Blockchain for Beginners
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Blockchains are distributed ledgers that use consensus protocols to track ownership or transactions across copies of the ledger maintained by members. A blockchain uses a consensus protocol like proof-of-work to agree on changes and additions to the distributed ledger. Membership in blockchains can be open to anyone, like in Bitcoin, or restricted to a fixed group. While blockchains provide advantages like distributed trust, achieving scalability is challenging due to the need for consensus among all members on every change.
![ByzCoin: Fast, Scalable Blockchains
DEDIS lab project presented in [USENIX Security ‘16]
● Permanent transaction commitment in seconds
● 700+ TPS demonstrated (100x Bitcoin, ~PayPal)
● Low-power verification on light mobile devices
1 2 3
1 2 3 4 5
...
5-10 sec
Bitcoin
Cothority
Miner
Witnesses
Key-Block
Micro-Block
depends on
6
Co-Signature](https://image.slidesharecdn.com/1102-cybsec-blockchain-161106171340/85/Blockchain-for-Beginners-16-320.jpg)
![Open Democratic Blockchains?
Proof-of-Personhood: “one person one vote”
● e.g., via Pseudonym Parties [SocialNets ‘08]
● Participants mint new currency at equal rate
– Decentralized analog to “basic income”?](https://image.slidesharecdn.com/1102-cybsec-blockchain-161106171340/85/Blockchain-for-Beginners-22-320.jpg)
Blockchain for Beginners
- 1. Blockchain for Beginners Bryan Ford Decentralized/Distributed Systems (DEDIS)
- 2. What is a Blockchain? In essence, a blockchain is: ● A distributed ledger ● A consensus protocol ● A membership protocol
- 3. How to track wealth (or anything)? Things ● Gold, beads, cash... Ledgers ● Who owns what?
- 4. Precedent: the Rai Stones of Yap Stone “coins” weighing thousands of kilograms ● Left in place once created (“mined”) ● Ownership transfer by public proclamation (this comparison shamelessly borrowed from Gün Sirer and others)
- 5. Alice 5 BTC Bob 2 BTC Charlie 3 BTC ... Distributed Ledgers Problem: we don't want to trust any designated, centralized authority to maintain the ledger Solution: “everyone” keeps a copy of the ledger! – Everyone checks everyone else's changes to it Alice 5 BTC Bob 2 BTC Charlie 3 BTC ... Alice's copy Alice 5 BTC Bob 2 BTC Charlie 3 BTC ... Bob's copy Alice 5 BTC Bob 2 BTC Charlie 3 BTC ... Charlie's copy
- 6. The Basic Goal: to Distribute Trust “weakest-link” security “strongest-link” security in a small group “strongest-link” security in a large group
- 8. The Power of Distributed Ledgers Can represent a distributed electronic record of: ● Who owns how much currency? (Bitcoin) ● Who owns a name or a digital work of art? ● What are the terms of a contract? (Ethereum) ● When was a document written? (notaries) ● …
- 9. What is a Blockchain? In essence, a blockchain is: ● A distributed ledger ● A consensus protocol ● A membership protocol
- 10. Blockchains Require Consensus Replicating a (fixed) ledger is actually easy… ● Decades-old technology: e.g., gossip protocols But the participants must agree somehow on who gets to extend the blockchain, and how! ● Must reach a distributed consensus on all changes
- 11. Nakamoto Consensus Public blockchains such as Bitcoin, Ethereum use consensus by crypto-lottery 1) Miners print their own “lottery tickets” by solving crypto-puzzle (proof-of-work) 2) Winner gets to add one block to blockchain; typically gets reward: e.g., print new money 3) All miners gravitate to longest chain. Repeat.
- 12. Drawbacks of Nakamoto Consensus ● Transaction delay – Any transaction takes ~10 mins minimum in Bitcoin ● Weak consistency: – You’re not really certain your transaction is committed until you wait ~1 hour or more ● Low throughput: – Bitcoin: ~7 transactions/second ● Proof-of-work mining: – Wastes huge amount of energy
- 13. Scaling Blockchains is Not Easy
- 14. Blockchain Scaling Approaches Avoid the problem: ● Move more work off-blockchain (Bitcoin) – Shifts burdens onto users, “trusted” intermediaries ● Tweak tuning parameters (Ethereum) – Limited headroom, reduced security margins ● Small, semi-closed groups (Ripple, Stellar) – Lose openness, public transparency benefits Solve the problem: ● Rethink architecture (Bitcoin-NG, ByzCoin) – Technically hard but best long-term solution
- 15. The Problem with “Off-Blockchain”... Even if the blockchain is secure, your money isn't! ● The only convenient/feature-rich ways to use are via less-secure Web exchanges, etc. – Ask you to “trust them” but frequently compromised
- 16. ByzCoin: Fast, Scalable Blockchains DEDIS lab project presented in [USENIX Security ‘16] ● Permanent transaction commitment in seconds ● 700+ TPS demonstrated (100x Bitcoin, ~PayPal) ● Low-power verification on light mobile devices 1 2 3 1 2 3 4 5 ... 5-10 sec Bitcoin Cothority Miner Witnesses Key-Block Micro-Block depends on 6 Co-Signature
- 17. What is a Blockchain? In essence, a blockchain is: ● A distributed ledger ● A consensus protocol ● A membership protocol
- 18. Who Participates in Consensus? Permissionless blockchains (Bitcoin, Ethereum): “anyone” who invests in solving crypto-puzzles. ● Now practical only with ASICs and cheap power ● Re-centralization: e.g., 4 pools now hold >50%
- 19. Environmental Costs Proof-of-work = “scorched-earth” blockchains ● Tremendous energy waste, now comparable to all of Ireland ●
- 20. Permissioned Blockchains Just decide administratively who participates; Fixed or manually-changed group of “miners” – No proof-of-work needed → low energy cost – More mature consensus protocols applicable – Higher human organizational costs – No longer open for “anyone” to participate
- 21. Other Membership Approaches ● Proof-of-Stake: assigns consensus shares in proportion to prior capital investment – Could address energy waste problem – Major unsolved security & incentive problems – Just reinvents the shareholder corporation
- 22. Open Democratic Blockchains? Proof-of-Personhood: “one person one vote” ● e.g., via Pseudonym Parties [SocialNets ‘08] ● Participants mint new currency at equal rate – Decentralized analog to “basic income”?
- 23. Blockchains need solid foundations
- 24. Conclusion In essence, a blockchain is: ● A distributed ledger ● A consensus protocol ● A membership protocol Thank you. Prof. Bryan Ford, head of DEDIS lab at EPFL.