Blockchains, Distributed Ledgers, and more Stefan Tilkov @stilkov


@stilkov Blockchain (noun) \ ˈbläkˈchān: A slow, hard-to-scale, distributed immutable event log with a consensus approach based on turning a tree into a chain by converging on the branch with the most hashing power provably spent on it

@stilkov Ledger (noun) /ˈlɛdʒə/ a book or other collection of financial accounts Distributed Ledger (noun) /ˈdɪstrɪbjuːtíd ˈlɛdʒə/
 A blockchain not called a blockchain because (a) it doesn’t actually chain blocks or
 (b) you think blockchains are uncool

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@stilkov Bitcoin: Vocabulary Transaction Block Wallet Address Node Blockchain Private Key Public Key maintains copy of creates consists of inputs encumbered with derived from derived from maintains validated by includes creates references previous Bitcoin contains

Consensus and
 Byzantine Failure Tolerance

@stilkov Hashing and Proof-of-work (PoW) Hashing Algorithm 0100101001001 01011111100101 0010101001010 11010101001011 1000100101001 00101011111100 12CA0219FABC1236

@stilkov Hashing Algorithm 0100101001001 01011111101101 0010101001010 11010101001011 1000100101001 00101011111100 ABC8329FF129878E Hashing and Proof-of-work (PoW)

@stilkov 0100101001001 01011111100101 0010101001010 11010101001011 1000100101001 00101011111100 12CA0219FABC1236 Hashing and Proof-of-work (PoW)

@stilkov Hashing and Proof-of-work (PoW) Hashing Algorithm 0100101001001 01011111100101 0010101001010 11010101001011 1000100101001 00101011111100 0000************

@stilkov PoW Energy Discussion Position 1: “Catastrophic” • Continuously increasing demand • The Netherlands: 106TWh/y • Bitcoin: 65 TWh/y • Little to no value, only speculation • Use of cheap & dirty energy sources • Completely useless hardware with limited shelf life

@stilkov PoW Energy Discussion Position 2: “No big deal” • Demand will not increase linearly • More useful than Christmas lights • Transparent costs, as opposed to classical banking • No need for multiple PoW chains • Use of cheap & clean energy sources, excess energy • ASIC-resistant algorithms @stilkov

@stilkov Proof-of-work alternatives • Proof-of-stake (PoS) • Proof-of-authority (PoA) • Proof-of-service (PoSe) • Proof-of-capacity (PoC) • Proof-of-elapsed-time (PoET) • …

@stilkov Permissioned vs. Public Trusted,
 Known Untrusted, Unknown Untrusted, Joined Untrusted, Known Bitcoin e.g. Ripple DB e.g. Dash

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@stilkov Criteria a.k.a. “So you think you need a blockchain …”

@stilkov Do you really need decentralization? • Is there a single trusted organization? • Do you trust it to not be malicious? • Do you trust in its competency and security practices? • Do you trust its longevity? You don’t need a blockchain.

@stilkov Are you suspicious about history? • Can you trust available information is correct? • Can you trust it hasn’t been tampered with? • Can you trust it’s complete? You don’t need a blockchain.

@stilkov Do you want to invite everyone? • Do you have control over who can participate? • Do you have a separate onboarding process? You don’t need proof of work.

@stilkov Is identity/authority problematic? • Do you trust that participants are who they say they are? • Can you be sure they have the authority to do what they do? • Is there a trusted arbitrator? You don’t need proof of work.

@stilkov Do you have doubts about processes? • Can you trust computation followed the rules you expected? • Can you trust code is correct? • Can you trust code hasn’t been tampered with? You don’t need smart contracts.

@stilkov Do you have nothing to hide? • Is all the data supposed to be private? • Is data only supposed to be visible to a subset of your users? • Is pseudonimity an insufficient solution? You can’t store your data
 in a (public) blockchain.

@stilkov Criteria • Do you really need decentralization? • Are you suspicious about history? • Do you want to invite everyone? • Is identity/authority problematic? • Do you have doubts about processes? • Do you have nothing to hide?

@stilkov Examples

@stilkov Property Management • Record (partial) ownership • Trade property/shares • Identity • DRM • Access Control • Digital Assets • …

@stilkov Obligations • Taxation • Emission fees • Debt • Clean energy fares • …

@stilkov Insurance and finance • Claim regulation • Ownership transfer • Shared sign-off • Intra-bank clearing • Asset management • Risk management/sharing • …

@stilkov E-Commerce • Provenance tracking • Virtual Marketplaces • Participation models • Loyalty programs • …

@stilkov Other use cases • Tracking of certifications • Fully automated payment (charging, usage fees) • Public records of GPS tracking • Safe auditing with legitimate (limited) law enforcement access • …

@stilkov Summary

@stilkov You probably don’t need a blockchain

@stilkov If you need one, carefully select something that matches your needs

@stilkov Beware of snake oil vendors

@stilkov Explore the benefits and disrupt :)

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 80331 München Germany Phone: +49 2173 3366-0 @stilkov That’s all I have.
 Thanks for listening! Questions? Stefan Tilkov @stilkov
 stefan.tilkov@innoq.com
 Phone: +49 170 471 2625 More at: https://blockchain.innoq.com

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