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Blockchain and Decentralization
The document discusses the origins and fundamentals of blockchain technology, explaining its decentralized nature and the significance of cryptographic security. It highlights the differences between centralized and decentralized organizational structures and explores concepts like decentralized autonomous organizations (DAOs) and smart contracts. Additionally, it addresses the realities and challenges of adopting blockchain technology, emphasizing the importance of understanding the economic models and governance surrounding tokens.
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Blockchain and Decentralization
- 1. Blockchain & Decentralization Priyabrata Dash(AKA Priyab Satoshi) Twitter: twitmyreview Medium: medium/Crypt-Bytes-Tech
- 2. Agenda • Origins ofBlockchain • Decentralization • DAO • Open vs Closed Blockchain • Realities of Decentralization • Q&A
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- 6. Origins Of Blockchain What isBlockchain? “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
- 7. Origins Of Blockchain BlockchainDesign •A blockchain, is a continuously growing list of records, called blocks, which are linked and secured using cryptography •Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data •By design, blockchains are inherently resistant to modification of the data
- 8. Origins Of Blockchain GenesisBlock •The blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. •The first block #0 created in 2009 is referred as Genesis block in Bitcoin Blockchain. •It is common ancestral parent of all the new blocks created and if traversed backward in time we will reach genesis block in the end.
- 9. Origins Of Blockchain ADistributed Database •Information held on a blockchain exists as a shared — and continually reconciled — database. •The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. •No centralized version of this information exists for a hacker to corrupt. •Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet or Blockchain network.
- 10. Origins Of Blockchain ANetwork Of Nodes • A network of so-called computing “nodes” make up the blockchain. • Node gets a copy of the blockchain, which gets downloaded automatically upon joining the blockchain network.
- 11. Origins Of Blockchain Transparentand incorruptible • The blockchain network lives in a state of consensus, one that automatically checks in with itself every few minutes. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “block”. • Transparency - Data is embedded within the network as a whole, by definition it is public. • It cannot be corrupted altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network.
- 12. Decentralization The Idea ofDecentralization • Decentralization means the network operates on a user-to-user (or peer-topeer) basis. • A global network of computers uses blockchain technology to jointly manage the database that records Bitcoin transactions. • That is, Bitcoin is managed by its network, and not any one central authority.
- 13. Decentralization Centralization vs Decentralization •“Centralization” is the systematic and consistent reservation of authority at central points in the system. • “Decentralization” is a systematic delegation of authority at all levels of management and in all of the system.
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- 15. Decentralization Advantage of CentralizedOrganizational Structure • Reduced cost • Uniformity in action • Personal leadership • Flexibility • Improved quality of work • Better co-ordination Disadvantage of Centralized Organizational Structure • Delay in work • Remote control • No loyalty • No Secrecy • No special attention
- 16. Decentralization Advantage of DecentralizedOrganizational Structure • Distribution of burden • Increased motivation and morale • Greater efficiency and output • Diversification of Activities • Better Co-ordination • Maintenance of Secrecy • Facilitate effective control and quick decision Disadvantage of Decentralized Organizational Structure • More cost • No specialization • Need more specialists • No uniform action • No equitable distribution of work • Control Systems • Branches of organization
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- 19. Decentralization Innovation Outcomes inDecentralization
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- 22. Decentralized Autonomous Organizations (DAOs) • ComplexSC - For multiple parties to interact • Self-governed Org - Incorruptible set of rules • Autonomous Governance - Independent from creator • Decentralized -Cannot be switched off • Self-sufficient - May charge users to pay for services
- 23. DAO Smart Contracts • Emulatetraditional contracts • Voluntary agreements • Enforced by law • “Trustless” & self-enforcing • Efficiency • Reduction of costs (negotiation, verification) • No ambiguity • Automatically execute terms
- 24. DAO Smart Contracts onBlockchain • Snippets of code • Deployed on the blockchain • Executed by the network • Autonomous • Independent from any third-party to operate • Potentially not controlled
- 25. DAO Challenges of CurrentOrganizations
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- 31. Open vs ClosedBlockchain
- 32. Open vs ClosedBlockchain
- 33. Open vs ClosedBlockchain
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- 35. Open vs PrivateBlockchain
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- 37. Open vs PrivateBlockchain
- 38. Open vs PrivateBlockchain Potential solutions: Sidechains or Interledger or Child Chains
- 39. Open vs Private Blockchain Blockchain coulddisrupt everything
- 40. Open vs Private Blockchain • THEBLOCKCHAIN is an inefficient database • But all these banks are investing in blockchains!
- 41. Open Vs PrivateBlockchain
- 42. Open vs PrivateBlockchain
- 43. Open vs PrivateBlockchain
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- 48. Realities of Blockchain •You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” ---- Buckminster Fuller • The killer app for the blockchain is not tokens, but it is the creation of private economies or ecosystems.Tokens are just enablers to that. • What is Tokenomics? • How you design your token role • How you distribute your tokens • How you govern your token monetary policy
- 49. Realities of Decentralization StayingTrue to Blockchain Technology • Removal of an intermediary or counterparty, and letting the blockchain enact consequences • Peer-to-peer as infrastructure • Network effects with new protocols • Decentralization at many levels • Autonomy in governance
- 50. Realities of Decentralization Question toAsk • Do you understand the economic model behind your token? • Will decentralized open source protocols be more powerful than their web equivalent? • Will decentralization deliver? • Will there be a crash? How? When? • How high is the sky, and how shaky is the ground? • Will regulators poke the blockchain in the eye, or ship it in shape? • Is every asset in the world destined to become liquid? • Are tokens here to stay, and will we see more standards beyond ERC 20 & ERC 721?
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