Blockchain and Decentralization: The Basics

General technology overview for wide audience. Distinguishing the essential and debunking myths.

Transcript

1. BLOCKCHAIN AND DECENTRALIZATION BLOCKCHAIN AND DECENTRALIZATION TECH TALK TECH TALK Cogniance | 2018
2. PRESENTER PRESENTER Andriy Shevchenko / Senior So ware Engineer @ Cogniance Lead Engineer of Blockchain R&D initiative aShevc
3. BLOCKCHAIN R&D ACHIEVEMENTS BLOCKCHAIN R&D ACHIEVEMENTS Completed general market overview / Completed technology stack overview / Implemented sample case study project Prepared service offering deck / Developed engineering principles for decentralized so ware development / View View Download View
4. PART I PART I THE BASICS THE BASICS DISTINGUISHING THE ESSENTIAL, DEBUNKING DISTINGUISHING THE ESSENTIAL, DEBUNKING MYTHS MYTHS
5. TOPIC OF TODAY'S TALK TOPIC OF TODAY'S TALK
6. DECENTRALIZED SOFTWARE DECENTRALIZED SOFTWARE Innovative approach to so ware development for products with shared data that heavily opposes traditional systems with server-centered architecture
7. STEPS TO UNDERSTAND DECENTRALIZED STEPS TO UNDERSTAND DECENTRALIZED SOFTWARE SOFTWARE What? Where? Who? How?
8. WHAT? WHAT? Blockchain. Chronologically accurate system of records Essential feature: data immutability Can be safely used in a shared environment
9. WHERE? WHERE? Architecturally decentralized system of independent nodes working according to a common protocol Essential feature: political independence. Protocol serves as an authority
10. WHO? WHO? Users in the decentralized so ware model are represented by the crypto-secured identity Private keys are used by users to sign the transactions Public keys are used by nodes to validate signature on the transactions Addresses are used by anyone for unique identification. May be used to transfer funds in cryptocurrency networks
11. EXAMPLE OF A CRYPTO-SECURED EXAMPLE OF A CRYPTO-SECURED IDENTITY IDENTITY Address: 0x1KKXs6zSxJ7mTFuVdFRyx9gW6aFvA2Ywxp Public Key: 0x0243c7970c2ebc422467a6d2ad5173d98aad831bf438d98fdb6afe09b8d1faf9e5 Private Key: 0xL1y1JJToHpwUCLb3AVNWk62F6UMfALLqch1vt3bbq7HvJZap5tkD Can also be presented as a QR code:
12. HOW? HOW? Through the consensus protocol Deciding whether to commit a distributed transaction to a ledger Synchronizing data replicas and ensuring consistency among nodes Must secure the network against attacks, i.e. double spend
13. DOUBLE SPEND PROBLEM EXPLAINED DOUBLE SPEND PROBLEM EXPLAINED
14. POPULAR CONSENSUS ALGORITHMS POPULAR CONSENSUS ALGORITHMS Proof of work Pros: proven and battle tested for almost a decade. Has efficient incentivization system Cons: very slow. Vast amount of computing power does not do any valuable work. Proof of stake and its variations Pros: can be very fast Cons: Hard to get right. Certain implementations suffer from increased levels of centralization. Certain incentivization mechanisms are not as efficient
15. WHY?..AND WHEN TO CONSIDER WHY?..AND WHEN TO CONSIDER DECENTRALIZED MODEL DECENTRALIZED MODEL
16. THE WAY BLOCKCHAIN TECHNOLOGIES THE WAY BLOCKCHAIN TECHNOLOGIES ARE USED TODAY ARE USED TODAY
17. POTENTIAL CHALLENGES POTENTIAL CHALLENGES By design, decentralized so ware is massively more vulnerable No regulation mechanisms established by legal authorities Currently popular public blockchain networks are slow and expensive to use
18. TRUE VALUE OF BLOCKCHAIN TRUE VALUE OF BLOCKCHAIN TECHNOLOGIES TECHNOLOGIES Establish a different trust model in which there is no trust required between parties and there are no authorities in place Allows to encourage previously poorly connected parties to cooperate
19. WHERE DECENTRALIZED SOFTWARE MAY WHERE DECENTRALIZED SOFTWARE MAY MAKE SENSE MAKE SENSE The counterparties that require connection are connected poorly or not at all The data that supposed to be shared is not shared efficiently The reason for poor connection between parties is inability to establish trustful relationship
20. Q&A Q&A