Cisco Live /11/2016

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6 Blockchain technology will become Like the TCP / IP for the WWW everyone uses it, but it will be transparent to them. Examples: Disrupt business models Car energy supplier can advertise where they are and if they are free, then have payment made by car! Cross industry Efficiency What if I collect weather data from IoT device and want to sell that via API call in small transactions to other markets? - Supply chain where something is, who last logged it, how long it was there, across different businesses. Peer-2-Peer Economy Paying someone instantaneously for access to hotel room? M2M pay drone via mobile phone for delivery. 6

7 Banks: Govn: Enterprises: Media: Inter / Intra bank money transfer (SWIFT without the middleman), securities, smart assets. Digital Identity, Voting, Land Registry, Patents & copyrights, Supply chain, Healthcare Cross-organization auditing and payments, Content Distribution 7

8 Why should you care? Fast evolution of disruption MtGox Tokyo based bitcoin exchange. Lost 850K BTC, at a price of $450 million. Namecoin First fork of bitcoin blockchain -.bit domain name registration. PeerCoin No limit on the number of coins. 1% inflation. Ethereum Vitalik Buterkin. Highest crowdfund in history in Blockchain 2.0 turing complete, with VM, for running smart contracts. 8

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13 Everyone has full copy of the blockchain they are using. Anyone can add a transaction to the blockchain record. Blockchains also contain storage and memory space. Storage is tied to accounts. but very much more expensive to read and write from blockchain storage / memory miners charge you more for transactions. 13

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15 Transaction example: Alice sends Bob 2000 Bitcoin for a car she buys off him. She creates a transaction that notes her blockchain account address, the amount (2000 Bitcoin) and Bob s destination account address. Alice then signs it with her private key that belongs to her account on the blockchain. The public key is broadcast to the blockchain at the time of account creation, so that everyone can verify a transaction from Alice is in fact valid. When the block with the transaction is mined, the transaction is written into the blockchain and the 2000 Bitcoin is transferred. 15

16 Mining for reward involves creating a hash from the transaction data and the hash of the last block. A hash has to look a certain way say, starting with a certain number of zero s for example, so have to keep trying to get a correct formatted hash- using a nonce. In the bitcoin network around 10 to the power 20 is required to produce a valid hash. This block and the hash then gets added to the end of the blockchain. 16

17 Consensus determines if that transaction remains in the blockchain database. Consensus is determined by the longest chain. Good miners add to the correct chain of transactions constantly, meaning any bad miner would have to insert a bad block (with it s false transactions) in then keep re-writing the good chain from that point until that fork of the chain became the longest overtaking the existing correct chain. To achieve the bad miner needs 51% of the mining (CPU) power a 51% attack for a considerable amount of time, to overcome all the other good miners. This has never happened on a public blockchain (yet). 17

18 Smart contracts require blockchain 2.0 type platforms that layer a VM over the top of the blockchain and allow turing complete programs to be stored and executed. Triggers can be explicit or timestamp / event orientated. This allows for much more complex applications to arise, utilizing the blockchain. Smart contracts cost small amounts of money to execute. 18

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21 Itunes Centralised server controls everything Napster Peer 2 Peer, with centralized server BitTorrent De-centralized. No central server UJO De-centralized. Uses blockchain to store data and provide programmability and auditability. Indexed for better searching. 21

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26 Advantages: Immutable - Data is always present, never removed which is great for regulation and audit. Auditable Full visibility for all participants in the blockchain. Programmable create complex applications based on a trustless system, using no dedicated infrastructure. Challenges: Scalability: With all these applications with many transactions and smart contracts, how does execution scale? Speed: It can take up to 17 seconds for a block to be verified on the fastest public blockchain. Not great for all applications. Privacy: If everyone can see all transactions, that might not always be fantastic for some markets (like banks). Over Application: Do you need a blockchain? Sometimes a database will do! 26

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31 Realizing the potential of IoT, digital identities and micro transactions in a peer-to-peer economy. 31

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