Introduction to Blockchain

The Blockchain Myth

• Blockchain ≠ Bitcoin (or any other cryptocurrencies)
• If you want to take this course to trade cryptocurrencies,
this course is not for you !!
• We do not want to argue on the legal issues of
cryptocurrencies -- We want to learn the technology and
its applications
The Blockchain Myth
• Anything and everything in the world cannot be solved using
a blockchain
• Blockchain is good but it cannot change the society in a
week or a month or a year
• "Want to prevent fraud and corruption? Use Blockchain"
-- Unfortunately, you are wrong! There can be a better
technology to solve your problem ...
The Blockchain Myth
• You cannot replace a database with a blockchain
• Blockchain is not a distributed database
• Blockchain is not designed to securely store ANY
data
Why this course ...
• To avoid all the hypes and apply Blockchain as a solution at the
right place ...
 Why this course ...
• To avoid all the hypes and apply Blockchain as a solution at the
right place ...

So, what is the

right place?
Decentralization – When
Do you Need It?
Supply Chain Management -A Use C
 Supply Chain in Petroleum
Industry

Crude
Purchase
Supply Chain in Petroleum
Industry

Crude
Crude
Transportation
Purchase
 upply Chain in Petroleum
ndustry

Crude Crude
Crude
Transportation Storage
Purchase
 Supply Chain in Petroleum
Industry

Crude Crude
Crude
Transportation Storage
Purchase

Refining
 Supply Chain in Petroleum
Industry

Crude Crude
Crude
Transportation Storage
Purchase

Distribution Refining
 Supply Chain in
Petroleum
Industry
Crude Crude
Crude
Transportation Storage
Purchase

Retail Refining
Distribution
 Petroleum Supply Chain in India
Ministry of Petroleum and Natural Gas

Upstream Downstream
Refining and
Exploration and Industry Marketing
Production
Bodies
Petroleum Supply Chain in
India
ONGC
Upstream
Exploration and
OVL
Production
Oil India
Ltd
Pvt E&P
Co
Petroleum Supply Chain in
India
Indian Oil Bharat Petr.
Downstream CPCL, BRPL NRL
Refining and
Marketing
Reliance Hindustan
Ind. Ltd Petr.

MRPL
Petroleum Supply Chain in
India
• Petroleum Planning and Analysis
Cell
• Center for High Technology
Industry • PRCA
Bodies • PetroFed
• Oil industry Safety Directorate
• Petroleum India International
 Requirements for a
Successful Supply Chain
• Minimization of material procurement
• Maximization of manufacturing capacity and sales
• Meet demand numbers
• Respond quickly to market opportunity by purchasing the
production shortfall from other players
• Objective of each production unit would be to maximize
the
throughput and its margin
• Procurement would purchase the feedstock with not the
best yields at lowest cost
 Requirements for a
Successful Supply
• Minimization of material procurement
• Maximization of manufacturing capacity and sales
• Chain
Meet demand numbers
• Respond quickly to market opportunity by purchasing
the

production shortfall from other players

Needs Strong Coordination among the Players
• Objective of each production unit would be to maximize
the
throughput and its
margin
• Procurement would purchase the feedstock with not
the
best yields at lowest cost
 Requirements for a
Successful Supply
• Minimization of material procurement
• Maximization of manufacturing capacity and sales
• Chain
Meet demand numbers
• Respond quickly to market opportunity by purchasing
the

How do we shortfall
production obtain from
Real-time Information from the
other players
• Objective of eachStakeholders?
production unit would be to maximize
the
throughput and its
margin
• Procurement would purchase the feedstock with not
the
best yields at lowest cost
 Requirements for a
Successful

• Maximization of manufacturing
Supply
• Minimization of material procurement
production shortfall from
capacity and sales other players
Chain
• • Objective
Meet demand numbers of each production unit
would be to maximize the
• Respond quickly to market opportunity by purchasing the
 throughput and its margin
How
 •do we obtain Real-time Information from the
Procurement would purchase the
feedstock with not the
Stakeholders?
 best yields at lowest
A web-based portal? cost
 Requirements for a
Successful

• Maximization of manufacturing
Supply
• Minimization of material procurement
production shortfall from
capacity and sales other players
Chain
• • Objective
Meet demand numbers of each production unit
would be to maximize the
• Respond quickly to market opportunity by purchasing the
 throughput and its margin
How do we obtain Real-time Information from the
 • Procurement would purchase the
Stakeholders?
feedstock
What with
is the guarantee thatnot the
the information
 best yields at lowest cost
submitted is correct?
 Requirements for a
Successful

• Maximization of manufacturing
Supply
• Minimization of material procurement
production shortfall from
capacity and sales other players
Chain
• • Objective
Meet demand numbers of each production unit
would be to maximize the
• Respond quickly to market opportunity by purchasing
 throughput and its margin
the
 • Procurement would purchase the
How do we obtain Real-time Information from the
feedstock with not the
Stakeholders?
 best yields at lowest cost
What is the guarantee that the information
submitted is correct?
What if someone denies the information later
on?
 Requirements for a
Successful

• Maximization of manufacturing
Supply
• Minimization of material procurement
production shortfall from
capacity and sales other players
Chain
• • Objective
Meet demand numbers of each production unit
would be to maximize the
• Respond quickly to market opportunity by purchasing
 throughput and its margin
the
 • Procurement would purchase the
How do we obtain Real-time Information from the
feedstock with not the
Stakeholders?
 best yields at lowest cost
We need a decentralized solution – Noone trust
each other, but they should cooperate
 Requirements for a
Successful Supply
• Minimization of material procurement
ximization of m ng
• anufactur capacity sale
MaChain
d et demand nui an s
• mbers
MeRespond quickly to market opportunity by purchasing the
•
production shortfall from other players
• Objective of each production unit would be to maximize
the
throughput and its
rocuBreo
l mecnktcwhoualdn i puirschatshe
•
margin
P
etheafneesdwstoeckrw!ti !h not the
best yields at lowest cost
 Conclusion – Decentralization
and Blockchain
• You have a network of different players (businesses, enterprises,
commercial establishments, Government or Private bodies, or
even the individuals)
• Everyone has their own interest – they want to fulfill their goal
• They do not trust each other
• If they cooperate, the society gets benefited
• Trustless Decentralization = Blockchain
 Requirements for a
Successful Supply
• Minimization of material procurement
• Maximization of manufacturing capacity and sales
• Chain
Meet demand numbers
• Respond quickly to market opportunity by purchasing
the

production shortfall from other players

Needs Strong Coordination among the Players
• Objective of each production unit would be to maximize
the
throughput and its
margin
• Procurement would purchase the feedstock with not
the
best yields at lowest cost
Moving towards
Decentralization ...
Moving towards
Decentralization ...
Moving towards
Decentralization ...
- 120432 barrels
produced at Mumbai
High on Dec 26, 2020
Moving towards
Decentralization ...
-120432 barrels produced
at Mumbai High on Dec
26, 2020
-16467 barrels transported
from Mumbai High to
HPCL Refinery on Dec 26,
2020 at
2:30 pm
Moving towards
Decentralization ..
-120432 barrels produced
The board has
.space,
at Mumbai High on Dec
26, 2020
infinite
-16467 barrels transported
you do
from Mumbai High to
not need to HPCL Refinery on Dec 26,
erase 2020 at
2:30 pm
anything!
Moving towards
Decentralization ..
-120432 barrels produced

.Everyone
at Mumbai High on Dec
26, 2020
-16467 barrels transported
from Mumbai High to
can see all HPCL Refinery on Dec 26,
the logs 2020 at
2:30 pm
and verify
Moving towards
Decentralization ...
-120432 barrels produced
at Mumbai High on Dec
26, 2020
-16467 barrels transported
Any change from Mumbai High to
in information HPCL Refinery on Dec 26,
is visible 2020 at
2:30 pm
to everyone
Moving towards
Decentralization ..-120432 barrels produced

.
at Mumbai High on Dec
26, 2020
-16467 barrels transported
The board is not from Mumbai High to
HPCL Refinery on Dec 26,
erasable, no 2020 at
one can deny 2:30 pm

later
Moving towards
Decentralization ..
-120432 barrels produced

.
at Mumbai High on Dec
26, 2020
-16467 barrels transported
from Mumbai High to
HPCL Refinery on Dec 26,
Simple one-step 2020 at
2:30 pm
auditing
Moving towards
Decentralization ..
- 120432 barrels

.
produced at Mumbai
High on Dec 26, 2020

Who will maintain this bulletin board?

- 16467 barrels
transported
from Mumbai High to
HPCL
Refinery on Dec 26, 2020
at
2:30 pm
Moving towards
Decentralization ...
- 120432 barrels
produced at Mumbai
High on Dec 26, 2020

Who will maintain this bulletin board?

- 16467 barrels
transported
from Mumbai High to

- Buy at2:30
HPCL
Cloud from amazon
Refinery on Dec 26, 2020

pm
Moving towards
Decentralization ...
- 120432 barrels
produced at Mumbai
High on Dec 26, 2020

Who will maintain this bu lletin board?

- 16467 barrels
transported
from Mumbai High to

- Buy at2:30
HPCL
Cloud from amazon
Refinery on Dec 26, 2020

pm
Who will manage it and provide the cost?
Moving towards
Decentralization ...
-120432 barrels produced
at Mumbai High on Dec
26, 2020
- 16467 barrels
transported
from Mumbai High to
Who will main t a i n t h i s
HPCL
Ref in er y on D e c2 6 ,
2:30 pm
20b uoflletin
- One 20 board? maintain a
the enterprises
at

private cloud
Moving towards
Decentralization ...
-120432 barrels produced
at Mumbai High on Dec
26, 2020
- 16467 barrels

Who will maintain this bulletin board?

transported
from Mumbai High to
HPCL
- One of the enter p r i ses maintain a private
Refinery on Dec 26, 2020
2at 3
:0 p m

cloud What is the guarantee that it is not a

fraud?
 Moving towards
Decentralization ...
- 120432 barrels
produced at Mumbai
High on Dec 26, 2020

Who will main t a i n t h i s b u

- 16 4 67 b arre ls tra n spo rt ed

lletin board? from Mumbai High to

Let everyone main HPCL
t a i n t h e s a m e copy of the
R e nif e y
r o
n D c
e 6
2 ,2 020 at
2:30 pm
board individually and independently
Moving towards
Decentralization ... - 120432 barrels
produced at Mumbai
High on Dec 26, 2020
Who will main -

t a in t h i s b u lletin
1 64 67 barr el s tr a nsp or ted

board?
from Mumbai High to
HPCL
Let everyone maintain the same copy of the
Refinery on Dec 26, 2020
at
board individually and independently
2:30 pm

BUT HOW?
Moving towards
Decentralization ..
-120432 barrels produced

.
at Mumbai High on Dec
26, 2020
-16467 barrels transported
from Mumbai High to
HPCL Refinery on Dec 26,
2020 at
2:30 pm
Moving towards
Decentralization ..
.
Moving towards
No one is the sole-
Decentralization
owner of the data, ...
but everyone has
a copy of the data
- there is no
central database
Moving towards
Decentralization
Everyone
holds exactly the
...
same copy of the
data at the same
instance of the time
What is a Blockchain?
An immutable append-only
ever-growing chain of
data.
Data once added cannot
be deleted or modified
later
What is a Blockchain?
There is no central database to
store the chain – everyone keeps a
copy of the chain and process
data locally
What is a Blockchain?
New information is added to
the chain in the form of
new blocks
What is a Blockchain?
Blockchain ensures that every
party has the same view of the
blockchain always
What is a Blockchain?
The Information is transparent to
everyone – so everyone can verify
and validate
Conclusion: Formally Defining
a Blockchain

A decentralized immutable append-

only public ledger
Conclusion

We got a broad idea of a blockchain and its possible use

cases (beyond cryptocurrencies)

We next learn some fundamental cryptographic

techniques used in the design of a blockchain ...