A workshop about blockchain By Sylvain Cottong - - PowerPoint PPT Presentation
A workshop about blockchain By Sylvain Cottong (sylvain@cottong.net) Humboldt Cosmos Multiversity Tenerife 29 & 30 June 2017 Content 1 st day: Introduction: What is BLOCKCHAIN ? One major BLOCKCHAIN instantiation:
(sylvain@cottong.net) Humboldt Cosmos Multiversity – Tenerife 29 & 30 June 2017
1st day:
2nd day:
in specific for the Canary Islands and Tenerife.
creation of new projects, new business and new technologies.
centralized record book )
copy of the record book, like a bank, or a land register.
stored on computers all around the world, both home computers and business servers - hence the term "decentralised".
everyone who has a copy - but that doesn't mean any one person who has a copy has control.
detailing that transaction.
have a copy of the record.
ultimately they agree (or disagree) that everything about the transaction is legitimate before giving that line item a tick of approval.
In the case of money transfer for ex:
centrally owned company, and you don't have to place your trust in any financial institution... there doesn't need to be any middleman of any kind.
terms, it's irreversible.
internet exists.
sending the money back - not the crossing out of the original transaction.
How is this different to a bank ?
this shared record book is impossible.
computers was to try and dishonestly change it, those changes would be rejected by the many computers used in the verification process - things wouldn't match up.
How is this different to a bank ?
repository of coins - that line item in the record book is the money.
someone named Jessie - the founder of this new digital currency - who writes "1 million coins now exist".
line item for each transaction. Jessie sent 500 to Bill, 1000 to Sue (Jessie likes Sue more, obviously), and so-on.
address to Jessie, which is the equivalent of your account details provided to receive a direct deposit with your bank.
Where is the money stored if there is no bank ?
have been sent to them.
Sue's wallet, he can no longer control where those coins go from now
being able to add new line items relating to any of the other 1 million coins that are documented in this shared record book.
Where is the money stored if there is no bank ?
entity, such as a bank or government agency, but collectively by a number of their users.
a record of the data’s earlier state.
a blockchain, creating permanent and secure records which cannot be tampered with, for instance by corrupt officials.
bitcoin for example), they didn’t keep a copy for themselves, or send it to 20 other people.
transparency, efficiency and trust. Naysayers respond that wider adoption may reveal security flaws
In summary
introduced the concept of bitcoin, and the design principle behind bitcoin is:
going through a financial institution.
2015 there were around 14 million bitcoins that have been created, increasing by 25 bitcoins every 10 minutes or so, with an agreed limit of 21 million, the last of which should be created a little before the year 2140.
Bitcoins are electronic assets
are recognised globally in a matter of seconds, and can be considered securely settled within an hour, usually.
against any currency, as with anything else), and the price is set by normal supply and demand market forces in marketplaces where traders come to trade, just like with oil or gold.
numbers being stored in the database of a financial institution like a bank or Paypal, whose rules you had to comply with in order to open an account and use, and whose permission you had to seek before being able to move the money.
‘home ground’ is the internet, as opposed to any geographical location.
can be controlled by the end user, without requiring signup with an institution.
Bitcoins are electronic assets
The bitcoin network
are associated with “bitcoin addresses”. Bitcoins themselves are not stored; but rather the keys or passwords needed to make payments are stored, in “wallets” which are apps that manage the addresses, keys, balances, and payments.
Blockchain”, sitting on thousands of computers across the world.
them over the internet to the other computers running the same software.
How are bitcoins stored ?
relaying information about new payments
the computers on the network)
How are bitcoins stored ?
payments from that address.
linked to its respective address, so it can’t be changed, unlike a conventional password or PIN number.
more memorable, it can be a pain to remember.
remember your password.
How are bitcoins sent ?
store bitcoins but store the keys that let you transfer or ‘spend’ them.
simply have a copy of the same keys.
the accounts, just as two people with duplicate keys to a bank’s safe deposit locker can race to unlock the locker, but the contents of the locker do not double.
How are bitcoins sent ?
you control, and move them to the control of another address (your recipient).
which bitcoins you’re sending which address you’re sending them from which address you’re sending them to
signed with the private key of the address which currently holds the
address in question (because only you know the private key).
computers on the network (called “nodes” or “payment validators”)
What happens when you make a bitcoin payment ?
technical details, and some business logic details (eg, does my payment attempt to create bitcoins out of nothing? Have the coins being sent already been sent elsewhere? etc).
network, who each run the same validation tests.
the same tests. Eventually all computers on the network know about this payment, and it appears on screens everywhere in the world as an “unconfirmed transaction”.
and passed around, it isn’t entered into the ledger yet.
Validators
add these transactions, in blocks, to the blockchain. This is known as “mining” bitcoin.
block of transactions to everyone’s blockchains, and does this by publishing this to the other computers on the network.
agree that the block and transactions conform to the rules, then they add the block to their own blockchain.
to award themselves with some amount of new bitcoins.
How do transactions get entered into everyone’s blockchains ?
for the network as a whole to guess correctly. This is the speed that transactions take to be confirmed onto the blockchain.
how fast it could be down if the guessing game was removed), and by making it computationally and therefore financially expensive to participate in this process, it also makes it financially expensive for miscreants to buy enough processing power to write their own abnormal blocks of transactions into the blockchain.
need to agree with all of the transactions, so they still cannot insert transactions that break the business logic rules, eg conjuring bitcoins out of thin air.
How do transactions get entered into everyone’s blockchains ?
transactions and creators of blocks. If enough of them decide to play by different rules, then the others will need to follow suit.
computation power they have.
pay for computing power, the costs of which are hardware, electricity, and support.
can only be changed by consensus of those validators. The validation logic (what does a valid transaction look like?) is baked into the code which is run by the validators.
(another myth is that the limit of 21 million bitcoins cannot be changed.
majority of network participants to agree to run it).
have invested huge amounts of capital and will not readily agree to change anything which may harm their mining rewards – “The turkeys won’t vote for Christmas”.
Changing the rules
Bitcoin price evolution 2010-2017
What is blockchain ?
computers that requires no central authority or third party intermediaries.
that verifies and stores the transaction.
about when and in what sequence the transaction took place.
place in the chain, thus the name blockchain.
every transaction that is replicated on servers across the globe.
How blockchain works
Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.
Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.
Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.
How blockchain works
Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others
The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.
What elements are common to all blockchains ?
Blockchains are persistant: Once added into the database (the blockchain) a record cannot be modified and it is very difficult to falsify entries. When an entry in the database (the blockchain) needs to be updated, a new record must be appended to the existing information. Blockchains are auditable: Finally, each of records can be viewed by any member of the public, allowing for any person to individually verify the authenticity of each transaction recorded for any single entry in the database (the blockchain).
the way a database build on one single operator can be
That is to say, it requires a system directly operated by known and trustworthy individuals (whether that is a known person, organization, computer, or any
(that is to say, you cannot know if it is an individual person, and organization, a computer operating automatically, or whatever else — let alone know them well enough to trust their decisions and actions implicitly).
Consensus
don’t need to trust each other)
(that is to say, try to add information to the database), it is necessary for the distributed operators of the blockchain to evaluate and agree on all addenda before they are permanently incorporated into the blockchain (the database).
new information must be reviewed and confirmed before being accepted.
Consensus
systems, for that matter):
Consensus
There is a big difference in what technologies you need, depending on whether you allow anyone to write to your blockchain, or only allow it to known, vetted participants. Bitcoin allows anyone to write to its ledger.
Private vs. public vs. consortium blockchains
aren’t vetted and can add to the ledger without needing approval, it needs ways of arbitrating discrepancies (there is no ‘boss’ to decide), and defence mechanisms against attacks (anyone can misbehave with relative impunity, if there is a financial incentive to do so). These create cost and complexity to running this blockchain.
Public blockchains
aren’t vetted and can add to the ledger without needing approval, it needs ways of arbitrating discrepancies (there is no ‘boss’ to decide), and defence mechanisms against attacks (anyone can misbehave with relative impunity, if there is a financial incentive to do so). These create cost and complexity to running this blockchain.
Public blockchains
public Blockchain.
exchange was the first public Blockchain followed by Ethereum which allows anyone to build smart contracts and decentralized apps on it.
blockchain is open source, it is not secured. On the contrary, it is highly secured using cryptography and consensus protocol.
Public blockchains
trusted: for example, an industry group, or a group of companies owned by an umbrella company.
contracts – “You’ll behave because you’ve signed this piece of paper.”
Private blockchains
Blockchain.
it’s just a distributed database.
identities to the internal processes.
and open protocols gets lost.
Private blockchains
consortium of members.
data or block.
may be participating banks, importer, exporter, ports of sending and receiving countries, custom officials etc. Some of these participants will have write access and some or all will have read access.
Consortium blockchains
at the top of the page there is usually the title of the book and sometimes the chapter number or title; at the bottom is usually the page number which tells you where you are in the book.
Blocks
the miner incentive reward (currently 25 BTC)
reference to the previous block, and a fingerprint (hash) of the data contained in this block, among other things. This hash is important for ordering.
Blocks
In the context of blockchains and cryptocurrencies, smart contracts are:
the blockchain),
In other words, they are little programs that execute “if this happens then do that”, run and verified by many computers to ensure trustworthiness. If blockchains give us distributed trustworthy storage, then smart contracts give us distributed trustworthy calculations.
Smart contracts
So, smart contracts are contracts on the blockchain that can be programmed to self-execute in various ways.
Smart contracts
do that” part of traditional contracts.
nuances of human languages.
blockchain (more on that later) and run by those computers, who come to an agreement on the results of the code execution.
Smart contracts
Control In a correctly set-up blockchain ecosystem, there should be no single source
multiple parties are constantly checking and re-checking and updates to the ledgers, and anything that doesn’t conform to pre-agreed rules is rejected by
Code With smart contracts running on a blockchain, the logic is run in parallel on all the participating computers, and the results are compared by all
agree the results. No one can cheat a blockchain, in theory.
Smart contracts
Transparency For all participants in a blockchain ecosystem to run the same code, each verifying the other, the logic of the smart contract must be visible to all. This means anyone can look into a smart contract, and if you like the logic, you can use it. If you don’t, you don’t. There will be smart contracts for general usage, and also very specific smart contracts. The transparency is both a pro and a con. It’s useful to all stakeholders of the contract to agree on what happens; on the other hand it’s not just the stakeholders that can see what happens – it’s everyone on the network. Privacy in blockchains is a contentious issue. There are solutions to the privacy-vs-validation tension being discussed, some using zero-knowledge proofs
Smart contracts
Flexibility & automation A so-called “Turing complete” smart contract can do anything that a normal computer can do, though the blockchain version will run much more slowly and be more expensive to run than on a regular computer (depending on the set-up of the blockchain), because ultimately you need to pay for all computers on the network to run the code in parallel.
Smart contracts
don’t agree on the outcome of the trade, due to a number of things:
there is back-and-forth on the wording of the documents, with in- house lawyers on both sides trying to protect their interests)
dependencies
computer code, which is much less fluffy than legalese, and agreed upon up-front. The external dependencies (price of oil, share price of Apple, etc) can be fed in via a mutually agreed feed. The contract will live on a blockchain, and run when an event happens or when the bet expires.
Smart contracts
Autonomy – You’re the one making the agreement; there’s no need to rely on a broker, lawyer or other intermediaries to confirm. Incidentally, this also knocks out the danger of manipulation by a third party, since execution is managed automatically by the network, rather than by one or more, possibly biased, individuals who may err. Trust – Your documents are encrypted on a shared ledger. There’s no way that someone can say they lost it. Backup – Imagine if your bank lost your savings account. On the blockchain, each and every one of your friends has your back. Your documents are duplicated many times over. Safety – Cryptography, the encryption of websites, keeps your documents safe. There is no hacking. In fact, it would take an abnormally smart hacker to crack the code and infiltrate. Speed – You’d ordinarily have to spend chunks of time and paperwork to manually process documents. Smart contracts use software code to automate tasks, thereby shaving hours off a range of business processes. Savings – Smart contracts save you money since they knock out the presence of an intermediary. You would, for instance, have to pay a notary to witness your transaction.
Smart contracts
goes to whoever correctly predicts tomorrow’s weather. The next day, that money can check an online weather service and automatically send itself to the correct person’s account.”
savings accounts. One might design an account that automatically donates to relief efforts in the case
donation decision.
were programmed to check a Hurricane’s status, and in the case of a Category 5 storm that makes landfall—it could allocate money to the correct local offices.
Smart contracts examples
Starting from late January 2016, it has experienced a surge.
culminated in Ethereum achieving a record-breaking market capitalization
However, the coin is now second only to Bitcoin on the cryptocurrency market capitalization list.
Etherum
in two distinct ways, both of which have been ultimately ineffective.
Turing complete, i.e. it cannot solve the problems that are easily solvable by some known programming languages, such as C++, for example.
all kinds of “crutches” to make it work.
depriving yourself of the opportunity to use the immense power of the whole Bitcoin’s network.
that can not be justified for every app.
Etherum
purpose programming language with its own blockchain.
it.
unlimited power.
the outputs by itself and distributes value between the participants by itself.
achieved with the help of smart contracts.
computers, which are connected to it, i.e. it isn’t: keep in mind, that there are no barriers to entry.
Etherum
collaborative effort created to advance cross-industry blockchain
collaboration, hosted by The Linux Foundation, including leaders in finance, banking, Internet of Things, supply chains, manufacturing, and Technology.
support Bitcoin or any
platform is thrilled by blockchain technology.
The Hyperledger Project
The Hyperledger Project
possible to use a blockchain to determine rules for a transaction or even to create a smart contract.
Distributed Ledger Technologies
Internet
maintenance of blockchain is open, distributed, and shared—just like TCP/IP’s
Internet
Internet infrastructure
also support a variety of other applications, including smart contracts, asset registries, and many new types of transactions that will go beyond financial and legal uses.
Evolution of blockchain
and automated financial system could work.
a regulatory and an economic system
Bitcoin blockchain. Instead of writing rules and appointing a regulator to monitor for breaches, which is how the current financial system works, Bitcoin’s code sets the rules and the network checks for compliance .
every 10 minutes, and the supply is limited so there will only ever be 21 million Bitcoins, a hard money rule similar to the gold standard (i.e., a system in which the money supply is fixed to a commodity and not determined by government).
Evolution of blockchain
creates risk. A new decentralized financial system made possible with cryptocurrencies could be much simpler by removing layers of intermediation
excluded, lower barriers to entry, and enable greater competition
achieve policy goals, without diluting standards
yet to be solved, but which will be the case
Evolution of blockchain
structures in our economic, legal, and political systems
up with the economy’s digital transformation
interact with one another with little friction.
blockchain revolution, many barriers—technological, governance, organizational, and even societal—will have to fall.
Evolution of blockchain
Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction
is still many years away
foundations for our economic and social systems
technological and institutional change gain momentum
phases—single use, localized use, substitution, and transformation—and reshape the economy
Evolution of blockchain
moment
processes, and intermediaries like lawyers and accountants? And what about managers? Their roles would all radically change.
They’ll need to develop new expertise in software and blockchain programming.
chains, for instance. This is happening in the diamond industry, where gems are being traced from mines to consumers
networks they’ve set up with a limited number of trusted counterparties can significantly reduce transaction costs.
Evolution of blockchain
passport control, and algorithm-driven decision making in the prevention of money laundering and in complex financial transactions that involve many parties.
change every institution, in some ways more so than the first generation did.
Evolution of blockchain
autonomous agents on a blockchain. And that this company would have no people—it wouldn’t need a CEO or management or people.
is deep, deep changes to the architecture of the corporation.
Decentralized autonomous organizations (DAO)
(embedded in the code)
their tokens as reflected by increased demand.
shareholders) of a DAO have the right to vote “yes” or “no” on any and every proposal facing the organization.
contract on a project basis (after you submitted a proposal)
when passed, work can commence.
DAOs: Companies of the future: No CEO, no boss, managed by blockchain
voted on your contract simply withdraw their votes.
DAO
and roles, the flexibility and agility to innovate is greatly increased.
hierarchical organization, that’s really tough to do. Ideas from the “edges” are tough to find, tough to manage, and tough to execute. In a flat organization, the community can rally and “fund” the best ideas from anywhere.
DAOs: Companies of the future: No CEO, no boss, managed by blockchain
and those who are a drag on the organization are removed much more quickly and efficiently.
work experience for everyone.
to multiple DAOs that, collectively, pay you more than a full-time job AND give you the flexibility to do more of what you love.
DAOs: Companies of the future: No CEO, no boss, managed by blockchain
DAOs: Companies of the future: No CEO, no boss, managed by blockchain
the blockchain.
to a computer network, not to a human being. The network has raised funds, signed contracts, and taken delivery of vehicles, even though its headquarters is distributed all over the net.”
costs of delivering goods anywhere in the world.
DAOs: Companies of the future: No CEO, no boss, managed by blockchain
“token” or “coin”, the ownership of which is recorded in the blockchain.
common route is to buy Bitcoin with your dollars, euros, yen, etc. and then use the Bitcoin to buy the tokens or coins of the specific DAOs in which you wish to be a member
DAOs: Companies of the future: No CEO, no boss, managed by blockchain
predictably inflationary and it is known to all, the value of the tokens increase along with demand.
dilution by central administrators such as government officials or incompetent executives. Ah, the power of blockchains!.
the top.” There’s no command and control. There’s no boss: Which is where the freedom from bad meeting tyranny comes in.
DAOs: Companies of the future: No CEO, no boss, managed by blockchain
person wants the value of the tokens to increase.
based on your skill set and beliefs, not based on what your boss thinks.
DAOs
DAO: The Fermat Project
The Fermat Project: “We envision a world where people can freely interact electronically without unnecessary third party interferences. Both for social and commercial
between individuals, no mining of private information, no unnecessary
companies and states, a world where people have the choices and the means to interact directly between each other.” It’s a vision about a decentralized and connected human species. It is also a plan on how to get there. Decentralization makes humans more resilient and eventually free. It offers an alternative to the current path where all humans will be connected to a matrix-like entity that will control it all, or a similarly ugly future as the one described at George Orwell novel “1984”.
DAO: The Fermat Project
The Fermat Project: “We envision a world where people can freely interact electronically without unnecessary third party interferences. Both for social and commercial
between individuals, no mining of private information, no unnecessary
companies and states, a world where people have the choices and the means to interact directly between each other.” It’s a vision about a decentralized and connected human species. It is also a plan on how to get there. Decentralization makes humans more resilient and eventually free. It offers an alternative to the current path where all humans will be connected to a matrix-like entity that will control it all, or a similarly ugly future as the one described at George Orwell novel “1984”.
DAO: The Fermat Project
Three years after its founding, the Fermat project has given birth to its first crypto-community: the IoP Community. From the broader Fermat community, a new community has been born, full of enthusiastic people willing to build a piece of Fermat’s vision of The Internet of People. The IoP Consortium — an institution that already has several members, managed by Daniel Csendes — and the wider IoP Community will receive a total of 300K IoP tokens from original founder Luis Molina to finance core development, community building, research, and entrepreneurship.
DAO: The Fermat Project
Connecting our personal devices between each other with direct connection over the internet.
Apps for our personal devices that know how to speak to each other directly over a device to device connection.
DAO: The Fermat Project
https://coinmarketcap.com/all/views/all
https://coinmarketcap.com/all/views/all
(sylvain@cottong.net) Humboldt Cosmos Multiversity – Tenerife 29 & 30 June 2017
2nd day:
in specific for the Canary Islands and Tenerife.
creation of new projects, new business and new technologies.
How to guide thinking ?
1) ideating broadly using “blockchain thinking;” 2) shortlisting feasible ideas; 3) and then defining implementation of ideas into the core process (and IT landscape) to capture business value. (= business model) In other words: 1) Think about people’s problems to solved and job’s to get done (private & businesss) 2) Think about what existing processes could be completeély redefined usine “blochain thinking” 3) Think about what comnpletely new services, products and processes could be developed using “blockchan thinking” ?
How to guide thinking ?
1) ideating broadly using “blockchain thinking;” 2) shortlisting feasible ideas; 3) and then defining implementation of ideas into the core process (and IT landscape) to capture business value. (= business model) In other words: 1) Think about people’s problems to solved and job’s to get done (private, businesss & government) 2) Think about what existing processes could be completely redefined usine “blochain thinking” 3) Think about what completely new services, products and processes could be developed using “blockchain thinking” ?