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.

Transcript

1. Blockchain:
 The World’s Slowest, Most Fascinating Database Stefan Tilkov
 stefan.tilkov@innoq.com
 @stilkov
2. 1.
3. 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
4. Cryptography?
 Oh no! Don’t worry.
5. Hashing Hashing Algorithm 0100101001001 01011111100101 0010101001010 11010101001011 1000100101001 00101011111100 12CA0219FABC1236
6. Hashing Algorithm 0100101001001 01011111101101 0010101001010 11010101001011 1000100101001 00101011111100 ABC8329FF129878E Hashing
7. 0100101001001 01011111100101 0010101001010 11010101001011 1000100101001 00101011111100 12CA0219FABC1236 Hashing
8. Hashing Hashing Algorithm 0100101001001 01011111100101 0010101001010 11010101001011 1000100101001 00101011111100 0000************
9. Public & Private Keys Private Key Public Key Derive
10. Public & Private Keys Private Key Public Key Derive Sign 0100101001001 01011111100101 0010101001010 11010101001011 1000100101001 00101011111100 12CA0219FABC1236 Private Key Public Key Derive
11. Sign 0100101001001 01011111100101 0010101001010 11010101001011 1000100101001 00101011111100 12CA0219FABC1236 Private Key Public Key Validate Derive Public & Private Keys
12. 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
13. CPU FPGA GPU ASIC specific generic SHA-256² Ethash Scrypt X11
14. 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
15. 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
16. 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
17. 2.
18. 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
19. Ethereum: Contracts & Code • Accounts can externally owned • Accounts can be embodied by code (“contract account”) • Contracts specify rules for interactions
20. “Here, run that code
 for me, will ya?”
21. Ethereum: Gas • Computation requires payment (“gas”) • Amount determined by caller • Execution of instructions consumes gas
22. 3. Alternatives
23. Private (“permissioned”) ledgers • Used internally or with trusted partners • Lots of startups: clearmatics, Eris, Peernova, BigchainDB, … • OSS initiative: HyperLedger (Fabric, Sawtooth Lake)
24. 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
25. Generalized: Hybrid approach • Create additional/parallel state model • Use blockchain only where absolutely necessary Main blockchain Registry Checkpoints BOC (Boring Old Application)
26. 4. So what?
27. 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
28. Stefan Tilkov @stilkov
 stefan.tilkov@innoq.com
 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?
29. 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