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Blockchain Overview

Blockchain Overview

As the foundation of Bitcoin's virtual currency, the blockchain technique is now the starting point for numerous new business ideas.The usual suspects surpass each other with superlatives how "disruptive" the Blockchain based startups will be.

In this talk, we look first at the technical foundations and then examine the advantages and disadvantages. We then identify practical scenarios and discuss how to implement them in practice.

Stefan Tilkov

November 30, 2018
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  1. Blockchain:

    The World’s
    Slowest, Most
    Fascinating
    Database
    Stefan Tilkov

    [email protected]
    @stilkov

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  2. Bitcoin
    • Practical application of cryptography to
    • maintain a pseudonymous, global history of transactions
    • with guaranteed consistency
    • without centralization or intermediaries
    • resistant to forgery and fraud
    • Created in 2009 by Satoshi Nakamoto
    • Most successful crypto-currency to date

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  3. Cryptography?

    Oh no!
    Don’t worry.

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  4. Hashing
    Hashing
    Algorithm
    0100101001001
    01011111100101
    0010101001010
    11010101001011
    1000100101001
    00101011111100
    12CA0219FABC1236

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  5. Hashing
    Algorithm
    0100101001001
    01011111101101
    0010101001010
    11010101001011
    1000100101001
    00101011111100
    ABC8329FF129878E
    Hashing

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  6. 0100101001001
    01011111100101
    0010101001010
    11010101001011
    1000100101001
    00101011111100
    12CA0219FABC1236
    Hashing

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  7. Hashing
    Hashing
    Algorithm
    0100101001001
    01011111100101
    0010101001010
    11010101001011
    1000100101001
    00101011111100
    0000************

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  8. Public & Private Keys
    Private Key
    Public Key
    Derive

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  9. Public & Private Keys
    Private Key
    Public Key
    Derive
    Sign
    0100101001001
    01011111100101
    0010101001010
    11010101001011
    1000100101001
    00101011111100
    12CA0219FABC1236
    Private Key
    Public Key
    Derive

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  10. Sign
    0100101001001
    01011111100101
    0010101001010
    11010101001011
    1000100101001
    00101011111100
    12CA0219FABC1236
    Private Key
    Public Key
    Validate
    Derive
    Public & Private Keys

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  11. 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

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  12. CPU FPGA
    GPU ASIC
    specific
    generic
    SHA-256²
    Ethash
    Scrypt
    X11

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  13. 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

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  14. 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

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  15. Bitcoin: Script
    • Intentionally limited scripting
    • P2SH (“pay to script hash”) address

    (as opposed to P2PKH)
    • Usage e.g. for multi-signature (joint accounts)
    • Challenge: To spend, provide valid input to script
    • Base script: Ensure recipient has private key matching a
    public key

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  16. Ethereum vs. Bitcoin
    • Blockchain as technical basis
    • Currency: Ether
    • 1 Block approx. every minute
    • Currently proof of work, change to proof of stake
    planned
    • Platform for arbitrary contracts
    • State as part of the blockchain

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  17. Ethereum: Contracts & Code
    • Accounts can externally owned
    • Accounts can be embodied by code (“contract account”)
    • Contracts specify rules for interactions

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  18. “Here, run that code

    for me, will ya?”

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  19. Ethereum: Gas
    • Computation requires payment (“gas”)
    • Amount determined by caller
    • Execution of instructions consumes gas

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  20. 3. Alternatives

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  21. Private (“permissioned”) ledgers
    • Used internally or with trusted partners
    • Lots of startups: clearmatics, Eris, Peernova,
    BigchainDB, …
    • OSS initiative: HyperLedger (Fabric, Sawtooth Lake)

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  22. Sidechain approach
    • Create additional/parallel state model
    • Anchor in blockchain for validation
    Main blockchain
    User
    Address
    Sidechain
    Address
    Side chain
    SC Address 1 SC Address 2

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  23. Generalized: Hybrid approach
    • Create additional/parallel state model
    • Use blockchain only where absolutely necessary
    Main blockchain
    Registry
    Checkpoints
    BOC
    (Boring Old Application)

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  24. The Good
    • The only practical, decentralized,
    open, secure, mature platform/
    database
    • Resistant to censorship
    • Fascinating technically
    • Fascinating in terms of disruptive
    new business models
    The Bad
    • Slooooooow
    • Applied to many use cases
    without thinking
    The Ugly
    • Hyped like crazy
    • Wasteful with energy
    • Resistant to regulation

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  25. Stefan Tilkov
    @stilkov

    [email protected]
    Phone: +49 170 471 2625
    innoQ Deutschland GmbH
    Krischerstr. 100
    40789 Monheim am Rhein
    Germany
    Phone: +49 2173 3366-0
    innoQ Schweiz GmbH
    Gewerbestr. 11
    CH-6330 Cham
    Switzerland
    Phone: +41 41 743 0116
    www.innoq.com
    Ohlauer Straße 43
    10999 Berlin
    Germany
    Phone: +49 2173 3366-0
    Ludwigstr. 180E
    63067 Offenbach
    Germany
    Phone: +49 2173 3366-0
    Kreuzstraße 16

    80331 München
    Germany
    Phone: +49 2173 3366-0
    @stilkov
    That’s all I have.

    Thanks for listening!
    Questions?

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  26. www.innoq.com
    OFFICES
    Monheim
    Berlin
    Offenbach
    Munich
    Zurich
    FACTS
    ~125 employees
    Privately owned
    Vendor-independent
    SERVICES
    Strategy & technology consulting
    Digital business models
    Software architecture & development
    Digital platforms & infrastructures
    Knowledge transfer, coaching & trainings
    CLIENTS
    Finance
    Telecommunications
    Logistics
    E-commerce
    Fortune 500
    SMBs
    Startups

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