BEGIN BLOCKCHAIN - Module 1 FINAL.pptx

Co-funded by the
Erasmus+ Programme
of the European Union
ONLINE COURSE
BLOCKCHAIN AND
BUSINESS

e n a b l i n g n e w g r o w t h f o r S M E ’ s
Modules Overview
1.0 – The Basics of Blockchain
2.0 – How can blockchain ecosystems serve entrepreneurs and SME’s?
3.0 – Will Blockchain Work for You?
4.0 – What regulations will impact my business?
5.0 – The Future of Blockchain?

e n a b l i n g n e w g r o w t h f o r S M E s
Module 1
The Basics of Blockchain

In this module, we will discuss a brief history of the internet and how it was designed. This foundation is needed to
help you gain an understanding of how blockchain technology builds upon the current internet protocols. We will see
how blockchain technology is changing the Internet from one of information exchange to one of value exchange. We
will also briefly discuss Bitcoin and how it is the first genuine application to showcase blockchain technology. We will
discuss the features of these new peer-to-peer networks that bring transparency and immutability to the ledger by
distributing copies to all participants or nodes in the network. Furthermore, we will examine how this new strand of
technology is opening up new career opportunities, as new skills and talent will be required to build the foundation
for blockchain to thrive.
Introduction

This programme has been funded with support from the European Commission. The author is solely
responsible for this publication (communication) and the Commission accepts no responsibility for any
use that may be made of the information contained therein
Learning
Objectives
Understand the link between the
early internet and blockchain
technologies
Explain the difference between
blockchain and Bitcoin
Discuss blockchain characteristics
Explain blockchain components:
• What the block in blockchain is
• How the blocks are chained together
• The immutability in a blockchain
1
2
3
4
By the end of this module, you
will be able to:

Content
1.1 – A Brief Introduction to Blockchain
1.2 – The Growth of the Internet
1.3 – What is Blockchain
1.4 – Blockchain vs Bitcoin
1.5 – The Features of Blockchain
1.6 – Test Your Knowledge

1.1
An Introduction to
Blockchain

Blockchain is a peer-to-peer ledger system that allows peers to transact directly with each other, eliminating the
need for a central authority.
At its core, blockchain is a system for recording information about a transaction in a new decentralized way that
makes it difficult or impossible to alter. These transactions are stored on blocks or sheets in a digital ledger that is
shared among the participants of the network. Consensus on the transactions brings the peer-to-peer network
into an agreement. Once the agreed-upon transaction blocks are recorded in the immutable ledger, trust becomes
a fundamental component built into the system.
Introduction to Blockchain

1.2
The Growth of the Internet

What began as an experiment in decentralized
computing communications between two
universities in 1970, became the Transmission
Control Protocol/Internet Protocol (TCP/IP). It was
developed as a standard in networking protocol
or computer communication standards, and it is
the backbone of today’s internet.
With the TCP/IP protocols in place, users had the
ability to link hypertext documents in an
information system accessible from any node or
computer using the TCP/IP protocol. The resulting
information system is what we know today as the
World Wide Web.

The growth of the World Wide Web
expanded the usage of this new technology
and expanded business opportunities. Web
servers, people who host and store the
documents and web browsers, companies
set up to help you view linked documents,
help create a household need for this
technology and the internet explosion
began.

• Web 1.0
• Web 2.0
• Web 3.0
The Explosion of the Internet
Three distinct areas emerged from the way
people began to interact with the internet…

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Basically, this first version of the Web
consisted of a few people creating web
pages and content and web pages for a
large group of readers, allowing them to
access facts, information, and content from
the sources.
Or you can sum up Web 1.0 like this: it was
designed to help people better find
information. This web version dealt was
dedicated to users searching for data. This
web version is sometimes called “the read-
only Web” because it lacks the necessary
forms, visuals, controls, and interactivity
we enjoy on today’s Internet.
Web 1.0
Where it started...
https://www.simplilearn.com/what-is-web-1-0-web-2-0-and-web-3-0-with-their-difference-article
People use the term “Web 1.0” to describe the
earliest form of the Internet. Users saw the first
example of a worldwide network that hinted at future
digital communication and information-sharing
potential.

Here are a few characteristics found in Web 1.0:
• It’s made up of static pages connected to a
system via hyperlinks
• It has HTML 3.2 elements like frames and tables
• HTML forms get sent through e-mail
• The content comes from the server's filesystem,
not a relational database management system
• It features GIF buttons and graphics
Take a real-world dictionary, digitize everything in
it, and make it accessible to people online to look
at (but not be able to react to it). Boom. That’s
Web 1.0.
Web 1.0 Characteristics

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If Web 1.0 was made up of a small
number of people generating content
for a larger audience, then Web 2.0 is
many people creating even more
content for a growing audience. Web 1.0
focused on reading; Web 2.0 focused on
participating and contributing.
This Internet form emphasizes User-
Generated Content (UGC), ease of use,
interactivity, and improved compatibility
with other systems and devices. Web 2.0
is all about the end user's experience.
Consequently, this Web form was
responsible for creating communities,
collaborations, dialogue, and social
media. As a result, Web 2.0 is considered
the primary form of web interaction for
most of today's users.
.
Web 2.0
Where we are now…
If Web 1.0 was called “the read-only Web,” Web 2.0 is known
as “the participative social Web.” Web 2.0 is a better, more
enhanced version of its predecessor, incorporating web
browser technologies such as JavaScript frameworks

Mobile Internet access and the rise of social
networks have contributed to a dramatic upturn in
Web 2.0’s growth. This explosion is also fuelled by
the rampant popularity of mobile devices such as
Android-powered devices and iPhones. In addition,
Web 2.0's growth made it possible for apps such as
TikTok, Twitter, and YouTube to expand and
dominate the online landscape.
It’s used by society at large and not limited to
specific communities.

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This Web interaction and utilization stage move users away
from centralized platforms like Facebook, Google, or Twitter
and towards decentralized, nearly anonymous platforms.
World Wide Web inventor Tim Berners-Lee initially called
Web 3.0 the Semantic Web and envisioned an intelligent,
autonomous, and open Internet that used Artificial
Intelligence and Machine Learning to act as a "global brain"
and process content conceptually and contextually.
This idealized version didn’t quite pan out due to
technological limitations, like how expensive and
complicated it is to convert human language into
something readily understood by computers.
Web 3.0
Where the future is
heading…
When trying to figure out the definitive
web 3.0 meaning, we need to look into the
future. Although there are elements of
Web 3.0 currently available today, it still
has a way to go before it reaches full
realization.
Web 3.0, which is also referred to as
Web3, is built on a foundation consisting
of the core ideas of decentralization,
openness, and more excellent user utility.
Web 1.0 is the "read-only Web," Web 2.0 is
the "participative social Web," and Web
3.0 is the "read, write, execute Web."

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• It’s a semantic web, where the web technology
evolves into a tool that lets users create, share, and
connect content via search and analysis. It is based
on comprehension of words instead of numbers and
keywords
• It incorporates Artificial Intelligence and Machine
Learning. If these concepts are combined with
Natural Language Processing (NLP), the result is a
computer that uses Web 3.0 to become smarter and
more responsive to user needs.
• It presents the connectivity of multiple devices and
applications through the Internet of Things (IoT).
Semantic metadata makes this process possible,
allowing all available information to be effectively
leveraged. In addition, people can connect to the
Internet anytime, anywhere, without needing a
computer or smart device.

• It offers users the freedom to interact publicly or privately without having an intermediary expose them to
risks, therefore offering people “trustless” data.
• It uses 3-D graphics. In fact, we already see this in computer games, virtual tours, and e-commerce.
• It facilitates participation without needing authorization from a governing body. It’s permissionless.
• It can be used for:
• M e t a v e r s e s : A 3 D - r e n d e r e d , b o u n d l e s s , v i r t u a l w o r l d
• B l o c k c h a i n g a m e s : T h e y a l l o w u s e r s t o h a v e a c t u a l o w n e r s h i p o f i n - g a m e r e s o u r c e s , f o l l o w i n g t h e
p r i n c i p l e s o f N F T s
• P r i v a c y a n d d i g i t a l i n f r a s t r u c t u r e : T h i s u s e i n c l u d e s z e r o - k n o w l e d g e p r o o f s a n d m o r e s e c u r e
p e r s o n a l i n f o r m a t i o n
• D e c e n t r a l i z e d f i n a n c e . T h i s u s e i n c l u d e s p a y m e n t B l o c k c h a i n s , p e e r - t o - p e e r d i g i t a l f i n a n c i a l
t r a n s a c t i o n s , s m a r t c o n t r a c t s , a n d c r y p t o c u r r e n c y
• D e c e n t r a l i z e d a u t o n o m o u s o r g a n i z a t i o n s . C o m m u n i t y m e m b e r s o w n o n l i n e c o m m u n i t i e s

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Web 3.0
Web 3.0 ultimately lets users interact,
exchange information, and securely
conduct financial transactions without a
centralized authority or coordinator. As a
result, each user becomes a content
owner instead of just a content user.
Remember that Web 3.0 isn't entirely in
place. However, we are already seeing
elements of Web 3.0 working their way into
our Internet experiences, such as NFTs,
Blockchain, Distributed ledgers, and the AR
cloud. Additionally, Siri is Web 3.0
technology, as is the Internet of Things.
However, when the full implementation
happens, it will be closer to Berners-Lee's
initial vision of Web 3.0. As he puts it, it will
be a place with "no permission is needed
from a central authority to post anything …
there is no central controlling node, and so
no single point of failure … and no "kill
switch."
Unfortunately, there is still a lot of work to
be done, especially in speech recognition;
human speech has a staggering variety of
nuances and terms that technology can't
fully comprehend. There have been
advances, but the process hasn't yet been
perfected.

Now that you’re all caught up on the
basics of the internet, lets move onto
the basics of blockchain…

1.3
What is Blockchain?

Blockchain is a new technology that has the power
to revolutionise the way in which you, businesses
and the world interact! But what is it? How does it
work?
Watch the short video to get a better
understanding of how blockchain works…
https://www.youtube.com/watch?v=yubzJw0uiE4

Listen to this podcast by Richard
Bradley explaining what Blockchain is in
Deloitte's broadcast series "Technology
Decoded“.
Podcast
https://www2.deloitte.com/ch/en/pages/
strategy-operations/articles/blockchain-
explained.html

Refers to a good or service being
offered by a company.
The Notebook Analogy

Let's use an analogy for blockchain. Let's refer to
blockchain as a notebook. Each page represents a
block on this blockchain. You can record data of any
kind, such as medical records and financial
transactions, on this page, which is also known as
a block, where each page (block) is chained to the
previous page (block). This chain is not just a link to
the previous page; it also contains information about
the page in such a way that, once the data on the
page is defined and added to the notebook, it cannot
be changed. If it is changed, information about the
page is changed. Then, the chain it holds with the
other page is changed, and so on. This is noticeable
since the chain link is broken. Hence, the lines on each
chained page are immutable.

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Blockchain technology also includes smart
contracts, which are intelligent programmatic
contracts, also known as rules; these are
defined and executed when an event of a
certain type occurs on the blockchain
network. It is called blockchain because the
chain of blocks is a linked list of the blocks,
where each block has one or many
transactions. These transactions are verified
and validated by the blockchain network in
each time span. The blockchain protocol's
consensus algorithm, adopted for that
blockchain network, defines the rules and
incentives of the participating nodes.

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What makes this blockchain notebook incredibly
powerful is that all the pages are linked together.
So that if I go back and try and change any data on
any page anywhere in this notebook, I break a link
in an obvious and easy-to-determine way. This
gives blockchain a key property known as
immutability. And it's what gives blockchain the
security that we've come to know and depend on.
Blockchains also give us an incredible technology
called smart contracts, which allow us to
programmatically define the rules and steps that
should be performed any time a certain type of
event is recorded in our blockchain or in our super-
secure notebook.
It’s All
Connected

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So, when you think about blockchain, don't get
intimidated thinking it's something high-tech, and
new, and cutting-edge. It's simply a new and
creative way of combining old ideas together to
give us an incredible new solutions platform.
You already understand all the major principles
and concepts required to understand what
blockchain is and why it's so powerful.
Is it really that
Complicated?

1.4
Blockchain vs Bitcoin

First things first, it is important to note that
blockchain is not Bitcoin!
Bitcoin is a digital currency running on top of the Bitcoin
blockchain. Bitcoin has no borders and was created as a
decentralized payment system, an alternative to currencies issued
by governments. Bitcoin is transacted over the Bitcoin network,
which is an open, public blockchain network. If you have an
Internet connection and a Bitcoin wallet application, you can
receive and send the cryptocurrency Bitcoin. Because of its solid
mathematical and cryptographic foundation, which enables
bitcoin to be secure and anonymous, people believe it to be
valuable and trust it.

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Bitcoin and cryptocurrencies are great use cases for
blockchain, but they are just one component of the
technology. Some privately run blockchains do not
use cryptocurrencies as a function of their
blockchains. Blockchain technology can easily
transfer anything from property rights, stocks, and
even artwork. There are many more use cases that
utilize blockchain technology which are more far
reaching than currency transfer.
Watch this short video on how Bitcoin works…
https://youtu.be/s4g1XFU8Gto
Blockchain vs Bitcoin

1.5
The Features of Blockchain

e n a b l i n g n e w g r o w t h f o r s m e ’ s
There are 7 main features of blockchain:
• Distributed Ledger
• Transparency
• Peer-to-Peer Network
• Consensus
• Encryption
• Immutability
• Programable

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A ledger is a collection of transactions. It is not a
collection of assets. Assets are part of a
transaction, but the ledger records the
transaction. With a digitally distributed ledger or
a blockchain, no one owns the ledger. The ledger
is distributed among participants in the network,
all running the same blockchain protocols. It is
decentralized in that an identical copy of the
ledger exists on every node/computer on the
network.
In 2009, Bitcoin became the first application to
leverage blockchain technology by recording the
first asset transfer on a public blockchain ledger.
Distributed Ledger
Watch this short explanation of distributed
ledgers…
https://www.youtube.com/watch?v=4b0A5XU3-tY

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In a blockchain, we can see all the
transactions that have occurred on the
shared or distributed ledger. A blockchain
stores details of every transaction that
occurred since the first transfer. This first
transfer, along with some system
information, becomes the first block in our
chain and is referred to as the genesis block.
Since every node shares a copy of the
agreed-upon ledger, there is no friction in
the transactions, everyone has the same
agreed-upon copy. Centralized systems are
not transparent, the information about the
ledger is controlled by one authority.
Transparency

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The ledger is stored, updated, and maintained by
a peer network. Nodes form the infrastructure of
a blockchain network. They store, spread, and
preserve the blockchain data, so a blockchain
exists on nodes. All nodes on a network follow
the same rules of operation or protocols, but
nodes have different roles. A full node contains a
copy of the blockchain protocol and transaction
history of the blockchain and aids in the
maintenance of the blockchain. The user node
interacts with the ledger.
Peer-to-Peer Network

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Consensus
Blockchain ledgers are different from centralized
ledgers because network participants have an
agreement upon what is in the identical ledger. For
the blocks to be added, all the nodes in the system
come to agree as to what transactions are accurate
and should be added to the chain of blocks. Since
there is no central authority telling the nodes which
transactions are valid, a new way to reach an
agreement or come to a consensus is needed.
The way in which each blockchain comes to
consensus is built into the protocol, they are the rules
built into the code that determines how the nodes
will add ledger transactions. The Bitcoin network
uses a proof of work consensus model. This process
of building agreement among a group of mutually
distrusting participants is a benefit of blockchain
consensus.

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Encryption
Encryption and cryptography are combined with
blockchain technology to assure the information on the
blockchain is authentic. Encryption refers to technical
processes that secure data and systems, making it
difficult for hackers to gain unauthorized access to
information or to meddle with networks and
transactions. In modern cryptography, encryption
generally entails the conversion of readable plaintext
into ciphertext (encrypted data that is unreadable) with
the use of an encryption algorithm or cipher. Only those
who are authorized to access the data can decode the
ciphertext back into readable plaintext.
Cryptography and blockchain offer a secure way to prove
something is authentic. Instead of relying on third-party,
trust is put into cryptographic algorithms that prove the
provenance and authenticity of an attestation.
Watch this short video to see how encryption
works in a blockchain setting…
https://www.youtube.com/watch?v=j2Or0DsUYkI

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Immutable
Cryptography also plays a part in another powerful
feature of blockchain technology, immutability.
What makes blockchain incredibly powerful is that
all the blocks are linked together. With the use of a
cryptographic technique called hashing, the linked
information is forged so that if you go back and try
to change any data on any block anywhere in the
shared ledger, the link with the other copies is
broken in an obvious and easy-to-determine way.
With blockchain, there is no possibility of changing
the data or altering the data inside the blockchain,
it is permanent. In a traditional database, a system
administrator oversees the ledger and can make
changes.

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Some blockchains offer an additional feature, smart
contracts, that impose logic into the system. If you think
of the Cryptocurrency blockchain as a calculator
recording financial transactions, you can think of these
blockchains as computers.
A smart contract is a program that runs on a blockchain
that can impose contractual agreements. Typically, they
work as digital agreements that enforce a specific set of
rules. These rules are predefined by computer code,
which is replicated and executed by all network nodes.
Blockchain smart contracts allow for the creation of
trustless protocols.
This means that two parties can make commitments via
blockchain, without having to know or trust each other.
They can be sure that if the conditions aren't fulfilled,
the contract won't be executed. Other than that, the
use of smart contracts can remove the need for
intermediaries, reducing operational costs significantly.
Programmable

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BEGIN BLOCKCHAIN - Module 1 FINAL.pptx