![Smart Contracts
Supply Chain
“UPS can execute contracts that say, ‘If I receive
cash on delivery at this location in a developing,
emerging market, then this other [product], many,
many links up the supply chain, will trigger a
supplier creating a new item since the existing
item was just delivered in that developing
market.’” All too often, supply chains are
hampered by paper-based systems, where forms
have to pass through numerous channels for
approval, which increases exposure to loss and
fraud. The blockchain nullifies this by providing a
secure, accessible digital version to all parties on
the chain and automates tasks and payment.](https://image.slidesharecdn.com/introductiontoblockchain-180306135202/85/Introduction-to-Blockchain-22-320.jpg)
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Introduction to Blockchain
- 2. Agenda 1. History of Blockchain 2. Fundamentals of Blockchain protocol 3. Applications 4. Future Scope 5. Reference
- 3. Time to Grab your Attention!!
- 4. History Satoshi Nakamoto invented blockchain which is fundamental to Bitcoin, to solve the double-spending problem of digital currency Published a paper on Bitcoin: A Peer-to-Peer Electronic Cash System 2008 ● Peer-to-peer electronic transactions and interactions ● Without financial institutions ● Cryptographic proof instead of central trust ● Put trust in the network instead of in a central institution Is Elon Musk the real Satoshi? Wikipedia Definition A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network.
- 5. Trust 2.0 - What is Trust ? - Belief on someone, something without evidence, proof. Given in advance - increase /decrease based on results of behavior on continuous basis - Whom do we trust ? (other than God) - Banks, Government, Credit Card, Utility Companies - What is Trust 2.0 - Shift from humans and orgs to computers and decentralized orgs, via an underlying blockchain-based decentralized consensus protocol that governs its delivery. Airbnb has designed for the human element of trust, the blockchain was designed for a parallel element of transactional trust, where the human is also part of it, but behind the scenes, and that human is represented on the blockchain via their identity and reputation status.
- 6. Why blockchain was needed?
- 7. Ownership ● An identification of the owner ● An identification of the object being owned ● A mapping of the owner to the object Proving ownership in a truly distributed system without a central verification authority and also a network on unknown reliability and trust
- 8. Benefits of Ledger ● Ownership provenance ● System of Record for transaction ● Creation of new entries ● Verification by others
- 9. The Double Spending Problem ● Digital money can be duplicated unless proper care is taken ● Without central authority it is hard to detect the double spend ● Blockchain adds transactions and waits for confirmation by Miners and peers ● Longest chain blocks confirm the transactions
- 10. Byzantine Generals Problem (Leslie Lamport)
- 11. Byzantine Generals Problem - Consensus ● Game Theory - Mathematical models about conflicts/coordination of humans or decision makers ● Block-chain - To solve Byzantine Generals Problem ● BGP - Coordinate the attack for victory, inspite of traitors/liars in group. ● Verification of work in creating the message, time limit (10 mins) to receive message ( or accept default strategy) ● Trust no one, yet deliver the message by resilience to potential attacks ● N > 3M ( or alternatively ⅓ traitors)
- 12. Proof of Work ● Mathematical or Compute Puzzle involving Hash value ● Complexity increases as it evolves ● Mining is hard to compute the “Nonce”, but quick to verify (NP-hard?) ● Get a hash of the transaction such that leading x-digits (e.g., first 4 digits are Zeros) ● Once you get the None satisfying the above condition, you have successfully mined and the entire transaction is verified ● 10 mins for creating and verifying a block
- 13. Proof of Work (Mining) Nonce is 11316 Nonce is 31914
- 14. e shortened hash value of Hello World! is 7F83B165. But what data combined with Hello World! would yield a shortened hash value with three leading zeros? So the hash puzzle is: Find the nonce that combined with Hello World! yields a shortened hash value that starts with three leading zeros.
- 16. Merkle Tree ● Hash of Nodes, branches and all the way to Root ● Transactions in a block are hashed ● Verify set of transactions and order of transactions
- 17. BlockChain Advantage ● Immutable ( or rather any tampering is easily detectable) ● Block chain ledger is distributed and each individual has their own copy ● Barring cartels, no one can control the network virtually ● Computationally it is hard to break the chain or historic transaction
- 18. Big Picture of Block Chain Glorified Linkedlist DAG ( Git?)
- 20. Limitation and Alternatives to Proof of Work ● High compute power and energy debates ● Possibility of 51 % attack ● Bitcoin pool cartels ● POS vs POW ○ PoS happens by a miner putting up a stake, or locking up an amount of their coins, to verify a block of transactions ● Casper ● Miners validate transaction and put into ledger first
- 21. Past vs Future
- 22. Smart Contracts Supply Chain “UPS can execute contracts that say, ‘If I receive cash on delivery at this location in a developing, emerging market, then this other [product], many, many links up the supply chain, will trigger a supplier creating a new item since the existing item was just delivered in that developing market.’” All too often, supply chains are hampered by paper-based systems, where forms have to pass through numerous channels for approval, which increases exposure to loss and fraud. The blockchain nullifies this by providing a secure, accessible digital version to all parties on the chain and automates tasks and payment.
- 23. BitCoin
- 25. Enterprise Adoption of Blockchain ● Walmart is trialing the use of blockchain to track the movement and origins of pork in China. ● UPS uses Blockchain for Supply chain management ● The Blockchain in Trucking Alliance https://www.ccn.com/bita-looking-disrupt- freight-logistics-industry/ ● Anti Counterfeit https://www.techinasia.com/bitse-vechain-blockchain-anti- counterfeiting ( Louis Vuitton – Product Passport ) ● In December 2017, De Beers announced investments in a blockchain-based diamond tracking platform that it hopes will augment supply chain transparency and diamond traceability to avoid conflict diamonds.
- 26. BlockChain in Government - Estonia https://medium.com/e-residency-blog/welcome-to-the-blockchain-nation- 5d9b46c06fd4 https://e-estonia.com/ http://www.smartdubai.ae/dubai_blockchain.php
- 27. Future
- 28. Reference/Books/Tutorials ● https://www.youtube.com/watch?v=_160oMzblY8 ● https://medium.com/@ConsenSys/it-was-the-best-of-times-it-was-the-worst-of-times- 3fc8c0865c6c#.whx8ustwn ● https://bitsonblocks.net/2015/09/09/a-gentle-introduction-to-blockchain-technology/ ● https://www.khanacademy.org/economics-finance-domain/core-finance/money-and- banking/bitcoin/v/bitcoin-overview ● https://www.youtube.com/watch?v=Lx9zgZCMqXE https://blockchainhub.net/blog/infographics/look- blockchain-technology/ ● https://hbr.org/2017/01/the-truth-about-blockchain ● https://hbr.org/2017/02/a-brief-history-of-blockchain ● Books (Business Blockchain, Mastering Blockchain)