Introduction To Blockchain Technology For Beginners

Introduction to the Blockchain Author: Omar El Rifai Project Team Members: Dr. Imen Megdiche, Pr. Franck Ravat, Pr. Olivier Teste, Dr. Maëlle Biotteau (INSERM, CHU), Pr. Xavier Deboissezon (INSERM, CHU)

3 Alice Bob Bank Send 50€ to Bob Notified that 50€ were added to account (1) Alice -50€ (2) Bob +50€ Centralized Currency: the Banking System

4 Alice Charlie Bob Decentralized (digital) Currency Dave

5 What the blockchain is not: A way to make quick money A way to privately send data over a network The solution to our worlds’ economic (or global) crisis What the blockchain is: A way for peers to reach consensus An authority free network An open source, mathematically based solution

6 Technical Presentation Overview

7 Part I: Background concepts • Digital Currencies • Cryptographic Primitives Part II: Blockchain Implementations: • Bitcoin Implementation • Ethereum Implementation (Smart Contracts) • Consensus Protocols Part III: Use Cases • General cases • Health care

9 Digital Currencies  The idea of a trust-less decentralized currency has been around for decades [Chaum 1989]  Motivation:  Free of administrative and government control  Value based on supply and demand only  Challenges:  Digital Fingerprint  Digital Signatures  Consensus

10 Secure Communication with Cryptography  Classical (Symmetric) cryptography  There exists a secret key that we use for encrypting a message  The secret key is the same for encrypting and deciphering a message  Analogy: we put a message in a safe  Problem: how to share the password safely?  Modern (Asymmetric) cryptography 1976  No need for initial password exchange  Every user has one private key and one public key  Analogy: public mailbox where the address is the public key

11 Secure communication: example RSA algorithm  The RSA (Rivest-Shamir-Adleman) cryptosystem is based on the fact that it is: Easy to find three very large positive integers e, d and n such that: Message to encrypt Private key Public key 1) Difficult to find the factorization of the product of two large prime numbers

12 Hash Functions How to Manipulate Large Files: Cryptographic Hash Functions o Algorithm that maps an arbitrary size input to a fixed size output. o Used to uniquely identify data (fingerprint) and ensure integrity. Deterministic Distributed Efficient Pre-image resistant Collision-resistant Hash function (e.g MD5)

13 Digital Signatures  A digital signature needs to have the following properties :  Unduplicable: no other document can be signed by it  Sender binding: associated with one sender only  Document binding: the original document can not be changed Hash the document Encrypt hash with private key Receiver decrypts hash To verify both validity and origin 1 2 3

14 Digital Signatures Alice Bob E(H(Alice)(M)) D(E(H(M))) = H(Alice)(M) M Hash M locally and compare with H(Alice)(M)  Let M be the message Alice wants to send  H() be a hash function  E() be a asymmetric encryption function  D() be the associated decryption function

15 Recap of a Blockchain Architecture Broadcast transactions Using address and sign using private key Verify signature using public key ...What about consensus? Alice Bob Charlie Dave Transactions and ledgers are fingerprinted using CHF

17 Bitcoin : A first working example  Based on established work in cryptography Satoshi Nakamoto published a paper in 2008 [Nakamoto2008] that contributed with the following :  A fully functional trustless digital currency system  An algorithm which prevents the “double spend” problem. The intuition is that transactions have to be timestamps and trust based on the entire network.  Security is guaranteed is the number of honest nodes is larger than the number of malicious nodes

18 Bitcoin: A chain of blocks List of TXs A hash of previous TX POW (consensus) 1 2 3

19 Bitcoin: Proof of Work (POW) High level idea: Proof of CPU effort (solving a puzzle) is attached to the block The block cannot be changed without redoing the work After chaining other blocks, it becomes even more difficult o TX history Sha256 Nonce 0000...00000101 01011011010010 10100010100101 10001001101011 30 leading zeros

20 Bitcoin: Proof of Work (POW) ctd.  So what incentivize the network to perform these computations (expending computational power)?  One answer is simple to be able to use a secure network of value exchange  Another (less idealistic) reason is that nodes that verify transactions (i.e miners) are rewarded with bitcoins when validating a block

21 Bitcoins : The Network Transactions are broadcast to the entire netwok in the following way: 1) Every node (participant) gather new transactions in “blocks” 2) Every node tries to find the POW for its block 3) When a node finds the solution to the POW, it transmits its block to other nodes 4) Nodes accept a bloc if all the TX are valid and not already spent 5) Nodes express their approval of the bloc by using its hash as part of the later TX they process In case of conflict, temporary branches can be created locally

22 Bitcoins : Reclaiming disk Space  To save up disk space, old transaction can be discarded.  A Merkle Tree structure is used so that the hash of the history is not changed Pruning old transactions

23 Bitcoins : Privacy in the blockchain  Because of consensus requirements, all transactions should be made public  Asymmetric encryption protocols (along with a firewall) can protect the identity of users

24 Recap of a Blockchain Architecture with Bitcoin Broadcast Verify signature using public key pk_alice New Block PoW Merkle Root Previous Hash ... New TX

28 Ethereum: Smart Contracts  Bitcoin: Consensus in a network without the need for a trusted third party  But consensus is limited to simple transactions  More complicated rules such as conditional money transfers or online voting can not be implemented  Ethereum: develop the idea further to allow consensus on code [Buterin2014] Bitcoin Ethereum Private keys own simple values (UTXO) All values are owned by a private key Private keys own Accounts There are externally owned accounts and internal accounts (can not be called directly)

29 Ethereum: Smart Contracts (ctd.)  Let’s think of the bitcoin as a state transition system

32  In PoW, the algorithm rewards participants who solve puzzles to validate transactions and create new blocks → mining  There are only 21 million bitcoins that can be mined in total.  Miners will still be incentivized to validate the bitcoin blockchain because they will collect transaction fees from users  The fact that bitcoin is capped means it was thought as a deflationary economy  PoW consumes large quantities of electricity What is wrong with PoW

33 Instead of relying on computational work, POS chooses the validator randomly but with probability associated to with wealth or age (i.e., the stake) → the more you own the more incentive you have of keeping the blockchain active Proof of Work Proof of Stake Participating nodes are called miners. Participating nodes are called validators Mining capacity depends on computational power Validating capacity depends on the stake in the network Mining produces new coins No new coins are formed Miners receive block rewards Validators receive transaction fees Massive energy consumption Low to moderate energy consumption. Significantly prone to 51% attacks 51% attacks are virtually impossible Proof of stake: the future?

35 Properties of the Blockchain that make it desirable for different use cases Decentralization Distributed stakeholders require a decentralized management system. Decentralization means no central authority can unilaterally take decisions Improved data security and privacy Data, once saved on the blockchain, can not be corrupted, alterated or erarased. All the data are timestamped and saved in chronological order. Cryptographic keys help protect the identities of users Data Ownership Proof of ownership and access control mechanisms through Scs Availability/ Robustness Replication of records on all nodes removes the single point of failure problems Transparency and Trust All the records and transactions are visible by everyone. This makes audit operations simple and efficient

36 Different areas of Application Blockchain Applications Internet of Things Health Governance Education Privacy and Security Business and Industry Data Management Financial Energy

37 Financial Applications  Besides crypto-currencies, a host of financial applications have been developed Example applications include:  Loan management  Financial auditing  Commercial property registration  Prediction Market Place Systems  …. Blockchain Applications Internet of Things Health Governance Education Privacy and Security Business and Industry Data Management Financial Energy

38 Business and Industry Applications  Supply chain auditing using the inherent transparency and immutability properties of the blockchain  Intellectual property management (musicians can store a hash of their creations on the blockchain and be remunerated accordingly)  Decentralized Insurance Policies with smart contracts automatically reimbursing if an accident were to happen Blockchain Applications Internet of Things Health Governance Education Privacy and Security Business and Industry Data Management Financial Energy

39 Data Management Applications  Data can not be stored directly because of privacy issues and scalability issues.  An encryption method called “zero knowledge Proof” (ZKP) is being studied for increasing the privacy (Zcash)  Some efforts in the direction of homomorphic encryption are also being done Blockchain Applications Internet of Things Health Governance Education Privacy and Security Business and Industry Data Management Financial Energy

40 Governance Applications  Citizenship / legal documents  Marriage, divorce, taxes  Voting  Namecoin for DNS service Blockchain Applications Internet of Things Health Governance Education Privacy and Security Business and Industry Data Management Financial Energy

41 Education Applications Blockchain Applications Internet of Things Health Governance Education Privacy and Security Business and Industry Data Management Financial Energy  Education certificates  Credit management  Securely Timestamped Manuscript Submission and Peer Review Feedback using the Blockchain

42 Energy Sector Applications Blockchain Applications Internet of Things Health Governance Education Privacy and Security Business and Industry Data Management Financial Energy

43 Health Care Applications  Many applications (medical insurance, medical supply, iot related etc...)  The most prominent use case in health-care applications are Electronic Health Records (EHR)  As the data are sensitive and patient specific some ownership and control issues arise  The blockchain has been used in several studies to guarantee data ownership and access control mechanisms for patients Blockchain Applications Internet of Things Health Governance Education Privacy and Security Business and Industry Data Management Financial Energy

44 Health Care Applications Traditional architecture for EHR Blockchain-based architecture Hashes of data are stored on-chain:  Ownership can be proved  Access control can be managed  Data modification can be detected

45 Blockchain-based EHR literature

46 The French Use Case “Blockchain-Based Personal Health Records for Patients’ Empowerment” EL RIFAI O., Bioteau M., MEGDICHE I., RAVAT F, TESTE O. (Submitted RCIS2020) Without blockchain Without blockchain With blockchain ● Access and control mechanisms unilateral ● All identities hosted on server ● Records security and immutability can be compromised just attacking the CNAM server Identity Management: CNAM registerand maintain a list of registered patients. 1) Democratize the governance of the registration process 2) Automatize the rules for registration clear and transparent. Access Management: The blockchain can host data hashes and user- defined access control policies. Data hashes fingerprint their medical records guaranteeing that the original copy is never tampered with. Access control policies stored on the blockchain would serve as immutable reference for the access rights Data Audit: Transactions are natively immutable on the bockchain, patients are guaranteed that the logs are not tampered with.

48 [Chaum1988] Chaum, David, Amos Fiat, and Moni Naor. "Untraceable electronic cash." Conference on the Theory and Application of Cryptography. Springer, New York, NY, 1988. [Nakamoto2008] Nakamoto, Satoshi. Bitcoin: A peer-to-peer electronic cash system. Manubot, 2019. [Buterin2014] Buterin, Vitalik. "A next-generation smart contract and decentralized application platform." white paper 3.37 (2014). [Casino2019] Casino, Fran, Thomas K. Dasaklis, and Constantinos Patsakis. "A systematic literature review of blockchain-based applications: current status, classification and open issues." Telematics and Informatics 36 (2019): 55-81 [Fan et al., 2018] Fan, K., Wang, S., Ren, Y., Li, H., and Yang, Y. (2018). MedBlock:Efficient and Secure Medical Data Sharing Via Blockchain. Journal of Medical Systems, 42(8):1–11. References

49 [Liu et al., 2018] Liu, J., Li, X., Ye, L., Zhang, H., Du, X., and Guizani, M. (2018).BPDS: A Blockchain Based Privacy-Preserving Data Sharing for Electronic Medical Records. 2018 IEEE Global Communications Conference, GLOBECOM 2018 Proceedings [Xia et al., 2017] Xia, Q., Sifah, E. B., Asamoah, K. O., Gao, J., Du, X., and Guizani, M. (2017). MeDShare: Trust-Less Medical Data Sharing among Cloud Service Providers via Blockchain. IEEE Access, 5:14757–14767. [Zhang et al., 2018] Zhang, P., White, J., Schmidt, D. C., Lenz, G., and Rosenbloom,S. T. (2018). FHIRChain: Applying Blockchain to Securely and Scalably Share Clinical Data.Computational and Structural Biotechnology Journal, 16:267– 278. [Zyskind et al., 2015] Zyskind, G., Nathan, O., and Pentland, A. S. (2015). Decentralizing privacy: Using blockchain to protect personal data. In Proceedings - 2015 IEEE Security and Privacy Workshops, SPW 2015, pages 180–184 References (ctd.)

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