Dr. Bacem Mbarek , Faculty of Informatics, Masaryk University
Module 1: Understanding Blockchain
1) What is Blockchain
Blockchain is a distributed ledger that records all the transactions that take place on the
network. A distributed ledger is a database that is consensually shared and synchronized
across multiple sites, institutions or geographies. It allows transactions to have public
"witnesses," thereby making a cyberattack more difficult. The participant at each node of
the network can access the recordings shared across that network and can own an
identical copy of it
A blockchain can be either centralized or decentralized. It is important, however, that
decentralized not be confused with distributed. While a blockchain is inherently
distributed (meaning that many parties hold copies of the ledger), it is not inherently
decentralized.
A blockchain is a way to implement a distributed ledger, but not all distributed ledgers
necessarily employ blockchains. In a distributed ledger,it is not necessarily the case that
all nodes either receive all the information.
By extension, a blockchain constitutes a database that contains the history of all the
exchanges made between its users since its creation. This database is secure and
distributed: it is shared by its different users, without intermediaries, which allows
everyone to check the validity of the chain.
Advantages of Blockchain over Typical Centralized System:
- Gets rid of any intermediaries
- Verification of transactions
- High-security protocols
- Lower costs
- Transparent network system
- Immutable and decentralized
Dr. Bacem Mbarek , Faculty of Informatics, Masaryk University
History of Blockchain Technology
1991-2008: Do you know when was the first time blockchain actually emerged? Well, back
in 1991, Stuart Haber and Scott Stornettqo started working on the first blockchain
technology. At first, they wanted to create a cryptographically encrypted block of chain.
Moreover, they tried to make it tamper-proof.
2) How it works?
Transactions between network users are grouped in blocks. Each block is validated by the
nodes of the network called “miners”, according to techniques which depend on the type of
blockchain. In the bitcoin blockchain this technique is called “Proof-of-Work”, proof of
work, and consists in solving algorithmic problems. Once the block is validated, it is time
stamped and added to the blockchain. The transaction is then visible to the receiver and the
entire network.
There are public blockchains, open to all, and private blockchains, the access and use of
which is limited to a certain number of actors.
Dr. Bacem Mbarek , Faculty of Informatics, Masaryk University
This process takes a certain time depending on the blockchain we are talking about (about ten
minutes for bitcoin, 15 seconds for Ethereum).
The decentralized nature of the blockchain, coupled with its security and transparency, promises
much broader applications than the monetary fie.
▪ Blocks:
“Blocks” on the blockchain are made up of digital pieces of information. Specifically, they
have three parts:
- Blocks store information about transactions like the date, time, and price, etc.
- Blocks store information about who is participating in transactions.
- Blocks store information that distinguishes them from other blocks. each block stores
a unique code called a “hash” that allows us to tell it apart from every other block.
Blockchain technology accounts for the issues of security and trust in several ways. First, new
blocks are always stored linearly and chronologically. That is, they are always added to the
“end” of the blockchain.
▪ Transaction
A Blockchain transaction can be defined as a small unit of task that is stored in public
records. These records also knows as blocks. These blocks are executed, implemented
and stored in blockchain only after the validation by all persons involved in
the blockchain network.
So, when a blockchain transaction happens all the nodes in the network will have to say
it’s valid or it won’t get added to the ledger.
Dr. Bacem Mbarek , Faculty of Informatics, Masaryk University
▪ Smart contract
In blockchain, the smart contract is a code fragment that executes the terms of a contract.
The code behind a smart contract contains specific terms that are executed when
triggered by specific agreed events. A blockchain network uses smart contracts to
provide controlled access to the ledger.
Smart contracts are designed and implemented within blockchains, and therefore they inherit
some of the blockchain’s properties:
• They’re immutable, which means a smart contract can never be changed and no one can
tamper with or break a contract.
• They’re distributed, which means that the outcome of the contract is validated by
everyone in the network, just like any transaction on a blockchain. Distribution makes it
impossible for an attacker to force control to release funds, as all other participants would
detect such an attempt and mark it as invalid.
Dr. Bacem Mbarek , Faculty of Informatics, Masaryk University
A. Channel
A channel can be defined as a sub-network for peers communication, if it is necessary to divide
transactions according to different boundaries according to some service logic.
B. Consensus
The process of keeping the ledger transactions synchronized across the network –to ensure that
ledgers update only when transactions are approved by the appropriate participants, and that
when ledgers do update, the update with the same transactions in the same order – is called
consensus.
3) Application domains
Trading - Governmental Services - Healthcare - Oil and Gas - Insurance -Media and
Entertainment -Travel - Network Solutions Cyber Security and the Internet of Things, ect.
We can classify the use of blockchain in three categories:
- Applications for the transfer of assets (monetary use, but not only: securities, votes,
stocks, bonds, etc.).
- Blockchain applications as a registry: it thus ensures better traceability of products and
assets.
- Smart contracts: these are stand-alone programs that automatically execute the terms and
conditions of a contract, without requiring human intervention once started.
The fields of exploitation are immense: banks, insurance, health and pharmaceutical industry,
supply chain of many sectors (food industry, luxury, international trade, distribution, wines,
aeronautics, automobile ...), music industry, energy, real estate, voting ...
Above all, blockchain paves the way for a new web, the decentralized web, and a new digital
economy, the token economy. To understand their challenges, it is crucial to avoid caricatures
about cryptoactive agents, which are at the heart of this revolution.
Obviously, these promises are not without challenges, whether economic, legal, governance, or
even ecological.
3) Blockchain platforms
Many Blockchain platformscan be considered like Ethereum, Hyperledger, Multichain,Open
Ledger, Chain, Bitcoin Blockchain, and Corda.
Dr. Bacem Mbarek , Faculty of Informatics, Masaryk University