Blockchain Basics Week4 Trust Essentials

Trust Essentials

Learning Objectives

  • Define elements of trust in a blockchain
  • Discuss consensus protocol
  • Explain "Trust"
  • Illustrate "soft fork" and "hard fork" ### Decentralized Systems

  • Establishing Trust in a Blockchain
    • Secure chain using protocols
    • Validate transactions & blocks
    • Verify availability of resources
    • Executing & confirming transactions

  • Steps one and two are validate transaction and check resources
    • About 20 criteria are validated
    • The syntax, the transaction signature, time stamp, nonce, gas limit, sender account balance, transaction signatures, fuel, or gas points and other resources available
  • Step three is execute transactions
    • Merkle tree hash of the validated transactions is computed
    • Miners execute the transaction or smart contracts for either transfer

Consensus Protocol

Proof of Work


Robustness is the ability to satisfactorily manage exceptional situations.

  • What if more than one miner solves the consensus puzzle where it close in time to each other?
    • Bitcoin protocol allows this chain split or two chains for the next cycle
    • The probability that the next block will happen at the same time is extremely low
    • Winner of the next cycle for block creation consolidates one of the chains and becomes the accepted chain
    • The transaction in the other blocks are returned to the unconfirmed pool
    • Ethereum handles this by allowing Omar or Runner-Up blocks and allocating a small incentive for these Runner-Up blocks
  • Double spending
    • Digital currency and other consumables can be reused in transactions
    • Bitcoin allows the first transaction that reference the digital asset and reject the rest of the transaction that reference the same digital asset
    • In Ethereum, a combination of account number and a global nonce is used to address the doublet spending issue


  • Soft fork
    • A minor process adjustment has to be carried out typically by bootstrapping a new software to the already running processes
    • A software patch or a bug fix to address an issue
  • Hard fork

    • A major change in the protocol

    • After a hard fork the emerging two chains are incompatible

    • In Oct 17, 2017, a few Ethereum improvement proposals (EIP) planned a hard fork

      • Proof of Work consensus still stays except that every hundred block, proof of Stake consensus protocol is applied for evaluating the latter

      • Minor incentive was reduced from 5 ethers to 3 ethers for block creation.
      • These are just few EIPs.

  • Summary

    • Soft fork and hard fork in the blockchain word are like the release of software patches,

      and new versions of operating systems respectively.

    • Forks are mechanisms that add to the robustness of the blockchain framework.

    • Well-managed forks help build credibility in the blockchain by providing approaches to manage unexpected faults and planned improvements.


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