This presentation shows the evolution of blockchain implementations from simple financial transactions to complex computer programs (i.e. Smart Contracts) Ethereum at its simplest, is an open software platform based on blockchain technology Ethereum allows developers to build and deploy decentralized applications.

1. Blockchain 2
From Simple Financial Transactions to Smart
Contracts

2. Agenda
• Blockchain Reminder
• What is Blockchain 2
• Ethereum
• Ethereum Components
• SmartContracts
• How SmartContracts Work
• Ethereum Advantages
• Ethereum Disadvantages
• Smart Contract DEMO

3. Blockchain
Reminder

4. Blockchain
• Bitcoin built on blockchain
• Financial transactions
• Limited tasks
• Main Objectives to eliminate intermediaries and
unnecessary fees by making decentralized
transactions on a distributed ledger

5. Blockchain 2

6. Blockchain 2
• Still capable of doing the financial transactions
• Plus making complex operations on top of that
• Complex Operations can be built as needed and
distributed on the blockchain network
• These Complex Operations are programs . Yes a
developer can code a program and upload it to
the blockchain network
• Mainly these programs called SmartContracts

7. What is a Smart Contract
• Computer program code
• Capable of facilitating, executing and enforcing
the performance of an agreement

8. Legal Contract
• Contains Legal Language (written by Lawyers)
• Heavily rely on third parties for enforcement
• Enforcement is very time consuming
• Very Ambiguous
• Lengthy and Expensive
• If no fulfillment by any of the parties - going to
court

9. Smart Contract Definition
• Program Created by Computer Programmers
• Written in a digital code (programing language)
• States the Rules
• States the Obligations
• Automatically Executed

10. Smart Contract Characteristics
• Deterministic
Whoever runs it gives the same value
• Immutable
Once deployed can’t be changed
• Verifiable
Gets unique address and can be verified by the interested
parties before using it

11. Smart Contract Features
• Speed (Near Real Time)
• Accurate
• Low Risk
• Fewer Intermediaries (No need for escrow)
• Lower Cost . Which leads to New Business
Models

12. Smart Contract Components
• Code
Where you code the logic of having inputs, fulfilling rules
and taking actions
• Distributed Ledger
Similar to a transaction the smart contract is encrypted and
distributed to contributors with a machine (decentralized)
• Execution
Once the contract is executed it is distributed on a ledger
and monitor the compliance to take action

13. Ethereum

14. What is Ethereum
At its simplest, Ethereum is an open software platform
based on blockchain technology that enables developers to
build and deploy decentralized applications
the Ethereum blockchain focuses on running the programming
code of any decentralized application
“Ethereum is a decentralized platform that runs smart contracts:
applications that run exactly as programmed without any possibility
of downtime, censorship, fraud or third party interference. These

16. Ethereum Components
• Ethereum Virtual Machine (EVM)
• Swarm - similar to BitTorrent app split the files into chunks but
incentivized by ether
• Whisper - secure messaging protocol between nodes
• Solidity - javascript like programing language to write smart
contacts
• Bitcoin blockchain has addresses
• Ethereum has accounts
• Account that only store ETH (Externally Owned Accounts -
EOA)
• Account stores ETH and Program (SC) - once the SC
uploaded to the network waits to be activated. The SC got
activated when sending ETH into it
• Once the Smart Contract is activated, it keeps monitoring for
events, milestones or conditions to occur

17. Bitcoin VS Ethereum
Bitcoin
Global network
of computers
used mainly for
processing
transactions
No
Programming
Language
Update
chain every
~10 min
BTC
21 M Supply
Original
Crypto
Currency
(Financial by
Design)
Ethereum
Platform with
programing
language to
create
programs (SC)
to create DApps
DAO
(150M ETH Held)
$50M stolen
Reset the Chain
before the 50M
were stolen
Update the
chain every
~30 sec
ETH
No Limit
Designed for
computer
power
payments
Ethereum
Classic
Continued
without reset
the chain
Code is LAW
without
intermediary
Smaller
Community
Smaller
Computing
Power
ETH Classic

18. DApps
• Decentralized Apps
• No Central Server
Centralized
App
Installed and Run
on Central Server
Hacked - all
data
Failure - entire
app is down
Sensorship -
can be blocked
Computer
Power
(more users -
slower)
DApps
On Multiple
Computers
Has to Hack
Majority
Failure - connect
to another
computer
To block - needs
to be blocked
from the majority
Computer
power
distributed
Blockchain
DApps
Operate Similar
to DApps Open Source
Run on Blockchain
allows Additional
Functionality
It has a token to
cover the cost of
computer power
Changes to the app
decided by the
majority - controlled
by the Majority

19. What is a smart contract
Smart contract is just a phrase used to describe
computer code that can facilitate the exchange of
money, content, property, shares, or anything of value
When running on the blockchain a smart contract
becomes like a self-operating computer program that
automatically executes when specific conditions are met
Written in Solidity Programming Language and runs
on the Ethereum virtual Machine EVM on ETH

21. How Smart Contracts Work

22. How Smart Contracts Work

23. How Smart Contracts Work
• Connected to ETH Crypto Currency
• Terms of the contract contains
• Payment Amount
• Compensation in case of failure to complete the
terms
• Payment would sent to the smart contract not the
seller
• Once the terms are fulfilled the money sent to the
seller and the ownership sent to the buyer
• If the terms failed to be fulfilled / expired the smart
contract rejects the transaction and sends the money
back to the buyer and the ownership to the seller

24. Uber VS Ether DApp
Uber
Save Credit Card info
within Uber
Uber Authorizes the
credit card for a
payment
When you take a car
to start a contract to
pay a certain amount
of money based on
your distance you
travel
When you finish the
trip the contract
executes and your
credit card is
automatically charged
CC takes fees for the
transaction
Ethereum DApp
You have an account
on ethereum network
which can send and
receive ETH (or
Wallet)
Smart Contract has
the driver and rider
parties and has clear
terms on the payment.
Once the ride starts,
the money sent to the
smart contract
Once the ride is done and if
the terms are fulfilled, smart
contract sends the money to
the driver and maybe some
If the ride terms fails, then
the smart contract returns
the money to the rider
The execution of the SC is
being compensated

25. New Methods for Funding
• Ethereum gave companies and developers to fund
while their growth
• Initial Coin Offering - possible before Ethereum
• Allows companies to develop applications and sells
tokens or coins that can be used in the application
• ICO before ethereum linked to the popularity of the
crypto currency
• ICO with ethereal linked to the popularity of the
application . If the application becomes popular and
widely used , then theoretically the tokens should
increase in value
• Companies can have funds without requiring Loans
or Venture Capitals Funding

26. Benefits of Ethereum
• Smart Contracts
Because smart contracts run on the blockchain, they run exactly as programmed
without any possibility of censorship, downtime, fraud or third party interference
• Greater ease and lower costs
• Ease of development and create applications
• Immutability – A third party cannot make any changes to data.
• Corruption & tamper proof – Apps are based on a network formed around the
principle of consensus, making censorship impossible.
• Secure – With no central point of failure and secured using cryptography,
applications are well protected against hacking attacks and fraudulent activities.
• Zero downtime – Apps never go down and can never be switched off.

27. Benefits of Ethereum

28. Disadvantages and Risks of Ethereum
• Not designed for real world payments
• New Technology - Still needs more time to be proven
• Badly written smart contract (written by humans) may
lead to exploits and steeling money - cant be argued!
obtaining a network consensus and rewriting the
underlying code

29. Disadvantages and Risks of Ethereum
• No free Applications
While social networks pays for hosting / computing and
users don’t however the personal data is the product. DApps
controlled by the users and it will be difficult to convince
users to pay for making any action on a decentralized social
network like / uploading images … etc
• ETH may not increase in value even if the application
gains popularity (speculators).
Speculators normally they don’t intend using the coins in the
app. The value of the token / point mainly depends on the
demand and supply of the token. High Supply depreciate the
value , hight demand appreciate the value

30. Disadvantages and Risks of Ethereum
• Not designed for real world payments
• ETH may not increase in value even if the
application gains popularity (speculators)
• Speculators normally they don’t intend using the
coins in the app
• The value of the token / point mainly depends on
the demand and supply of the token. High Supply
depreciate the value , hight demand appreciate
the value

31. Skyline
especially if connected to military
and government systems

32. GAS
• Internal pricing for running a smart contract
• Decouple from unit of ETH for computing and
from market value
• Originator of the transaction sets the price of the
GAS upfront

33. Wallet Types
Online Wallet/Web Wallet
These are wallets accessible over the internet with a web browser. These wallets are simple to set up and use for
cryptocurrency beginners, yet vulnerable to attacks.
Mobile Wallet
These are mobile software applications designed to hold cryptocurrencies. It’s usually developed to work with devices
that run Android and iOS operating systems. These wallets make cryptocurrency transactions easy, most especially “on
the go”.
Desktop Wallets
Also software applications for personal computers. This is to some extent considered more secure than the other two
types mentioned above (web & mobile wallets). Though these wallets create private keys offline, it’s necessary to
connect to the internet to have the software updated to display your actual fund (if any).
Hardware Wallets
These are special digital devices (called wallets), great for storing large cryptocurrencies you don’t need for everyday
use. Of course, you can also use it for daily use, it all depends on you. These wallets offer more security on
cryptocurrencies stored in them than all other types of wallets.

34. MultiSig Wallets
• Your multi-sig wallet is a smart contract living on the blockchain!
• Once the multi-sig wallet has been deployed, Ether can be sent to it just
like to any other Ethereum address.
• The weird bit is that they each have to use a normal wallet to talk to the
multi-sig wallet.
• Before creating a multisig wallet - you need to
• A list of people who are allowed to do things (Tom, John and Harry)
• Rules on how many of those people have to agree before it happens
• Once Tom has submitted -
submitTransaction(0x31EFd75bc0….fDab6a3F22,1000000000
,) he will get a message back from his wallet with a number or hash
code which is the transactionID. Tom has to communicate this
transactionID to Dick or Harry to get them to confirm it.
• Harry or John will confirm the transaction - function
confirmTransaction(uint transactionId)

35. DAO
• Decentralized Autonomous Organization
The government who votes for the contracts
Public and Transparent
When a transaction is placed, the DAO checks if A has
balance , withdraw and then set your new balance

36. DAO Attack !!
Multiple Transactions happened at the same time
Checks on the balance, it is valid! make a
withdraw then update the balance
Deposit the new amount and repeat
More $50M were withdrawn from the Ethereum
platform

37. Ethereum is moving to Proof Of Stake

38. Ethereum is moving to Proof Of Stake
• Lowers the overall energy and monetary cost
• No ASIC advantage
• Makes 51% attack harder: 51% attack happens when a group of
miners gain more than 50% of the world’s hashing power. Using
proof of stake negates this attack.
• Malicious-free validators: Any validator who has their funds locked
up in the blockchain would make sure that they are not adding any
wrong or malicious blocks to the chain, because that would mean
their entire stake invested would be taken away from them.
• Block creation: Makes the creation of newer blocks and the entire
process faster.
• Scalability: Makes the blockchain scalable by introducing the
concept of “sharding”

39. Writing a smart
contract DEMO

40. https://youtu.be/cDziE9ctFS0

41. Referenceshttps://blockgeeks.com/guides/ethereum/
https://www.amazon.com/Ethereum-Understanding-Blockchain-Decentralized-
Cryptocurrencies-ebook/dp/B078683DXR
https://www.slideshare.net/JrmeKehrli/blockchain-20-69472625
https://blockgeeks.com/guides/ethereum-developer/
https://blockgeeks.com/guides/decentralized-applications/

42. Thank You !
Qais Ammari
qais.ammari@triphop.com