INTRODUCTION TO BLOCKCHAIN

By Adebara Ayomide

Blockchain Developer

STELLAR BLOCKCHAIN BOOTCAMP

WHAT IS BLOCKCHAIN?

• Decentralization: No single point of control; multiple participants maintain the ledger.
• Transparency: All participants can view the transactions recorded on the blockchain.
• Immutability Once recorded, transactions cannot be altered or deleted.

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A blockchain is a decentralized, distributed ledger that records transactions across many computers in such a way that the registered transactions cannot be altered retroactively

Blockchain technology enables secure and transparent transaction tracking without the need for a central authority.

KEY CHARACTERISTICS

Check this out:

https://holamite.hashnode.dev/blockchain-technology

HISTORY AND EVOLUTION OF BLOCKCHAIN

ORIGIN

BITCOIN (2009)

ETHEREUM (2015)

MILESTONES

The concept of a blockchain was first outlined by Stuart Haber and W. Scott Stornetta in 1991 as a way to timestamp digital documents to prevent backdating or tampering.

 Created by an unknown person/group under the pseudonym Satoshi Nakamoto, Bitcoin was the first application of blockchain technology.

Introduced smart contracts, allowing more complex transactions and decentralized applications (DApps).

2010: First Bitcoin transaction (pizza purchase).

2011: Emergence of alternative cryptocurrencies.

2017: ICO boom and widespread interest in blockchain.

2020: Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) gain popularity.

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HOW BLOCKCHAIN WORKS

Overview

• A blockchain is a chain of blocks where each block contains a list of transactions.
• Blocks are linked using cryptographic hashes.

Block Structure

• Header: Contains metadata such as the previous block hash, timestamp, and a nonce.
• Transactions: A list of all transactions included in the block.

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Data Storage and Linking

• Each block references the hash of the previous block, forming a chain.
• This ensures that altering a single block would require altering all subsequent blocks, making tampering difficult.

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BLOCKCHAIN TERMINOLOGY

Node

 A computer that participates in the blockchain network

Ledger

A record of all transactions on the blockchain.

Consensus

 The process by which nodes agree on the validity of transactions.

Hash

 A cryptographic function that converts input data into a fixed-length string.

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Smart Contract

Wallet

A digital tool that allows users to store and manage their cryptocurrencies.

A self-executing contract with the terms directly written into code.

DECENTRALIZATION?

• Increases security by reducing single points of failure.
• Enhances transparency and trust among participants.
• Promotes resilience and resistance to censorship.

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Decentralization means that control is distributed across multiple participants rather than being centralized in a single entity.

Decentralized Systems: Bitcoin, Ethereum

Centralized Systems: Traditional banks, centralized exchanges

IMPORTANCE IN BLOCKCHAIN

EXAMPLES

Check this out:

https://holamite.hashnode.dev/blockchain-technology

CONSENSUS MECHANISMS

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A consensus mechanism is a process used by blockchain networks to achieve agreement on the state of the ledger.

Ensures all participants agree on a single version of the truth, maintaining the integrity and security of the blockchain.

IMPORTANCE

TYPES

• Proof of Work (PoW): Requires nodes (miners) to solve complex mathematical problems to validate transactions and create new blocks. Used by Bitcoin.
• Proof of Stake (PoS): Validators are chosen based on the number of coins they hold and are willing to "stake" as collateral. Used by Ethereum 2.0.
• Delegated Proof of Stake (DPoS): Participants vote for a small number of delegates to validate transactions and create new blocks.
• Byzantine Fault Tolerance (BFT): Ensures that the system can continue to function correctly even if some nodes act maliciously. Used by Hyperledger Fabric.

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BENEFITS OF BLOCKCHAIN TECHNOLOGY

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• Transparency: All transactions are recorded on a public ledger that can be audited by anyone.
• Security: Advanced cryptographic techniques protect data integrity and prevent tampering.
• Efficiency: Automates processes and reduces the need for intermediaries, lowering costs and speeding up transactions.
• Traceability: Provides a clear record of the origin and journey of assets, useful for supply chain management.

CHALLENGES AND LIMITATIONS OF BLOCKCHAIN

• Scalability: Difficulty in handling a large number of transactions quickly.
• Energy Consumption: High energy usage, especially in Proof of Work systems.
• Regulatory Uncertainty: Lack of clear regulations in many jurisdictions.
• Adoption: Resistance from traditional institutions and the need for technical expertise.

USE CASES OF BLOCKCHAIN TECHNOLOGY

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OVERVIEW OF MAJOR BLOCKCHAIN PLATFORMS

• Cryptocurrencies: Bitcoin, Ethereum, and other digital currencies.
• Supply Chain Management: Enhancing transparency and traceability of goods..
• Healthcare: Securely storing patient records and ensuring data privacy.
• Finance: Streamlining cross-border payments and reducing fraud.
• Voting: Providing secure, transparent, and tamper-proof voting systems.

• Bitcoin: The first and most well-known cryptocurrency, primarily used as digital gold.
• Ethereum: A decentralized platform that runs smart contracts and DApps.
• Stellar: Focuses on facilitating cross-border payments and remittances.
• Hyperledger: An open-source collaborative effort to advance cross-industry blockchain technologies.
• Cardano: A blockchain platform focused on sustainability and scalability.

BITCOIN OVERVIEW

INTRODUCTION

Bitcoin is a decentralized digital currency that operates without a central authority.

KEY FEATURES

USE CASES: Digital payments, store of value, remittances.

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• Uses Proof of Work consensus mechanism.
• Limited supply of 21 million bitcoins.
• Transactions are pseudonymous and secure.

ETHEREUM OVERVIEW

INTRODUCTION

Ethereum is a decentralized platform that enables developers to build and deploy smart contracts and DApps.

KEY FEATURES

• Uses a Turing-complete programming language.
• Supports the creation of custom tokens (ERC-20) and NFTs (ERC-721).
• Transitioning from Proof of Work to Proof of Stake (Ethereum 2.0).

Use cases: Decentralized finance (DeFi), NFTs, DAOs.

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Adebara Ayomide

Stellar

STELLAR OVERVIEW

INTRODUCTION

Stellar is a blockchain platform designed to facilitate cross-border payments and asset transfers.

KEY FEATURES

USE CASES: Remittances, microtransactions, asset tokenization.

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• Uses the Stellar Consensus Protocol (SCP) for fast and low-cost transactions.
• Focuses on financial inclusion and connecting financial institutions.
• Supports the issuance of custom tokens.

COMPARING BLOCKCHAIN PLATFORMS

BITCOIN

Bitcoin focuses on being a digital currency and store of value.

ETHEREUM

Ethereum provides a platform for decentralized applications and smart contracts.

VS

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ETHEREUM

Ethereum is versatile with a wide range of applications.

Stellar specializes in cross-border payments and financial services.

STELLAR

VS

KEY CONCEPTS RECAP

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• Consensus Mechanisms: Methods to achieve agreement in a blockchain network.
• Decentralization: Distributed control and governance.
• Transparency: Open and auditable ledger.
• Immutability: Inability to alter recorded transactions.

TRANSACTION EXAMPLE

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• Alice sends 1 Bitcoin to Bob.
• Transaction is broadcast to the network.
• Block is added to the blockchain, and the transaction is confirmed.
• Miners validate the transaction and add it to a new block.

BLOCKCHAIN IN ACTION

DIAGRAM OF A BLOCKCHAIN TRANSACTION FLOW

FUTURE OF BLOCKCHAIN TECHNOLOGY

• Increases security by reducing single points of failure.
• Scalability solutions (e.g., sharding, layer 2 solutions).
• Enhanced privacy features (e.g., zero-knowledge proofs).
• Integration with emerging technologies (e.g., IoT, AI).

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INNOVATIONS

ADOPTION TRENDS

• Increasing use in finance, supply chain, and healthcare.
• Growing interest in DeFi and NFTs.
• Regulatory developments and standardization.

QUESTIONS AND DISCUSSION

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Summary & Next Steps

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• Understanding blockchain basics and its key characteristics.
• Exploring the history, evolution, and major platforms.
• Introduction to Stellar blockchain.

RECAP

• Deep dive into Stellar network fundamentals.
• Understanding Stellar Consensus Protocol (SCP).
• Transactions and operations on Stellar.

PREVIEW OF DAY 2

THANK YOU

Adebara Ayomide​

adebaraayomide@gmail.com

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