Blockchain Pinyi Fan Precursor Technology First conceptualized - - PowerPoint PPT Presentation

Blockchain

Pinyi Fan

Precursor Technology

The history of Blockchain

This Photo by Unknown Author is licensed under CC BY

• First conceptualized in 2009 by an unknown web user who created the

blockchain alongside the bitcoin cryptocurrency

• This user created a bitcoin white paper which explained the technology behind

the digital currency – blockchain.

• Later cryptocurrencies such as Ethereum, Litecoin, etc employ the same

technology

The Bitcoin White Paper

– Written in 2009 by an online user with the an alias of Satoshi Nakamoto, the paper explains the inner workings and philosophy behind bitcoin and the blockchain – Emphasizing a need for privacy, the intended role of bitcoin was to create a digital currency which eliminated the middle man – The blockchain is decentralized through its P2P architecture

What is the blockchain?

– In simple terms, it’s a data structure(“block”) that stores transaction data and cryptographic block hash addresses that link them together(“chain”) – A blockchain is a P2P network consisting some number of nodes which work together to approve a set of transactions – This data in turn forms a public ledger which essentially acts as a record of all historical transactions

Blockchain Visualized

This Photo by Unknown Author is licensed under CC BY-SA

Proof of Work

– So how does one add to the blockchain? – A miner utilizes their computer’s computational power to calculate the hash of the previous block to verify the validity of all

• f the block’s transactions

– In return, the miner is rewarded with some token in order to incentivize them to continue mining

Ethereum

– Released in 2015, the Ethereum blockchain allows for logic to be employed within transactions, called contracts on Ethereum – This allowed for code to be included in these contracts – Many decentralized apps began to appear

Cryptokitties

Other Applications

– Decentralized voting systems – Decentralized cloud storage – Decentralized banks/exchanges – Decentralized protocols

“The Ultimate Goal”

– To create a privacy-conscious decentralized network with no dependence on centralized servers

The Good

– Blockchain technology allows privacy to be controlled by the user – Allows for transparency and reliability on a network – Decentralizes established technological institutions such as Google and Facebook, which have had numerous privacy issue in recent years

The Bad

– The anonymity of blockchain technology enabled its use as a currency on the Dark Web – Many have held concerns for the energy consumption of crypto mining – As a result of mining pools, some groups have more control than individuals on a blockchain network

The 51 percent attack

– When an individual or group takes control of a decentralized network by taking control of more then 50% of network nodes – This can prevent new blocks from generated and transactions from being confirmed

The DAO Attack

– The DAO was an attempt in 2016 to create a decentralized autonomous organization on the Ethereum network – An initial fundraising effort saw over $150 million raised leading up to the attack – A decentralized autonomous organization is a self-functioning

• rganization governed by a set of rules

– In June 2016, a hacker attacked the DAO and siphoned almost 3.6 million ether ($50 million) into a child DAO

The Result

– The attacker supposedly sent a message defending his attack shortly after the incident – A hard fork resulted which returned the DAO’s funds to its original users – A sizable amount of users disagreed, resulting in the legacy protocol continuing as Ethereum Classic

Conclusions

– While the technology places privacy as its utmost advantage, it is also a disadvantage as many criminals hide their activities in these transactions – The issue of regulation is recurrent in discussions about blockchain: if no rules are created to govern the protocol, then dubious practices will appear – The energy consumption of mining is also a concern, as its total consumption outnumbers whole countries

Sources

– https://hackernoon.com/beyond-crypto-blockchain-ethics- eabd8df6faf5 – https://coincentral.com/blockchain-ethics/ – https://www.coindesk.com/understanding-dao-hack-journalists – https://blockgeeks.com/guides/what-is-blockchain-technology/