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Introduction Blockchains and Smart Contracts
- 1. Gentle Introduction to Blockchainsand Cryptocurrency Bobinson K B
- 2. Agenda • Digital cash •Bitcoin : an economical invention • Smart contracts • Public and Private Blockchains • Applications • Forensic Audit of transactions
- 3. Digital Cash • Attemptsto address issues using Cryptography • Hashcash : Proposed in 1997 and implemented in 2002 • B-Money by Wei Dan - 1998 • Centralised
- 5. Economics • Mimics Centralbanks in decentralised fashion • “Mints” money • Limited Supply - results attributes like Gold • Deflationary
- 6. Quick primer onHashing • Hashing is commonly used for checking integrity • Computation uses high CPU power • Bitcoin: SHA256, Etherum: Keccak-256 (SHA-3 equivalent)
- 7. Public Key Cryptography •2 Keys - Asymmetric • One Key is Private/Secret • Second key is Public : known to all • secpk256k1 + Elliptic Curve Cryptography (accounts - both Bitcoin and Ethereum) • secpk256k1 + Elliptic Curve Digital Signature Algorithm (ECDSA) • Ethereum Smart contracts : EdDSA
- 8. Cryptography + Hashing •Generation of addresses : Random number (private key) > seckpk256k1 curve (public key) > hash (address) • Transaction Signature • Blockhash
- 9. Bitcoin • Decentralised Peerto Peer Network • Public Transaction Ledger • Consensus Rules : Regulates Currency issuance • Proof of Work : Global Consensus
- 10. Peer to PeerNetwork
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- 13. Currency issuance, Consensus •Currency issue halves every 210K blocks • Started at 50 BTC per block • Capped at 21 million • Blocks generated every ~10 minutes
- 14. Proof of Work •A difficult to solve puzzle • Unique for every block • Blocks to be found every 10 minutes • Adjusts difficulty based on the network • participation • Uses SHA-256 Hashing
- 15. Anatomy of ablock
- 16. Genesis block ScriptSig TheTimes 03/Jan/2009 Chancellor on brink of second bailout for banks
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- 18. Mining • Difficulty target: Keep readjusting periodically • Block hash must be less than “target” • Results in funding a new, number every new block
- 19. Crypto currency • Issuedbased on strict conditions • Native assets/coins : BTC, ETH, SOL, DOT • Native coins are created/minted by mining • Tokens aka non-native coins are created by smart contracts • Native coins are earned by mining or processing transactions
- 20. Distributed Ledger • Everyblock contains transactions • Stored across the world • No central server • Immutable - cannot alter/delete : Ultimate source of Truth • Every node, miner performs computations —> smart contracts!
- 21. Smart Contracts • User’scan submit computations • Pay the network to perform the computations • Solidity Programming language • Bitcoin has minimal SCRIPT capability • Runs on all nodes (full nodes) in the network
- 23. Why smart contracts? • Trustless • Decentralised and censorship resistant • Transparency • Immutability • Global consensus —> ideal for financial, ownership tracking applications • Programable money, Assets
- 24. What can smartcontracts do ? • Create Digital Certificates - Property Ownership, Land records, Degree certificates, Chain of Custody (criminal investigations) • Secure Handshakes : Execute contracts • DeFi, DEX • Escrow & complex financial operations • Securely store assets/cryptocurrency
- 25. Course Certificates • Studentsjoin an online course/session • After the successful completion, everyone can be given certificates • KYC: Implement an Aadhar based OTP verification to ensure identity
- 26. Escrow • Payments linkedto conditions • Delivery of assets • Time bound payments (or reversal)
- 27. DID • Decentralised Identity- DID • Applications like Digiyatra : Government ID, biometrics can be “attested” • European Union Digital Wallet
- 28. Cross chain transactions •Chains store value and data • Value, aka tokens can be moved between chains • Burn or lock in source chain, mint in destination chance
- 29. Privacy • Obfuscate transactions •Often involves ZK-SNARK (zero knowledge Proof) • Monero, Zcash : chains focusing on privacy • Tornado Cash : mixer • Makes it difficult to track transactions
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