Blockchain

What happened at MT. Gox?

-conducted 70% of bitcoin transactions -850,000 Bitcoins were stolen, 100,000 of their own wallet worth $450m -Mark Karpeles stole $290m in bitcoin

What are the benefits of peer-to-peer cryptocurrencies

1. full transparency 2. full privatcy 3. rapid settlement 4. low transactions fees 5. one version of the truth 6. no currency exchange fees because of country 7. volatility (not solved yet) 8. cyber crime unprofitable 9. rules are added

Testnet

A test blockchain used by developers to prevent expending assets on the main chain.

What is a private key?

used to sign transactions, only 1 person should have access to a private key

How blockchain can help in Energy?

Microgeneration of electricity is becoming a huge trend in the power generation business. New energy initiatives such as home power generation and community solar power are filling in gaps of power supply across the world. As microgeneration adds to traditional power suppliers, it fosters creation of an energy market. Smart meters can register produced and consumed electricity in a blockchain, which allows for consumption of the surplus energy in a different location, providing credits or currency to the original producer. The credits can then be redeemed against the grid when the microgenerator needs additional electricity from the grid. The blockchain enforces these contracts in real time or near-real time, allowing for a utility market to be created with minimal red tape.

Confirmation

- A confirmation means that the blockchain transaction has been verified by the network - This happens through a process known as mining, in a proof-of-work system (e.g. Bitcoin). - Once a transaction is confirmed, it cannot be reversed or double spent - The more confirmations a transaction has, the harder it becomes to perform a double spend attack.

Proof of Work

- A consensus distribution algorithm that requires an active role in mining data blocks, often consuming resources, such as electricity - The more 'work' you do or the more computational power you provide, the more coins you are rewarded with

Proof of Stake

- A consensus distribution algorithm that rewards earnings based on the number of coins you own or hold - The more you invest in the coin, the more you gain by mining with this protocol

Off-Ledger Currency

- A currency minted off-ledger and used on-ledger. - An example of this would be using distributed ledgers to manage a national currency.

Wallet

- A file that houses private keys - It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.

Block Reward

- A form of incentive for the miner who successfully calculated the hash in a block during mining. - Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those.

Hybrid PoS/PoW

- A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network - In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).

Ripple

- A payment network built on distributed ledgers that can be used to transfer any currency - The network consists of payment nodes and gateways operated by authorities - Payments are made using a series of IOUs, and the network is based on trust relationships.

Litecoin

- A peer-to-peer cryptocurrency based on the Scrypt proof-of-work network - Sometimes referred to as the silver of bitcoin's gold.

Permissioned Ledger

- A permissioned ledger is a ledger where actors must have permission to access the ledger. - Permissioned ledgers may have one or many owners. - When a new record is added, the ledger's integrity is checked by a limited consensus process. - This is carried out by trusted actors — government departments or banks, for example — which makes maintaining a shared record much simpler that the consensus process used by unpermissioned ledgers. - Permissioned block chains provide highly-verifiable data sets because the consensus process creates a digital signature, which can be seen by all parties. - A permissioned ledger is usually faster than an unpermissioned ledger.

Soft Fork

- A soft fork differs from a hard fork in that only previously valid transactions are made invalid. - Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. - This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version.

Proof-of-Work

- A system that ties mining capability to computational power. - Blocks must be hashed, which is in itself an easy computational process, but an additional variable is added to the hashing process to make it more difficult. - When a block is successfully hashed, the hashing must have taken some time and computational effort. Thus, a hashed block is considered proof of work

Hard Fork

- A type of fork that renders previously invalid transactions valid, and vice versa - This type of fork requires all nodes and users to upgrade to the latest version of the protocol software

Mining

- Act of validating blockchain transactions. - The necessity of validation warrants an incentive for the miners, usually in the form of coins. - In this cryptocurrency boom, mining can be a lucrative business when done properly. - By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.

Where are Venture capitalists spending their money? How much have they spent in the last few years? Where have investment dollars recently shifted?

- Between 2009-2013 the funding is $93m - Between 2014-2016 the funding is $993m - First VC directed capital towards Bitcoin but now it is moving towards how Blockchain can be deployed. - 2015 - 2016: 67% blockchain infrastructure; 33% bitcoin wallets, exchange, mining

Halving

- Bitcoins have a finite supply, which makes them a scarce digital commodity - The total amount of bitcoins that will ever be issued is 21 million. - The number of bitcoins generated per block is decreased 50% every four years. - This is called "halving." - The final halving will take place in the year 2140.

Block Explorer

- Block explorer is an online tool to view all transactions, past and current, on the blockchain. - - Provide useful information such as network hash rate and transaction growth.

Ethereum

- Blockchain-based decentralized platform for apps that run smart contracts - Aimed at solving issues associated with censorship, fraud and third party interference

Address

- Cryptocurrency addresses are used to send or receive transactions on the network - Usually presents itself as a string of alphanumeric characters.

Public Address

- Cryptographic hash of a public key - Act as email addresses that can be published anywhere, unlike private keys

Cryptographic Hash Function

- Cryptographic hashes produce a fixed-size and unique hash value from variable-size transaction input - The SHA-256 computational algorithm is an example of a cryptographic hash

DAO

- Decentralized Autonomous Organizations - Corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules

Difficulty

- Difficulty, in Proof-of-Work mining, is how hard it is to verify blocks in a blockchain network. - In the Bitcoin network, the difficulty of mining adjusts verifying blocks every 2016 blocks. This is to keep block verification time at ten minutes.

EVM

- Ethereum Virtual Machine - Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code. - Every Ethereum node runs on the EVM to maintain consensus across the blockchain

Distributed Ledger

- Ledgers in which data is stored across a network of decentralized nodes. - Does not have to have its own currency and may be permissioned and private

Multi Signature

- Multi-signature (multisig) addresses allow multiple parties to require more than one key to authorize a transaction - The needed number of signatures is agreed at the creation of the address - Multi signature addresses have a much greater resistance to theft.

Peer to Peer

- Peer to Peer (P2P) refers to the decentralized interactions between two parties or more in a highly-interconnected network - Participants of a P2P network deal directly with each other through a single mediation point

P2P

- Peer-to-peer (P2P) refers to the decentralized interactions that happen between at least two parties in a highly interconnected network. - P2P participants deal directly with each other through a single mediation point.

Turing Complete

- Refers to the ability of a machine to perform calculations that any other programmable computer is capable of - An example of this is the Ethereum Virtual Machine (EVM).

SHA-256

- SHA-256 is a cryptographic algorithm used by cryptocurrencies such as Bitcoin. - However, it uses a lot of computing power and processing time, forcing miners to form mining pools to capture gains.

Double Spend

- Scenario, in the Bitcoin network, where someone tries to send a bitcoin transaction to two different recipients at the same time. - However, once a bitcoin transaction is confirmed, it makes it nearly impossible to double spend it. - The more confirmations that a particular transaction has, the harder it becomes to double spend the bitcoins.

Dapp

- Short for decentralized application - Open source, operates autonomously, has its data stored on a blockchain - Incentivized in the form of cryptographic tokens - Operates on a protocol that shows proof of value

Private Key

- String of data that allows you to access the tokens in a specific wallet - Act as passwords that are kept hidden from anyone but the owner of the address

Block Reward

- The reward given to a miner which has successfully hashed a transaction block - Block rewards can be a mixture of coins and transaction fees, depending on the policy used by the cryptocurrency in question, and whether all of the coins have already been successfully mined. - The current block reward for the Bitcoin network is 25 bitcoins for each block.

bitcoin (lowercase)

- The specific collection of technologies used by Bitcoin's ledger, a particular solution. - Note that the currency is itself one of these technologies, as it provides the miners with the incentive to mine.

Scrypt

- Type of cryptographic algorithm and is used by Litecoin - Compared to SHA256, this is quicker as it does not use up as much processing time

Unpermissioned ledgers

- Unpermissioned ledgers such as Bitcoin have no single owner — indeed, they cannot be owned - The purpose of an unpermissioned ledger is to allow anyone to contribute data to the ledger and for everyone in possession of the ledger to have identical copies. - This creates censorship resistance, which means that no actor can prevent a transaction from being added to the ledger. - Participants maintain the integrity of the ledger by reaching a consensus about its state

51% Attack

- When more than half of the computing power of a cryptocurrency network is controlled by a single entity or group -This entity or group may issue conflicting transactions to harm the network, should they have the malicious intent to do so.

What is the structure of a bitcoin transaction?

-A bitcoin has inputs and outputs -Output have up to two addresses -Inputs may have multiple addresses

What is SHA256 Hash? How is it different from RSA?

-A hash is a transformation of one number to a different number -SHA 256: this is the function using all over the bitcoin function. Always generates a 32 bit address -RSA Hash: created in 1977: the gold standard. which produced a really large number

What data is stored in the wallet?

-Bitcoin addresses - public-private key pairs - for each of the wallet owner's addressed -transactions done from/to addresses -User preferences -Reserve keys -Versions number -Key pool: new public and private keys are pre-generated and stored in a queue before use

What is the purpose of a bitcoin wallet?

-Contains the private keys for all the addresses a person owns -wallets also describe the client software used to make transactions (send and receive bitcoins)

ASIC

-Short form for 'Application Specific Integrated Circuit'. - Often compared to GPUs - ASICs are specially made for mining and may offer significant power savings.

What happened at Silk Road?

-online black market for illegal items -FBI shut the site down and seized 26,000 bitcoin worth 3.6m -Seized another 144,000 Bitcoin from the founder worth $28.5M

What are the 4 main issues of distributed ledger payment system?

1) Limited scalability 2) Privacy concerns 3) Currency volatility 4) Untested consensus

Who are using blockchain to conduct business today?

1) Santander For the past few years, Santander has been actively exploring the possibilities of distributed ledgers, including an investment in Ripple. Current projects cover a range of short-term and long-term situations within payments and related fields.

Who are the top 10 cryptocurrencies?

1. Bitcoin 2. Ether from Ethereum 3. Litecoin 4. Monero 5. Ripple 6. Dogecoin 7. Dash 8. MaidSafeCoin 9. Lisk 10. Storjcoin X Find out more: http://www.hongkiat.com/blog/hottest-cryptocurrencies-to-know/

What are the problems with traditional currencies issued by governments & transacted through trusted third parties?

1. Lack of transparency 2. delays in settlements 3. high transaction fees 4. Multiple versions of truth 5. Currency exchange fees 6. exchange rate volatility 7. cyber crime 8. inconsistency of rules / rules change at whims

What are the data fields in a block header? Which fields can be altered?

1. Protocol version 2. Previous block hash: helps create the sequence of the chain 3. Merkle root: takes a hash of all the transitions below in the transaction 4. Timestamp: when the block was created 5. Bits: condensed of the mining difficulty is 6. Nonce: the only one that is allowed to be changed, the winning arbitrary value that produced the successful block chain

What is considered the first real transaction on Bitcoin in which bitcoins were used to pay for a physical item? 2010 when 10,000 Bitcoins were used to buy a pizza

2010 when 10,000 Bitcoins were used to buy a pizza

What is the max number of bitcoins? Will the max number likely be enough?

21 million Yes, the bitcoin and be broken down into smaller fractions.

Transaction Block

A collection of transactions gathered into a block that can then be hashed and added to the blockchain.

Node

A copy of the ledger operated by a participant of the blockchain network.

Private Currency

A currency issued by a private individual or firm, typically secured against uninsured assets.

On-Ledger Currency

A currency minted on-ledger and used on-ledger. An example of this would be the cryptocurrency, Bitcoin.

Digital Signature

A digital code generated by public key encryption that is attached to an electronically transmitted document to verify its contents and the sender's identity

Digital Commodity

A digital commodity is a scarce, electronically transferrable, intangible, with a market value.

Digital Identity

A digital identity is an online or networked identity adopted or claimed in cyberspace by an individual, organization, or electronic device.

Attestation Ledger

A distributed ledger providing a durable record of agreements, commitments or statements, providing evidence (attestation) that these agreements, commitments or statements were made.

Central Ledger

A ledger maintained by a central agency.

What is a digital signature?

A signature is mathematically generated from a hash of something to be signed, plus the private key for each address!

Tokenless Ledger

A tokenless ledger refers to a distributed ledger that doesn't require a native currency to operate

Distributed Network

A type of network where processing power and data are spread over the nodes rather than having a centralized data centre

Participant

An actor who can access the ledger: read records or add records to.

Agreement Ledger

An agreement ledger is distributed ledger used by two or more parties to negotiate and reach agreement.

Proof-of-Stake

An alternative to the proof-of-work system, in which your existing stake in a cryptocurrency (the amount of that currency that you hold) is used to calculate the amount of that currency that you can mine.

where are bitcoin wallets stored?

An application from a mobile phone, hardware, desktop, or the cloud.

Who wrote the 8-page white paper for bitcoin?

An unknown person or group named "Satoshi Nakamoto"

Who is the real Satoshi Nakamoto?

Australian entrepreneur Craig Wright

How blockchain can help in Law?

Blockchains can contain a huge amount of data, including entire contracts. The impact of "smart contracts"—protocols that facilitate or enforce contract performance using blockchain—will have a profound impact for industries. Smart contracts eliminate the middleman, such as a legal firm, as payment will happen based on certain milestones being met. By its very nature, the smart contract is easily enforceable electronically, creating a powerful escrow by taking it out of the control of a single party.

Block

Blocks are packages of data that carry permanently recorded data on the blockchain network.

What is a public key?

Derived from public keys, start with 04 or 03, 02

What are the differences between deterministic and non-deterministic smart contract?

Deterministic -can run on their own -the information in contract block chain has enough information to carry out the action without any outside information. non-deterministic -the contract needs outside information

Double Spending

Double spending occurs when a sum of money is spent more than once

Bitcoin (uppercase)

The well known cryptocurrency, based on the proof-of-work blockchain.

How should wallets be secured?

They can be hacked! -keep small amounts in your wallet -cannot recover a forgotten password -create a strong password -backup wallet in many places -encrypt wallet and backups -offline wallets for savings -keep software updated

What is double entry accounting versus triple entry accounting?

Triple entry: every transaction has three entries: the credit, the debit, and the receipt. There are three parties that have copies of the transaction - the two account owners and the blockchain

Transaction Fee

- All cryptocurrency transactions involve a small transaction fee - These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block

Initial Coin Offering (ICO)

- An event in which a new cryptocurrency sells advance tokens from its overall coinbase, in exchange for upfront capital. - Frequently used for developers of a new cryptocurrency to raise capital.

What are the two services performed by trusted third parties like banks and credit card companies?

- Authentication: who someone is - Duplication: prevent double spending and making sure you have the money you want to transfer

Replicated Ledger

A ledger with one master (authoritative) copy of the data, and many slave (non-authoritative) copies.

Blockchain

- A blockchain is a shared ledger where transactions are permanently recorded by appending blocks - The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.

Consensus Point

A point - either in time, or defined in terms of a set number or volume of records to be added to the ledger - where peers meet to agree the state of the ledger.

Cryptocurrency

Also known as tokens, cryptocurrencies are representations of digital assets

Peer

An actor that shares responsibility for maintaining the identity and integrity of the ledger.

Bitcoin

Bitcoin is the first decentralized, open source cryptocurrency that runs on a global peer to peer network, without the need for middlemen and a centralized issuer.

How are Bitcoins released into circulation?

Bitcoins are released into circulation like gold. From the unmined bitcoins, bitcoins are released to a miner who works hard to earn it.

What is blockchain?

Blockchain is an encrypted, distributed database shared across multiple computers or nodes that are part of a community or system.

Consensus

Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other

Who has implemented blockchain?

Eleven banks of the R3 consortium have already connected on the centralized Ethereum-based blockchain network. The Estonian government has used blockchain-based technology (keyless signature infrastructure) to authenticate data in their databases since 2013.

Difficulty

This refers to how easily a data block of transaction information can be mined successfully

How is the miner's reward amount determined?

First miner won 50 Bitcoins per block mined, then they are rewarded halves every 210,000 blocks mined

Fork

Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network

Upon what metaphor is bitcoin based?

Gold mining. Because like gold there is only a limited amount in existance

How blockchain can help in Government?

Government departments that work in silos cause the exchange of information to be delayed, negatively impacting citizen services. Linking the data between the departments with blockchain ensures that data is released in real time, when both the departments and the citizen consent to sharing data. Blockchain technology could improve transparency and check corruption in governments worldwide.

After release of the white paper, how did Bitcoin become a reality?

In 2009, the first block is mined. The first transaction was made between Nakamoto and Hal Finney

How does blockchain reduce the possibility of security breaches?

In a traditional implementation, a rogue administrator can potentially change historical transactions because of his or her access levels to the data. However, with a blockchain implementation across data centers, one would need a large number of teams working together across data centers to modify historical data—which greatly reduces the possibility of data tampering. The more widespread the environments, the more difficult it is to tinker with data.

What are the impacts of digital fiat currencies?

Influence of digital fiat currencies will vary depending on the system adopted.

What makes it one of the most exciting technologies?

Its ability to reduce the possibility of security breaches by even its own operators.

Hash Rate

Measurement of performance for the mining rig is expressed in hashes per second.

Multi-Signature

Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a transaction.

Oracles

Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.

What is an address?

Shorter version of a public key - begins with 1 or 3

Smart Contracts

Smart contracts encode business rules in a programmable language onto the blockchain and are enforced by the participants of the network.

Solidity

Solidity is Ethereum's programming language for developing smart contracts.

Hash

The act of performing a hash function on the output data. This is used for confirming coin transactions.

Genesis Block

The first or first few blocks of a blockchain

Block Height

The number of blocks connected on the blockchain.

Consensus Process

The process a group of peers responsible for maintaining a distributed ledger use to reach consensus on the ledger's contents.

Confirmation

The successful act of hashing a transaction and adding it to the blockchain

How does a private key become a public key?

The wallet generates the private key. Uses elliptic curve cryptography Public address is created

How blockchain can help in Defense?

Unauthorized access or modification of critical defense infrastructure, such as operating systems and network firmware, could seriously compromise national security. For most countries, defense infrastructure and computer systems are distributed across different locations. Blockchain technology distributed across multiple data centers can ensure security against attacks on important network and hardware equipment by ensuring consensus-based access for modification.

How blockchain can help in Healthcare?

Using digital signatures on blockchain-based data that allows access only when authorized by multiple people could regulate the availability and maintain the privacy of health records. In addition, a community of people, including hospitals, doctors, patients, and insurance companies, could be part of the overall blockchain, reducing fraud in healthcare payments.

How you can set up a smart contract for a conference, where organisers can sell tickets, set a maximum number of attendees, and provide refunds automatically?

https://medium.com/@ConsenSys/a-101-noob-intro-to-programming-smart-contracts-on-ethereum-695d15c1dab4#.446rzf1ro

Why is block chain considered unbreakable?

it does not store any person data at all, blockchain only stored account transactions.

What data fields are posted in the Blockchain for each bitcoin transaction?

the outputs and inputs for each transaction on the blockchain. The software verifies that the address are not inputs and that they are outputs in the blockchain. To prevent double spending

How does a public key become an address?

the public key is transformed into an address by hashing it twice: the second shortens the first hash to produce a shorter address

What does today's centralized ledgers look like?

• Traditional systems rely on central authority to generate trust and transfer value • When money passes between participants, a central counterparty records the transfer to prevent cheating • Participants then undertake costly, time-consuming and duplicative reconciliation with their own systems

What does distributed ledgers look like?

• Trust comes from the process itself rather than from the status of any one player • Participants validate changes collectively, and changes are updated across the network almost immediately • The system has great potential to speed up transaction times, improve transparency and reduce costs