Blockchain 101

Bitcoin as a first system named "blockchain"

2008, Satoshi Nakamoto whitepaper

A blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a merkle tree root hash).

definition by Wikipedia

What it was supposed to solve is a double-spending problem for digital currency using a peer-to-peer network. Its goal was to provide a usable high-volume payment system.

source: Wikimedia

Great analogy would be git!

Bitcoin blockchain vs git

What it stores?

git - snapshot of the system in time

Bitcoin - transactions history

How it creates the chain?

Both are using cryptographic hash functions.

Bitcoin additionally uses asymmetrical cryptography for transaction signing and leverages a Proof Of Work algorithm

Does it allow branching?

Git does

Bitcoin - not really

Blockchain is supposed to be immutable, its transactions are not reversable - at least that's the assumption

Where is the cryptography involved?

Blocks parent-child relation (chaining)

Transactions signing

Consensus mechanism - Proof Of Work

Bitcoin transaction lifecycle

source: https://www.bambora.com/en/ca/blog/bitcoin-explained/

How transactions work

source: https://freedomnode.com/guides/17/how-bitcoin-works

How does the Proof Of Work algorithm work?

source: cryptographics.info

What does it mean to send transaction to the blockchain network?

What does it mean your transactions has a number of network confirmations?

How the nodes communicate between each other?

What is the nodes discovery mechanism?

What if there are two versions of the chain?

What is ICO?

What is a cryptowallet?

Can I keep by Bitcoins on my pendrive?

Blockchain challenges

Energy consumption

Storage

Throughput - relies on block generation interval and maximum size of blocks

Network stability

Thanks!

github.com/pawk