A Blockchain Picture Book

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Video in TIB AV-Portal: A Blockchain Picture Book

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A Blockchain Picture Book
Blockchain origins and related buzzwords, described in pictures.
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You are free to use, adapt and copy, distribute and transmit the work or content in adapted or unchanged form for any legal purpose as long as the work is attributed to the author in the manner specified by the author or licensor.
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Where is the blockchain, how long is it, and what does it have to do with cryptography? And is it really something completely new? I spent a lot of time in pubs explaining to people what this blockchain hype is all about. It turns out that the best way to do that is to use images - literally. The idea behind this talk is to give you a rough understanding of the scientific background behind the Blockchain technology.
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[Music] I'm very happy to be allowed to announce the following talk it's called a blockchain picture book and it's held by alx blockchain is a topic we hear constantly everywhere in the media it's
sold as a solution for everybody and for everything doesn't matter what but how it really works and what it really is most people don't really have an idea so today we
got a beginner's introduction with pictures so please welcome Alex on stage with a big round of applause
[Applause] [Music] hi yeah my name is Alex and I'm from the Technical University of Brunswick I'm working in the Institute of application security I suppose you're here to see my blockchain picture book read but right from the start this talk is not about the newest cryptocurrencies out there and it's also not about in which ICO you should invest in I'm absolutely clueless about that topic sorry to disappoint you maybe I'm here to give you a very rough introduction to the idea and the basics of this blockchain thing out there so maybe you can judge my own so I hope there are no
blockchain experts in the audience maybe so this is a foundation talk that means I do not expect any technical or mathematical backgrounds at all so let's just give it a try imagine the following
situation once upon a time there were two people let's call them Mary on the left and
Alex on the right they wanted to trade with each other Mary she wants to buy a house from Alex that she brings to a great amount of money and Alex on the picture brings the keys for this house that should be sold to Mary but since Marian Alex do not know each other they do not trust each other as well so they set up a contract for the street just to be on the safe side here on the right you can see a typical contract for trade and it consists of some important informations like a description of the object that should be sold the house of Alex maybe the address what's inside and stuff they greet amount of money let's say the house cost self a million whatever the persons who are involved in this trade in this case Marion ELYX and of course the signatures as a final step this contract must be timestamp for being valid so nowadays
those kind of contracts usually exists as digital documents but for both the digital and the analog document if an evil party it's hands on all copies of this contract we can modify it in a malicious way let's say removing the time stamp this can void the contract and thus make the treadle the trade invalid and by the way the evil party can also be one of the persons involved in this trade so let's say our Alex the evil one you want to take the money from Mary but also keep the house okay this is our initial situation so in 1990 in Hubbardston Etta
proposed in a scientific paper a cryptographically solution for binding a tiny stem and advisably to a digital document what does it means they both the timestamp and a digital document are merged into a new document and can't be separated from each other without being damaged so we will see later how this exactly works for now let's pretend this block which you can see here contains our digital document and the timestamp and both binded by some mystical fancy cryptographic technique which is represented by this blue frame okay so unfortunately we still face the problem that our evil party remember alex is the
evil party he can just make this contract and all copies disappear and claim there never existed before so to tackle this problem Harmon Stinnett her their paper further
proposes a chaining technique for those blocks all of which contains of course different contracts so the result is the chain of blocks a block chain here we are hey and since this is a chain it's not possible to remove one of the blocks removing a block from the inside of the chain will just break it completely in a way that you can put it together anymore without damaging it as we will see later okay so hmm this doesn't prevent that anyone can just make this whole chain disappear
maybe so but the longer the chain gets the more people are involved in this chain the higher the risk for evil parties malicious task is discovered okay clear so far right but the problem remains this chain has to be stored somewhere you remember it's digital so let's say another trusted party gets this husk so here we are this is our trusted party and which is in charge for a blockchain
but the thing is distrusted party you can also fail or become untrusted and it doesn't have to be malicious at all it also may happen that the storage for blockchain fails so crashes or any data may be destroyed due to any hardware failure may be or the trusted party just deletes it accidentally maybe so it's like with every centralized service you
have to trust so imagine your email provider just disappears tomorrow how many services are using which depends on the email address okay so for that reason the paper suggests to distribute copies of our blockchain to a lot of other parties so here we are here you
see a lot of other parties wherever they are who owns a copy an exact copy of our blockchain remember this blue color represents something cryptographically okay so you can see there's no centralized storage anymore instead we have a large number of participants which we can rely on so let's call this a decentralized network remember this term it will get important later so for now even if some of those parties fail as long as the majority stores valid and of course the same copy of our blockchain we can keep going
okay you still with me right okay so the question remains how this
mystical cryptography you thing stuff whatever works this is how such a block
actually looks like and in fact this is the first block blockchain block ever created but I suppose you're not really interested in a math lecture okay so as I promised let's keep the mathematical details and stay visual but just for information this is a block okay let's
pretend we observed another trader Alice and Bob are doing a trade and we can see Alice wants to sell a smartphone or whatever to Bob so do you remember those Polaroid cameras where you could take a picture and it was printed instantly you know them I think they're back confessional so while we observe this situation we take a Polaroid picture of it it's printed and this picture attests this trade so we take this picture and
put it on a blackboard like this here so
let's say this picture represents a block you remember this blue frame blocks like we saw them before okay somewhat later we observe another trade
here Charlie wants to sell his car to Peter and again we take a picture but this time we hold the picture from before the one which is already in the blackboard into the background of this situation like here so now we take the new Polaroid picture and put it back to our blackboard okay
so what do we see now the first picture which is our first block appears in the
background of the second picture which is our second block so let's say the second block is chained to the first block so if someone evil wants to change the content of the first block he must also change the content of the second block which means more effort for this evil party okay so of course let's keep doing the same and at the third picture to reboot here we can see even Alex another Alex trading some goods and in addition again we can see the second picture is in the background of this third picture so it's the same thing
the third is changed to the second okay you're with me nice and of course for the sake of completeness we had the
fourth block where Armand and ads are trading and this house is more expensive this term so again we see the content of the third block in the fourth block that's their change so now we can see the big picture here so if our evil party now wants to change something on this first trade on the first picture that means he must change the second and the third and the fourth
pictures well else this modification is detectable you agree okay so one can say we created our very special kind of blockchain here consisting of polaroid pictures which represents blocks of course okay so this
support can bring us some fancy properties and at this point it's important to say that some of these properties are optional there are different kind of blockchain systems out there and most of the properties depends on what kind of blockchain is in use and of course the use case but let's just take a look at some of the important properties in my opinion so return to
our blackboard here which we constructed earlier so we already observed this chaining mechanism this picture and picture thing you remember so this mechanism makes our blocks immutable and thus the contracts inside this blocks are immutable as well of course so they can only be modified if the complete chain is also modified so let's take our board and place it
anywhere in the public this gives all the people walking around the possibility to keep an eye on everything happening on our chain on the board and maybe detect any anomalies so we can say well blockchain snows coolers open source software maybe other parties who
make up our distributed network you remember we talked about that before creates an exact copy of our blackboard and they upped the updates they copy every time something news appended to the chain so if the original blockchain on this board becomes invalid or disappears or whatever we can ask our distributed network for the last valid copy of this chain and put it back on the board [Music] but even if some of those parties becomes malicious as long as the majority of all parties is honest and own a valid copy of our blockchain we could prevent fraud on it and at least
it's possible to ensure anonymity for all involved parties parties of our distributed network as well as the parties involved in the contracts inside the blocks okay so in summary we can say
in the contracts in our blockchain are immutable the control over the blockchain is
decentralized and it's really hard to get a majority of the network to the bedside I suppose our block our boat and that's the blockchain inside are exposed to public scrutiny and it's not possible to remove one of the blocks from inside the chain without breaking it completely we can provide anonymity to our distributed network and the parties involved in the transactions or the contracts inside the chain and at least we don't have to be at the mercy of a single institution like a bank or government or whatever okay so looks like some fancy properties these are just some of a lot of properties which we can achieve so let's take a closer
look on a common blockchain application I suppose most of you here heard of the
so-called cryptocurrency stuff especially Bitcoin maybe some of you own some Bitcoin of course there are many more cryptocurrencies out there WAPA Cornwall Cohen stuff but let's talk about financial transaction on a
blockchain in general so this is a classic German bank
transfer form before the times of online banking this fool was used to transfer money from one bank account to another maybe some of you still remembered you had to write extremely clear it was horrible and you filled out this form give it to your bank and they take care of everything else so you can see some fields here these are the names of the sender and the receiver of the money the sender is in the bottom here you can see the account numbers this is the bank ID and in this case you can see it's the same bank of course the amount of money and a signature of the sender as well as the date so for financial trans transactions
we are cryptic currencies like Bitcoin whatever we don't need that much information the only information we need here are the senders and the receivers public keys they are used the same way as account numbers but they are much longer more cryptical of course still we need the amount of money the sender's signature which also contains the timestamp remember this stuff is digital so back in the good old days we just filled out this form put it into a
special letterbox in the bank and forget about it in cryptocurrencies very simply said all Commission transactions like this here are collected by our distributed network so let's say our distributed network
collected seven pending transaction so but this transactions are not in our blockchain yet let's get back to our blockchain we have five blocks currently with any contracts or transactions inside so and now we face the question which of those transactions shall form over six lakh in this chain okay you agree on this question maybe some of you would say hey we have some timestamps on
the transaction why can't we use them the thing is that our distributed network it's in different time zones and I don't know network delays and all this stuff so we need another solution for this question I suppose some of you already has an idea how to use this so if all involve parties follows a rule on
how to find an agreement on something whatever we can call this a consensus protocol so maybe some of you heard this term before
okay so remembered let's replace transactions and contracts with something much simpler let's say some
fancy symbols have been proposed as candidates for next block the red one in the chain so our distributed network consisting of some participants now face the question which of those symbols shall form the next block and there are different ways to achieve this goal so let's talk about the best known Conlon's protocols maybe one of the most popular
used by a Bitcoin network it's the proof-of-work protocol I see some people laughing okay so what
does it got to do with competition back to your initial question which of the
symbols shall form the next block so very simply set each time a new block shall be created and this means as long as they're pending transactions we need new blocks our network holds the public race and everyone can take part in this
race so the winner of the race can decide which symbol gets into the new block look simply and in this race we
can see that the winner of part he selects the heart symbol for the next block so it appears there so the outcome of this race is known to every / - it's
known to our distributed network so each of those parties in this network appends the new block into their own local blockchain copy holding this heart symbol inside okay right unfortunately as some of you may know this protocol has some drawbacks and the most serious
of these is probably the negative impact on the environment that means holding such races consumes many resources and of course in reality not motorcycles but a very large number of highly specialized high-performance computers take part in these races and of course they need to you to mount a huge amount of power which is not really great for the environment so for last year it was estimated that the Bitcoin network needed at annual rate as much power as the whole country of Denmark which is a lot okay so you don't like this protocol
let's take a look on another one so this protocol depends on the vote of
participants in a group we call it the consortium vote this is one of the names for this protocol back to our initial
question was defensive symbols which of them shall form the next block in our chain so instead of a huge network of unknown participants driving motorcycles and holding races this time we invited
some parties in a fixed group we call this group consult soon so each time a new block shall be created the participants of this consortium hold the vote it's similar to a democratic election so the symbols at a symbol most parties voted for wins stead symbol so in this round we can see two party sorted for a circle two parties wooded for the heart and three parties voted for a star symbol so the star is selected by the
will of the people and thus appears in the next block you agree okay so the outcome of this vote is visible again to a distributed network which holds copies of all blockchain so each party in a distributed network appends and you block into their own local copy holding the star symbol inside so great we see no environmental drawbacks here maybe this is the best solution okay some of you disagree yeah um well the chop here is the formation of the
consortium this is one of the drawbacks we can't ensure that the invited parties or participants of our consortium unbiased here is he a very human and this Doman only allows participants to our consortium party who promises to vote for this circle symbol and nothing else so we can say he's kind of a filter so since there are only participants who refers to circle symbol and the consortium they also vote for it eventually as you can see here so among other drawbacks this protocol may be misused for corruption or whatever okay it's still with me nice okay let's check
the last consensus protocol may we have more success here so this one depends on the share or stake of the system that everyone owns this consensus protocol will be called proof of stake but what doesn't have to do with randomness maybe you ask so one last time we repeat our question which of the symbols shall form the next block in our chain so let's pretend we have any system let's say all
existing symbols in this world form our system we can see the system this is the circle on the right side and the whole system belongs to five parties which are on the bottom left this five colored parties so this colored circle represents the stake of each party on the system so each round these parties would on which symbol shall form the next block but this time the decision for who is the winner it's made randomly taking into account the stake of each party so we can call this awaited randomness okay so how or does this exactly work let's imagine this roulette wheel I hope some of you know this kind of game okay usually you spin the wheel you throw a bulb on it and sometimes they will stops turning and the ball ends on any number on this wheel and this number is the winner done but instead of numbers this time we distribute the symbol candidates on the wheel according of the stake of its motor okay
so let's play the game that's how or wheel looks like and with spinach and throw a bullet and keeps rollin and rollin and rollin and it stops at some point on a symbol here it landed on the triangle so the triangle is the winner symbol for an x-block and it appears there eventually as you can see on the top right okay you're with me all right so what happens when the steak of one of these parties
is significantly larger than the steak of others here our red stakeholder is a very rich man and holds the majority of the system so as you can imagine even if our assistant chooses randomly since this randomness is weighted his chance to be chosen is significantly larger than the chance of others so of course
there are even more consensus protocols out there and you can spay spent a few hours talking about them but to get to the point every effort to reach a fair consensus seems to come with drawbacks and depending on our use case and
blockchain system which are which we are using those drawbacks can have negative impacts so why I was still putting all this effort into this blockchain science you may ask let's get back to an initial situation where Mary and Alex traded and
Mary wanted to buy a house from Alex you remember so here Mary have to trust Alex that the house he sells to her it's really his own property and that he won't he woke the trade of tools on the other hand alex has to trust Mary that she gives him the promised amount of money for this house so if a bank is involved in the street they both Mary and Alex has to trust this Bank for transferring the money safely from Mary - Alex and of course the right amount of money and red currency and in big traits like house selling usually notaries involved Marion LX has to trust this notary to be impartial so
we see traditionally such traits involves a lot of trust and Trust in such things as traits it's not really popular as to Heath has been a lot of disappointments in the past as you may know and all this blockchain science is the most promising approach for mitigating the nice need of distrust so far but I think we're still a long way from reaching this goal so let's see what the future may bring us thanks for attention
thank you very much for this nice
introduction if you have questions please go to the mics and there's three simple rules to follow now first if you want to ask a question a questions normally one sentence ended by a question mark nothing else second if you speak into Mike keep it close to your Mound mouth just like you would like to bite into it but please don't do so and third for everybody who's leaving now please do this quietly thank you very much so let's start with a question from the internet hi there's a question from is C so you
talked about how block chains provide anonymity and could you like explain what that means in the context of a block chain because after all it's like real people having a transaction so yeah what is the definition of anonymity in this context this is a very technical question I suppose for the technical people anonymity means we don't have names like we seen on the German bank transfer form where you can exactly see Mary and Alex are trading so you have the names and you exactly know who these people are in the technical case that means we use public keys and of course we can create public keys without seeing the person behind it so in this case it's possible to ensure anonymity but as some of you may know comes to drawbacks its technical microphone number three
you showed us different ways of choosing
which which transaction is next but I was think I don't know how if there is a possibility that some transaction will be lost like
you know what one of the truth sections
just disappear from this yeah because all other are chosen before before it like how long does it take to do the vote oh really depends on the protocol as some of you may know in case of blockchain where has this time minute stuff that means every ten I think ten minutes when do any wrong because of this cryptographically hash whatever but it absolutely depends on the protocol as this voting protocol works completely different so that's the reason why I didn't want to go into details because it depends on the protocol so we can talk about it later if you want to but I think this is out of scope here
microphone number two please thanks for the talk a lot of the example I see on blockchain
are basically database owned by one company so it doesn't really so what is for you the most exciting usage of blockchain that you see today I cannot answer this question because I don't truly know what kind of solutions are they of course I know the popular stuff like hyper legend whatever for me personally the current solution are not really cool but because of technical backgrounds but I can imagine that the distributed computing protocols behind this blockchain thing can lead us to some very cool stuff but we need to put much more science inside it and that means really science
even have a question at microphone number two great talk yeah for for distributed
computation there was already a lot of okay so I can it go a bit closer to the mic please sorry if if one of the most interesting usage is distributed computation it was City at home there is a bunch of bah blah blah at home so I'm not sure then again that what's the competitive advantage let's say a blockchain to those where should previous distributed computation protocols I'm not sure if I understand your question but do you ask what exactly is new about all this thing if the advantage is distributed computation yeah that was done before and I'm not sure what's the advantage of doing it by a blockchain technically a blockchain is absolutely nothing new so distributed computing is a quite old topic it's nothing else than just a distributed database in fact with some other properties which can be combined so that means blockchain is a combination for me personally of a lot of techniques so I think we just should use many more distributed computing solutions for like stuff like financial financial transactions or smart contract stuff whatever so this blockchain term you must be really careful with it that's a very
nice warning so please give another warm round of applause for Alex [Applause]
[Music] [Music]