Article | REF: TE6300 V1

Blockchain. Basics. Bitcoin. Ethereum

Authors: Laurence LECOEUR, Jean-François GERVAIS

Publication date: April 10, 2022

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ABSTRACT

This article discusses the origins of the blockchain and describes the first Bitcoin blockchain. It allows monetary transactions to be recorded in blocks in a distributed registry on a peers network, without a central controlling organ. Cryptography provides security and trust with digital signatures and hash functions. The Ethereum blockchain is then presented with its tools to overcome the limitations and weaknesses of the Bitcoin blockchain. The smart contract, a major innovation of Ethereum, broadens the fieldsof applications: the blockchain becomes programmable. The automatic execution of programs allows the development of decentralized autonomous organizations. Finally, a few examples of (relatively recent) applications will be reviewed, reflecting the diversity of technologies to meet the various use cases in a large number of sectors.

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AUTHORS

  • Laurence LECOEUR: Telecommunications Engineer, Télécom Paris - Former head of research at the Institut National de l'Audiovisuel (INA)

  • Jean-François GERVAIS: Digital Learning Project Manager at the Institut National de l'Audiovisuel

 INTRODUCTION

The blockchain concept is based on a decentralized, freely accessible digital data management protocol. Blockchain offers a new way of using the Internet, enabling the transfer of value (via transactions) from peer to peer, without the need for a trusted intermediary. The transfer and recording of data is secured by cryptography, which creates trust between users.

Such exchanges of value on a decentralized network represent a major innovation. Until now, when a transfer (of a file or image, for example) was made over the network, a new copy was implicitly created. The Internet was based on free, infinitely reproducible copying (what is infinitely reproducible has no value), and only information could be created, published, stored, copied and exchanged on the network. Innovation means moving from an exchange of information content to an exchange of value. This is made possible by cryptography, which provides a solution to ensure that the transfer takes place without duplicating the transferred content. In other words, when a valuable good is transferred, the sender is dispossessed of its value, while the recipient becomes its new owner.

Blockchain has created a non-reproducible digital asset that can be a cryptocurrency, but also any other type of digital asset. It is transferred from peer to peer, and its identification makes double spending impossible.

As for data storage on a decentralized network, it also brings major changes to our current model of society. It calls into question traditional centralized databases where information is recorded and certified by a trusted third party: the bank guarantees payment, the administration certifies civil status, the INPI (Institut national de la propriété intellectuelle) registers a trademark...

It also challenges the monopoly of certain centralizing platforms, notably the GAFAs. Currently, the omnipotence of the GAFAs, who dominate the market, blocks the development of any new entrants, who are subject to the law of "winner takes it all". For example, by 2020, market share in smartphone operating systems will be monopolized by Google and Apple, leaving no room for rivals. The GAFAs can thus use their dominant power to limit the arrival of competitors.

In opposition to this centralization, blockchain introduces a totally decentralized certification system on the web, with no trusted third party or intermediary, based on a register that is open and accessible to all, recording unforgeable entries. It's a new form of "notarization", with cryptography replacing the trusted third party or centralizing intermediary.

In addition to these two types of use - the exchange of value and the "notarization" of goods - we need to add...

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Blockchain: principles, Bitcoin and Ethereum