchain
network ppbe an IP DPR example of permission list blockchain that private
blockchain at work and pbft and multi signature is our example of permission
private proxy Network so if we see in this diagram so the probably to private
and the entities decrees from top to bottom and if we talk about permission
then it goes again from validators to from permission to permissionless
blockchains side-chains they resist another term inside blockchain platforms
that is called side chains what are these side chains side chains
are separate block chains which is connected to other block chains so the
use of two-way peg which allow transfer of digital coins or assets between block
chains at a fixed or otherwise deterministic exchange rate if you can
see from the figure various block side chains are existing along main block
chains and giving two directional to a arrow that allows transfer of bitcoins
or digital coins or tokens between these side chains and within main block chain
these char and block chains or side chains you can say serve various
purposes like this one side chain can be used for beta perp releases before
making it main branch of existing block chain beta releases can be used to test
the release before making it part of main release of block chain similarly
there could exist side chains of side chains even and this can serve different
purposes even this can be used as micro services like micro payments this can be
used for R&D purposes research purposes and serving various other mean needs
that an organisation need side chains exchange extensions can be done in
following manners they can be used as native asset issuance they can used as
smart contracts they can be used as real word property registries and they can be
used to secure handles such chains can have other side chains for things like
micro payments they allow for is parent may experimentation pre-release versions
of future side chains or even a beta version of Bitcoin itself so what
all the advantages are that side-chain offers sidechains enhances blockchain
performance and privacy protections how they do this when you have a different
requirement you want to test any new prop chain release if you have any other
service integration with you can do it using sidechain without interrupting the
existing main blocks in network so your existing blockchain and can keep serving
the requests the way it is doing right now and your new side chains can be used
to serve your special needs and special requirements that may not be needed as
part of the main blockchain second what the offer is side chaining is any
mechanism that allows tokens from one blockchain to be securely used within a
complete separate blockchain but still moved back to the original chain if
necessary your side chains are part of your main blockchain they allow a point
where bitcoins or other tokens can flow from main blockchain to side chains and
from side chains to rock chain vice-versa so existing blockchain
brokens can be used and utilized when whenever required in the new transaction
in side chain as well side chains can have other side chains for also as
micropayment as we have seen in the above diagram so these are the benefits
of side chains that offer with the when existing with the main block chain
transfer of assets inside blocks side chains how it happens let’s take an
example of route rostock in order to transfer asset from one chain to another
so how it happens that step one they are user on the patient first parent first
has to send the clear coin to a special output address that is of rootstock
address and then coin will consequently become logged and understandable so the
moment main blockchain start sharing his blocks showing that amount of coin
amount of asset is locked inside the main block chain and becomes unusable
for the third pot amount of time inside the network so it will not be shown in
the main balance of the wallet of that node then the next step becomes after
the transaction completes the Stevi then confirms it across the chains so what
does happen when the transaction is completed the blockchain node is freed
of that amount of transaction and start reflecting in the network as is main
available balance so this is all happening by using the transaction and
the coins available in the main blockchain and that was used
for transaction inside the other side chain Network after waiting out a
contest period which is just a secondary method to help preventing double
spending the equivalent amount will be created and is printable on the side
chain and vice-versa once the transaction is completed so
when SPV confirms when waves SPV stands for simple payment verification cross
the chains then transaction is considered complete and the amount is
again returned back to the and start showing in the nodes wallet side chains
have their own – to help protect them from nefarious actors and attack against
the network so in short we can say that side chains also have our small block
chains that are their own minors and ensure the integrity and validity and
authentic authenticity of any transaction coming across in the
networks so what are the platforms for implementing block chains in nowadays
since block chain has evolved a lot in last one decade there are many
developers organization investors and ideas generators have evolved with
various kind of black gaussian platforms so nowadays there is this multiple block
chain with multiple facilities multiple advantages and multiple features out of
which we will be discussing about few that constitute important area inside
blockchain terminology the first one is aetherium we’ve all might have heard
about term ethereum it is a public permission list blockchain a blockchain
platform that lets anyone build and use decent light applications that run on a
blockchain technology like Bitcoin no one controls or owns a theorem it is a
public permission list but Roxy network where everyone can participate and
transact and earn token or currency then comes multi chain this is again a
blockchain platform for the creation and deployment of private blockchains
permission block chains so it can be used either within or between
organization as well since this is permission so this is permission and it
gives you it requires permission in order to transact and participate in the
existing blockchain multi chain network hydrogen a joint develop refer to of
rainbow technologies and the etherium project it’s supposed the creation of
scalable blockchain based applications then comes hyper
laser this is again becoming very much famous in Gaussian technologies it is an
open-source collaborative effort created to advance cross industry proxy and
technologies it is supported by Intel and obtained
Souls Linux Foundation then open chain open chain is again a blockchain
platform that is well suited for organizations wishing to issue and
manage to chip digital assets it takes a different approach than the standard
Bitcoin approach of on implementing blockchain then IBM bluemix being a
giant player IBM also allows and have their own blockchain network and
platform that is on tube IBM bluemix built on top of hyper laser project and
it offers additional security and infrastructure facilities for
enterprises so IBM are preparing blockchain you know such in such a
manner that they are Enterprise ready and can be directly used by enterprises
and financial or other organization to start and migrate their existing
applications to clocks in network in order to facilitate and utilize the
features and benefits provided by blockchain this is another kind of proxy
network exists that is called chain yet another and well-suited for financial
applications based on chain core which is an enterprise software product then
Iowa is another blockchain that is a relation to the evolutionary new
blockless distributed ledger which is a scalable lightweight and for the first
time ever makes it possible to transfer values without any fees if we see the
above blockchain platforms take some amount of fees in one form of other
while IATA helps that’s again a block list distributed ledger and do not take
any fees for twin transaction over blockchain network
they are various more big chain DB an open source system that start with a big
data distributed database and then add blockchain characteristics tree
centralized control immutability and the transfer of digital assets then comes
corridor there is again a digital dash integer platform which pluggable
consensus so consensus can be multiple consensus can be used here plugged with
the blockchain and utilized and simply forms a different kind of blockchain
with flexibility of adding pluggable consensus you can anytime change the
consists of Gotham by from proof of work to prove of straying from pbft from BOE
T so it provides ways options of using multiple consensus algorithm theorem an
open source digital ledger and smart contract platform based on ethereum
that is customized is theory employed form using
distributed legend a smart contract stellar an open source distributed
payment infrastructure that provides restful HTTP API servers which connect
to stellar core the backbone of the stellar network and help you giving a
blockchain network where you can utilize and do your transactions related to your
business need so in this session we will be discussing the third topic of our
course agenda that is Bitcoin and blockchain in everyone knows who has
knowledge about the blockchain knows that 2008 was the year when blockchain
was invented by a Japanese scientist so that time bitcoin was the first
application created over blockchain and no one was able to differentiate whether
bitcoin is a bad bill buys whole block chain or blockchain is a whole broke
Bitcoin or there can be other applications also and no one has idea
like the blockchain can become so much popular and becomes a very much
trustable and immutable network that everyone tries to implement their
applications that are required to be secure and trustful nowadays if we see
every bigger organization is trying to bring their application and ideas on
blockchain network why that we already discussed block chains are immutable
once records are recorded into the blockchain they cannot be changed that
provides very much security to your data your transactions and brings a network
of trust where applications can easily invest and forget about the security and
virus and other hacking furries when you talk about blockchain
tenten’s industries also know the every transaction recorded on blockchain is
completely auditable and all the nodes recorded are well validated and follow
all the business rules and business logics that a business application is
needed also Bitcoin and blockchain how are they
are related and how they are differ so let’s see what bitcoin is and what was
its era even this era time also can be considered has Bitcoin are only because
it is again still booming in form of a cryptocurrency and stands very strong
against all existing currencies like dollar pounds and any other so let’s
learn about the history of Bitcoin detail of Bitcoin in 2008 Bitcoin
thought of was registered by Satoshi Nakamoto Bitcoin appear to be electronic
cash system-wide paper posted in October 2008 and that was the first time and
word came to know about blockchain or Bitcoin in 2008 Bitcoin kept growing and
Satoshi mind the first Genesis block of 50 Bitcoin in January the first block in
the Bitcoin blockchain as you all know is called Genesis block so the first
length the first block chair bitcoins length was 50 Bitcoin containing Genesis
block vidcon 0 10.1 released on cryptography at MedStar calm and using
it then coming to 2010 first offer n transaction of 10k Bitcoin for 2 pieces
was done successfully and first specialized GPU hash miners and pooled –
operation was also successfully done in 2011 continuing the journey of Bitcoin
it took parity with the US dollars first time ever it came into existence as a
global currency dollar 31 top of first bubble followed by the first fried probe
2012 December dollar 13 slowly rising for a year as it was really fluctuating
so during history of Bitcoin it kept kept fluctuating yet kept creating
history in the financial market and showing people the strength of clock
chain in 2013 November Bitcoin broke dollar thousand in second bubble it was
a peak for Bitcoin currency but sadly in December 2013 prices crashed again to
down to 600 in 2014 prices fell again following the shutdown of mt.gox
impacting the Bitcoin market Bitcoin continued to fall due to a false report
regarding Bitcoin ban in China they were various fake news around Bitcoin people
who are not secure few news were false news were generated by the financial
markets it is online money it is not secure hackers are driving it bla bla
bla in April it started a stabilizing at
dollar 450 after a long time after a long fall it stabilized at dollar 450
value in 2015 prices fell again through to early 2015
large spike in value from two to five to 250 at the start of October 2 2015 was
recorded and the record high was taller 5 0 4 in 2015
price again stabilized to low dollar 600 range in 2016 as a Chinese renminbi
depreciated against the US dollar Bitcoin rose to the upper dollar 700
during this period and renminbi depreciated against the US dollar
Bitcoin rose to upper dollar 700 again in 2017 prices fell 30% in a week
reaching a multi-month low after 750 again and prices broke above the
November 2013 high of dollar one two for two and then traded above to one two
nine zero again dollar that was again a good first high highest of Bitcoin price
reached its maximum in the history of Bitcoin reached all-time high of over
dollar 12,500 in 2017 that was all about history of Bitcoin how it started
hard start is moving in the market how it captured the market how it was it
became popular how it fell and prized in the market and what was about the values
it attained during its whole history even in these days
Bitcoin stands strong against order and if we talk about the current value of
Bitcoin in dollar so in today’s date as well it stands strong against dollar and
has value of three thousand eight hundred fifty seven US dollar so really
stands strong in nowadays as well and still growing and what would one Bitcoin
is equivalent to three thousand eight hundred fifty seven US dollar so you
might have heard the people who invested that time initially in the blockchain
and the Bitcoin are really went into very good amount of profit and it was
having a boom at that particular of time along with Bitcoin there were multiple
other cryptocurrencies that evolved and attained a very good value and even some
times they even defeated the value of Bitcoin in the market so if we talk
about Bitcoin the first blockchain focused
decentralized digital currency was Bitcoin uses consensus to control its
creation and management rather than relying on a central authorities that
instead of all of mediator hell electronically in a p2p open ledger
called the blockchain that was the first web blockchain developed the idea the
first ever idea of blockchain there not printed they are produced by people
using software that solves mathematical problems and those mathematical problems
are called consensus those puzzles are used in order to create new blocks
inside the network and as part of the award against the creation of new block
why to use bitcoins it is super fast as you all know there is no mediation
mediator transitions are intended instantaneous if they are zero
confirmation transaction or they can take around 10 minutes in a merchants
request confirmation they are really cheap Bitcoin transition phases are
minimal and in some cases they are free – it’s absolutely decentralized because
the currency is decent lies you own it no central authority has control over
bitcoins they’re autonomous and free inside the network never worry about
chargebacks once bitcoin has been sent they are gone
a person who has sent the Bitcoin cannot try to retrieve them without the
recipients consent under any circumstances that means if you have
spent your bra bitcoins and transfer it to some other person you cannot retrieve
it back if you not claim it back because there is no central authority you have
to request the recipient of the money a Bitcoin in order to send it back to you
otherwise there is no option if your Bitcoin is gone then it is gone it also
act as the best family security transactions Rick don’t require you to
give up any secret information they use two key public and private key that are
given and the creation of your note and your wallet it is not in finisher II
Bitcoin has been assigned a hardwired value of dollar 21 million in its
protocol itself so anytime in its lifetime it can achieve maximum value of
21 million that can be created until it is itself change in the protocol from
dollar 20 from 21 million to some other value a till date it can only can grow
to 21 million only it’s really private it is like having a clear
it’s plastic wallet with no visible owner everyone can look inside it but no
one knows who owns it make your own money you can certainly buy bitcoins in
the open market but you can also mind your own if you have computing power and
participate as a validator node and solve the problem who for work can be
used to solve the problem and if you are winner you will be rewarded with a
Bitcoin by solving the problems know where and how to get the bitcoins
in order to sell or buy a Bitcoin customer has to join the Bitcoin
blockchain network you can buy the Bitcoin using your wallet your credit
card or online also to start with a user must install a version install a virtual
wallet onto a PC or mobile device the wallet keeps track of your Bitcoin
balance and all transactions Bitcoin can be bought either through online payment
or through any company once the funds are available a buyer can place an order
for a Bitcoin similar to trading stocks throwaways online exchanges and then it
can start participating in the proxy Network Bitcoin can also be purchased
from third parties which sends the coin directly into your virtual wallet every
time you transact you will be using your wallet address in order to buy or sell
bitcoins Bitcoin its client to join a Bitcoin ecosystem and start using a
cryptocurrency all the users are required to do is download an
application or use a web-based application that is client there are
three kind of clients available in order to transact with the Bitcoin full client
web client and lightweight client full client is stores the complete history of
Bitcoin transactions and manages the users wallet and capable of initiating
transaction directly on the Bitcoin network that means it has full access
and full role inside Bitcoin network and can manage the transaction and keep
record of them web client web clients are accessed through a browser and it
stores the users wallet on a server owned by a third party they are used by
exchanges primarily so you can open a web site do your transactions on a
Bitcoin using third party users wallet then comes lightweight client this type
of client stores the users wallet but relies on third party own servers for
access to the Bitcoin transactions and network so there are three kinds of
Bitcoin full connect clients web client and lightweight client available with
the help of third parties or maybe Bitcoin network to allow in your
transaction over Bitcoin network with coin wallets so as we discussed about
Bitcoin wallets and Bitcoin currencies we should know how these wallets are
created and how they are store against and for each peer the
Wade of Bitcoin wallets or clients available in the market wave wallets
wave wallets our website or even online exchanges that allows storage example
blockchain dot info coinbase so these web wallets you can use online and store
your Bitcoin currency mobile wallets a smartphone wallet
makes it really easy to scan QR code to make quick payments by a phone already
no need to go to the browser for same example stands red wallet mycelium your
bids green bits etc since now we are very friendly to our mobile phones
gadgets though mobile wallets are introduced and like patreon and their
apps you can use QR codes of your Bitcoin and do purchase and sale over
the Bitcoin network then comes dick stop bullets similar to mobile wallets they
use apps installed on a personal computer like desktop or laptop and they
act as a wallet to transact on Bitcoin network example electron multi bit
armory hardware wallets a piece of hardware is used to store the private
keys to your bitcoins example legend nano and treasure so you are storing
your private keys in a hardware wallet and that can be used for for the
transactions then comes paper wallets it is a most secure cold storage solution
that is used for storing your private keys and can be used as wallet for
Bitcoin transactions example coin desk bit address then multi signature wallets
these wallets require multiple private key signatures to make a transaction
that means you need to have multiple private key signature before you
initiate and sign your transactions over the Bitcoin network example our carbon
wallet coinbase prop trail electron and coin guide more details about these
wallets can be found on web those who are interested in reading the details of
these kind of wallets how these are developed designed and used for storing
the bitcoins so this picture this slide show
comparison between different kind of wallets if you see here we have web
interface mobile app desktop client independent wallet privacy security
newbie friendly all these criterias and features can be compared again each kind
of wallet available we we can have hot wallet we can have
hardware wallet we can have again multiple type of hot wallets to store
our Bitcoin who payments so in your hot wallet web interface are available in
some of them it is available and some is not mobile app for some of hot wallets
are available for some it is web client – desktop client available then in all
kind of wallets you could see privacy and security is same and good because
they are operating on Rajee networks so these are example of different kinds of
wallet that you can see what features they provide and what which as they do
not provide so if we talk about the features and comparison of these wallets
you could see and follow the below table if a wallet is unsafe easy for beginners
very convenient and free of cost while mobile wallets are and safe again easy
very convenient and free of all who using their when mobile wallet is not
suggestive next off wallets are safe bit complicated for beginners every Jean
condo convenience and again free of cost Hardware wallets are very safe they are
little complicated and if we talk about convenience they are not convenient and
they require certain amount of cost to be spent in order to use Hardware wallet
maybe ninety to four hundred US dollars paper wallet these are considered again
very safe and really difficult for use for beginners non convenient and usually
free then multi signature are again safe difficult to use for beginners
convenience varies as per the uses of multi signature wallets and is again
free so this was all about wallets let’s see what all wallets exist
following these types of wallets Jack’s wallet now that we have discussed and
compare various bitcoin wallets let’s see have already in working called
checks for it Jack wallet is used for bitcoins and
when you log in to use it this is how its home screen looks like you can
create new wallet or you can released over existing wallet using the UI once
you press one continue you get an extra screen where you can receive wallets
sorry receive bitcoins from senders or you can also become sender and send
bitcoins and there is also a QR scanner code available that can be used for
the transactions using this worid in turn this what it will show your balance
also in terms of Bitcoin and in terms of US dollar
there’s a second section of this Jaguar it shows that your transaction history
the number of transactions that you have done you on the Bitcoin and along with
the details so when you start sending your bitcoins from Jeff’s wallet and you
click on the send you have to enter the recipient address the amount of bitcoins
you want to transfer and then you have to click send in order to send the
Bitcoin so procedure for sending the Bitcoin as you summarized in the last
picture using the jack wallet you have to click on the send button in the
address section that you have to paste a Bitcoin address of the person you are
willing to send the Bitcoin and the amount you want to send and then click
the blue icon for send and sending the bitcoins even if you want to generate
our receive bitcoins through Jack’s wallet you have to click on receive you
have to click on the amount that you want to generate and receive from the
address so step four you request your payment using your QR code or you can
give your address for the transaction requesting the Bitcoin for that
particular amount okay so this is how you can send and receive bitcoins using
your Jeff wallet there are other similar wallets exist in the market with have
which have similar functionality as of check wallet with some different Gy now
the second important point comes to secure your wallet how you are going to
secure your Bitcoin wallets there are multiple ways to secure and make your
Bitcoin wallet more secure you can encrypt the wallet too in order to
protect your wallet from prying eyes is to encrypt it this makes it difficult to
access your wallet but not impossible you have to use public there public and
private key pair in order to voice and rip the wallet and while using you have
to use the decrypted version of it you can use multi-sig that allows multiple
parties to partially seed an address with a public key the required number of
signatures agreed at the start when people create the address and that is
more secure as compared to encryption normal encryption of the wallet where
you are using multiple signatures multiple signature that is used by
multiple seeds and peoples in order to create a
signed a dress third eye of is you take a back off of it backing up
your wallets makes a copy of your private keys but it is important to back
up your whole wallet you can also take it offline cold storage wallets store
private Bitcoin offline and they are not accessible over Internet and this also
makes it secure that is available to you only how to buy your first bitcoins it
is still quite difficult to acquire bitcoins in most countries crypto
currency exchanges are the easiest way to be a buy bitcoins so you can do them
you can buy your first Bitcoin using bitstamp
a European currency market that supports several currencies including euros and
US dollars via wire transfer you can use coinbase a us-based Bitcoin wallet and
platform where merchants and consumers can transact into Bitcoin zip it zip a
is the fastest and easiest way to buy and sell bitcoins in India so if you
want to purchase and sell your but coin bitcoins in India you can use chip zip
it coin secure one secured is the most
secure Bitcoin exchange to buy sell and accept bitcoins or Internet so these
were some sort of mechanism some sort of options using which you can buy your
first big bitcoin over internet and all our options available are using crypto
currency in order to exchange your bitcoins in easiest manner now how to do
sell your bitcoins you have option of selling the bitcoin in two minutes
selling bitcoins online or selling bitcoins in person how to sell bitcoins
online there are three ways to – so direct trade involves a trade with
another person directly over internet exchange trades involves online exchange
where you can trade with the exchange rather than another injured individual
or any unknown person so you are doing bitcoin exchange or selling in form of
exchange trading over the Internet peer-to-peer node appear to appear trade
allow Bitcoin owners to obtain discounted goods their Bitcoin via
others that want to obtain them with cryptocurrency with so they are trading
in Bitcoin you an auction to trade in Bitcoin you can buy discounted goods
with your Bitcoin over Internet via others that want to obtain
cryptocurrency and return these are few example of selling bitcoins online with
exchanges websites that offer this type of selling model include coin buy
and local bitcoins in the US and bit bargain UK and bit leashes in the UK and
many other exchanges across the globe you have option to transfer or sell
bitcoins peer-to-peer again the marketplace act as an intermediary
offering uses the platform Bitcoin wallet and escrow for transactions so
these are some examples of selling bitcoins online or offline but beware of
using web site for transacting into Bitcoin there are various project
website available in the market online that may cheat you and exploit your
internet in order to hack your system and spoil the bitcoins amount available
in your wallet so we need to be very careful while sending your information
and transacting with online parties that simply anonymous to you always buy and
sell Bitcoin formalized vendors so this screen shows various places to spend
bitcoins one example is Bitcoin store where you can buy and buy multiple items
in exchange of Bitcoin and that extras as a online marketplace that sells a
variety of electronic gadgets then you have bit premier luxury Bitcoin online
only marketplace where you can find anything from high-performance sports
cars to work of art and even real state also then you got gift that is used to
buy receive redeem and send digital gift card for over 200 tailors including
Amazon and Sears Target and gain stop so gift is used to buy coupons or digital
cards gift cards now they accept Bitcoin also over other payment options other
option available is coin gigs that again allows you doing transaction in form of
bitcoins that conduct a transaction solely in bitcoins only you can find
everything from books to t-shirt to gift vouchers on coin gigs then you got
Virgin Galactic JPEG comm these are other options where you can utilize your
bitcoins in order to purchase our items from marketplace you got Bitcoin
commodities travel Bitcoin commodities helps you sales gold and silver coins
bars and sheets has an incident suggest it accepts Bitcoin payments while travel
for coins dot-com acts as a middleman between you and travel sites such as
Expedia you pay in bitcoins to travel for coins who will pay for your flights
using standard currency that was all about a places we are
spend sale and purchase your Bitcoin Bitcoin blockchain transaction and
transition script so before spending the bitcoins we should be securing them
inside orbit coin wallet that we already learned now what is Bitcoin blockchain
transaction and transitional script that we’ll be learning here in coming slides
now that we have seen how a Bitcoin is used and I spent let’s see what exactly
happens in our transition occurs there are various Bitcoin protocol that can be
used while doing transactions mining research and support payments retail
buying selling and storing financial services these are the areas where
bitcoins ecosystem be used your mining hardware manufacturing mining platforms
you can use it for foundation for profits venture capital security you can
use it the Bitcoin protocol for payment processes if CRO services then you can
use for retail services like merchants directories of stores that accept
bitcoins you can use bitcoins protocol for exchanges software wallets market
makers it embroiders and then you can use them for financial services as well
like institutions tendrils insurers hedge funds and therefore products
derivatives investments these are examples of using Bitcoin protocol for
various the kind of applications and services the structure of Bitcoin
transaction our transition contains a number of fields as you can see here in
the table format like it contains every Bitcoin transaction contains a version
which is size of 4-bit bytes and that specifies the rules this transaction
follows then you got input input counter in the Bitcoin transaction field that is
of one to nine bytes variable integer and it includes how
many inputs are included in the transaction then outputs you get
variables to store outputs for one or more transactions then you get one to 9
bytes variable integer type of output counter that is used to count how many
outputs are included variable outputs is used to store one or more transaction or
put and then lock time is a UNIX timestamp or block number that is used
to save the timestamp of the transaction in four bytes
unspent transaction output how an unspent transaction looks you TXO or
unspent transaction output is a fundamental building block of a Bitcoin
and unspent transaction output that can be spent
as an input in a new transaction the network keep track of all available UT
axles currently numbering in the millions so these are the stored coins
or blog bitcoins that are available in your Bitcoin network that are unspent
and stored as a form of Einstein spent transaction output the first block
contained 50 mine BTC in address is equal to 50 the second block contained
50 mind built Matewan and in address a our transactions and name 20 Bitcoin to
address B and putting the change in address C so in that way becomes a
becomes his was 50 your B becomes 30 20 and C has a value of 30 bitcoins the
third clock contained 50 mine Bitcoin in address a her transition sending the 20
Bitcoin from address B to address D are available so after three blocks you
could see there are four unspent outputs a has two unspent output worth rupees 50
between each C as a single unspent output was rupees 30 Bitcoin and he has
a single and spent output worth rupees 20 Bitcoin and there are two spent
outputs also the 50 Bitcoin generated in the first block is spent in the second
block the 20 Bitcoin output created in the second block and spent in the third
block so what do you see here let’s review the example again to Spain into
more detail the first block was a and was having 50 mined bitcoins the second
block was containing 50 mine Bitcoin in address a a transaction sending 20
Bitcoin to B so this 20 amount or deduct it from a 50 and putting the change in
entries of it so it becomes a has 50 then B got 20 bitcoins and the C becomes
30 in production of 20 bitcoins the third block contained 50 mind
Bitcoin in address a a transaction sending a 20 Bitcoin from address p2 T
is used now so you’re a got 50 plus 50 bitcoins and now C was 30 again and he
got 20 Bitcoin transferred from B so these are the values in this third block
note that unspent outputs don’t merge together the two unspent 50 Bitcoin
outputs at address a are separate and will remain separate at least until they
are spent in our transaction so each honest
transactions are stored separately and should not be mushed together during the
transaction Bitcoin transactions input and outputs firstly for a geometry truth
about transaction any Bitcoin amount that we sent is always into an address
you need to have recipient address in order to send any Bitcoin and Bitcoin
amount we received is locked to the receiving address and should not be used
which is usually associated with our wallet so for the amount of Bitcoin we
are sending to other party will be logged from our wallet until it is
successfully sent to the recipient any time we spend Bitcoin the amount we
spend will always come from the funds previously received and currently
present in our wallet address receive Bitcoin but they do not send Bitcoin
bitcoin is sent from about it so that our four thumb rules or truths about
transaction occurring for Bitcoin transactions so this block of code shows
Bitcoin transaction example the block you got three blocks the first block has
hash of third transaction then version of it and other details you got in block
section and out block section also into the transaction example transition
format version is a currently at version one if you could see the from the figure
income encounter is the number of input counts that are available to this
transaction and output contraries out counter that is number of output amounts
you could see here the output amount and input about are defined as discussed
transition log time should be zero or in the past for the transaction to be valid
included in a block then size of the transaction in byte so these are the
information that are present as there in the header of the Gaussian transaction
example Bitcoin transaction input and outputs so the amount that goes into our
wallet are not jumbled like the coins in a physical wallet this amount received
don’t mix but remain separate and distinct as the exact amounts received
by the wallet here’s an illustration just an example you create a brand new
wallet and in time which receives three amount of 0.01 0.2 and 3 bitcoins as
follow you will send 3 Bitcoin to an address associated with the wallet and
two payments are made to another address by Ellis if you see in the figure two
people then amount two addresses held by a Bitcoin wallet
and the wallet wallet balance for this wallet was initially 3.2 one Bitcoin
adding zero point zero one zero point two and three Bitcoin in your wallet now
these all amounts were came from two three different resources from Ellis and
Ellis and you now the wallet reports a balance of 3.2 won by summing up the
amount yet if you are tried if you were to virtually speak in inside the wallet
you would see not three two one 321 million Satoshi but three their
distinct amount grouped together by their originating transactions so by
this we can conclude that each amount added to the wallet are kept separately
the received amount bitcoins don’t mix but remain separated as the exact amount
sent to the wallet the three amount in the example about called the outputs of
the originated transactions and Bitcoin wallet always keep or put separate and
distinct this should be clear by now we should not be summing up the amount of
currency or Bitcoin received transaction inputs transaction inputs are pointers
to you react so they point to you TXO by reference to the transaction hash and
sequence number until now we understand what our hash I will try to elaborate it
more using a demo an example so hashes are as discussed are the mechanism using
using which you can create your strings encrypted format and that are when
hashed create a unique value that changes when your input string changes
so hash of any given string is always unique and can never be generated using
any difference inside the string I will show you how you can test and generate
hash you can go to any online website and start I will just take an example of
this example with site where you can go and generate hashes and play with it
according to your learning and as per your interest in this topic you can give
any data in this comment box or text box say hello see if you see here even if it
was empty it was having a hash value so empty string also has a hash value and
is always of a fixed length here in this demo we are using such
2:56 hash so sha-256 is always considered a very strong hashing
mechanism that is almost impossible to hack and translate
so if you see he’ll who generates a unique hash string and if we try to
change it by a dot even the hole has changes the dish this way hash is always
remain unique and you can always use them to preserve the validity or
authenticity and integrity of your data blocks so this was an example of hash
let’s move to the param topic again so your transaction inputs are pointers to
you TXO you’d react Savino unspent transaction outputs this point to you XO
by reference to the transaction hash and sequence number to sell or spend UT XOR
transition input also includes unlocking scripts that satisfy the spending
conditions set by the UT X for every transaction input has the following
field it has transaction hash pointed to the transaction containing the UT XO to
be spent then it could be a 32 byte size then output index the index number of
the UT XO to be spent first one is always zero and it size is 4 bytes then
unlocking a script size a locking script size length is in bytes to follow it can
vary from 1 to 9 bytes then unlocking script I script that fulfills the
condition of the UT x o locking script and it is off again variable size then
sequence number currently disabled transaction replacement feature set to
hexadecimal value 0 x FF FF FF FF and this is again of size 4 bytes so these
all fields constitutes your transaction input block what does our transaction
look like our transition has three pieces of information in this example
you can see it has in sign public key out and the amount of the Bitcoin that
is being transferred so the input is is a record of which Bitcoin address was
used to send the bitcoins to the customer in the first place then amount
is the amount of Bitcoin that a sending to the vendor output is the bitcoins
address of recipient Bob so these three transaction fields constitute your
transaction block each input and output field is using the address of the sender
and receiver note or you can say peers in transaction is signed using sender’s
private key and it uses the address of the receiver in order to transfer the
amount to the recipient so this whole figures depicts the same that we
discussed to Bitcoin is same to the address of the Khans customer and add in
node it is signed with the key then output is sent to the address of the
vendor the amount to Bitcoin and three Bitcoin is again sent to the address of
the customer change now example to show that transfer of Bitcoin let’s say and
he has three point two one Bitcoin in his wallet
sent to him at different addresses so these addresses these amounts were sent
from Ellis me you or Ellis again so these all have different addresses and
they send the balance to Andy and constitute three point two one Bitcoin
in his wallet the received amount remain separated as exact amount sent to the
wallet if you can see here in the figure and that is called transaction output
spending consumes UT X’s and creates new ones you could see from the figure
before balance of node one or you can say the sender was three point two one
Bitcoin so when he tries to tried to sending 0.15 Bitcoin to Bob it destroys
output of amount 0.02 Bitcoin from the transaction or you can see you TXO
available in his wallet and creates a new output of amount 0.05 Bitcoin inside
the wallet of the sender node so whenever a transaction is initiated it
looks the nearest value available in the wallet and it detects the money from
that portion only the from that address only for spending suppose scenarios
planes the zero point two value was near to the 0.15 Bitcoin required to send to
the bar and this woman was detected from this particular address only and at
least 0.05 balance after the sprint so 0.15 Bitcoin will be spent will be sent
to Bob’s address and will aside in his wallet as an output
waiting eventually to be spent the 0.05 Bitcoin is called change and will be
sent back to your wallet so you see the whole block the whole address amount
was translated and transferred to the bomb and this amount the change
the remaining portion was returned back to the wallet as new mattress
transaction as double entry bookkeeping with the previous example it is clear
that a transaction in Bert Bitcoin is a double entry bookkeeping how let’s see
in the given diagram this is an expressive fan a specimen of a double
entry bookkeeping you got inputs you got outputs so you have entry for both in
form of bookkeeping you got three into four inputs input one two three four and
each has different value of zero point one zero with coin 0.20 Bitcoin once
point one zero Bitcoin and 0.15 Bitcoin respectively then your output entries
are our three output one two and three and these have again different values of
zero point one zero Bitcoin zero point two zero zero point two zero between
again so when we sum up the total inputs and outputs he come across total inputs
of zero point five five bitcoins and total outputs off
0.50 bitcoins so when we calculate for different it is 0.05 Bitcoin and this is
implied as transaction fees if you see the amount of transaction input can
never be equal to the transaction output because our difference is applied that
is called transaction fees for completing the transaction that is why
it is called double entry bookkeeping because it stores both the entries of it
input and output blocks and do all the calculations for transaction fees
Bitcoin transaction lifecycle how Bitcoin transaction lifecycle starts and
flows till the end that can be depicted from the given figure we start here Rob
opens his Bitcoin wallet his scans copy laura’s address in order to send the
money what Bob is doing Bob’s quest to send zero point three Bitcoin to his
friend Laura is an example of this whole Bitcoin lifecycle he’s trying to
transfer three point three Bitcoin to his frame he opens his wallet scans the
address of Laura in order to say in the zero point three Bitcoin fills the
amount and the fees of transaction and then sends over the network then it
passes through user o machines and the wallet signs our transaction using Rob’s
private key this transaction before sending over the
network is signed using drop private key and it is all time spent and second
round until now the transaction is propagated and validated by the network
nodes – or validators include the transaction in the next block to be
mined so this transaction is not part of group of transactions of a new block
that is being mined by the validated nodes we all know that mining is the
computation process of calculation of certain hashes and take time
so when manning is done the miners who solved the proof of work propagates a
new block to the network and new bitcoins are created and dessert the
nodes then verify the result and propagate the block and add to the
blockchain when the final confirmation is done and blockchain had got the new
block added Laura can see the first confirmation on his wallet and his
device that the amount has been transferred successfully and received by
her new confirmations appear with each new block that is created every one
every node in the inside the block she network is made aware of the new block
creation and this is this constitute the whole lifecycle of a transaction inside
a Bitcoin transaction lifecycle now we’ll be discussing about various
transaction forms in Bitcoin let’s see what are the various type of forms used
in Bitcoin transactions this is the figure depicts a common transaction form
the most common form of transaction is a simple payment from one address to
another which includes some change returned to the original owner so this
is a very basic example of transferring Bitcoin from one addressed to other
where input 0 from Elly signed by Alice is sent to output 0 to pop and then
output 1 comes as change returned to the Alice then comes aggregating
transactions these are another common form of transaction where transition is
one that aggregates several inputs into a single output so what happens multiple
inputs are aggregated and formed in a form of transaction and sent to output 0
to the output pony pure on output node these type of transaction are sometimes
generated by wallet applications to clear up with smaller amounts that were
received as change for payments then distributing transaction transactions
that distributes one input to multiple outputs represents multiple recipients
so here the sender address a sender Pere can try to send amount or Bitcoin to
multiple addresses in one transaction itself so he can generate one input with
multiple items the multiples a recipient addresses and this will be further
distributed in multiple outputs depending on the number of addresses
different addresses are available so this type of transaction is sometimes
used by commercial entities to distribute funds such as when processing
payroll payments to multiple employees so this is a quite good example where
this can be used by an organization to send salary of multiple employees inside
their organization which will have all employees have different addresses in
the network voter scripts in Bitcoin now that we know that transaction in Bitcoin
consists of input and output these inputs and outputs offer nothing but the
scripts Bitcoin scripting language script all Bitcoin transaction have
scripts coded into its inputs and output mechanism design goals are fourth like
programming language or stag based simple programming language used reverse
polish notification data is pushed onto the stack and operation is performed
composed of opioids operation in Bitcoin is composed of opioids or operation
codes that help deciding the results example of Bitcoin scripts you can see
on the screen the strip shows shown alongside will execute the values in
that track and will return to value to true if the equity equation is valid so
it has multiple steps to executed inside the script the scripts are written in
the old stag based programming language that is called fourth or other similar
programming languages they have syntax the have solution pointers and squishin
start from the left that constant value 2 is pushed to the top of the stack in
the second third step test execution pointer execution continuous moving to
the right with this feature step constant value 3 is pushed to the top of
the stack we clearly see the status structures track is used here in order
to propagate the script execution then the add option specifies adding the
values operation ad pops the talk to items out of zest as tax are
added them together and then operator adds pushes the result five into the top
of the stack this is centers of this programming language that is used to
calculate the value and propagate the transactions when the strip’s shown
alongside is executed the result is of true code making the equations valid
that means the constant value firebase pushed again to the top of the stack
that was is received as a result of adding two and three the operation equal
pops the top two items out of the stack and compares the value five and five and
if they’re equal the equal push is true or if they are not it will be zero most
common script types pay to public key hash p2p KH one of the most commonly
used transaction or prescript it is used to pay to a Bitcoin address second is
pay to public key this is the simplified form of that p2p th this is not commonly
used in new transactions anymore because p2p khr more secure way to multi sign
P – MS multi same outputs allowed to share control of Bitcoin between several
keys and that make them more secure that we have already seen in previous
sessions pay to script hash scripts that contain the hash of the another script
called redeem strip and health is another way of common script types using
transactions stripped mechanism transaction valued validation engine
relies on two type of scripts to evaluate the transaction lock and lock
unlocking script script cig that signs using public key and while plus looking
a stripped is stripped public key that uses to placate hash 160 public cash
equal verify and check the signature that is a function written and for
locking and unlocking the script unlock the script is stripped sig is provided
by the user to solve the encumbrance while lock script in locking a script
lock is found in a transaction output and is the empress that must be
fulfilled to spend the output combining the output and input two scripts the two
scripts together would form the following combination validation script
caifa signature kev public key output the
hache 160 and Kefi public key hash Oh pickle Oh check see the script combined
when executed will evaluate to true if and only if the unlocking script matches
the conditions set by the locking script so you can this is just an example of
writing codes in your input and artful scripts you have when you have your own
requirement you can simply code and you should use it obviously should be having
the knowledge to write in the code and then you can evaluate and get the value
accordingly true and false by meeting the certain conditions allowed by the
locking script to the unlocking script the result will be true if the locking
either if the unlocking a script header has a valid signature from the café’s
private key that corresponds to the public key hash set as encumbrance now
here comes the evaluation of the script took this on this screen you could see
there how steps provided in the scripts are executed and evaluated pointer is at
the initial state saying so signature sign-off happens is the public key
duration starts value seek is pushed pushed to the top of the stack then
public key is pushed and execution continues moving to the right with each
step value public is pushed to the top of the stack on the off of the signature
and this algorithm is repeated continuously till the end of the steps a
step by step in secretion of the combined script which will prove this is
a valid transaction in the next step to operator duplicates the top item in the
stack the resulting value is pushed to the top of the stack again so for the
audiences those are not into development this kidney could be a bit tricky they
should know how push and pop happens from the stack and how operations are
performed over their sty data structures so these those scripts are simply
following the data structure instructions they are pushing the items
into the stack doing pop and push items in order to execute the instructions
written the next item hash 160 operator is pushed is picked and hash it hashes
the top item in the stack with the re p.m. rip MD 160 sha-256 public key the
resulting value pub key hash is pushed to the top of the stack now that is
received by a received by hashing now the value pub key hash from the script
is pushed on top of the value pub hash up key hash calculated previously from
the head 160 of the Pupkin the equal verify
operator compares the pub key hash encumbering the transaction with the pub
key hash calculated from the user table key that is public key and if they match
both are removed and execution continues a check seek operator checks that the
signature matches the public key and pushes true to the top of the stack is
true so since the script alongside returns true this transaction is valid
otherwise it’s trans invalid so this is how any script works any Bitcoin script
works and calculates the transaction values nodes in Bitcoin network so since
we have discussed more about transaction puts an output and the scripts we will
see now what are the various nodes in Bitcoin network in the Bitcoin network
full nodes are the enforcers of consensus rules but not all full nodes
are created equal there are several different kind of
Bitcoin full nodes which exist in the ecosystem pruned selfish full nodes
approved node is a full node that proves raw block and undo data by deleting it
from the disk this can be achieved to say that this space a selfish Bitcoin
node is a node that does not applaud new blocks or transactions to the other
Bitcoin peers in the network archival selfish full nodes an archival node is a
full node that stores a complete copy of the Bitcoin blockchain data on the disk
within this data that rival node operator can make queries against the
blockchain to find information pertaining to the particular transaction
or addresses common Bitcoin nodes in the Bitcoin network at welcome network
result routing node full blockchain if you see here you
could see a reference client that contains Bitcoin core then you got full
blockchain node you can have a solo miner you can have lightweight simple
payment validators wallet then you can have pool protocol servers myung-bo
nodes lightweight as pv straight-up wallets so the network routing node are
canta contains a full block Shin database and network routing node on the
Bitcoin p2p network the surface client contains a wallet miners full blockchain
database and network routing code node on the Bitcoin p2p network solo – solo –
contains our mining function with a full copy of the blockchain and a Bitcoin p2p
network routing node lightweight SPP wallets our container
contains as a wallet and a network node on the Bitcoin p2p protocol without a
blockchain then comes your pool protocol service gateway router is connecting the
Bitcoin p2p network to nodes running other protocols such as pool
mining or stratum nodes sample pool server stratum server then mining nodes
containing a mining function without a blockchain with the stratum protocol
node S or the other pool P mining protocol node so one other type of
common Bitcoin nodes is lightweight SPV stratum wallet again contains a wallet
and donate foot node on the stratum protocol without a blockchain so here
you do not need to worry these are just example of common Bitcoin nodes that are
used in Bitcoin network and there are many if you are interested you can
really go through the web and read about the definition an example of these kind
of nodes that are used in Bitcoin network ok guys we’ve come to the end of
this session I hope this session on blockchain was
informative for you if you have any doubts feel free to come and about it
below thank you

7 thoughts on “Blockchain Tutorial | What Is Blockchain | Intellipaat

  1. Following topics are covered in this tutorial:
    01:01 – transformation of money

    03:45 – what is bitcoin

    05:13 – what is blockchain

    05:45 – definition of blockchain

    09:01 – blockchain tectonic shift

    11:57 – how trading happens using current systems

    12:46 – problems with the current trading systems

    16:18 – distributed systems

    21:32 – transaction in distributed network

    27:36 – bitcoin address & wallets

    55:00 – currency generation

    01:06:53 – benefits of blockchain

    01:17:37 – database in blockchain

    01:42:21 – blockchain ecosystem

    02:20:58 – bitcoin & blockchain

    02:30:39 – bitcoin wallets

  2. Guys, which technology you want to learn from Intellipaat? Comment down below and let us know so we can create in depth video tutorials for you.:)

  3. sir I have placement interview after few days, So can I mention Blockchain in my resume after watching this video or I need to have more in depth knowledge ??
    I am currently pursuing btech.

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