Cryptography in Bitcoin

Transcript

1. in Bitcoin Cryptography by U-Zyn Chua for Singapore CryptoParty 15

   April 2013

2. U-Zyn Chua is not Cryptographer Economist

3. U-Zyn Chua is IT Consultant @ Security enthusiast Bitcoiner

4. How many... ? Bitcoiner? Knows about Bitcoin? Have no idea

   about Bitcoin?
5. None

6. What is Bitcoin? Distributed electronic cash protocol and a unit

   of currency

7. What is Bitcoin? Satoshi Nakamoto Genesis block on 3 Jan

   2009 “Gone for good” since late 2010

8. What is Bitcoin?

9. 1m44s

10. What makes a currency? Scarce Predictable growth Secure Valuable

11. Production is halved every 4 years Never more than 21

    million

12. ~USD 100/Bitcoin

13. Problems Currency creation Keeps value stable Fraud prevention

14. Cryptography No central bank No watchdog only No authority

15. How does Bitcoin work? Public-key cryptography Peer-to-peer network Proof-of-work

16. Public-key crypto 160-bit hash (SHA-256) 18YCR8bvxLaVCmbgY6eCavF733QDs1sQDT Base58-encoded Generate as many

    as you want 215,000,000,000,000,000,000,000,000,0 00,000,000,000 addresses per capita.

17. Public-key crypto

18. Transaction Public & broadcasted http://blockchain.info

19. Transaction 499335.01317523 1DkyBEKt5S2GDtv7aQw6rQepAvnsRyHoYM 105555.03133700 1933phfhK3ZgFQNLGSDXvqCn32k2buXY8a 79957.03133700 1FeexV6bAHb8ybZjqQMjJrcCrHGW9sb6uF 53000.03133700 16cou7Ht6WjTzuFyDBnht9hmvXytg6XdVT 50259.03133700

    1CfPAfVDe1Br11SkNrk2bEMmMP3bAA5wRr 50130.03133700 13vJZKHKBirruXwmjMaRtakzPQRRHQit1S 50000.03133700 1P3S1grZYmcqYDuaEDVDYobJ5Fx85E9fE9 50000.03133700 1DEpjpftLbsGiCJvJDp2F2quVRnymV8U5Q 47458.03133700 1BBqjKsYuLEUE9Y5WzdbzCtYzCiQgHqtPN 44914.03133700 1MR6pXDZ6gpBVN8n61SqCNF61vU8ZzRu8Y 44512.03133700 1BVA88962SxcymHSfqXSy9F7cgXefi3zgt 40000.03133700 16Ls6azc76ixc9Ny7AB5ZPPq6oiEL9XwXy 40000.03133700 12HddUDLhRP2F8JjpKYeKaDxxt5wUvx5nq 40000.03133700 1cXNTyXj4xPGopfYZNY5xfSM1EPJJvBZV 38058.03133700 1FngtAcZsLfK89MNe7TqzyqVtSype8TiVD 38000.03133700 18Hsgq92AUB1PYLU6MUMQXiwdebaDRo9oQ 35000.00000000 1DAmsh8tHUtH2cVUDMxnDkKr8SaPNkb36h 31000.03133700 12ib7dApVFvg82TXKycWBNpN8kFyiAN1dr 30000.03133700 1MyGwFAJjVtB5rGJa32M6Yh46cGirUta1K Bitcoin richest

20. Transaction 499335.01317523 1DkyBEKt5S2GDtv7aQw6rQepAvnsRyHoYM 105555.03133700 1933phfhK3ZgFQNLGSDXvqCn32k2buXY8a 79957.03133700 1FeexV6bAHb8ybZjqQMjJrcCrHGW9sb6uF 53000.03133700 16cou7Ht6WjTzuFyDBnht9hmvXytg6XdVT 50259.03133700

    1CfPAfVDe1Br11SkNrk2bEMmMP3bAA5wRr 50130.03133700 13vJZKHKBirruXwmjMaRtakzPQRRHQit1S 50000.03133700 1P3S1grZYmcqYDuaEDVDYobJ5Fx85E9fE9 50000.03133700 1DEpjpftLbsGiCJvJDp2F2quVRnymV8U5Q 47458.03133700 1BBqjKsYuLEUE9Y5WzdbzCtYzCiQgHqtPN 44914.03133700 1MR6pXDZ6gpBVN8n61SqCNF61vU8ZzRu8Y 44512.03133700 1BVA88962SxcymHSfqXSy9F7cgXefi3zgt 40000.03133700 16Ls6azc76ixc9Ny7AB5ZPPq6oiEL9XwXy 40000.03133700 12HddUDLhRP2F8JjpKYeKaDxxt5wUvx5nq 40000.03133700 1cXNTyXj4xPGopfYZNY5xfSM1EPJJvBZV 38058.03133700 1FngtAcZsLfK89MNe7TqzyqVtSype8TiVD 38000.03133700 18Hsgq92AUB1PYLU6MUMQXiwdebaDRo9oQ 35000.00000000 1DAmsh8tHUtH2cVUDMxnDkKr8SaPNkb36h 31000.03133700 12ib7dApVFvg82TXKycWBNpN8kFyiAN1dr 30000.03133700 1MyGwFAJjVtB5rGJa32M6Yh46cGirUta1K Bitcoin richest 500k BTC ~ USD 50 million stored in a PUBLIC string!

21. Mining Adding tx records to ledger Confirm transactions Profit (50

    25 BTC / block) ???
22. None
23. None

24. Block chain Broadcasted transaction database since Day 1 (Jan 3

    2009) 1 block every 10 minutes (how?) Currently at >6GB

25. Block Field Purpose Version Client version Previous hash Hash of

    previous block Merkle root Hash of transactions Timestamp Current UNIX time Target Target hash Nonce 32-bit number

26. Target 1 block every 10 minutes (this is how!) A

    (max) target hash output Generate lower hash than the target The higher the target is, the harder it is

27. Target Let’s look back at block’s component and assume that

    we want to make a hash with the following output 0x0000000000000fffffffff.....

28. Target Difficulty is adjusted every 2016 blocks (2 weeks) Based

    on time it takes for the last 2016 blocks Current chance to find a block: 0.0000000000000000303436847859644281966140511030971538275

29. Block generation

30. Block generation

31. Cryptography is the authority! is the watchdog! Many other clever

    features of Bitcoin

32. Security incidents

33. Security incidents

34. Security incidents

35. Is Bitcoin safe? https://github.com/bitcoin/bitcoin Reward: USD 140 million

36. Is Bitcoin safe? https://github.com/bitcoin/bitcoin Reward: USD 140 million Reward: USD

    1.1 billion!

37. Bitcoin vs Bank Bitcoin Bank Trust no one Trust bank

    Open source Closed source Proven & known security Obscured security

38. Questions? @uzyn uzyn@zynesis.com