Part 2

Introduction to Blockchain Course

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 Blockchain Technology - Characteristics
 Cryptographic Algorithms  Hashing  Distributed ledger

 4 basic key components:  Public Key & Private Key  Consensus

 Secret
 Key  Digital Signatures  Trustless
 Function
 Cipher  Mining/Miners  Immutable

C RY P T O G R A P H Y PEER TO PEER TRANSACTIONS DECENTRALISED

To each, has its own Glossary.

Lets unpack its meaning and overarching genesis.

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Power of Cryptography in Blockchain Technology

 Secret is the data message one is sending in a safe, secure fashion and guarantees that
it will not be tampered with.

 Computing takes the secret and combine it with a key. A key is a piece of data that is
consumed by the computer function, the next component.

 Function receives the key and the secret. Uses the key to change the data in the secret
to create what is known as the cipher.

 Cipher is the encrypted message to protect against bad actors. They do not know how
to decrypt the cipher back into the secret data. Involves maths.
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 (1) CAESAR CIPHER
Oldest Tool used by Julius Caesar

Caesar Cipher shifted the entire alphabet over 3 letters.

Each letter will in turn serve as a different letter.

CRYPTOGRAPHY
Example Cipher: Meeting Tomorrow
ACTIVITY 1 Answer: PHHWLQJ WRPRUURZ

ROMAN STYLE
Encrypt these messages: Decrypt these messages:

 Delivery of supplies delayed  OHDS WKURXJK WKH VLGH GRRU

 Meet agent in front of cinema  WKH URRVWHU FURZV DW GDZQ

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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 (2) ST. CYR SLIDE
Crypto Tool used by French Military Academy

Much more customisable. Accompanied with an alphabet or device that has 2

rows of the alphabet and can shift freely.

CRYPTOGRAPHY
ACTIVITY 2 Click to add text Example Cipher: Meeting Tomorrow (‘K’)
Answer: WOODSXQ DYWYBBYG

FRENCH STYLE
Encrypt these messages: Decrypt these messages:

 Agent down (‘K’)  PDAB PQMP SADSQAGE (‘M’)

 Retreat now (‘U’)  XEPYKEJ (‘W’)

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

K L M N O P Q R S T U V W X Y Z A B C D E F G H I J
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 (3) RAIL FENCE CIPHER
Used by Abraham Lincoln to send orders to his generals

No replacement of letters. Rearranged to make them difficult to read.

CRYPTOGRAPHY
ACTIVITY 3 CIPHER MESSAGE

HLOOIYUDYELHWSORA
AMERICAN STYLE

ANOTHER EXAMPLE

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 What Cryptography Does Blockchain Uses?

Secure Hashing Algorithm (SHA 256) bit for securing and verifying peer to peer transactions. The
hashing algorithm is a complex, computer mathematical function that condenses data to a fixed size or
otherwise the encrypted cipher text. This produces irreversible and unique hashes. Irreversible meaning
that if you only had the hash, you cannot use that to figure out what the original piece of data was,
allowing the original data to remain secured and unknown. And, unique meaning that two different
pieces of data can never produce the same hash which is one of the key characteristics of Blockchain
Technology. Lets get deeper into Hashing!

Plain Text #Hash Function Hashed Text

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 HASHING

 SHA 256 Hash function will take any length string and create a fixed length output of 64 characters. It does not matter how
long or short your data message is.

 Lets try some hashing! Go to https://xorbin.com/tools/sha256-hash-calculator

 A hash with 64 characters of numbers and letters create an astronomical number of combinations and there’s little chance of duplication. In Blockchain,
hashes are used as identifiers for blocks, transactions and addresses.

 For example ownership of digital photos. You hash the photo with details such as time it was taken, who took it and where it was taken to create a hash
output and then keep adding new hashes to other photos. Remember hash is always mathematically associated with the original data/picture in this case.

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Private Key and Public Key
 You have seen that through hash, it goes from a state of plain text to cipher
text that is mathematically encrypted. Now when the message arrives at its
destination, it must be decrypted so that the receiver can read the data.

 In Blockchain transactions, cryptography involves 2 keys.

- Private key is first generated
- Public key is then also created as a pair.

 It uses complex algorithm process with a wide range of software available.

For example Adobe I/O.

 As you see the process makes it possible to generate the public key from
the private key but makes it very difficult to figure out the private key from
public key.

HOW DO WE USE THIS?

 Whenever you want someone to send you something secret in the

blockchain, you first send them your public key. The sender will lock the
message with your public key and then send the message to you.

 You open the message with your private key. And only you have the private
key. Someone who tries to intercept the message will be unable to unlock
the message.

 Additionally Digital Signatures come into place. Lets find out more!

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 A digital signature is the digital version of the unique stamp (history).

 Digital signatures uses private/public key pairs to function.

 When sending a peer to peer message or transaction, the message is signed with a
private key. And, when the message is received and the receiver has your public
key, it verifies that the signature was created with the private key pair of the
sender. This authenticates that the sender is who they say they are.

 If someone attempts to bluff/ping you by using another private key, the receiver
using your public key would immediately know it is not from you because the
public key would not authenticate the private key of the sender.

 Digital signatures not only secure data but also the identity of the individual
sending it. So one can sure that they are communicating with whom they intend
to.

 Simple but powerful.

 This private/public key pair infrastructure is essentially understanding how

blockchain technology works. It is the way that all the transactions in a
blockchain database are authenticated.

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 Blockchain Technology - Characteristics
 Hashing

 Public Key & Private Key

 Digital Signatures

 Mining/Miners

C RY P T O G R A P H Y PEER TO PEER TRANSACTIONS DECENTRALISED

To each, has its own Glossary.

Lets unpack its meaning and overarching genesis.

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Mining in Blockchain Technology - Aplenty of Transactions

 Lets first think of mining in traditional context. Coal, gold, diamond or oil. Why
does it takes up so much resources, money and time?

 Now, lets bring mining into a computing context.

 In the blockchain network, transactions are passed around from nodes to nodes
and also working to add transactions in blocks into the blockchain. This process is
called mining.

 Blockchain transactions rely on a computer to record and validate transactions

because of a particular problem inherent in any system of digital currency called –
double spending or counterfeiting.

 Mining is therefore a peer-to-peer process of solving complex computational

mathematics problems based on the hash algorithm that cannot be done by hands
but, only by high-powered computers. Certainly when they solve the above, the
node wins a reward - Bitcoin.

PROOF OF WORK

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As you see, mining is necessary to maintain the ledger
of transactions in the blockchain by solving
computational puzzle.

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Blockchain Mining with Further Explanations - Video

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 Blockchain Technology - Characteristics
 Distributed ledger

 Consensus

 Trustless

 Immutable

C RY P T O G R A P H Y PEER TO PEER TRANSACTIONS DECENTRALISED

To each, has its own Glossary.

Lets unpack its meaning and overarching genesis.

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What is the notion of Decentralised in Blockchain?
It is not centralised. This is the Mojo!

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 Popular examples for centralised infrastructures are Facebook, Visa,
Master, Tik Tok (dependable on them).

 Examples of decentralised infrastructures are Bitcoin, BitTorrent and

Ethereum.

Advantages of Decentralised Infrastructure

 Distributed, the ledger is spread across the whole network.

Participants talk to each other directly.

 Consensus, participating nodes agrees with the ledger updates

before adding to the block. Validated against the strict criteria
defined by the Blockchain Protocol

 Trustless, no central authority is in control of updating the

blockchain ledger. You do not need to know the third party but
trust the blockchain system itself.

 Immutable, this means that ledger entries made can never be

edited or deleted which is different to traditional databases.
Security of the blockchain system.

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 Blockchain Tech Characteristics Complete

C RY P T O G R A P H Y PEER TO PEER TRANSACTIONS DECENTRALISED

To each, has its own Glossary.

Lets unpack its meaning and overarching genesis.

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Cryptography Additional Resource

https://www.youtube.com/watch?v=_160oMzblY8

https://www.youtube.com/watch?v=xIDL_akeras

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