BLOCKCHAINS
ARCHITECTURE, DESIGN AND USE CASES
PRAVEEN JAYACHANDRAN
SANDIP CHAKRABORTY IBM RESEARCH,
COMPUTER SCIENCE AND ENGINEERING, INDIA
IIT KHARAGPUR
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Image courtesy: http://beetfusion.com/
CONCEPTUALIZATION AND
APPLICATIONS
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The Permission-less Model
• Works in an open environment and over a large network of participants
• The users do not need to know the identity of the peers, and hence the
users do not need to reveal their identity to others
• Good for financial applications like banking using cryptocurrency
Privacy and Security
• The system is tamper-proof – it is “extremely hard” to make a change in the blockchain
– Tampering the system becomes harder as the chain grows
• For Bitcoin, the transactions are pseudo-anonymous
– Transactions are sent to public key addresses,- cryptographically generated
addresses, computed by the wallet applications
Peer Addresses (Reference: Bitcoin)
• “Address” in bitcoin is synonymous to an “Account” in a bank.
• The wallet listens for transactions addressed to an account,
– Encrypts the transactions by the public key of the target address
– Only the target node can decrypt the transaction and accept it
• However, the actual transaction amount is open to all for validation
Blockchain (at Permission-less Model) as a Tree
Block 3 Block 6
Block 1 Block 2 Block 5 Block 7 Block 8 Block 12
Block 4 Block 9 Block 11
• The longest chain is the accepted chain Block 10
Accepting the Longest Chain
Accepting the Longest Chain
Accepting the Longest Chain
A new block is mined
Accepting the Longest Chain
Always include it in the
longest chain
Orphaned Blocks
Block 3 Block 6
Block 1 Block 2 Block 5 Block 7 Block 8 Block 12
Block 4 Block 9 Block 11
• The blocks which are not part of the longest chain Block 10
The Cryptocurrency Applications using Blockchain
Currency Status Release Features
Bitcoin (BTC) Active 2009 The first decentralized ledger currency
Litecoin (LTC) Active 2011 The first cryptocurrency that uses Scrypt
as a hashing algorithm
Bytecoin Active 2012 Focused on user privacy through
(BCN) impassive and anonymous transactions
Peercoin Active 2012 Uses PoW and PoS functions
(PPC)
Emercoin Active 2013 Trusted storage for any small data (DNS,
(EMC) PKI, SSL infrastructure etc.)
The Cryptocurrency Applications using Blockchain
Currency Status Release Features
Ripple (XRP) Active 2013 Designed for P2P debt transfer
Waves Active 2016 An open blockchain platform to develop
applications for high volume transactions
Omni (MSC) Active 2013 Both a digital coin and a communication
platform built on top of bitcoin
blockchain
Gridcoin Active 2013 The first cryptocurrency linked to citizen
(GRC) science through Berkley Open
Infrastructure for Network Computing
Bitcoin Block Explorer
Source: https://blockchain.info/
The Permissioed (Private) Model – Blockchain 2.0
• Blockchain can be applied just beyond cryptocurrency
• The underlying notions of consensus, security and distributed replicated
ledgers can be applied to even closed or permissioned network settings
• Most enterprise use cases only involve a few ten to a few hundred known
participants
Permissioned Blockchain
• Can leverage the 30+ years of technical literature to realize various
benefits like
– Strict notion of security and privacy
– Greater transactional throughput based on the traditional notions of
distributed consensus
• Raft Consensus
• Paxos Consensus
• Byzantine Fault Tolerance (BFT) algorithms
Permissioned Blockchain Applications
Source: https://www.multichain.com
• Asset Movements and Tracking
Permissioned Blockchain Applications
• Provenance tracking - tracking the origin and movement of high-value items across a
supply chain, such as luxury goods, pharmaceuticals, cosmetics and electronics.
– When the high-value item is created, a corresponding digital token is issued by a trusted entity,
which acts to authenticate its point of origin.
– Every time the physical item changes hands, the digital token is moved in parallel -> the real-
world chain of custody is precisely mirrored by a chain of transactions on the blockchain.
– The token is acting as a virtual “certificate of authenticity”, which is far harder to steal or forge
than a piece of paper.
The Blockchain Based Distributed Web
How IPFS Works
• Each file and all of the blocks within it are given a unique fingerprint based
on a cryptographic hash
• IPFS removes duplications across the network and track version history for
every file
• Each network node stores only the content it is interested in and some
indexing information that helps to figure out who is storing what
Source: https://ipfs.io/
How IPFS Works
• When looking up files, you ask the network to find nodes storing the
content behind a unique hash
• Every file can be found by human readable names using a decentralized
naming system called IPNS
Source: https://ipfs.io/
Hyperledger Fabric
• A permissioned blockchain framework that provides an enterprise-grade
foundation for transactional applications
• A shared ledger that supports smart contracts – ensures security and
integrity of recorded transactions
• Unlike Bitcoin and Ethereum, Hyperledger Fabric supports privacy and
confidential transactions
Hyperledger Fabric
• Fabric supports the notion of channels, a “subnet” of peers within the
network that wants to share information confidentially
– Gives restricted visibility - important for business applications
• Fabric has no notion of mining, use the notion of distributed consensus
under a closed environment
The Fabric Network
Source: IBM Code Tech Talk
Summary
• Two models of Blockchain network – Permission-less (an open
environment) and Permissioned (a close environment)
• Permission-less model is suitable for open control-free financial
applications like cryptocurrency
• Permissioned model is suitable for business applications like smart
contract
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