Bitcoin & Blockchain (parte 1) - Università degli Studi Roma Tre (10/04/18)

Talk presso il Dipartimento di Ingegneria dell'Università degli Studi di Roma Tre
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Transcript

1. Introduction to the Blockchain and Bitcoin Federico Tenga COO at Chainside federico@chainside.net
2. The blockchain
3. March 2018 Create electronic non fiduciary money Objective
4. March 2018 • p2p transactions Goals
5. March 2018 • p2p transactions • Censorship resistant Goals
6. March 2018 • p2p transactions • Censorship resistant • Permission-less Goals
7. March 2018 • p2p transactions • Censorship resistant • Permission-less • Bonus: store of value Goals
8. March 2018 • p2p transactions • Censorship resistant • Permission-less • Bonus: store of value • Bonus 2: privacy-aware Goals
9. March 2018 • WHO is transacting? Decomposing the problem
10. March 2018 • WHO is transacting? • WHERE do I keep track of the transaction? Decomposing the problem
11. March 2018 • WHO is transacting? • WHERE do I keep track of the transaction? • WHAT is the object of the transaction? Decomposing the problem
12. March 2018 • WHO is transacting? • WHERE do I keep track of the transaction? • WHAT is the object of the transaction? • WHEN is the transaction occurring? Decomposing the problem
13. March 2018 • Everything is controlled by a centralized server The PayPal model
14. March 2018 • Everything is controlled by a centralized server • Easy to be censored and shut down The PayPal model
15. March 2018 • Everything is controlled by a centralized server • Easy to be censored and shut down • Security hole and reliability risks The PayPal model
16. March 2018 • Everything is controlled by a centralized server • Easy to be censored and shut down • Security hole and reliability risks • No control on the total supply The PayPal model
17. March 2018 • Using digital signatures you can easily identify the actors in the system WHO - Digital signatures
18. March 2018 • Using digital signatures you can easily identify the actors in the system • The receiver of the transaction can verify that the sender is actually the owner of a balance WHO - Digital signatures
19. March 2018 • Using digital signatures you can easily identify the actors in the system • The receiver of the transaction can verify that the sender is actually the owner of a balance • No need to rely on a central party to manage identities WHO - Digital signatures
21. Digital signatures PRIVATE KEY PUBBLIC KEY
22. March 2018 • Instead of keeping everything on a central server, each users keeps locally a copy of the transactions that are relevant to him WHERE - The distributed ledger
23. March 2018 • Instead of keeping everything on a central server, each users keeps locally a copy of the all the transaction history • Less trust required through the central party, more difficult to censor transactions but less scalability WHERE - The distributed ledger
24. March 2018 • Originally applied by Dr. Adam Back to solve the problem of email spamming The Proof of Work
25. March 2018 • Originally applied by Dr. Adam Back to solve the problem of email spamming • To send an email, you were required to calculate the hash of the text + a nonce, and keep hashing changing the nonce until an hash with the required number of 0 was found The Proof of Work
26. March 2018 • Originally applied by Dr. Adam Back to solve the problem of email spamming • To send an email, you were required to calculate the hash of the text + a nonce, and keep hashing changing the nonce until an hash with the required number of 0 was found • The receiver could easily verify that a work was done in order to send the email The Proof of Work
27. March 2018 • Instead of having a central party issuing new digital money, the PoW can be use to create new coins WHAT - The Proof of Work to issue money
28. March 2018 • Instead of having a central party issuing new digital money, the PoW can be use to create new coins • Users have the guarantee that their wealth cannot be easily diluted without an effective work done WHAT - The Proof of Work to issue money
29. March 2018 • Instead of having a central party issuing new digital money, the PoW can be use to create new coins • Users have the guarantee that their wealth cannot be easily diluted without an effective work done • The object of the transaction has a value since a work was done to create a coin WHAT - The Proof of Work to issue money
30. March 2018 WHEN - PoW for transaction validation 50 btc to Alice/ random number SHA256 0de8c5eadad506ec3e777a25ebc5982d22364e987ac759d5ce685731b798e627
31. March 2018 Mining
38. March 2018 • The user A can create a valid transaction towards the user B, and later a second valid transaction spending the same coins towards the user C WHEN - The double spending problem
39. March 2018 • The user A can create a valid transaction towards the user B, and later a second valid transaction spending the same coins towards the user C • Both B and C when validating the transaction believe they received the coins, creating two different versions of the ledger WHEN - The double spending problem
40. March 2018 • The user A can create a valid transaction towards the user B, and later a second valid transaction spending the same coins towards the user C • Both B and C when validating the transaction believe they received the coins, creating two different versions of the ledger • If the double spending is not forbidden, users can create new money at 0 costs WHEN - The double spending problem
41. March 2018 • An easy solution would be to have a central coordinator to decide which transaction came first WHEN - Looking for coordination
42. March 2018 • An easy solution would be to have a central coordinator to decide which transaction came first • This of course this causes censorship resistance and reliability problems WHEN - Looking for coordination
43. March 2018 • An easy solution would be to have a central coordinator to decide which transaction came first • This of course this causes censorship resistance and reliability problems • Everybody needs to have a full copy of the ledger (to detect double spending) and a consensus on the state of the ledger has to be achieved WHEN - Looking for coordination
44. March 2018 • The PoW is already applied for issuing transaction (mining), to decide which transactions are valid it can be applied also to other people non-issuing transactions WHEN - PoW for transaction validation
45. March 2018 • The PoW is already applied for issuing transaction (mining), to decide which transactions are valid it can be applied also to other people non-issuing transactions • A PoW algorithm is applied to a block of transaction, the first one to find an hash with the required difficulty get the issuing transaction (reward) and decides the validity of other people transactions WHEN - PoW for transaction validation
46. March 2018 WHEN - PoW for transaction validation 50 btc to Alice/ random number SHA256 1 btc from Bob to Carol 5 btc from Dave to Frank 2.3 btc from Ted to Chuck 0de8c5eadad506ec3e777a25ebc5982d22364e987ac759d5ce685731b798e627
47. March 2018 The chain of blocks
48. March 2018 • Everybody needs to see all the transaction history to audit the blockchain, is it is too big few people can afford the equipment to do it Problem
49. March 2018 • Everybody needs to see all the transaction history to audit the blockchain, is it is too big few people can afford the equipment to do it • To keep transaction validation affordable the block needs to stay small (limit 1 MB) Problem
50. March 2018 • Everybody needs to see all the transaction history to audit the blockchain, is it is too big few people can afford the equipment to do it • To keep transaction validation affordable the block needs to stay small (limit 1 MB) • If the block stay small, few transactions can be on the blockchain and few people can use it Problem
51. March 2018 PoW for transaction validation
52. March 2018 • WHO? → digital signatures Bitcoin protocol
53. March 2018 • WHO? → digital signatures • WHERE? → distributed redundant ledger Bitcoin protocol
54. March 2018 • WHO? → digital signatures • WHERE? → distributed redundant ledger • WHAT? → PoW generated tokens Bitcoin protocol
55. March 2018 • WHO? → digital signatures • WHERE? → distributed redundant ledger • WHAT? → PoW generated tokens • WHEN? → blockchain Bitcoin protocol
56. March 2018 • p2p transactions • Censorship resistant • Permission-less • Bonus: store of value • Bonus 2: privacy-aware Goals achieved achieved achieved achieved almost
57. March 2018 • p2p transactions • Censorship resistant • Permission-less • Bonus: store of value • Bonus 2: privacy-aware Goals achieved achieved achieved achieved almost
58. March 2018 • p2p transactions • Censorship resistant • Permission-less • Bonus: store of value • Bonus 2: privacy-aware Goals achieved achieved achieved achieved almost
59. March 2018 • p2p transactions • Censorship resistant • Permission-less • Bonus: store of value • Bonus 2: privacy-aware Goals achieved achieved achieved achieved almost
60. March 2018 • p2p transactions • Censorship resistant • Permission-less • Bonus: store of value • Bonus 2: privacy-aware Goals achieved achieved achieved achieved almost
61. March 2018 Bitcoin transaction structure TX K 0.5 BTC Alice’s sig 1BTC Alice’s sig 0.3 BTC Alice’s sig 0.4 BTC Alice’s sig 1 BTC Alice’s sig 3 BTC to Bob 0.2 BTC to Alice (change) TX L 3 BTC Bob’s sig 3 BTC to Carol Alice to Bob: 3 BTC Bob to Carol: 3 BTC TX M 2 BTC Carol’s sig 4 BTC to Eve 1 BTC to Carol (change) Carol to Eve: 4 BTC 3 BTC Carol’s sig Inputs Outputs Inputs Outputs Inputs Outputs
62. Is bitcoin good money?
63. March 2018 Figure 1 Bitcoin supply and inflation
64. March 2018 Why Bitcoin is a good form of money The ability of an asset to be a good trading token can be valuated comparing fungibility, divisibility, portability, scarcity and durability. Fungibility Divisibility Portability Scarcity Durability Fiat currency Coffee beans Diamonds Gold Bitcoin
65. March 2018 Bitcoin network effect The security of a blockchain is provided by miners through a Proof of Work process to validate transactions. Miners are incentivised to stay on the blockchain with more security and profitability Miner Users The utility of a currency-like asset is higher if more people use it and accept it as a payment method. This means that obviously, users are incentivised to join the network that already has a large number of users Network Nodes The security and the usability of a blockchain network are not only given by miners, but also by the network nodes which have the role to rely transactions and verify that the network’s rules are enforced. Application Developers Business owners and engineers interested in building applications on top of a blockchain protocol will always prefer to invest their time and money on the network that can guarantee more security and more users.
66. Introduction to the Blockchain and Bitcoin Federico Tenga COO at Chainside federico@chainside.net