L01 : Blockchain Flashcards
Blockchain Technology: Definition
Blockchain technology refers to computer protocols that facilitate peer-to-peer transactions. Several transactions are bunched together and stored in blocks. The blocks are chronologically organized in chains. The chain of blocks constitutes a digital ledger.
The digital ledger is distributed and decentralized. The ledger is therefore transparent for all participants in the peer-to-peer network. Blockchain technology also defines rules to establish consensus among all participants in the peer-to-peer network.
The consensus mechanism ensures that all new information stored in the digital ledger is verified and correct. To protect the integrity of the digital ledger, stored data is immutable.
Blockchain vs Distributed Ledger Technology
- DLT is an umbrella term for …
- Blockchain technology is a distributed database in which new information is stored in blocks, and new blocks are …
- DLT does …, nor that …
- Blockchain technology is a special use case of distributed ledger technology, they are not the same
distributed databases that are curated by multiple entities
added to old blocks, creating a chain of blocks
neither require that information is stored in blocks; blocks are organized in chains
Difference between distributed and decentralised
Distributed systems: Decision-making might be centralized, but processing and operations are spread across various nodes.
Decentralized systems: Decisions are made by consensus. Every node in the network can validate and verify data or transactions
Problems that Blockchain technology resolves?
Enables trust-less p2p networks. Elaborate.
Trustless does not mean an absence of trust.
* Decentralization and Distributed Trust
* Trust in cryptography
* Trust in consensus protocols
Decentralisation and Distributed Trust
◦ Decentralization: … rather than storing it in a single
database ensures …
◦ Distributed Trust: Unlike traditional systems where trust is centralized in third-party
intermediaries, blockchains …. Everyone ..
Data distribution across a network; no single party has control over the entire blockchain
distribute trust among all users
maintains a copy of the ledger, and transactions must be verified collectively
Trust in cryptography
◦ Secure Transactions: …
◦ Immutable Records: Blockchain-stored data are nearly impossible to alter due to …
Cryptographic techniques such as hashing and digital signatures ensure that only the digital asset owner can initiate transactions
hash functions, making ex-post alterations computationally impractical
Trust in consensus protocols
◦ Agreement on Validity: Consensus mechanisms ensure …
◦ Network Harmony: …, otherwise consensus rules reject the transaction or block
agreement on the validity of transactions without needing a central authority
All participants have a synchronized ledger and agree on the current state of the blockchain,
History of the blockchain I
- 1983-Cryptography Applied to Digital Cash
David Chaum’s proposal of applying cryptography to digital cash paved the way for secure
digital transactions, laying the foundational concept for cryptocurrencies. - 1988–Concept of Offline Electronic Cash
David Chaum, along with Fiat and Naor, introduced the idea of offline electronic cash, leading
to the creation of DigiCash, an early form of digital money that incorporated user privacy. - 1991-First Description of Blockchain
Stuart Haber and W. Scott Stornetta described the first work on a cryptographically secured chain of blocks, proposing a system where document timestamps could not be tampered with. - 1992-Computational Puzzles to Combat Email Spam
Dwork and Naor proposed using computational puzzles to deter spam emails, an idea which
would later influence Proof of Work systems used by cryptocurrencies.
History of the blockchain II
- 1994-CyberCash/CyberCoin and SET Standard
CyberCash attempted to create an electronic cash system, and SET was an early protocol to secure credit card transactions, both precursors to modern payment protocols in the blockchain. - 1997-IntroductionofHashcash
Adam Back’s Hashcash used proof of work to limit email spam and denial-of-service attacks and became a significant influence on Bitcoin’s mining process. - 1998-Bitgold, a Precursor to Bitcoin
Nick Szabo conceptualized Bitgold, a decentralized digital currency system, introducing many
elements that would later be integral to Bitcoin, like the Proof of Work consensus mechanism. - 2008-Bitcoin Whitepaper Released
An individual or group under the pseudonym Satoshi Nakamoto released the Bitcoin whitepaper, outlining a decentralized digital currency system that became the first successful implementation of blockchain technology.
Blockchain features (5 features) TIDDS
- Transparency: Every transaction on the blockchain is visible to all participants, which ensures transparency.
- Immutability: Once data has been added to the blockchain, it cannot be changed or removed. This is because each block contains the hash of the previous block, creating a chain of blocks. Changing a single block would require changing every subsequent block, which is computationally impractical.
- Disintermediation: Blockchain eliminates the need for trust or intermediaries in transactions. This is possible due to the technology’s design and the cryptographic proofs that underlie it.
- Decentralization: No single entity has control over the entire blockchain. It operates on a peer-to-peer network where each participant, or node, has access to the entire blockchain.
- Security: Transactions must be agreed upon through a consensus mechanism before they are added to the blockchain, and cryptographic hashing further ensures the security of the transactions.
Blockchain types: (6)
Draw flowchart.
Slide 27
Public & Permissionless Blockchain
Pros
Cons
use cases
Pros: Secure, Decentralised, Inclusivity, Transparency/Trust
Cons: Not scalable, no privacy, energy consumption
Crypto, Document validation
See slides for more info on what those terms mean.
Private & Permissioned Blockchain
Pros
Cons
use cases
+ : Access control, Scalability, Efficiency, Privacy
- : Centralisation, Less secure, Less transparent
Supply chain, Asset ownership
See slides for more info on what those terms mean.
Hybrid Blockchain
Pros
Cons
use cases
+ : Access control, Scalability/efficiency, Optimisation
- : Complexity, Less transparent
Medical records, Real Estate
See slides for more info on what those terms mean.
Consortium Blockchain
Pros
Cons
use cases
+ : Access control, Scalability/Efficiency, Security
- : less transparent
Banking, Research, Supply chain
See slides for more info on what those terms mean.
