This is a simple introduction to blockchain and related opportunities.

1. Ikhlaq Sidhu
Ikhlaq Sidhu
Chief Scientist & Founding Director
Center for Entrepreneurship & Technology
Industrial Engineering & Operations Research
IEOR Emerging Area Professor Award
UC Berkeley
Hello and Welcome

2. Ikhlaq Sidhu
What is Blockchain and why does it matter?

3. Ikhlaq Sidhu
 A public ledger of
transactions
 Distributed data
(many copies)
 Decentralized
(not created by
just one machine)
What is Blockchain, more specifically?

4. Ikhlaq Sidhu
Before Blockchain, to trade money, you needed trusted agents
(banks) who keep your accounts
A = Alice B = BobMail a check of $5
Bob’s BankAlice’s Bank
Ledger at Bob’s Bank:
Transaction Amount Balance
$100.00
Check #1
from Alice
$5.00 $105.00
Ledger at Alice’s Bank:
Transaction Amount Balance
$50
Check #1 to
Bob
-$5.00 $45.00
• Validate funds
• Signature
• Records
• Manage disputes
Bob
Alice
$5

5. Ikhlaq Sidhu
New Idea: What if everyone keeps a copy of the same ledger?
http://www.slideshare.net/raffaele.mauro/
cryptocurrencies-blockchain-smart-contracts-a-general-introduction-46027023

6. Ikhlaq Sidhu
So if Alice wants to give Asset X to Bob, she simply sends out
the transaction to everyone in the network.
A
B

7. Ikhlaq Sidhu
The same copy of the ledger is kept
by all the people who trade.
www.imponderablethings.com

8. Ikhlaq Sidhu
A Check is like a “Transaction”
From
To
Amount
Signature
Tx Id
Metadata
From
To
Amount
Signature
Note
Michael Crosby, Nachiappan, Pradhan Pattanayak, Sanjeev Verma, Vignesh Kalyanaraman
Check Transaction

9. Ikhlaq Sidhu
Immutable:
• Can not simply edit the transactions
• Can even change one bit in a block
• Can not insert a block
Transactions are grouped into blocks
that point to each other

10. Ikhlaq Sidhu
Some clever safeguards have been built in so that no one
single authority needs to be “trusted” in the system
A
B
1. You can only spend what you have (everyone knows your balance)
2. You can not spend someone else’s asset (you need to sign with your private key)
3. You can not double spend (Pay two people with the same asset, but a transaction
has to accepted as valid which means you have to wait for 6 blocks to be added, 1
hour)

11. Ikhlaq Sidhu
So What can you do with blockchain technology?
• Transfer asset to someone else and record that it was done
• Trace who had it before, and before that, and before that …
• You can access the blockchain like a database
• You can have transactions with “anonymous” people and yet still not
require a trusted agent
People believe that blockchain can "replace or disrupt" money
transactions, record keeping, notarization, tracking of goods, which
means that the opportunity is the same size as "the banking market", "the
document market”, …

12. Ikhlaq Sidhu
Some problems with blockchain technology?
• The current version is getting long (65GB) and growing. Everyone needs to
keep a copy of the blockchain.
• It takes lots of computing power to create new blocks. Millions of
computers are all working in parallel to create each block.
• It takes about 60 min before people can trust a large transaction.
• For large numbers of people, it uses distributed consensus. For smaller
numbers, you can modify the technology to use other ways, like simply
voting.

13. Ikhlaq Sidhu
However, many firms are investing in blockchain

14. Ikhlaq Sidhu
And many new ventures are being developed

15. Ikhlaq Sidhu
Case Supply Chain and asset tracking:
• Everledger is permanent ledger for diamond certification and related
transactions. It provides verification for insurance, law enforcements, and
owners.

16. Ikhlaq Sidhu
Smart Contracts
• Computer Program that
automatically executes the terms of
a contract
Example: You want to buy a car:
• The transfer requires sign-off from
car dealer, bank, and buyer.
– From Dealer to Bank
• When payments are completed, car
is transferred
– From bank to buyer.
• If payments are not made in time,
right to sell changes:
– From user to bank.
Smart contracts can work with
blockchain to automatically
transfer assets

17. Ikhlaq Sidhu
Challenge
• You can apply block chain to many applications
• But many times,
– there is a simpler way that simply does not need blockchain technology
– There is already a good solution and no change is needed
• We must find applications where only blockchain can be a good solution.
Software Platforms

18. Ikhlaq Sidhu
Remember: The Key benefits are:
– Working with people who can’t trust each other
– No single agent can resolve the issues
– There is value in making the information public
and transparent