Wokshop SAIS 2018 Dr. Meg Murray Kennesaw state university The Blockchain: What is this emerging technology that is taking the digital world by storm Wokshop SAIS 2018 Dr. Meg Murray Kennesaw state university

What is the Blockchain The Blockchain is a ledger of facts decentralized, distributed, digitized ledger of facts recorded chronologically and shared publicly

Blockchain Origins Introduced as the underlying technology for the cryptocurrency “Bitcoin” Described in a 9-page white paper written by ‘Satoshi Nakamoto’ https://bitcoin.org/bitcoin.pdf The paper provides technical details as it outlines a democratized currency

This workshop isn’t about currency but… It is hard to describe the blockchain without referencing its seminal application (Bitcoin) The blockchain was designed to deal with many of the problems associated with money Reliable transaction verification to overcome such issues as double spend and chargeback without the need for a 3rd party intermediary The use of the blockchain has expanded beyond currency to other assets of value

The Blockchain Image by Nikin Kale, University of Southern California

How do you get Blockchain Code? Blockchain and its associated supporting software programs are open source For example, you can become a node in the Bitcoin blockchain by simply downloading the Bitcoin Core software https://bitcoin.org/en/download

Blockchain’s 3 Underlying Technologies Peer-to-peer networking Private key – Public key Cryptography Heavy reliance on hashing Distributed consensus Based on the resolution of a mathematical challenge

Peer – to – Peer Networking In a messaging P-2-P, a node is connected to at least 8 other nodes

Cryptography in the Blockchain Cryptography is used heavily in a blockchain Varies but typically includes: Key pairs: public key – private key ECDSA – digital signature Cryptographic hash functions SHA-256 most common

Example Public key – Private Key Bitcoin

Example Bitcoin Key Pair Implementation of key pair varies by application In Bitcoin, you ‘pay’ to a public key or a public key hash Private key is what identifies ownership of the Bitcoin If the private key is lost SO ARE THE BITCOINS This guy in London threw out his hard drive that held the private keys to 7,500 bitcoins

Hashing in the Blockchain Cryptographic hash function most commonly used is SHA-256 Hashing reduces any set of text to a 64-character string If any change is made to the original text, the hash value changes Hashing is used to create the ‘immutable’ link between 2 blocks Good site to experiment with hashing https://anders.com/blockchain/hash.html

The Block Each block contains: collection of ‘facts’ (i.e. transactions) a reference to the block that came immediately before it an answer to a difficult-to-solve mathematical puzzle called the nonce known as the proof-of-work coinbase transaction first transaction in the block - used to send the block reward

Blockchain.info

Distributed Consensus This has two functions: Transaction verification New block creation and acceptance Consensus is achieved when nodes agree that the nonce of a new block header is the correct answer to a hashing puzzle Can only be solved by brute force methods Referred to as Proof-of-Work Known as ‘mining’

Blockchain put together

Mining – the Bitcoin way The Proof of Work is a brute force search for a nonce Nonce results in a hash of a block header that meets a certain target difficulty By expending resources (hardware, electricity, cooling) miners race to solve the hashing puzzle winner claims the bitcoin reward by announcing they have performed the Proof of Work current mining activity https://blockchain.info/charts/hash-rate The target difficulty adjusts every two weeks to retain an average time to mine a new block at 10 minutes Often done by adding or subtracting the required number of leading zeros https://anders.com/blockchain/block.html [under block]

This nonce meets the target requirements

Blockchain with Mining

Use Cases for the Blockchain Cryptocurrencies – Bitcoin was the first (but now not the only!!) Smart Contract (Ethereum) Transaction contains ‘tokens’ Turing code {set criteria for contract} Government tracking of documents (Dubai by 2020) Property deed ownership tracking Vote tracking Licensure and credentialing College transcript sharing

A word on Bitcoin Bitcoin the currency is very volatile Bitcoin for as a transaction processing system is not very scalable Note it takes 10 minutes for a transaction to be verified Miners do not have to accept transactions Starting to see this happen if a low fee is attached 51% attack risk Any miner can control more than 50% of the hash rate, they can manipulate the blockchain Disagreements in Bitcoin rules (i.e. 10 minute block time…) can result in forks in the blockchain First fork was Bitcoin Cash Now there is also Bitcoin Gold and Bitcoin Diamond

Blockchain in the IS curriculum Many implications for the blockchain as a theme in an IS class Great way to teach various underlying technologies Provides additional opportunities to experiment with cryptography, hashing, consensus The study of blockchain maps well to theories of diffusion theories of adoption of innovation Blockchain as a database Blockchain for data tracking and archiving

Diffusion of the Blockchain Technology Adoption S-curve Diffusion of Innovations, Everett Rogers

Questions?