1. ג'ואי מזרחי
מיכל חקשור
דור אזולאי

2. Agenda Background Advantages and disadvantages
Process of adding a block to the blockchain
Asymmetric cryptography
Merkle trees
Consensus methods
Mining

3. Blockchain? What is
Blockchain technology provides a distributed ledger
Shared with a P2P FTP (file transfer protocol)
The distributed ledger is made up of blocks of data that are chained together with cryptography
Blockchain is immutable
Provides a trustworthy database without a third party
There is a slide with content behind this picture, the picture is an effect

4. Introduction
The core ideas of a distributed ledger were introduced in when a need for secure digitalized signatures emerged
Blockchain was first introduced in 2008 by Satoshi Nakamota white paper
Blockchain is not only bitcoin

5. Permissionless VS. Permissioned
Permisionless:
Public
Everyone can read or write data
Validated by the public
Slower
Permissioned:
Private
Used mainly by financial institutions
Faster and Cheaper
Ability to define read and write permissions

6. Influences of Blockchain
Removes bureaucratic barriers
Enhanced Security
Encryption
Decentralized technology
Prevents hacking
Time and energy efficient
Terminates the need for a third party
Transparency
Tracing transactions

7. Disadvantages of Blockchain
Complexity- many unknown terms that need to be learned by users in order to use blockchain
Data modification- once data is added to the blockchain, it is almost impossible to modify it
Security flaw- The ‘51% Attack’
Private keys

13. What is a block?
Average size: 1 MB, containing more than 1500 transactions
Identify a block through a cryptographic hash.
Contains a merkle tree root
Every block contains a hash of the previous block, creating a chain of blocks

14. https://blockgeeks.com/guides/what-is-hashing/

15. Tokens
A digital token is capable of being traded or transferred between people without an intermediary
Types of tokens:
Cryptocurrency
Utility Tokens
Asset Token
Security Tokens
Tokens are usually built on Blockchains

16. Hashing and SHA-256
Function that maps data of arbitrary size to fixed size output (in SHA-256 the output is of 256 bits)
Deterministic
Fast
Unique
Irreversible
Blockchain Mechanics- Terence Spies

17. Cryptocurrency
“A cryptocurrency is a digital or virtual currency that uses cryptography for security purpose. A crypto currency is difficult to counterfeit because of its security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.” Cryptocurrency: Its Risks And Gains And The Way Ahead- Krishna Kumar Thakur, Dr. G. G. Banik

18. Blockchain Keys
Public and private key pair compromise of two mathematically related cryptographic keys.
It is highly impossible to derive a private key from a public key
The public key is made available to everyone
The private key remains confidential to its owner
Using asymmetric cryptography we can encode a message using a public key and decode it using a private key

19. Asymmetric Cryptography

21. Bob decrypts with his private key

22. Merkle Tree Binary Hash Tree Used for storing large amounts of data
They provide a means to prove the integrity and validity of data
Their proofs and management only require low bandwidth to be transmitted across networks
Costing only 2*log2(N) operations (where N is amount of data)
Each block holds a Merkle root hash, containing summary of all data on block

27. Merkle Proof Used mainly by SPV nodes
Uses a Merkle path, to concisely prove the validity of data being part of a dataset without storing the whole data set
To ensure the validity of a certain data set being inclusive in a larger data set without revealing either the complete data set or its subset

32. Run Time

33. Consensus Methods
“Consensus decision-making is a group decision-making process in which group members develop, and agree to support a decision in the best interest of the whole. Consensus may be defined professionally as an acceptable resolution, one that can be supported, even if not the “favourite” of each individual. Consensus is defined by Merriam-Webster as, first, general agreement, and second, group solidarity of belief or sentiment.”
Blockgeeks.com
Every type of Data Base needs a method of maintenance
Central DB’s: Some central authority is in charge
Blockchain: The public P2P network verify and authenticate changes
There are two main types of consensus mechanisms in blockchain
Proof of Work or POW
Proof of Stake or POS

34. Proof of Work The first miner that solves a puzzle gets rewarded
Miners compete with each other
High use of resources
Risk of a 51% attack

35. Proof of Stake
A validator’s stake determines whether they can validate a new block
PoS can neutralize the 51% attack risk posed by PoW
A validator might only appear to have a stake in the network — called the “nothing-at-stake” problem
No mining needed
Faster Validations
Can be much more cost affective

36. Mining
Adding transactions to the blockchain while securing and validating them
Miners are pc’s who run a special program
This program competes with other miners to solve a mathematical puzzle
The puzzle(for bitcoin) is to hash a value that means criteria
The winning miner gets a reward(in PoW)

37. Just to remind the audience about the content and structure of blockchain

38. Bitcoin Difficulty Adjustment
The difficulty is the measure of how difficult it is to mine a new block
It is recalculated every 2016 blocks
This calculation will yield on average a new difficulty every two weeks
Correlates to the networks “hash rate”

39. Mining’s Energy Usage
As of April 2018, at least 2.6 GigaWatts of energy is used to solve the mining puzzle and that’s over a third of the electrical consumption of Israel.

41. https://theaccountant. org

42. Future of Blockchain Optimization
Using POS instead of POW
Growth of DLT-based digital structures 
World trade
Transparency Across Industries
Government cryptography
Internet of Things

43. Sum Up A public and permanent distributed ledger Consensus Methods
Merkle Hash Tree
Faster settlements
Transaction authentication by asymmetric cryptography
A P2P network of broadcasted messages

44. Any Questions?

45. Bibiliography
Dylan Yaga, Peter Mell, Nik Roby, Karen Scarfone. “Blockchain Technology Overview”, January 2018 Andreas M. Antonopoulos. “Mastering Bitcoin”, 2010 Ruzanna Chitchyan, Jordan Murkin. “Review of Blockchain Technology and its Expectations: Case of the Energy Sector”, March 2018 Krishna Kumar Thakur, Dr. G. G. Banik. ” Cryptocurrency: Its Risks And Gains And The Way Ahead”, March 2018 David Snyder “Blockchain for the Internet of things” , January 2017