Lesson 2: Distributed Ledgers and Smart Contracts

Captions as YouTube publishes them, usually machine-generated, so names such as Daml and Canton can be misheard.

1. 0:00

   we're going to take a look at what we mean by distributed Ledger technology often referred to as dlts what makes Canton a unique distributed Ledger smart contracts as well as what makes demo unique as a smart contract language a distributed Ledger is a decentralized system designed to record and synchronize transactions across multiple servers databases or systems it provides transparency immutability and

2. 0:33

   security through a network of participants who validate and maintain the Ledger's integrity there are many types of distributed Ledger but the core purpose for all of them is to ensure that transactions are recorded in order depending on the system this isn't always straightforward you may be familiar with Bitcoin which uses a distributed ledger to create and track the digital

3. 0:59

   currency's transactions to ensure transactions are recorded in the right order Bitcoin uses two concepts known as a blockchain and proof of work transactions are bundled in blocks and cryptographically signed with an algorithm using information from each block if anyone tries to change a previous transaction it would break the Chain's cryptographic signatures and signal to everyone something has happened proof of work is part of that cryptographic signing

4. 1:32

   when the algorithm runs it's looking for a very specific format or pattern to the signature that signature takes work for a computer to produce often referred to as mind if multiple computers produce the same signature at the same time there's consensus if there's a disagreement the longest chain wins the one that has done the most work in simple terms you could represent Bitcoin as a chain of blocks that have been validated by miners

5. 2:04

   that the transactions in the blocks have happened this chain goes back to the very beginning when Bitcoin was created there are some challenges for businesses though to use a technology like Bitcoin for one nothing on the chain is private it's Anonymous but all transactions are public this is a challenge for many koac or know your customer regulations it takes a substantial amount

6. 2:34

   of computing resources to cryptographically sign all the transactions for a given block this means transactions are validated and distributed over a relatively long period of time and since the chain of transactions goes back to the very first transaction it's difficult to comply with many General data protection regulations also known as gdpr there's more to how these proof of work blockchains function but that's enough for us to compare it to Canton

7. 3:07

   Canton is also a distributed Ledger and a protocol but the way it ensures transactions belong on The Ledger and what order they should appear is different Canton is primarily designed to provide a virtual shared system of record which means if you could access the views of all the parties involved You Could reconstruct all the data but unlike other blockchains Canton allows for privacy at the sub-transaction level data is shared on a need to know basis so you

8. 3:40

   can have exclusive or shared views of the data Canton is also a permission to network the network is a collection of synchronization domains connected to participant nodes the synchronization domain runs a mediator and a sequencer that ensures transactions are in the proper order this means transactions are faster to process than most public blockchains and you can know your customer while maintaining privacy data can even be pruned from The Ledger over time

9. 4:14

   to comply with gdpr the data is then distributed to the various participant nodes according to the rules outlined in the damel smart contracts which brings us to the question what is a smart contract smart contracts were first developed with the ethereum blockchain they used a simple if this then that structure that allowed for agreements to be run programmatically the goal was to have contracts that didn't require trust because they would be automatically

10. 4:47

    completed when the conditions are met damel builds upon this premise of automating contracts but allows for the transactions to be private this ability to allow for transactions and even sub-transaction privacy meaning even the choices made in a contract can be private is unique to the DML smart contract language and is fully supported by the Canton Network let's review a distributed Ledger is a decentralized system that can record and synchronize transactions

11. 5:22

    Canton is a unique distributed Ledger that allows for privacy and operates on a permissioned network smart contracts automate agreements based on predefined conditions Daniel is a smart contract language that allows for sub-transaction privacy and is designed for the Canton Network