1. Bitcoin and Blockchain
BSAD 141
Dave Novak

2. Topics Covered
General discussion of cryptocurrency such as bitcoin and the use of block chain technologies

3. Review
Many questions about Enterprise Resource Planning (ERP) software
Which package is the best?
Why do companies use software other than ERP software?
Why don’t software developers make “better” ERP software?
How widespread?
How successful?

4. Review

5. Review
Fact – organizations have many different processes, use many different software applications, and collect and use many different types of data
How does an organization choose which software applications (or application suite) to use?
How would you decide?

6. Review There is no one software package that does everything
Different software packages have various strengths and weaknesses
The foundational functionality of most ERP software is RDBMS
Historical focus on accounting and financial transactions!

7. Review
Enterprise???
An enterprise is not necessarily an organization - any organizational / human undertaking or endeavor
Directing groups of people to accomplish some purpose using a particular platform
Arranging and managing all activities, processes, products, transactions, services, physical buildings, and all technologies (networks, software applications, databases, hardware, etc.)

8. Review
Create frameworks or blueprints of current architecture and visions of where enterprise can or should go
Enterprise architecture
Proactively and holistically positioning and managing an enterprise
Translating strategic vision into management plan
Part of strategic plan

9. Review
Structure and arrangement of all pieces is the architecture of the enterprise
There is a process associated with enterprise architecture
Take stock of components – what are processes, buildings, products, services, laptops, networks, servers, databases, events, capabilities, organizational structures, etc.
How do these components enable or constrain organization?

10. Review
Involves technological components and integrating those components with strategic vision
What technologies (including software) best enable to the enterprise to accomplish its goals?
How should these technologies be deployed?

11. Review Processes modeling and DFDs
Understanding frameworks and templates
Use a variety of design tools
Unified Modeling Language (UML)
Common notation and diagrammatic views for different design issues
Requirements analysis
Visualize complex issues
Communication
Analytical skills (intuition and methodological)

12. Review

13. Discussion of cryptocurrency (such as bitcoin) and block chain

14. Cyrptocurrency What is a currency?
Some set of verified entries in a database of accounts, balances, and transactions
Valued transactions in a database that no single entity can change without abiding by very specific conditions

15. Cyrptocurrency A peer-to-peer electronic cash system
To have a viable digital payment / cash system, you need:
A payment network with accounts, balances, and transactions – usually handled by a centralized “master” server
A decentralized P2P network has no centralized server
Transaction management must be handled by all individual members of the network together

16. Cyrptocurrency
All peers must have an updated list of all transactions and agree on those transactions
Breaks down if there is disagreement
Must reach consensus without central authority

22. Cyrptocurrency
Confirmation of a transaction is a key component of the process
Only miners can confirm transactions
Stamp the transaction as legitimate and share the transaction in the P2P network

23. Cyrptocurrency Anyone can be a miner
There is no centralized “authority” to do this
Miners have to invest time / effort to qualify
Provide “proof of work” – find a hash (a product of a cryptographic function) that connects a new transaction block to the preceding transaction block
Miners add a block to the blockchain by finding a solution to a cryptographic puzzle – they are rewarded with cryptocurrency

24. Cyrptocurrency
1) Irreversible: After confirmation, a transaction can‘t be reversed. By nobody. And nobody means nobody. Not you, not your bank, not the president of the United States, not your miner. Nobody. If you send money, you send it. Period. No one can help you, if you sent your funds to a scammer or if a hacker stole them from your computer. There is no safety net.
2) Pseudonymous: Neither transactions nor accounts are connected to real-world identities. You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters. While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real world identity of users with those addresses.

25. Cyrptocurrency
3) Fast and global: Transaction are propagated nearly instantly in the network and are confirmed in a couple of minutes. Since they happen in a global network of computers they are completely indifferent of your physical location. It doesn‘t matter if I send Bitcoin to my neighbour or to someone on the other side of the world.
4) Secure: Cryptocurrency funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Strong cryptography and the magic of big numbers makes it impossible to break this scheme. A Bitcoin address is more secure than Fort Knox.

26. Cyrptocurrency
5) Permissionless: You don‘t have to ask anybody to use cryptocurrency. It‘s just a software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other cryptocurrencies. No one can prevent you. There is no gatekeeper.

27. What is bitcoin?

28. What is bitcoin? Decentralized Digital currency Peer-to-peer
Currency exchange
Digital wallet
Miners and verification
Transparent public ledger

29. What is bitcoin?
Open source
Transaction fees
Chargebacks

30. Need to know https://bitcoin.org/en/you-need-to-know#instant

31. Blockchain supports bitcoin
What does the name “blockchain” mean?
Blockchain network continually validates every 10 minutes
Reconciles and posts every transaction every 10 minutes
Each 10 minute transaction / update period is referred to as a “block”
The “chain” is the sequential, visible history of the block events

32. What is blockchain?
A permanent, continually reconciled, incorruptible digital ledger of economic transactions
Distributed, but not copied – you can view the latest version on the internet, but you cannot save a copy to your hard drive or copy it
Records are truly public and transparent
Hosted by millions of computers simultaneously

33. What is blockchain?
“The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient, and ask them to make revisions to it. The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes because you are locked out of editing it until the other person is done with it. That’s how databases work today. Two owners can’t be messing with the same record at once.
Source:

34. What is blockchain?
That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again). With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people
Source:

35. What is blockchain?
Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.”
Source:

36. Perspective
“Blockchain solves the problem of manipulation. When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain’s opportunities are the highest in the countries that haven’t reached that level yet.”
Source: Vitalik Buterin

37. Blockchain Distributed database
Completely shared and continually reconciled database of transactions
Not stored or managed in any single location
Truly public and easily verifiable

38. Blockchain Robust Cannot be controlled by any single entity
Has no single point of failure
Bitcoin blockchain has operated without substantial disruption since 2008
Conceptually sound

39. Blockchain Transparent Data are embedded in the network
Cannot be altered or corrupted
Requires a huge amount of focused computing power to override the network

40. Blockchain Network of decentralized P2P nodes
Imagine trading stocks in real-time, with no broker, and with no transaction fees
The “currency” is managed by the users of the network (who can come and go as they please) as opposed to a centralized authority

41. Blockchain Security Data are stored everywhere across the network
No central points of vulnerability
Relies on advanced encryption technologies not user names and passwords (public key encryption)

42. Blockchain Who will use it? Governance? Crowdfunding
Currently used in financial transactions
No “middleman”
Just need a computer
Governance?
Crowdfunding
Supply chain auditing

43. Summary
Cryptocurrency and blockchain technology