 Hi, welcome to today's webinar. It's offered to you by a professional learning program. I'm very happy to welcome all our alumni here at this webinar. My name is Gederie Knut and I'm director of the Tuber University Fund and I'm also director of alumni relations. And today as director of the fund, I wanted to ask your attention for something that really concerns me. And it's about our international students. They are in financial distress due to COVID-19. We have all kinds of arrangements in an allowance for students but international students are not covered by this. At the Tuber University Fund we set aside funds to help these students who are in financial distress and can't study. I would like to ask you today if you would please consider donating to these students. That would really help them a lot because you know if you're in financial distress it's really hard to study and focus on success. So if you could help us today we will really appreciate that. We'll send you a ticket and SMS with a request for a donation and obviously if you don't want to donate it's fine just ignore it. But if you can and if you are willing to that would be very much helpful to our students. Thank you, enjoy today's seminar and see you soon. Hello and welcome now in life after the commercial break as they say. Welcome to the Tuber University Knowledge Session of today. My name is Fadri Knut and I'll be your moderator for today. This session is called Trust in the Blockchain Rules and I'm very happy to introduce Professor Eddie Vassen to you. For those of you who don't know him yet he's Professor of Accountancy and he has a specialization in Accountancy Information Systems. He is also Director of the Postmaster Accountancy Program here at Tuber University and he teaches at Artegas Business School for Business and Society and he has an excellent track record in what we call professional learning or post-executive education. So we're very happy to have him here. I want to take any more time and I'll give the floor to Eddie. Before I do that I just wanted to ask you what we do is that we all mute our systems so no sound. We will put on our webcam because it's nicer to look at faces than to look at these black holes so to say. So please put on your camera. Please do mute your mobile phone and don't use it because we find it interferes with the connection. And obviously you're okay to ask a lot of questions in the chat. Eddie has promised to look at the chat while he's talking and try to answer the questions on the go and if they are not answered we'll have a look at them at the end of the session. So thank you for all for putting on your camera. I see a lot more faces. Nice to see you and now we'll go over to Eddie. Eddie the floor is yours. Thank you Friedrich. Just checking you see my full screen now trust in a blockchain world. Everybody okay good. I'm talking English now because but I was instructed that I could also do it in Dutch. So I would like to hear now from the participants. Is there anybody who doesn't speak Dutch then please raise your hand make yourself known and then I will do this in English otherwise we'll continue in Dutch. Dutch please English please. Well we have one English so English yes okay we continue in English. Okay so my slides are on English so that's good. Well trust in a blockchain world. Trust and blockchain these terms very often are combined. You see them in one sentence and I did the same. So what do I mean by trust and what do I mean by a blockchain world? Well trust is that you believe in something before you know for certain that this is true or that something will happen. So you believe something that of which you don't know that it's really going to happen or that it's a truth. That's trust then you need trust. Well blockchain world blockchain is a hype term. You may have heard the term in connection to to bitcoin. More about that later and but there are many more applications of blockchain and I would like to talk a little bit more about the blockchain applications and then link that to trust today. Let's take an example. This one will a seller indeed ship the order of goods that they have ordered that they have one of them that I made a payment for. This is a common situation when you are working on the internet for example you buy something at the market at an electronic market then you need one of the parties is going to deliver something the physical good and another party is going to make a payment. So who's going to pay first or who's going to deliver first who's going to do that and the easiest solution of course is to to make the transaction where both parties simultaneously transfer the good and the money but that's in practice that's very often not possible because this is only possible when you meet the person. I go to a store for a product that I immediately receive from the from the shop owner but on internet that's not possible. So what can we do to be certain that a seller indeed ships the ordered goods after I have made the payment? Suppose I made the payment can also reverse it that the seller first ships the goods and then afterwards he hopes that I'm going to pay for them. It's exactly the same situation. We need to trust each other and of course what's the standard solution when you don't trust each other and that's unfortunately that's often the case on the internet that you don't know what you are doing business and there's a lot of fraud on the internet then we use a trusted third party for that. I would like to give you an example of Markplatz the Dutch place where you can offer goods private people can can sell their goods and other people can can buy them and what they did is say they introduce a system where they themselves from Markplatz together with the payment service provider function as a trusted third party. So we have the system here the trusted third party as a first party the seller and the second party is the buyer and the trusted third party is the party that in this case receives the money from the buyer and also notifies the seller that the money is received so that the seller can without any risk transfer them the goods ship the goods to the buyer. So the procedure is that the seller sends a payment request to to the buyer. Markplatz knows of it then the buyer pays to Markplatz through that online pay service Markplatz affiliated payment service provider OBB could also be again or a genico or booker who all these companies or the German wire card which is now negative in the news and that service provider that that payment service provider puts the money on a clearing account until the buyer has received the goods. Both the seller and the buyer receive a payment confirmation from OBB from the service provider the payment service provider that the payment has been affected then as soon as the seller receives the notification the confirmation of the payment by the buyer then the seller ships the goods to the buyer then the buyer sends the goods receive confirmation to Markplatz and then Markplatz through his payment service provider transfers the money to the seller. So you see here that Markplatz together with a payment service provider fulfills a crucial role in this they are the trusted to a party and because there's a trusted to a party these two parties can do business with each other without the risk that one of the two parties will default they don't know payment or either no shipment of the goods. I'm looking once in a while in the chat so if there are no questions so if you have questions please let me know okay so just in the chat and then I will look and then immediately. Now what we can do now is instead of a trusted to a party which is an organization which we have to pay which may be economically not feasible or technically not feasible or just too time consuming we may create a situation where technology information communication technology takes over that whole of a trusted to a party. So what we will do is we will replace a trusted to a party like in this case Markplatz together with a payment service provider who will place a trusted to a party by a trust protocol and a trust protocol that's merely a piece of software and that's what blockchain does blockchain uses a trust protocol as a substitute for trusted to a parties. So what is blockchain? It's quite a complicated mechanism and it's very difficult to explain this in just half an hour which I have now but I'm going to give it a try and I will skip some elements to make it just to avoid that I make it unnecessarily complicated. A blockchain is a distributed database. That means that it's a database that has multiple copies of the same database. So we are with 30 people today in this session each of you has a computer that has a hard disk on it and each of you has a full database of the blockchain of the blockchain that we are working on. There's not just one blockchain or more blockchains for example for the Bitcoin there's a blockchain but there's also a blockchain for Ethereum there's another cryptocurrency and you can have many many more blockchains for each individual application you can have a separate blockchain that you create such a blockchain has its own protocol protocol its own software that runs on the blockchain. So we see in a blockchain that the database that's in the blockchain is stored on many computers on multiple computers not on just one but on more than one for example if we together the 30 people that participate in the session will decide to build a blockchain for the 30 of us then we will have 30 completely identical copies of the database and the database will for example contain transactions. So in that database then we see that there are clusters of transactions that are blocks they are called blocks that are sequentially interlinked so sequentially means in time they are linked so a more recent transaction comes later in the blockchain than an older transaction which comes later than an even older transaction so that every transaction that you see now is more recent than a transaction that's earlier in the blockchain and these blocks they are linked to each other by so-called hashes and I will explain later on what what hashes are. Now in these sequentially interlinked clusters of transactions to the blocks there are also tokens that that act in a certain way mainly they follow the rules of a specific trust protocol and as I said that trust protocol that's a piece of software and for example very famous blockchain is the bitcoin blockchain bitcoin cryptocurrency at the moment 80 200 euros one bitcoin that the bitcoin has its own blockchain and it has a certain software and we call that software for the bitcoin the bitcoin core software bitcoin core software and the bitcoin core software that manages that blockchain for the bitcoin is an example of a trust protocol and what that software does is just administer transactions and in bitcoin transaction is a very simple thing namely I have bitcoin and I want to send the bitcoin to one of you what I do then is I have a wallet an electronic wallet where my bitcoins are stored and from my bitcoin address I sent the bitcoin to your bitcoin address everything electronically what happens then as soon as I sent that to my wallet so for example my phone or my computer at the moment that I send this transaction this payment to you then this is a transaction that's being picked up by all the computers in the network and for the bitcoin there are around 10,000 computers in the network and all these computers see my transaction and then they check if this is a valid transaction and when is the transaction valid when I want to make what to pay one bitcoin to you well it's a valid transaction if I really have that that bitcoin if I don't have a bitcoin it's suppose I only have half a bitcoin in my wallet I cannot make a payment of one bitcoin it's the same as what you do with banking transactions if I have 10 euros on my bank account and I want to pay 20 euros then they will say well we are not going to do that because you don't have the money exactly the same happens with the blockchain of the bitcoin if I don't have the money if I don't have one bitcoin and I want to pay one bitcoin then it's an invalid transaction but instead of one trusted third party the bank we have in the blockchain we have the Bitcoin blockchain we have 10,000 validating parties so not just one but all computers in the network do this validation check that means that if I want to have this transaction being recorded becoming a real transaction so becoming settled in banking terms then we need consensus about the validity of my transaction and in the bitcoin blockchain consensus is defined that if 50 plus one of the computers in the network finds this valid transaction then it is a valid transaction but that means that more than 5,000 computers have to say that this is a valid transaction so multiple checks each of these computer checks if I really have one bitcoin if I want to transfer it so that's a very reliable mechanism because 5,000 checks are better than just one checked by a bank and a bitcoin that's an example of a token the token is a generic term the formal definition of a token is a chain of electronic signatures by cryptographic technology a token is sent from A to B from my wallet to your wallet we will use cryptography for that and the general term is a token a transaction as already indicated can only be recorded in the blockchain if it has been validated by a majority of the nodes that participate in the network of the blockchain important to realize so 50 plus one for the bitcoin blockchain is needed to make a developed transaction then these transactions are collected in a block so a cluster of transactions transactions that at one point are offered and for the bitcoin blockchain every 10 minutes on an average a block is is written on average so all these transactions let's say that these are 3,000 transactions such a block with 3,000 transactions can only be recorded in the blockchain if the use consensus mechanism allows this and then the consensus mechanism I will talk about that later but with the bitcoin blockchain the consensus mechanism is so called proof of work remember that term proof of work that's a consensus mechanism and proof of work sees to it that a block with transactions is being recorded to the blockchain then once a block so the transactions in a block is recorded in the blockchain it cannot be removed or altered a blockchain is a shared single source of truth because of that because once it is recorded after validation you know that what goes in is validated so it's correct and then once it's in the blockchain it cannot be removed or altered but these are two very important characteristics can you imagine an information system database where everything that goes in you are sure that this is true that there's a fact what goes in and then once it is recorded nobody can change it that means as I indicated in this last bullet the blockchain database is a shared single source of truth only truth all the ERP systems all the other information systems that a company has may contain errors but the blockchain cannot be changed that's a single source of truth now I would like to do a short poll with you three questions there you are and we will share the results then there you go okay I have 25 answers I think that's it 10 seconds and then I'll go to the to view the results so here are the results you can see them okay so 32 percent have bitcoins that's quite a substantial number so what I did before I bought bitcoins I don't have a lot but before I bought bitcoins I really wanted to understand how it works so I studied how blockchain works so that I would not be surprised by stupid things that I would do with the wallet and then the bitcoin addresses that I have so to avoid mistakes because bitcoin at the moment as I said it's 8200 euros it's quite a big amount of money then an interesting question do you work with blockchain technology for other purposes and cryptocurrencies that's a small number if you have a lot if you have some time left at the end I would hear from these 12 percent so three people what the applications are that they are working with so blockchain applications other than cryptocurrencies and then going back to slide two would you classify blockchain in the world of facts or the world of beliefs and I indicated that blockchain creates the truth everything that is in the blockchain is 100 percent true because it's validated before by a large group of computers according to fixed algorithms second once it is in the blockchain it cannot be changed anymore and I'm going to explain why it is possible that it cannot be changed anymore so that means that indeed classified blockchain the world of facts or the world of beliefs blockchain is a concept from the world of facts so it's about absolute certainty that's also why sometimes the term trustless the term trustless is used in a blockchain world that doesn't mean that people don't trust each other but it means that trust is a redundant concept nobody needs trust in a blockchain world because the trust protocol takes care of trust so you don't nobody's interest in trust anymore you don't need to have that belief in something before you know for sure that that something will happen and that's the blockchain world I see that are some questions okay I'm going to do the few questions now the first question by Reijn what if Tobias does not send the goods received so we are talking to the marketplace yes marketplace did it like this they will anyhow then send the payment to the to the seller they do it like that and then if apparently and they try to find out then how the goods where the goods are because track and trace is an important element of the servers that mark paths delivers they do track and trace and then they if eventually if the goods really were not delivered sent by the by the sender then they they can sue him of course but it's very transparent the system in a blockchain world so if you have a smart contact in place to the transport to call the place this would be not a good approach because smart contracts that you want on the blockchain to make that payment and to after the goods are received that would do everything automatically so you need the goods received notification because everything in a blockchain world needs to be programmable no people involved anymore so no human judgment anymore possible also no lawsuits possible because up front you write a small contract and everybody is forced to comply with the contract it's impossible to not comply because a small context executes itself based on the trigger in this case goods receive notification is the trigger sent to the small contract small context transfers the money to the to the pay to the seller is that clear Reijn that first question yes thank you then Christina how do you fit for samples from computers validated transaction on which criteria there are many criteria more than 20 but the most important one is if I want to transfer one bitcoin do I have one bitcoin in my world so they can check because the blockchain database is completely transparent everywhere but you can see you also we get the moment I could show you the blockchain database and see exactly how much money was sent to a certain bitcoin address and how much money was paid by a certain bitcoin address so every computer can automatically check if a certain bitcoin address that wants to transfer money to another bitcoin address indeed has enough bitcoin to transfer so if I don't have one bitcoin I cannot transfer one bitcoin that's the most important validation criteria they also look at various format aspects but this is the validation of do I have some money it's the most important one okay Christina yes thank you and Reijn has another question what is the criteria I have to bitcoin so I could transfer it it's met that one yeah but someone else is initiating transaction by itself valid transaction but for others it did not someone else cannot do that because a token bitcoin is an example of a token and only the person who has the private key of that bitcoin address of that wallet and the bitcoin address can send a token can send the bitcoin to another bitcoin address so if you don't have the private key compare a private key with a very complicated and long password then it's important to send from a certain bitcoin address just impossible to protocol it has also that's useful the bitcoin doesn't allow that Reijn is that clear so the answer to your question by itself it's it's clear but because it's such a long token and such complex I cannot remember it in my head right so I have stored it somewhere so if someone could access that private key with intent to transfer the bitcoin to to himself right exactly so what you should do is to keep it offline you cannot type it it's long it's 34 characters or even more so you make a file out of it and you store it offline on the usb stick but you never have it on the place where hackers could reach it this is exactly what happens in the big cryptocurrency exchanges when you read about Schwart with blockchain with bitcoin for example then this is always that the hacker breaks into an exchange and exchange has a service a very good service they maintain the wallets of their customers and they have to buy the keys of the customs not you as a customer you just have a pin code of four digits to enter your phone and that's it but your private key is managed by the exchange where you have stored your money and then if then a hacker breaks into that exchange they can and they gain access to all the passwords then they can send money from your wallet from your bitcoin addresses to other different addresses and of course the other different addresses where they send them I need to will be their own bitcoin addresses yeah yeah so it's basically the same like if they break into my wallet and grab out the the notes and go to the shop and buy things yeah exactly that's the best that's good okay thank you um is there a role for uh jaco um is there a role for the author with worldwide use of blockchains for multiple purposes yes there is a role um there are many roles for the auditor um I myself am an auditor uh and the first moment where the author comes in place is when there's a blockchain application and there's a smart contract with them such a smart contract as they indicated is a contract that executes itself that contract is administered on the on the blockchain and everybody on the blockchain every noted the computer and network they make use of the same smart contract and you cannot change that smart contract because it's visible to all the other participants in the blockchain that you cannot just change the smart contract because all the other participants will see that now um what's important is that the smart contract doesn't contain errors you cannot make contain mistakes and there are where some smart contracts that were programmed the last three years that contained works like any software package contains errors and they only found out that there were errors in that software and that smart contract after it went really wrong for example there was this ethereum uh distribute autonomous organization that acted as an investment fund they collected 150 million dollars from crowdsourcing and then they wanted to use that money for example to finance art projects but within a few hours a hacker broke into that smart contract because that hacker discovered a mistake in the contract and they stole 50 million dollars from that from that smart contract so it's important that IT auditors do an audit on smart contracts that's all of the auditor what an author also can do is become a member in a blockchain become become a node so a member of that network with this computer and do continuous monitoring on every transaction that's being done in the blockchain because the the auditor does the validation checks by himself based on what he wants to know as an auditor so becoming a node in a blockchain application also the very first transaction that's we put in a blockchain that's done by people so a new blockchain there is always a we call it the genesis transaction that fairly first transaction needs to be verified and that's a physical thing for example if I want to put a bottle of wine I want to create a virtual representation as a token of a bottle of wine in a blockchain then the first recording of that bottle of wine needs to be checked so there is a wine farm who puts that into the system and if the wine farm wants to cooperate for it with that wine then the then everything that follows in the blockchain is also incorrect so you need to have an order there also the first recording in in a blockchain there are apps that we use wallet apps that may be unreliable so an audit on the apps on our phones so many walls for auditors okay yeah clear awesome economics in the case in economy is quite a hassle yeah that's a very complicated question yes you're right in the crypto in the crypto world there is no authority the invisible hand is doing all the work and in the case in economy the government believes that they can influence the economy so indeed we must believe in the invisible hand of the classical economists of the Austrian school yeah if you don't do then you will never be a proponent of a blockchain I agree okay clear so these were some questions that we had let's continue now what am I doing with my time okay yeah let's see why use blockchain well you want to use blockchain for example to enhance reliability of information blockchain is a shared single source of truth so if I have a database with all the transactions that were ever done for example the bitcoin or with any other token then we know for sure that these transactions actually happened the way they happened so 100 reliability safeguard assets I can make from assets digital or physical assets I can make a virtual representation in a blockchain so I can transfer the virtual good for example bottle of wine my my previous example I can make a token out of that and administer the token in a blockchain so if the bottle of wine goes for me to you I also transfer the token for my token address to your token order address that represents that bottle of wine in such a case you can perfectly well follow all the transactions in the supply chain that cross organizational boundaries we can also use blockchain for enforcing compliance with applicable laws and regulations because we write smart contracts and because smart contracts will always be executed if a certain criterion is met so that this the contract executes itself based on a certain trigger it cannot be stopped then you know that compliance will always happen as long as the smart contract is defined properly so compliance by default that's why it enforce you can enforce compliance and then we can make interactions between members of ecosystems more efficient and effective so we can make supply chains faster we can manage business processes faster we can take all kinds of intermediaries out of a system out of a supply chain so that the supply chain becomes shorter and the money or the values go to the people who really deserve the money and an interesting example here is a copywise of music there's a songwriter that writes beautiful songs but there are so many different parties in between before the song reaches the audience to Spotify or a CD or a DVD that there's only a very small amount of the money that goes to the songwriter and all these parties in between all these intermediaries receive a lot of money for that in a blockchain world you can say we take out all these intermediaries and replace them by a trust protocol and then the trust protocol manages the whole chain and we have examples of artists who did that already so with that you can make an ecosystem or supply chain if you will more efficient these are all internal control goals interesting to know from an authoring perspective these are all internal control goals that you can realize with the blockchain when to use blockchain well first of all there must be a shared database where more parties than one can write data too it's a shared database that's recorded on many different computers i have a copy you have a copy your neighbor has a copy everybody has a full copy of their database and there are there's more than one party who can write to their database those parties are models of different legal or economical entities so different organizations or economically speaking or economically or legally speaking these parties don't trust each other think of the market example that i gave where i sell something to you and we don't know each other and still we need to trust each other to do it to make a transaction and it is also not possible to have a trusted third party in place economically or technically not feasible so what you can do with a blockchain trust protocol you may replace a trusted third party as markplatz did with their with the online payment service provider now how does the blockchain work so as i said there are multiple copies of the same database on computers spread all over the world if you want to participate as a node computer in the bitcoin blockchain now tonight you can go to just google download bitcoin software and then you can download it from from a github for example the software you want it and then your computer starts synchronizing with other computers to have a full database of the bitcoin blockchain and then after a few days at least 24 hours from now on you will have a full copy of the bitcoin database all the transactions that have ever been done with the bitcoin will then be recorded on your computer and if you leave your computer on your computer starts working as a validation node so checking the transaction indeed is a valid transaction and then just putting a transaction that you found to another node in the network also to do the same validation check so the validation rules we already had some questions on that so there is one big validation rule and many derived validation rule the big one is if i want to transfer money from a to b do i have that money the transactions are grouped into blocks by so-called miners and miners are very powerful nodes in the network you with your laptop or your desktop computer cannot in the bitcoin blockchain you cannot become a miner you need a very powerful so-called application specific integrated circuit big computer with with fans on it to cool the the processors because there's a lot of internet traffic and that these miners they do a very specific thing what they do namely is they collect all the validated transactions that have not been written to the blockchain yet and then they put it in a block and then with a block they are going to do some calculations and the thing that they have to do is which is very time consuming and takes a lot of computer press he is find a number that together with the other numbers in that block that they have created so the numbers based on the transactions that are in the block find a number that together with the other numbers in the block lead to a hash that is smaller than a target hash that's provided by the system this is complicated the puzzle is i will repeat what i just said the puzzle is what these computers need to solve these miners need to solve is find a number that together with the other numbers in a certain block that the block that the miner has created lead to a hash that's smaller than a target hash now you need to know what the hash is for that reason anybody know what a hash is i don't see any let's see no idea okay that's a very explicit yeah yeah okay passwords okay monar yeah good yeah yeah okay well let me first explain what the hash is a hash is a so-called mathematical trapdoor you have a certain input you put it in a hashing algorithm and then the output is something some number for example you can have 64 digits and you cannot calculate back from the output to the input you can only go from input to output you cannot calculate back from the output to the input and this has to do with the fact that a hash uses so-called modulus functions so for example seven divided by three what would that be if you don't know uh decimals and you don't know how to calculate parts of the numbers seven divided by three will be two remains one so because two times three is six plus one is seven and the one so what remains after you divide uh that's the outcome of a modulus function yeah you want also 11 proof is also an interesting one it's a much more simple thing than a hash nowadays in the even numbers that we have a hash is calculated from the numbers uh and you if you google it tonight after the session you can find how the the even hashing analysis calculated but because the numbers behind after an L in our bank account two two digits that's a hash using a modulus function uh and but as i said a hash uh can go from input to output but you cannot calculate back from output to input what you can do is take the output and then to trial and error you can try to find the input but only by trial and error and that's exactly what these miners do these miners they uh they just start using uh generating numbers numbers numbers combine them with the other numbers in that block where all the transactions are in and then they hope to find a hash that's smaller than the target hash now what we are talking here is is about a hash that consists of 64 numbers uh hexadecimal so in the system not decimal but hexadecimal which means 16 numbers instead of 10 numbers um so it's a very complicated and long number that we are looking for and the the the challenge is find a number that together with the other numbers in that block lead to a hash that's small on the target hash you cannot calculate and then when you can just try try try try so billions of times these miners try numbers combined with the other numbers in that block and if a now a miner finds a number that leads to a hash that's smaller than the target hash then he has a solution and then the miner acquires the right to write a block that's a transaction that that he created to write that to the blockchain and then that block with transactions is appended to the last block in the blockchain through a hash because part of the block is the hash of the previous block this is very complicated uh to be uh one year to understand this uh so i don't expect you to understand this but what happens now is that if you have a block for example here um you have block 205 on this slide and at the moment we are already at block 2012 that miners are working on to try to write it now if a cheating note wants to change this block for example i'm a cheater and i have this full database on my computer like all the other group and nodes in the in the network have the full database i want to cheat i want to change a number a bitcoin address i want to change it into my own bitcoin address for example i see that there's one bitcoin address where 20 bitcoins were sent to by another bitcoin address well if i change the bitcoin address into my bitcoin address where the money went to so that i will have 20 bitcoins on my address i can do that on my computer but then i should also try to convince all the other computers in the network who we have of course the original database not with my fordrant input i have to convince them that this is a valid transaction what i'm doing now what i then need to do is i need to calculate for my block for for 2005 where my transaction is in i need to recalculate the hash of that block problem is so i changed something in the block the hash will be completely different of this block but that hash of this block 205 will be also the input of block 206 because the in 206 there is a number that the miner had looked for to find the hash that's smaller than the target hash with the other information in that block including the hash of the previous block so if i change the hash of this block 205 i also need to change the hash of block 206 and the hash of this block is also input for block 207 so i also need to change the hash of 207 i need to change the hash of 208 i need to change the hash of 209 to 10 to 11 up to 212 but on average because i have to try so often so much billions of times i have to try this takes 10 minutes per block to remind to do the mining again to find that number that needs the criterion the number that i reach after hashing is smaller than the target hash so i need to redo the hashing for all these blocks on average that takes 10 minutes knowing that all the other miners they just continue with the block 2013, 14, 15, 16 after this i will never catch up with them so it's virtually impossible for me to just change something here because all the other miners they just continue with the real blockchain and then the longest blockchain is always according to the software is always the blockchain that is the only truth the shared single sort of truth is the longest blockchain the thing about that that means that nobody can cheat once a block has been written and there are two, three, four, five or even more blocks after this then this block can never be changed anymore is this more or less clear yes that's a good question if you now this block is just no let's go to block 211 but that's just been written so Rain says i'm the miner writing the last block i did you do do not need to change anything because you are in this block and then if anybody not only you as a miner but anybody who has access to this block and that is all all the nodes in the network even you with your computer you can change uh recording in that database and then if you want to change the blockchain you only need to redo the work of this block and i said it's the random process on average it takes 10 minutes and you may be lucky when you want to change something here that you can do it in two minutes by just finding the number on earlier than the other ones and all the other ones they took them more than 10 minutes to reach this solution and then you can have the rewritten blockchain so there is always a risk that when nodes one two or three blocks have been written after a block so for example here after block two and 11 there's only one block after this there's always a risk that within one two or three blocks somebody can change the blockchain after three blocks written over an existing block it's not possible anymore and you can calculate but this is a there's a shortcoming there's a risk that in a blockchain but after three blocks it cannot be changed anymore okay Rain yes thank you so mining by mining a block of transactions it is make sure that the block after it has been written cannot be changed anymore so mining uses hashing find a number that gives a hash that is smaller than a specified target hash mining takes a lot of computer capacity so miners want to be rewarded for their work we call this what miners do we call that proof of work you deliver proof of work when you find a number that together with the other information in a block and the hash of the previous block gives a hash that is smaller than the target hash now use cases there are various use cases for example land registry suppose there's no land registry cadastral in in dutch there's no cadastral then you could replace you could use land registry blockchain to record all land transactions so that you know that there's only one person who owns that land if there's no central recording of ownership of land or other real estate then five people cannot with a contract and all may claim that they are the rightful owner of the of the land or the other real estate that's because there's no central authority so there's no trusted third party so if you replace if you don't have a trusted third party you can use a trust protocol and then the trust protocol functions as the trusted third party and then you can use for land registry tickets we have companies in the Netherlands it gets ticketing that directly sell tickets from the artist to the visitors of their performances kus mevis for example participates your from you for attack you can sell you can buy the tickets to a blockchain application there's no person involved and the money goes directly from the person who buys it the ticket comes on a smartphone to a blockchain application cannot be changed and the money goes down into into the wallet of the performer in the artist there will be an effective and efficient system elections can you imagine that your identity is in the block is in the blockchain so not in your passport but in a blockchain application that runs on your smartphone then the election is merely sending a token from a to b namely from your wallet to the wallet of the the voting agency so you don't need to go to a to a bureau somewhere in corona times this will be wonderful to do elections as a as a very safe system because you can only vote once it's unlike with sms voting where you can can send more than one text message for a vote no with elections on a blockchain you can only send one vote no more that's embedded in the mechanism of a blockchain so i can trace and supply chains i gave the wine the vineyard example of bottles of wine electronic markets i gave market plots as an example electronic rights management intellectual rights management i gave the example of of the artist that sells diary to his music to the to the users licenses that you can obtain you can also put your personal credentials for job application in the blockchain for example if you graduate from tilda university the university has a blockchain application they want a server that is a node in a network of of nodes that is shared all over the world where the parties that want to know if you are not lying about your personal credentials so the master degree that you have from tilda can degrade that you were acquired they can just directly check on that database a blockchain database to see if you are not lying because university is part of the blockchain then banks use for example zero knowledge range pool for privacy if i want to to give a mortgage as a bank then i need income information but i don't want to record all that income information because on the gdpr i think a and urge it's very risky to record all that personal information so what we do is in a blockchain we make ranges we make ranges that indicate whether a person is entitled to to a mortgage or not without recording the exact salary of a person compare this with you buy liquor at the liquor store and the liquor store owner now wants to see your password to see if you are older than 18 well he doesn't need to know that you are 19 or that you are 25 he also doesn't need to know your social security number doesn't need to know your length your height i mean not know what your color color of eyes where you registered with your password none of his business you only need to know if you are older or younger than 18 that's what we mean by zero knowledge proof are you older or younger than 18 the liquor store owner needs to know that and with a blockchain application when your identity for example is in is in a blockchain you can do that well liquid assets can be swapped at banks large amounts uh rabu recently swapped 25 million in a matter of seconds without any transaction fees in the blockchain application energy exchange between people households who have solar panels on the roof one family uses more energy other family use less energy and then they exchange energy and the settlement is done through a blockchain application no trust the third party needed triple entry accounting the third recording of all transactions that the company does in a blockchain the shared single source of truth and when there are deviations between the ERP system of company a with the blockchain then the mistake is in the ERP system and not in the blockchain because blockchain is a shared single source of truth we see there are many examples an interesting one is this the distributed autonomous organization that's an organization that's represented by rules and coded as a computer program completely transparent controlled by shareholders in a certain blockchain application no central government because it's managed by a blockchain application the investment fund that i talked earlier about today that was uh that was an example of a DAO a distributed autonomous or decentralized autonomous organization that was entirely based on a smart contract that ran on ethereum another blockchain then then the bitcoin blockchain and these are the types of organization that you can think of when we are talking about the so-called programmable economy an economy with platforms that for the company like platforms like uber rb mb but also all these electronic markets or facebook or google all these companies that bring supply and demand together in an electronic way and want to function automatically that's where these distributed autonomous organizations will become more and more important in the near future and they all these distributed autonomous organizations all run on blockchain applications now some questions i see hans how could the risk math with certainty hans can you explain your question i don't quite don't understand what what your question is yes we talked about the risk from the last two blocks that's uh but uh introduction you talked talked about that blockchain is a certain way of truth so i see a certain experience about this ah yeah i see what you mean yes yeah my claim is that with blockchain because everything that's recorded in the blockchain is 100 true so if i do a transaction with you for example the marketplace mark pass that uh transaction uh i sell something to you and expect that you pay me the amount that we agreed upon you can have such a transaction completely safe without any risk be administered on a blockchain because of the characteristics of a blockchain so for that specific part of the world that transaction between you and me there's 100 uncertainty that both of us will meet our obligations so it's not everything is certain and that's why in the beginning i said a world of certainty of course the entire world will never be certain it will be about certain elements of that world yes okay yeah is that clear yes you will next session you will have also a decision making on the uncertainty so we will continue with uncertainty because the world blockchain you take away a little bit uncertainty for certain transactions okay but i don't think we have 100% certainty with this example another member someone told us but it's never 100% i agree with you so we always always read some flow somebody may find out about your private key and that's the transaction you may have so that that's the risk that you need to organize and that's also why auditors may they still remain important but their task may change referring to another question that we had earlier today exactly but this is another type of audit that's going to happen so that also the author will this profession will completely change not only in the financial numbers and knowing if financial statements comply with international financial reporting standards that can be done automatically now the auditors go into data and see if the data are of high quality and if they are not manipulated in all the platforms and everything goes automatically okay and given the time uh how much more time do you think because we're nearing to uh 8 30 and i was just wondering you're coming to the takeaway this was my last one yeah yeah yeah so no problem i'm making it this one minute so i'm looking at the questions um so yolanda you said credentials of 1997 yolanda you asked earlier today what was it in what context yolanda are you there yeah it's about the credentials of tilden university where they were yes okay yes what they can of course say they know who graduated and we can do that that uh looking back they know exactly who graduated with what numbers because the university has an archive and they can build their blockchain retrospectively yes it's really possible actually i was involved and i am involved in the project with the spanish university uh to just test if you can do that so we have a server here and then the spain and then we have a server then we can see if you can exchange bilaterally on to a blockchain application the credentials just testing okay okay yeah okay then now anyone who can access the database blocked with your information can see all the information no no that's the idea um there are two possibilities of course you can have uh so-called private blockchain we are a limited group who is allowed to see all the data uh can see the data in readable form so see your bsn see your name address etc but most real blockchains like the bitcoin blockchain is a public blockchain where there is not one part in charge everybody can read the database but what you can read for example for the bitcoin blockchain you can only see the bitcoin address that sends an amount of bitcoin the amount of bitcoin and the address that receives the amount of bitcoin and there's no register or index that links the bitcoin addresses to people to the names of people and that's what i mean with the public blockchain what you can do is working for example with that zero knowledge range proof uh where all kinds of information about you is recorded that information is recorded in a hash form so you can use it for verification purposes without having to read the actual data compared to the password if i have a password i register for example at bolder com i register uh uh my my credentials i choose a password the password is uh hashed by bolder com the hash of the password is recorded and next time when i want to go to the to bolder com i type in my password and immediately the same hashing algorithm is used on my password address type and the hash is compared with the hash that's in the database of bolder com so they compare hashes and not actual passwords and bolder com can never find out what my password is because they didn't record it they only have the hash of my password and typical for hashes is you can't calculate back to the original number no you say which means that you need a lot of hash to check whether someone is 18 or all or no this is not so when it's recorded that for example the birth date of somebody you don't need to check it you you just need to know to input a certain number to see if this number matches the hash it's bigger or smaller than the hash so you don't you don't need to lot of uh snow trial and error here no that's not needed good i think um these were the last questions uh this time the takeaways are this uh an important use case of blockchain is cryptocurrencies but there's much more distributed ledger technology is a generic term for blockchain i kept on using the term blockchain but if you use dlt the subject technology you you make it the much more generic term we live in a world of uncertainty but trust is essential for transacting a world of certainty but trust is not needed can be created artificially by using the subject technology so by using blockchain uh to its versatility the subject technology has great potential in control finance process management supply chain management audit oversight so i gave you quite some examples already of how you can apply blockchain and dlt because our information reliability safeguarding of assets compliance with applicable laws and regulations and more efficient and effective interactions between members because of this intermediation distributed technology is not new it's just a combination of all the technologies that are combined in a very smart way don't link blockchain directly to uh to cryptocurrencies it's just cryptocurrencies it's bitcoin for example it's just one application which may or may not make it but all the other applications are boxing they may become much bigger than we now expect much more bigger than for example bitcoin or other cryptocurrencies okay i'm a little few minutes but one question i can imagine that people want to leave now okay no questions anymore and i thank you for your attention and have a nice evening on this hot summer evening and now you can go outside sit on your terrace with a nice glass of wine that's what i'm going to do at least thank you thank you all thank you adi for um explaining this to us okay you're welcome bye