Blockchain Fundamentals

Lesson 1

Introduction to Blockchain

This lesson begins our study of blockchain by taking a 30,000-foot view of what blockchain is, how it works, and where it is used. We define some of the specialized terminology you need to understand how blockchain works. You'll learn about the beginnings of Bitcoin with a ground-breaking white paper written by a mysterious author, followed by a discussion of other cryptocurrencies and development platforms.

Why Is Blockchain Needed?

Why do we even have blockchain? This lesson describes the global financial crisis that led to the problem that blockchain can solve—a lack of trust in traditional financial markets and instruments. Blockchain's greatest advantage is that it secures the data integrity of transactions and supports many common business models.

The Blockchain Marketplace & Workforce

This lesson illustrates how blockchain is part of the Fourth Industrial Revolution and provides examples of how specific business sectors—such as the financial, healthcare, and supply chain sectors—are applying blockchain. You'll learn about disruptive companies offering new services by leveraging blockchain. Finally, we summarize the common roles and responsibilities of blockchain team members.

Ownership Concepts in Blockchain

A key concept in the security of transactions stored in blockchain is ownership. This lesson covers how blockchain works to prove ownership of tangible items like homes and less-tangible things like identity while maintaining privacy. We look at the basic security concepts of identity, authentication, and authorization related to proving ownership in blockchain.

The Shared Ledger

This lesson explains how blockchain's shared ledger stores transactions that associate owners with things they own by tracking the history of the item's purchases. Records for an automobile purchase, an airline reservation, medical treatment, bank account information, or payroll records are all examples of transactions that are stored by blockchain's shared ledger. Anyone can access the data while the blockchain conceals the private information of transaction participants through encryption.

Securing Transactions with Cryptography

Blockchain's great security is based on its use of hashing functions. This lesson delves into the cryptology of blockchains, describing how hash functions work. The lesson goes on to present the concept of digital signatures and shows how blockchain verifies them to authorize transactions.

Distributing the Shared Ledger

Blockchain relies on peer-to-peer (P2P) networks to store and maintain data. This lesson identifies common network structures and their characteristics, then explains the attributes and advantages of peer-to-peer networks. The lesson also illustrates how peer nodes support trust in the blockchain.

Gaining Consensus on Blockchain

Because blockchain depends on its network participants to validate transactions and ensure data integrity, the concept of consensus is vital. All nodes on the blockchain must agree that the data presented is valid. This lesson explains how consensus algorithms work, focusing on the Proof of Work, Proof of Stake, and alternative consensus algorithms. The lesson also presents various incentives that blockchain networks use to entice and reward their participants.

Cryptocurrencies

Bitcoin, a cryptocurrency, was the first and is still the most recognized application of blockchain. This lesson defines cryptocurrency and explains its origins and evolution. It also discusses how cryptocurrencies and tokens are monetized, valued, and exchanged.

Blockchain Business Cases

Blockchain provides transparency, data integrity, and security for transactions. How do businesses actually use it in the real world? This lesson examines core use cases, such as proving existence or non-existence. Then it considers enterprise use cases, along with specific implementations of blockchain such as shared business processes. Finally, it covers application use cases, such as payments and settlements.

Implementing Blockchain

So how do you know if blockchain may benefit your organization? This lesson describes how to decide whether or not blockchain is suitable for a given project, then explains the roles of blockchain project team members. Also discussed is the issue of which blockchain platform to choose.

The Future of Blockchain

The benefits and characteristics of blockchain provide numerous opportunities for improving processes and disrupting industries. This lesson projects potential future implementations and market disruptions. Although blockchain addresses many business problems, the fact that it is still a young technology with room for improvement is also considered.