Edx Course: Blockchain for Business

1. Introduction
- Hyperledger is umbrella of opensource blockchain and related tools
- Hyperledger sawtooth, Iroha and Fabric

2. Distributed ledger technologies

• Includes blockchain and smart contracts
• A distributed ledger is a type of data structure which resides across multiple computer devices,
generally spread across locations or regions.
• Three basic components
i. Data model: that captures current state of ledger
ii. Language of transaction: That changes the ledger state
iii. Protocol: Used to build consensus among participants around which transactions will be
accepted, and in what order, by ledger
• Transactions are grouped into blocks. There can be any number of transactions per block.
• Nodes and machines on a blockchain network group these transactions and send them
throughout the network
• Concept of consensus: agreement among the network peers. So each machine has exact copy
of the blockchain throughout the network

• Blockchains
• Peer to peer distributed ledger forged by consensus, combined with a system of smart
contracts and other assistive technologies
• Smart contract: computer programs that execute predefined actions when certain conditions in
the system are met
• Consensus: A system of ensuring that parties agree to a certain state of system as the true state
• Recording of things in real time; validation in real time
• Applicable to all places that need to track material effort, money
• Log based system- records what has happened as it is happening
• Fabric: hub and spoke model
• Sawtooth: Star model
• Iroha: Mobile environment; intermittently connected
• Term- tunnelling : to connect between nodes across the internet

• Difference between DLT and Blockchain

• DLT- decentralized database
• Data Structure used to be called blockchain
• Chronological chain of blocks
• Feature- Timestamping
• Block consists of four piece of metadata
• The reference of previous block
• Proof of work (known as nonce)
• The timestamp
• The Merkle tree root for the transaction included in this block

• Merkle tree
• Binary hash tree
• To summarise all the transactions in a block, producing an overall digital fingerprint of the
entire set of transaction, providing a very efficient process to verify whether a transaction
is included in a block
• Anti-tamper mechanism to ensure that the large dataset has not been changed
6. Transactions
• Record of an event, cryptographically secured with digital signature, that is verified, ordered
and bundled together into block form the transactions in the blockchain

• Type of Blockchains
• Open public blockchains (Permission less)
• Bitcoin or Ethereum
• Network can commoditize trust
• Permissioned blockchain
• Hyperledger
• Supply chain management
• Peer to Peer (P2P) network architecture
• Generally more safe than central servers

• Blockchain network is P2P network

• Consensus Mechanism : Whereby peers synchronize data on blockchain
Types:
• Proof of work (Bitcoin)
• Proof of stake (Ethereum)
• Proof of Elapsed time (Hyperledger Sawtooth)

• Immutability of Data on Blockchain

• Anthony Lewis
"When people say that blockchains are immutable, they don't mean that the data
can't be changed, they mean it is extremely hard to change without collusion, and
if you try, it's extremely easy to detect the attempt."
• Smart Contract
• computer programs that execute predefined actions when certain conditions in the system are
met
• Facilitate the exchange of value, including money, content, property or share between fixed
number of parties

• Bitcoin:
• Motivation: To transfer value over internet without intermediary
• Problem solved : double spend
• It is Programmable money
• Vitalik Buterin-
"Cryptoeconomics is about building systems that have certain desired properties
using cryptography to prove properties about messages that happened in the past
while using economic incentives defined inside the system to encourage desired
properties to hold into the future."
• Cryptoeconomics
• The malicious actors cannot take over the network through an escalated
attack.
• The malicious actors cannot collude to undertake an organized majority
attack on the network.
• The payoffs of securing the network are consistently higher than the cost
of attacking the network.
 • The cost of attacking the network is prohibitively high.

• Ethereum
• Bitcoin has a very limited programming language
• Ethereum uses a more expansive set of programming languages for many other type of
programs and applications
• Core invention: Ethereum Virtual Machine (EVM)
• EVM runs on Ethereum network and runs a turing-complete software
• Designed for zero downtime
• Website-
"Ethereum is an open blockchain platform that lets anyone build and
use decentralized applications that run on blockchain technology".
• Facilitates scripting functionality or smart contracts