Blockchain is a distributed public ledger that records all Bitcoin transactions in a permanent, verifiable way. It uses cryptography to ensure the integrity and security of each transaction. New transactions are grouped into blocks and added to the blockchain through a process called mining, where miners compete to solve complex math problems. In return for securing the network, miners are rewarded with new Bitcoins. This decentralized system allows for peer-to-peer transactions without an intermediary.

1. BLOCK-CHAIN
& the Bitcoins
Ninad
Sarang

2. Index
What is TRANSACTION ?
BlockChain !!!……Never heard what is that??
The BTC Aka BitCoins
Who discovered?
How it works?
Advantages & Disadvantages
Applications

3. hello!
I am Ninad Sarang
Cyber Security Consultant @ NSEIT
You can find me @linkedin >ninad sarang

4. 1.
What is TRANSACTION ?
Let’s start with the basics

5. How Card Swap Transaction works?

6. Advantages
 Regulated
 Controlled & created by government
 Hard to steal by hackers
 Hard to transmit
 Hard to trace
 Refundable
Traditional ways of transaction
Disadvantages
 No record when coverted to cash
 Used for crime
 Transaction cycle takes time
 Refund process takes time
 Fees , charges are applicable
 Dependent on trusted third parties

7. BLOCK CHAIN
BlockChain !!!……Never heard what is that??

8. ““The first generation of the digital revolution
brought us the Internet of information. The
second generation — powered by blockchain
technology — is bringing us the Internet of value: a
new platform to reshape the world of business
and transform the old order of human affairs for
the better.”
-Don Tapscott

9.  the block chain is a public ledger with all Bitcoin transactions that have ever taken place
since the very first one, the so-called Genesis Block. Every active node in the Bitcoin
network has a copy of the block chain. And every time a new “block” is discovered via
mining, it is appended to the block chain, as the name suggests. In other words, the block
chain is a big list of Bitcoin transactions.
 The blockchain has complete information about the addresses and their balances right
from the genesis block to the most recently completed block.
Lets Define BlockChain

10. BTC Aka BitCoins
“Lets Understand Blockchain with BTC”
What is Bitcoin?
✘ A protocol that supports a decentralized, pseudo-anonymous, peer-to-peer digital
currency/crypto currency
✘ A publicly disclosed linked ledger of transactions stored in a blockchain
✘ A reward driven system for achieving consensus (mining) based on “Proofs of Work” for
helping to secure the network
✘ A “scare token” economy with an eventual cap of about 21M bitcoins

11. Who Discovered??
“Satoshi Nakamoto” created the reference implementation that began with a Genesis Block of 50
coins.The software is open source and royalty free
2008
✘ August 18 Domain name "bitcoin.org" registered[1].
✘ October 31 Bitcoin design paper published
✘ November 09 Bitcoin project registered at SourceForge.net
2009
✘ January 3 Genesis block established at 18:15:05 GMT
✘ January 9 Bitcoin v0.1 released and announced on the cryptography mailing list
✘ January 12 First Bitcoin transaction, in block 170 from Satoshi to Hal Finney
[1] https://en.bitcoin.it/wiki/History

12. The Basic Mechanism
 Transactions are published to the Bitcoin P2P network
 Miners (computers) compete to solve a proof-of-work problem on average every 10
minutes
 The winning miner publishes a summary of recent transactions in a block
 Miners are rewarded with new coins for having published a valid block
 Blocks are linked to previous blocks, creating a block chain
 The value of every account is evident on the blockchain
 Everyone is expected to know the whole blockchain

13. How it works?
Coins flow from Inputs to
Outputs
✘ A coin owner transfers coins by
digitally signing (via ECDSA) a
hash digest of the previous
transaction and the public key
of the next owner. This
signature is then appended to
the end of the coin.

14. Pseudo Anonymous
✘ Using public key cryptography, specifically Elliptic Curve Cryptography due to its
key strength and shorter keys
✘ Transactions are sent to public key “addresses”
1AjYPi8qryPCJu6xgdJuQzVnWFXLmxq9s3
1Give4dbry2pyJihnpqV6Urq2SGEhpz3K

15. Public Ledger
✘ Every viable transaction is stored in a public ledger
✘ Transactions are placed in blocks, which are linked by SHA256 hashes.
https://blockchain.info

16. Arriving at Consensus
✘The longest path represents the accepted chain.
✘ A participant choosing to extend an existing path in the block chain indicates a
vote towards consensus on that path. The longer the path, the more computation
was expended building it.

17. Consensus Process = Mining
✘Originally the digital wallet could also participate in the consensus process by attempting to
secure the network directly .This process is known as “mining”
✘Mining involves attempting to find a numerical value, known as a “nonce” that when
combined with all open transactions can be “hashed” into a value that satisfies a certain
“difficulty”
✘Custom, purpose built-hardware is used

18. “Proof of Work” -Process
 This is the way new Bitcoins are created.
 Miners publish blocks on the blockchain. As a reward for publishing blocks, they get to keep
Bitcoins. (50 for the first 4 years, 25 then 12.5 now, halving every four years)
 Miners also get transaction fees
 Race to find a conforming hash every 10 minutes
 Don’t do it (unless you have cash, time, and an underutilized electrical engineering skill)
 Incredibly competitive, Risky, High upfront investment
 Technology is changing rapidly
 Now requires specialized hardware (ASIC chip)
 Miners reasonably must join a guild (Miners Pool)
 The combined computing power of the miners is thousands of times more powerful than
the most powerful super computers in the world

19. “Proof of Work” -Process
 Hashcash algorithm designed to prevent spam
 A hash is an apparently random set of 256 bits
 Every time you change something being hashed (for example, with a nonce) the hash completely
changes
 There is a 50% chance the first bit might be 0
 If you change the thing-to-be-hashed a little bit, you could try a few times and get one with the first bit
of 0
 First 2 bits: 25% , First 10 bits: 0.0977%
 Find a hash with the first 63 bits as 0 (0.00000000000000001%), and you can publish a block and win
12.5 Bitcoins

20. “Proof of Work”-continue
 Hashing is straightforward, but not challenging
 Unless the goal is to say, find me a hash value that satisfies a certain level of “difficulty”
 For example, let’s say the challenge is find a hash-value that begins with a number of zeros,
for a given input
 The Proof of Work comes from finding a number (known as a NONCE) that when added to
the input changes the output of the hash value to satisfy the difficulty.
 In the Bitcoin world this is what “mining” is and in effect is little more than a lot of hash-
power spent on guessing winning lottery numbers that satisfy the difficulty of the problem
in order to obtain the reward from the network

21. Transaction Confirmation
 Having a transaction provisionally accepted into a candidate block signals that the
network has verified that the inputs were viable
 Every new block accepted into the chain after the transaction was accepted is considered a
confirmation
 Coins are not considered mature until there have been 6 confirmations
 New Coins created by the mining process are not valid until about 120 confirmations
 This is to assure that a node with more than 51% of the total hash-power does not pull off
fraudulent transactions

22. “What is Bitcoin Mining” – Video
http://www.bitcoinmining.com

23. Purchase / Exchange Bitcoins
In addition to mining bitcoins, they can be acquired from an exchange!

24. If you want to be Node (Miner)
Your computer will act as a full node which means:
 Connecting to the bitcoin network
 Downloading the blockchain
 Storing the blockchain
 Listening for transactions
 Validating transactions
 Passing on valid transactions
 Listening for blocks
 Validating blocks
 Passing on valid blocks
 Creating blocks
 Mining’ the blocks

25. Features of Bitcoin
 All-electronic
 Provable value
 Fast transactions
 Low-cost transactions
 No third-party trust required
 Uncontrollable (Decentralized)
 Irreversible trades
 No double-spending
 Some anonymity (pseudonymity)
 Inflation resistant
 Deflationary (Maximum of 21M issued)
 International
 Widely accepted as a currency

26. Uses For Bitcoin
 Convenient online purchases
 Micro-payments
 Black-market transactions
 Investment
 A place to hide money
 Gambling
 Ransom
 Escape currencies that are in trouble
 International transactions and financing
 Buying foreign goods
 Paying foreign employees

27. Some technical notes
 The Technology Behind BTC
 Hashing (double-SHA256, RIPEMD-160)
 Proof-of-work (hashcash proof)
 Dual key encryption (Elliptical Curve Digital Signature Algorithm, Merkle
Trees )
 Peer-To-Peer Networking (similar to IRC Internet Relay Chat)

28. All About BitCoins
https://www.youtube.com/watch?v=oSP-taqLWPQ

30. thanks!
Any questions?
You can find me at
ninadsarang18@gmail.com