1. 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

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

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

4. 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

5. The Blockchain
Image by Nikin Kale, University of Southern California

6. 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

7. 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

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

9. 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

10. Example Public key – Private Key Bitcoin

11. 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

12. 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

13. 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

14. Blockchain.info

15. 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’

16. Blockchain put together

17. 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
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
[under block]

18. This nonce meets the target requirements

19. Blockchain with Mining

20. 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

21. 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

22. 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

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

24. Questions?