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Ethereum “The World Computer” Libby Kent 1 @viskobatz

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Overview • Bitcoin: poof of work based blockchain • Ethereum: blockchain + general purpose PL + arbitrary state • EVM • DApps (smart contracts) 2 @viskobatz

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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

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Ledger Keeping Track of State Scruffy 15 Simon 10 Z^2 9 Drun 8 Lydia 8 Tom 8 Brian 10 4 @viskobatz

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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

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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

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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

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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

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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

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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

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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

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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

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(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

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Proof of Work • Mechanism through which peers gain the right to participate in the systems. Miner 14 @viskobatz

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Proof of Work Properties 1. Hard to find solution. 2. Easy to verify. 15 @viskobatz

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Review Cryptographic Hash Function SHA-256(N-e size input) SHA-256 00110101… (256 bits) 16 @viskobatz

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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

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Found The Nonce 3 nonce (242k) 0 1 2 18 @viskobatz

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PoW + Longest Chain 0 1 2 2 19 @viskobatz

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PoW + Longest Chain 0 1 2 2 3 3 20 @viskobatz

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PoW + Longest Chain 0 1 2 3 3 21 @viskobatz

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PoW + Longest Chain 0 1 2 3 3 22 @viskobatz

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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

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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

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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

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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

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Alternative Apps On Top of Bitcoin Blockchain • Namecoin 27 @viskobatz

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Alternative Apps On Top of Bitcoin Blockchain • Namecoin • Colored Coins > 1384: Litecoin (2011) Namecoin (2011) Auroracoin (2014) Zcash (2016) 28 @viskobatz

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Alternative Apps On Top of Bitcoin Blockchain • Namecoin • Colored Coins • Metacoins 29 @viskobatz

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2 Approaches 1. Building an independent network. 2. Building a protocol on top of Bitcoin. 30 @viskobatz

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Bitcoin Blockchain + General Purpose PL + Arbitrary State 31 @viskobatz

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Ether • Main crypto fuel. • Used to pay transactions fees. 32 @viskobatz

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Ethereum 2 Types of Accounts • External accounts • Internal (contract) accounts 33 @viskobatz

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External Accounts (like Bitcoin account) • Externally owned by a secret key. • Send message by creating and signing a TX. 34 @viskobatz

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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

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Ethereum Accounts are the State (S) • 20 Byte address: 0xcc16e3c00dbbe76603fa833ec20a48f786dfe610 • State transition: direct transfer of value and information between accounts. 36 @viskobatz

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Account ( Nonce, Ether balance, Contract code, Storage (rt)) 37 @viskobatz

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(Nonce, Ether balance, Contract code, StorageRt) 0xcc16e3c 00dbbe76 613fa833e c20a48f78 6dfe610 38 @viskobatz

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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

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Interactions In Ethereum msg Singed(tx) Update Storage Contract DoAThing Contract DoAnotherThing 40 @viskobatz

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Gas 41 @viskobatz

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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

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Transaction Initiated From an External Account signature sender amount eth to STARTGAS GASPRICE nonce data 43 @viskobatz

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Code Execution • Ethereum Virtual Machine (EVM). • Every peer runs the EVM. 44 @viskobatz

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EVM [block_state] [transaction] [message] [code] [memory] [stack] [pc] [gas] 45 @viskobatz

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EVM Initialization PC: 0, STACK: [], MEM: [], STORAGE: {} EVM 46 @viskobatz

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ADD 3 10 13 ADD PC --> 86 85 SLOAD 84 87 10 3 + 47 @viskobatz

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SSTORE 13 0 SSTORE PC --> 90 89 SWAP1 88 [13,0,0,0,0,..] Contract Storage 48 @viskobatz

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DApps Smart Contracts The Internet 62 @viskobatz

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Financial DApps • Token Systems. • Financial Derivatives. 63 @viskobatz

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Semi-financial DApps • Stable Value Coins (MKR). • UBI (Universal Basic Income). 64 @viskobatz

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Non-financial DApps (Governance) • Identity and Reputation Systems. • Decentralized File Store. • Decentralized Autonomous Organizations. 65 @viskobatz

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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

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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

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