okay so if you
um if you want to be able to basically
consider blockchain for any kind of uh
service
or or project or use case right we first
have to understand this blockchain
presents many advantages some of them
are
the following: security, transparency, and
trust. We'll talk more about this
in the coming slides. Now if you consider
a traditional
client server application or for any of
your existing projects or for a new
project, think of it this way
you'll have to invest money and time and
resources and efforts into
building the application and then into
securing it so
the first question that your management
or your executive director will always
ask you
for any kind of a new solution is: is it
secure?  and how much is it going to cost
me?
right so is it secure it's one of the
most important fundamental questions
that we always get asked by management
or by the executive directors
about the security of the application
the potential threats
and how are we going to mitigate those
threats so in this case
a normal client server application even
be a web app or even a
a mobile app the more you have to spend
on security you have to buy
SSL licenses: secure socket layer you
have to purchase endpoint security you
have to purchase
application level security and then when
your application grows in volume
you'll have to purchase additional
layers of security on it firewall
security and
different layers of application type
security aspects on that application
port securities
and so on so as the application grows in
volume you still have to pump additional
money into it to secure it
right and that's can be a very huge cost
burden
a burden on the company and that's what
blockchain has a major advantage because
security is
built into the blockchain network itself
within the blockchain architecture you
have different security
layers built into the blockchain
framework uh the secure hashing
algorithm is only one side of it
right so here we'll talk about how the
security is built into the system and in
the
in the section to the next coming
section we'll talk about the specific
different layers of blockchain security
that is built
into the network itself right which
gives us an advantage for you to be able
to deploy
your application on all right so let's
go ahead and continue here
okay first so these are the core uh
fundamentals in blockchain right
security transparency and trust
and this is why blockchain blockchain
solves the following
problems in any kind of a project or an
application or
or the design of an application security
transparency trust
is embedded or built into the blockchain
network here's how
first of all trust the issue with trust
is the following um
traditionally we have central control
right central authority every single
bank financial institution
insurance company and every traditional
company
owns and maintains and the centralized
control of that data
customer service information accounting
information
financial records information about that
specific company organization
employee salaries employees benefits and
all that right all that is maintained in
a centralized control environment
that's owned by that specific entity
right so
trusting essential authority is no
longer viable
why because the 2008 financial crisis
proved that point to us right we can no
longer maintain trust in the so-called
banking system right because the
financial services
the the economic crisis of 2008
proved that after we trust that system
that's what happened right um trust was
violated
by those in power by those or owners or
custodians of that
financial institutions so now we have to
take a look at the difference
model decentralized control right we can
no longer trust a centralized model
now we have to look at different models
that can help protect our
interests and our investments as
consumers the second part is control
there is the risks of having central
control over an application
leads to corruption and fraud here is a
big question
when you give unlimited power to a few
individuals
and then they know they can get away
with it by doing certain things by
changing manipulating the system
chances are they may condone into um
malicious activities right chances are
if a ceo of a company knows that he can
do x y and zed
and get away with it and he's going to
be untouched
right chances are he may or may not
condone and support
illegal malicious activities but if you
distribute that power right distribution
if you distribute that power and control
over 10 000 individuals and you say okay
if you have 10 000 people
and all these the majority of these
people have to be able to work together
to be able to be convinced to
manipulate or change tr transaction
records into an organization
it's less likely that ten thousand
people or 8 000 people
are all going to be corrupt it's the
power in numbers
right this presents a fundamental
model or aspect of blockchain as a
decentralized
technology there's no single entity that
controls and owns the data
it's completely completely distributed
decentralized
right we'll talk more about what that
means in the next few slides
audit firms right so audit firms
basically here
when an auto firm issues the audit
report for a bank we accept it as is
right we don't question it but then
six months later like for example the
wells fargo case
and other banking fraud cases that
happened 2008 financial
crisis of the banking fraud cases
we now see okay what happened to these
auditors they were supposed to audit
these financial statements and give us
confirmation that their financial
statement the financial
is a sound right the financial
environment of the company is sound and
stable
but then we realized it was all
committed fraud so what was the purpose
of paying these accountants and these
these auditors and this is what raises
the question about
trust now we can no longer maintain the
trust in the existing system
thanks to the financial crisis that
happened 2009
thanks to the continuous aspects of
fraud that we find in different
international organizations
across different banks across different
investment banks and so on
right we can no longer maintain that
trust even though they
go and they mean regulation standards
and requirements and then they go and
maintain their records with their
auditing firm and
they issue the autonomous reports and
they issue their shareholders agreements
and every year
it still proves to us that there's
there's
there's a big gap in the market which we
have to we have to address
blockchain presents many advantages one
of it is
solving the problem of trust using
decentralized
and distributed computing
okay so this is an example of a company
back in the uk in london
a big four firm kpmg has been stung with
seven figure fine by the uk's accounting
watchdog
following a lengthy probing to its
audits of fatsyndicate218
syndicate 218 was a insurance company
based in the uk
and basically what happened was the kpmg
accountants and auditors
colluded with syndicate syndicates
top management and they basically
inflated the financial records of the
company and
a year later it was discovered that
they don't hold the right financial
records as was stated by kpmg and hence
they were
uh they were fined right the uk wing of
international professional services
giant kpmg has been hit with a 6
million pound fine and severely
reprimanded
following an examination by the
financial reporting council of this 2008
2009 audits of syndicate 218
right so essentially they were
discovered again this brings up the main
point we can no longer maintain trust
in these audit firms because of cases
like this
and cases like this are happening across
the world across different industries
manufacturing sectors
financial services sectors investments
insurance and so on
so we need something else to be able to
make to maintain the trust
of these organizations and for the
stakeholders
of these companies
the ryzen 5 divides a broad group dubai
abroad
was a brush capital was one of the
largest
private equity firms in the middle east
they were holding assets north of 15
billion dollars
sorry north of 14 billion dollars in
assets right and now
two years later they were going to
complete liquidation
the top management has been accused of
fraud and mismanagement of funds
and the entire executive board and
and of course they were using also
another auditing firm
which every year that auditing firm was
confirming
in their audit report that abroad
capital was sound and they were
maintaining all their accounting records
and everything was perfect
and then three years later they're going
to complete liquidation and the
management
are being charged by fraud and
mismanagement of funds and
fraudulent activities on their
transactions right a lot of funds were
missing
over 384 million dollars were missing
taken by some executives
so again it brings up another big gap of
why and why we should consider other
technologies to consider
for those specific use cases
okay so this is published by ey in 2019
97
of business leaders recognize the need
to demonstrate integrity
in their organizations right this was
published by eoi
as a survey between organizations across
the middle east
all right i'll stop it right here guys
and we'll continue on in the next
lesson
hey guys welcome back all right we'll
continue on the next uh the next lesson
um so we'll talk now about transparency
and confident
confidentiality which is the second
aspect of the
advantages that blockchain presents
so let's go ahead and continue here
all right so the second aspect is
transparency
confidentiality which means that now
blockchain the public blockchain which
is bitcoin and ethereum whenever you're
making a trade of a
bitcoin or units or ether when you're
buying and selling
here's what this means the transaction
that you do
is completely transparent which means
that
all the transactions of the bitcoin
network when you
when you're buying and selling bitcoin
william with your wallet address
can be viewed on the block explorer or
in the in the case of ethereum on
etherscan.io
these are the websites which allow you
to see all the different transactions
that occur
on the blockchain network for bitcoin or
for
ethereum so for bitcoin it's a blockscap
a block
scanner and for ethereum it's the
etherscan.io which essentially shows you
all the different transactions that
happened
all the way up to 2008 or 2015 when
ethereum was first created
in the case of bitcoin you can see all
the transactions coming in
since the start the birth of bitcoin in
2009
right now this is a this is a
fundamental aspect because
we no longer are hiding behind uh
centralized control
everything is completely private
transparency in the sense that the
transactions are there but there's
no link to the identity of the person
who owns that wallet address
right so if i'm sending you let's say
one
five bitcoins to your account when i go
ahead and do it
there's no link on the address on my
wallet address that connects me my id
or my social security number or my birth
certificate
or my passport id or my driver's license
id
is linked to my wallet address on the
network
when i go and create a wallet address on
the
bitcoin blockchain all i need to do is
print a
a code and they will assign me a
hexadecimal code
which represents my wallet address on
the network
and then i go and deposit funds into it
right through of course through the
cryptocurrency exchange right
in case of binance or any other
cryptocurrency exchange that you sign up
with
when you transfer the funds into it your
wallet address on the bitcoin blockchain
is
only as code there's no id or link to
your identification
which is a powerful way that's when we
say confidentiality because
your identifications being um
owned by you not by the system as
opposed to any bank
or any financial institution where they
own your id
and they're linked to your account now
this there are some big advantages in
this case like for example with a major
bank announces
their private banking business just grew
by you know two billion dollars or three
billion dollars
or private equity business they just
grew they just signed up so
some ultra high net worth individuals
and so now the increase in profit
banking from like
2 billion to 4 billion this attracts a
lot of negative attention
hackers across the world are seeing this
now they know oh
so bank abc now just increased their
private banking to 4 billion
let's go and attack them let's go and
approach them let's see what they have
right you become an easy target for
hackers
so what does the bank have to do invest
more in security
invest more in protocol security and
application layer security to protect
their systems from these potential hacks
right in the blockchain world the um the
transactions are public
which means that transactions
can be viewed by anybody but nobody
knows it belongs
to you right so
in the case of public and private
blockchains private blockchains we'll
talk more about in detail later on
uh the private the transactions are
private within our permission base
based on user access and based on the
entities involved
and um so for example today's dba
database administrator or let's say a
system administrator
or basically your your tech support they
have complete control
over seeing your entire database of
applications and your transactions and
your employees salaries
and your for example your email services
and so on right they have full access
and that becomes a big risk if that
person gets fired or terminated
unexpectedly then that person can hold a
lot of information
about you and they can expose you to the
public or to
mainstream media which can be very
detrimental and high risk to your
organization
now that's the key advantages right
about what blockchain's confidentiality
and transparency in blockchain
all right i'll stop right here guys and
then we'll continue on the next lesson
to talk about security
in the blockchain network
hey guys welcome back okay so
the third aspect of the fundamentals of
blockchain which makes it very
attractive as a technology is security
so now we'll be talking about security
and how it plays an important role
in the built-in architecture of what
blockchain
offers all right
okay so as we said earlier the first was
transparency
and confidentiality or sorry the second
was transparency and confidentiality and
the first was trust
so trust transparency confidentiality
and the third aspect is now security now
the biggest advantage of blockchain is
that it has a built
in security layers within the blockchain
architecture right and that gives you a
huge advantage when you're comparing it
to traditional
client server applications whether
you're doing a mobile app
or whether you're doing a basic web app
for your
use cases right in your traditional use
cases you have to factor security in
within the design of your application
which means that you have to spend time
and effort and development time
to building the secure layers in your
application
and you have to probably procure
security licenses whether it's ssl and
different security licenses application
level security
to make it more secure and to make your
application secure
especially when it grows in volume of
transactions
okay so how does blockchain address
security in this case right
so as we said earlier blockchain comes
from a distributed model so it's inbuilt
redundancy and decentralization
if you're for example in a public
ethereum or bitcoin if any nodes of the
bitcoin network goes down
right the bitcoin transactions still
occur it does not affect
the service the bitcoin service if i'm
gonna send you five bitcoins
you're still gonna get it as um as long
as there is one or two nodes out there
who are confirming and mining the
transactions so it's very similar to
bittorrent
and whenever you're downloading a file
in bittorrent
um the file still continues to download
as long as you have one or two seeders
online who are seeding the bits of that
file
right so whenever you're downloading any
kind of content on bittorrent such as
music or movies or any kind of files or
applications
you have maybe 10 000 seeders out there
and leechers and whenever you're
downloading
it downloads bits by bit from each of
those seeders
as long as these seeders are are online
and connected you're still going to
continue receiving your download
if some seeders go offline you're still
going to get your your download it just
might be a bit slower
right so disaster recovery is addressed
and built
into the system which means any node of
the application that goes down
your application is still up and running
because it's completely distributed
right it has high availability
because of the the decentralization
model or the distributed model
and any number of nodes can go down
without impacting or affecting the
blockchain application
any record so here you got
so here you go any record of the
transact can be verified by anyone
openly in the case of a public
blockchain right
if you're deploying application on a
public blockchain such as ethereum
or even on bitcoin on the public mainnet
then that means your transactions are
going to be
available to be seen on the block
scanner right
we'll talk more about that in the in the
next section on security
in a private blockchain records are
permission based which means that you
have selected parties
which you give authorized access to
you'll be able to see those records
uh in in the in the case of private
blockchain
it's easy to audit any transaction and
the trail of it right
blockchain is designed to make it very
easy for you to be able to
track and monitor and see the
transactions on it
right it was designed that way
specifically to be able to
remove possibilities of fraud or kind of
investigation
so this is why we're saying blockchain
has major
advantages when it comes to security
because the security is built
into the network you don't have to go
and do a dr
site for your application or disaster
recovery or replication of your
or your of your of your infrastructure
in a separate um
separate data center or separate cloud
architecture because security is built
into the network
okay a simple truth about hacking right
so blockchain helps reduce the risk of
being hacked
security encryptions provide easy
exposure now
the security we'll talk more about the
the different security layers in
blockchain such as
the sha in detail and the cryptography
asymmetrical program in the next section
but however just keep this in mind
all right in any given model in any
given scenario
you cannot eliminate hackers from from
happening or bad actors or malicious
actors from
committing um wrongdoing right
there they're always going to be people
who believe that they're that they can
outsmart the system
which they can actually um or they
believe that they
they can get away with things or they
believe that they are smarter than than
the people involved
and they can actually get away with with
certain things
and hacking is just one of those areas
or professions so there's always going
to be hackers
so you cannot eliminate that threat
right there's only always going to be
people who are with ransomware and so on
it's this is the nature of technology as
you advance in your defenses
the hackers also advance in their
attacks however what you can do is what
you can control is to make it very
difficult for hackers to try to hack or
intercept your application
and if they do commit any any fraud or
malicious activities
they're going to be easily exposed so
you're increasing the risk of them being
exposed
those are the two main aspects that you
can consider when it comes to cyber
security
and when it comes to defense against
potential hacks so
blockchain helps make that possible
right the way
the system designed and the architecture
and the nodes and the transactions
is designed that to make it very very
difficult
for hackers to try to be able to hack it
intercept the application of the
blockchain network
and specifically if any attack occurs
it's going to be easily exposed
it can be easily exposed to hackers and
those
individuals for for them to be able to
be pinpointed by
the application that's the advantage of
blockchain presents
this is part of the design mechanism
that satoshi did
or designed into the application into
the blockchain network
specifically for that purpose because he
knew remember blockchain was designed in
2008
during the internet era right so the uh
the impact
uh the possibility of fraud and and um
and hacks was already there traditional
banking systems
were designed in 70s and the 60s right
in the 80s way before the internet
so they were not designed with security
in mind
and that's what makes a blockchain
network a compelling technology to
consider
because of these built in security
transparency and trust
within the actual network right
okay so the total benefits so
when you consider all these three
aspects security transparency and trust
um these are the these are the benefits
that you gain right transactions are
immutable
they cannot be changed modified or
deleted right
this protects against fraud and
malicious activities and people want to
be able to hide and transfer records
asymmetric cryptography private key
publicly this gives you security that
you'll be able to access
those records using your private key and
private key public visa is part of a
very powerful cryptographic hash
which is a very uh secure algorithm used
within the blockchain network
high availability high availability and
redundancy no need for dr sites it's
built
into the network no id is linked to the
transaction or the accounts
this protects the identification of
people and users
right to be able to to avoid hackers
from being able to attack because of
specific people who who they are
targeting
potential attacks can be discovered
relatively with ease because of the
design of the blockchain network
it can be easily detect potential
threats
and hackers attempts on the network
transactions are verified and confirmed
in real time which gives it a faster
settlement time and less errors
during the transaction through the
completion of
completion of transactions right all
these are benefits that we can
gain from using a blockchain as an
infrastructure as a database as a
network for us to deploy your
application on
versus the traditional client server
application where we have to build
the security and all these factors into
the application which contributes to the
design process
and it gives it a much higher cost okay
i'm gonna leave it out here guys and
i'll see you guys in the next lesson
thank you for watching
