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Blockchain 101Mike McRoberts

Principal – McS, LLC

July 24, 2018

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“…the Blockchain, can change…well everything.”Goldman Sachs Emerging Theme Radar report December 2015

Internet of Information—Thin Protocols, Centralized Applications

Internet of Value—Fat Protocols, Decentralized Applications

“Blockchains can help us advance from a ‘don’t be evil’

world to a ‘can’t be evil’ world.”Muneeb Ali, Blockstack Co-Founder

Depending on who you ask…“Blockchain is as dramatic as the creation of the internet itself”

Or

“This new way of storing and accessing information is as important as the concept of the client/server database model was thirty years ago”

Bitcoin paved the way

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But

New models are emerging that

challenge the original

functionality of BC algorithm

Blockchain – the first digital medium for

value just as the internet was the first for

information

Bitcoin = Cryptocurrency Asset

Blockchain = Distributed Database

Ledger that atomizes and spreads data

over thousands of nodes all locked

together with clever cryptography

Whitepaper - Bitcoin: A Peer-to-Peer Electronic Cash System By Satoshi Nakamoto

The network timestamps

transactions by hashing them

into an ongoing chain of hash-

based proof-of-work, forming a

record that cannot be changed

without redoing the proof-of-work.

www.bitcoin.org

A Blockchain is a continuously-

growing list of ordered records called

blocks.

Each block contains a timestamp

and a link to a previous block.

By design Blockchains are inherently

resistant to modification of the data

— once recorded, the data in a block

cannot be altered retroactively.

- What is it?

Ethereum Whitepaper – A Next Generation Smart Contract & Decentralized Application PlatformBy Vitalik Buterin

• Proof of work innovation

• Self-executing Smart contracts

• Turing-complete programming language

Basic Blockchain Elements

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How Smart Contracts Work

Source: DHL

Continued Evolution of BlockchainMajor Blockchain innovations since Satoshi Nakamoto first published white paper in 2008:

Bitcoin Digital cryptocurrency

BlockchainSeparation of underlying bitcoin technology from the currency and

used for other inter-organizational cooperation

Smart ContractEmbodied in a second-generation Blockchain system called

Ethereum, which built little computer programs directly into the

block

Proof of StakeAt the cutting edge of Blockchain thinking, “proof of stake” is

generally replacing “proof of work”

ScalingProcess for determining how many computers are necessary to

validate each transaction and dividing up the work efficiently

Note—The transition from Proof of Work to Proof of Stake and other Consensus

Algorithms will reduce Electrical Energy Use and supports greater use of Blockchain

based Solutions.

Three Levels of Blockchain1 – Storing Digital Records

Blockchain allows unprecedented control of information through secure, auditable and immutable records of not only transactions

but digital representations of physical assets

2 – Exchanging Digital Assets

Users can issue new assets and transfer ownership in real time without banks, stock exchanges or payment processors

3 – Executing Smart Contracts

Self-governing contracts simplify and automate lengthy and inefficient business processes

Source: Deloitte University Press

The Internet – Intranet Comparison

Source: Coindesk

Logistics “Frictions” Blockchain May Address

• Lack of visibility into supply chain

• Long processing times

• Data discontinuities and antiquated IT

• Regulations/certification requirements

• Proliferations of players and handoffs

• Extensive manual inputs

• Significant paper-based processes

Blockchain Clinic Applications in Logistics, pwc, June 2017

Case Study – Food Blockchain Network

Case Study-Blockchain Rewards for Healthy Living

EV Charging & Sharing

Potential Impact of Blockchain on Electric Utilities

Blockchain Technology Trends in 2018

Source: “Blockchain in 2018: Beyond the Hype” – Professor Ahmed Banafa – San Jose State University