Libby Kent on Ethereum: The World Computer - PWL NYC

In 2009 bitcoin emerged as a peer-to-peer value transfer system, and was successfully deployed throughout the world. Four years later (2013), the Ethereum white paper was published by an 18 year old Vitalik Buterin which builds on top of the Bitcoin consensus model to allow for distributed computation and applications to be deployed on a decentralized peer-to-peer network.

This paper discusses introducing a turing complete language that can be run on top of the network, utilizing a modified consensus algorithm (GHOST), strategies for defending against mining centralization, further application of such a system beyond just finance, the introduction of state, as well as a history of bitcoin and and the fundamental concepts of the underlying blockchain.

Transcript

1. Ethereum “The World Computer” Libby Kent 1 @viskobatz
2. Overview • Bitcoin: poof of work based blockchain • Ethereum: blockchain + general purpose PL + arbitrary state • EVM • DApps (smart contracts) 2 @viskobatz
3. Bitcoin (2009) 1. “Decentralized peer-to-peer online currency that maintains a value without any backing, intrinsic value or central issuer.” 2. “Proof of work based blockchain for public agreement on the order of TXs. “first-to-file” bitcoin the first credible solution.” 3 @viskobatz
4. Ledger Keeping Track of State Scruffy 15 Simon 10 Z^2 9 Drun 8 Lydia 8 Tom 8 Brian 10 4 @viskobatz
5. Single Leader -> Followers Centralized Scruffy 15 Simon 10 Z^2 9 Drun 8 Lydia 8 Tom 8 Brian 10 (Z^2, 1) --> Scruffy (Drn, 1) --> Scruffy 5 @viskobatz
6. Ledger (1) (2) (3) Current State (0) Start State Scruffy 10 Simon 10 Z^2 10 Drun 10 Lydia 10 Tom 10 Brian 10 (Z^2, 1) --> Scruffy (Simon, 1) --> Scruffy (Tom, 1) --> Scruffy Scruffy 14 Simon 10 Z^2 9 Drun 8 Lydia 9 Tom 8 Brian 10 6 (Drn, 1) --> Scruffy @viskobatz
7. Ledger (1) (2) (3) Current State (4) (0) Start State Scruffy 10 Simon 10 Z^2 10 Drun 10 Lydia 10 Tom 10 Brian 10 (Z^2, 1) --> Scruffy (Simon, 1) --> Scruffy (Tom, 1) --> Scruffy (Lyd, 1) --> Scruffy Scruffy 15 Simon 10 Z^2 9 Drun 8 Lydia 8 Tom 8 Brian 10 7 (Drn, 1) --> Scruffy @viskobatz
8. Decentralized All Peers Can Commit (Z^2, 1) --> Scruffy (Drun, 1) --> Scruffy (Lyd, 1) --> Simon (Drun, 1) --> Z^2 (Z^2, 1) --> Tom (Simon, 1) --> Scruffy (Lyd, 1) --> Scruffy (Tom, 1) --> Scruffy 8
9. Decentralized Ledger Single Shared Truth Current State (1) (Z^2, 1) --> Scruffy Genesis State Scruffy 10 Simon 10 Z^2 10 Drun 10 Lyd 10 Tom 10 Brian 10 Scruffy 12 Simon 10 Z^2 9 Drun 9 Lydia 10 Tom 10 Brian 10 (Drun, 1) --> Scruffy 9 (0) @viskobatz
10. Current State (1) (Z^2, 1) --> Scruffy Genesis State Scruffy 10 Simon 10 Z^2 10 Drun 10 Lyd 10 Tom 10 Brian 10 Scruffy 12 Simon 11 Z^2 9 Drun 9 Lydia 9 Tom 10 Brian 10 (Drun, 1) --> Scruffy 10 (2) (Lyd, 1) --> Simon (0) @viskobatz
11. Current State (1) (Z^2, 1) --> Scruffy Genesis State Scruffy 10 Simon 10 Z^2 10 Drun 10 Lyd 10 Tom 10 Brian 10 Scruffy 13 Simon 10 Z^2 9 Drun 9 Lydia 9 Tom 11 Brian 10 (Drun, 1) --> Scruffy 11 (2) (Lyd, 1) --> Simon (3) (Drun, 1) --> Z^2 (Z^2, 1) --> Tom (Simon, 1) --> Scruffy (0) @viskobatz
12. Current State (1) (Z^2, 1) --> Scruffy Genesis State Scruffy 10 Simon 10 Z^2 10 Drun 10 Lyd 10 Tom 10 Brian 10 (Drun, 1) --> Scruffy 12 (2) (Lyd, 1) --> Simon (3) (Drun, 1) --> Z^2 (Z^2, 1) --> Tom (Simon, 1) --> Scruffy (4) (Tom, 1) --> Scruffy (0) Scruffy 14 Simon 10 Z^2 9 Drun 9 Lydia 9 Tom 10 Brian 10 @viskobatz
13. (5) Current State (1) (Z^2, 1) --> Scruffy Genesis State Scruffy 10 Simon 10 Z^2 10 Drun 10 Lyd 10 Tom 10 Brian 10 (Drun, 1) --> Scruffy 13 (2) (Lyd, 1) --> Simon (3) (Drun, 1) --> Z^2 (Z^2, 1) --> Tom (Simon, 1) --> Scruffy (4) (Tom, 1) --> Scruffy (Lyd, 1) --> Scruffy (0) Scruffy 15 Simon 10 Z^2 9 Drun 9 Lydia 8 Tom 10 Brian 10 @viskobatz
14. Proof of Work • Mechanism through which peers gain the right to participate in the systems. Miner 14 @viskobatz
15. Proof of Work Properties 1. Hard to find solution. 2. Easy to verify. 15 @viskobatz
16. Review Cryptographic Hash Function SHA-256(N-e size input) SHA-256 00110101… (256 bits) 16 @viskobatz
17. Proof of Work / Mining In Blockchain (Bitcoin) 0 1 PrevBlockHeaderHash + nonce (242k) SHA-256 0000001…(256) target six 0s Repeatedly generate a nonce 2 17 @viskobatz
18. Found The Nonce 3 nonce (242k) 0 1 2 18 @viskobatz
19. PoW + Longest Chain 0 1 2 2 19 @viskobatz
20. PoW + Longest Chain 0 1 2 2 3 3 20 @viskobatz
21. PoW + Longest Chain 0 1 2 3 3 21 @viskobatz
22. PoW + Longest Chain 0 1 2 3 3 22 @viskobatz
23. Bitcoin Peers Closed World • state = copy who owns which Bitcoins (UTXO) • tree of new transactions • network / protocol rules: blocksize: 1MB blocktime: ~10 min consensus mechanism: proof of work 23 @viskobatz
24. Bitcoin Accounts • Public private key pair. • Public key reference to the account (UTXO). • Externally owned by a secret key, digital signature to transfer value. 24 @viskobatz
25. Bitcoin as a State Transition System • State (S): Shared ledger of who owns which bitcoins. UTXO (value, owner). • State Transition: Recording transfer of values. ‘$X from A to B’ (S, TX) -> (S’) 25 @viskobatz
26. Bitcoin Script • Bitcoin Script (stack based language). • Opcodes: OP_SHA256, OP_VERIFY. • Bitcoin Script Not Turing Complete (no loops). • Verify a digital signature. 26 @viskobatz
27. Alternative Apps On Top of Bitcoin Blockchain • Namecoin 27 @viskobatz
28. Alternative Apps On Top of Bitcoin Blockchain • Namecoin • Colored Coins > 1384: Litecoin (2011) Namecoin (2011) Auroracoin (2014) Zcash (2016) 28 @viskobatz
29. Alternative Apps On Top of Bitcoin Blockchain • Namecoin • Colored Coins • Metacoins 29 @viskobatz
30. 2 Approaches 1. Building an independent network. 2. Building a protocol on top of Bitcoin. 30 @viskobatz
31. Bitcoin Blockchain + General Purpose PL + Arbitrary State 31 @viskobatz
32. Ether • Main crypto fuel. • Used to pay transactions fees. 32 @viskobatz
33. Ethereum 2 Types of Accounts • External accounts • Internal (contract) accounts 33 @viskobatz
34. External Accounts (like Bitcoin account) • Externally owned by a secret key. • Send message by creating and signing a TX. 34 @viskobatz
35. Contract Accounts • Internally owned – is contract code • Only runs when receives a msg. • Can read / write to internal storage. • Can create other contracts. 35 @viskobatz
36. Ethereum Accounts are the State (S) • 20 Byte address: 0xcc16e3c00dbbe76603fa833ec20a48f786dfe610 • State transition: direct transfer of value and information between accounts. 36 @viskobatz
37. Account ( Nonce, Ether balance, Contract code, Storage (rt)) 37 @viskobatz
38. (Nonce, Ether balance, Contract code, StorageRt) 0xcc16e3c 00dbbe76 613fa833e c20a48f78 6dfe610 38 @viskobatz
39. Interacting with the System • Transactions: come from external accounts. Signed data package that contains a message. • Messages: sent from external accounts and from internal (contract) accounts. 39 @viskobatz
40. Interactions In Ethereum msg Singed(tx) Update Storage Contract DoAThing Contract DoAnotherThing 40 @viskobatz
41. Gas 41 @viskobatz
42. Transaction Need Gas STARTGAS GASPRICE Limit to pay for computation steps (how much gas you are willing to pay) e.g. 2000. Fee to pay miner per computation step, e.g. .001. 2000 * 0.001 = 2 ether Check that the sender has 42 @viskobatz
43. Transaction Initiated From an External Account signature sender amount eth to STARTGAS GASPRICE nonce data 43 @viskobatz
44. Code Execution • Ethereum Virtual Machine (EVM). • Every peer runs the EVM. 44 @viskobatz
45. EVM [block_state] [transaction] [message] [code] [memory] [stack] [pc] [gas] 45 @viskobatz
46. EVM Initialization PC: 0, STACK: [], MEM: [], STORAGE: {} EVM 46 @viskobatz
47. ADD 3 10 13 ADD PC --> 86 85 SLOAD 84 87 10 3 + 47 @viskobatz
48. SSTORE 13 0 SSTORE PC --> 90 89 SWAP1 88 [13,0,0,0,0,..] Contract Storage 48 @viskobatz
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62. DApps Smart Contracts The Internet 62 @viskobatz
63. Financial DApps • Token Systems. • Financial Derivatives. 63 @viskobatz
64. Semi-financial DApps • Stable Value Coins (MKR). • UBI (Universal Basic Income). 64 @viskobatz
65. Non-financial DApps (Governance) • Identity and Reputation Systems. • Decentralized File Store. • Decentralized Autonomous Organizations. 65 @viskobatz
66. Ethereum Peers • state = External (who owns what) + internal (contract) accounts. • state transitions: arbitrary EVM • tree of new transactions • network / protocol rules: blocksize: 1MB -> limited by the gas limit blocktime: ~10 min à ~10-15 secs consensus mechanism: proof of work + GHOST 66 @viskobatz
67. Ethereum • Concept to run arbitrary computations on top of a blockchain. • Easy to create alternative decentralized applications (DApps). • Namecoin a few lines of code. • Easy to create alternative coins. • PWL Token! • Keep Calm and Play on. 67 @viskobatz