How blockchain work

1. BLOCK CHAIN

2. CONTENT
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◇ What is Blockchain? Pg.4
◇ Why we need Blockchain? Pg.7
◇ Key elements of Blockchain Pg.9
◇ How Blockchain works? Pg.11
◇ Bitcoin & Blockchain Pg.13
◇ Benefits of Blockchain Pg.15
◇ Disadvantages of Blockchain Pg.19

3. “
“To understand the power of blockchain systems, and the
things they can do, it is important to distinguish between
three things that are commonly muddled up, namely the
bitcoin currency, the specific blockchain that underpins it
and the idea of blockchains in general”
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4. What is Blockchain?
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5. Overview
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Blockchain is a shared, immutable ledger that
facilitates the process of recording transactions
and tracking assets in a business network.
An asset can be tangible (a house, car, cash, land)
or intangible (intellectual property, patents,
copyrights, branding). Virtually anything of value
can be tracked and traded on a blockchain
network, reducing risk and cutting costs for all
involved.

6. ◇ Blockchain is the main technology behind the
cryptocurrency exchanges.
◇ Also referred as Bitcoin Block Explorer
service. It is a network of Decentralised
systems.
◇ In 1982, cryptographer David Chaum
introduced the idea of Blockchain technology.
◇ Bitcoin’s backend underlined technology was
based on Blockchain.
◇ It uses Blocks of Data & Hash which are
connected to each other i.e. Hash of One
block is connected to its successive block.
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7. Why we need
Blockchain?
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8. 8
Business runs on information. The faster it’s received and
the more accurate it is, the better. Blockchain is ideal for
delivering that information because it provides immediate,
shared, and completely transparent information stored on
an immutable ledger that can be accessed only by
permissioned network members. A blockchain network
can track orders, payments, accounts, production, and
much more. And because members share a single view of
the truth, you can see all details of a transaction end-to-
end, giving you greater confidence, as well as new
efficiencies and opportunities.

9. Key elements of
Blockchain
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10. Distributed Ledger
Technology
All network participants
have access to the
distributed ledger and its
immutable record of
transactions. With this
shared ledger,
transactions are
recorded only once,
eliminating the
duplication of effort that’s
typical of traditional
business networks.
Immutable Records
No participant can change
or tamper with a transaction
after it’s been recorded to
the shared ledger. If a
transaction
record includes an error, a
new transaction must be
added to reverse the error,
and both transactions are
then visible.
Smart contracts
To speed transactions,
a set of rules – called a
smart contract – is
stored on the
blockchain and
executed automatically.
A smart contract can
define conditions for
corporate bond
transfers, include terms
for travel insurance to
be paid and much
more.
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11. How Blockchain
works?
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12. 12
As each transaction
occurs, it is recorded
as a ‘block’ of data.
Those transactions show
the movement of
an asset that can be
tangible (a product) or
intangible (intellectual).
The data block can
record the information of
your choice: who, what,
when, where, how much,
and even the condition –
such as the temperature
of a food shipment.
Each block is
connected to the ones
before and after it
These blocks form a
chain of data, as the
asset moves from place-
to-place or ownership
changes hands. The
blocks confirm the exact
time and sequence of
transactions, and the
blocks link securely
together to prevent any
block from being altered
or a block being inserted
between two existing
blocks.
Transactions are
blocked together in an
irreversible chain: a
blockchain
Each additional block
strengthens the
verification of the previous
block and hence the entire
blockchain. This renders
the blockchain tamper-
evident, delivering the key
strength of immutability.
This removes the
possibility of tampering by
a malicious actor – and
builds a ledger of
transactions you and other
network members can
trust.

13. Bitcoin & Blockchain
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14. 13
Bitcoin & Blockchain
◇ Bitcoin is a cryptocurrency, while blockchain is
a distributed database.
◇ Bitcoin is a currency and a system that uses a blockchain
as underlying data structure, which can be used for many
things, including cryptocurrencies.
◇ Bitcoin is powered by blockchain technology,
but blockchain has found many uses beyond Bitcoin.
◇ Bitcoin promotes anonymity, while blockchain is
about transparency. To be applied in certain sectors
(particularly banking), blockchain has to meet strict Know
Your Customer rules.
◇ Bitcoin transfers currency between users, while
blockchain can be used to transfer all sorts of things,
including information or property ownership rights.

15. Benefits of Blockchain
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16. 16
◇ Greater trust
With blockchain, as the member of a members-only network,
you can rest assured that you are receiving accurate and
timely data, and that your confidential blockchain records
will be shared only with network members to whom you
have specifically granted access.

17. ◇ Greater security
Consensus on data accuracy is required from all network
members, and all validated transactions are immutable:
permanently recorded. No one, not even a system
administrator, can delete a transaction.
◇ More efficiencies
With a distributed ledger that is shared among members of a
network, time-wasting record reconciliations are eliminated.
And to speed transactions, a set of rules – called a smart
contract – can be stored on the blockchain and executed
automatically.

18. …other uses
 Online voting
Since security is
reliable in
Blockchain
technology, and it
saves time and
man power.
 Real Estate
Real Estate
Information is
what isn't
manipulated very
frequently hence
blockchain
technology
provides a
reliable platform
to store these
information.
 Online Identity
Using it online will
show only specific
identity only, and
for storing this
online information,
Blockchain can be
a good option to
consider.
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19. Disadvantages of
Blockchain
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20. 20
 Blockchain is not a Distributed Computing System
It is a network that relies on nodes to function properly.
The quality of the nodes determines the quality of the blockchain.
 Scalability Is An Issue.
Blockchains are not scalable as their counterpart centralized system.
In simple words, the more people or nodes join the network,
the chances of slowing down is more!
 Some Blockchain Solutions Consume Too Much Energy.
Blockchain technology got introduced with Bitcoin. The miners are
…….incentivized to solve complex mathematical problems. The high energy
…….consumption is what makes these complex mathematical problems not so
…….ideal for the real-world.

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 Blockchains are Sometimes Inefficient.
Right now, there are multiple blockchain technologies out
there. If you pick up the most popular ones including the
blockchain technology used by Bitcoin, you will find a lot of
inefficiencies within the system. This is one of the big
disadvantages of blockchain.
 Users Are Their Own Bank: Private Keys
To access the assets or the information stored by the user in
the blockchain, they need private keys. It is generated during
the wallet creation process, So, if you as a user who forgets
its private key, are eventually logged out of their wallet and
no one can get it back. This is a serious drawback as not all
users are tech-savvy.

22. Thanks!
-Aman Thakur (20CSU336)
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