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Page 1: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin & BlockchainsKevin Sekniqi

Page 2: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

A Brave New World - The Vision of David Chaum

David Chaum

PhD CS/Business Adm from Berkeley 1982Founded IACR same year

eCash, mix nets, voting systems …

Page 3: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

A Brave New World - The Vision of David Chaum [1983]

http://www.hit.bme.hu/~buttyan/courses/BMEVIHIM219/2009/Chaum.BlindSigForPayment.1982.PDF

Page 4: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

A Brave New World - The Vision of David Chaum [1983]

Page 5: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

A Brave New World - The Vision of David Chaum [1983]

Basically ...

● Electronic payment systems suffer from loss of privacy and cumbersome trust on single entities.

● Privacy protection, however, encounters issues of security and safety of data.

Page 6: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Nick Szabo [1998]

Page 7: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Nick Szabo [1998]

Page 8: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Nick Szabo [1998]

http://unenumerated.blogspot.com/2005/12/bit-gold.html

Page 9: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Satoshi Nakamoto and the Anon Post [2008]

Page 10: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Satoshi Nakamoto and the Anon Post [2008]

Page 11: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Satoshi Nakamoto and the Anon Post [2008]

Page 13: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

The Search For Satoshi Nakamoto

Page 14: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

The Search For Satoshi Nakamoto

Page 15: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Goals

An electronic payment system:

● Guarantees safety of transactions, protects against double spends, gives full freedom to owners.

● Yet no central trusted authority, no reliance on quorum since identities are not known.

Page 16: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

N3

N4

N6

N5

TX1 = [Alice → Bob] TX2 = [Alice → Carol]

Page 17: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

N3

N4

N6

N5

Page 18: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

N3

N4

N6

N5

TX1

TX2

TX1

TX2

TX2

TX1

Page 19: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

N3

N4

N6

N5

TX1

TX2

TX1

TX2

TX2

TX1

PBFT

Page 20: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

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TX1

TX2

TX1

TX2

TX2

TX1

PBFT

Who are you?

Page 21: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin

New

Good

Evil Here’s what I know

Here’s what I know

?

Page 22: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Homebrewed Bitcoin

● PBFT / Classical consensus● Plain gossip?

Page 23: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

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TX1

TX2

TX1

TX2

TX2

TX1

Page 24: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

N3

N4

N6

N5

TX1

TX2

TX1

TX2

TX2

TX1

Page 25: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin

SHA256(SHA256(TX || Nonce)) < {0}k {0,1}*

Page 26: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

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TX1

TX2

TX1

TX2

TX2

TX1

Found it!

Page 27: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

N3

N4

N6

N5

TX1

TX2

TX1

TX2

TX2

TX1

Found it!

Page 28: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

N3

N4

N6

N5

TX2

TX2

TX2

TX2

TX2

TX2

Page 29: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

N3

N4

N6

N5

TX1

TX2

TX2

TX2

TX2

TX2

Page 30: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N4

N6

N5

TX1

TX2

TX2

TX2I’m confused

Page 31: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin

Page 32: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N4

TX1

TX2

I’m no longer confused

B2 B3 ...

B2 B3 ...

Loses!

Wins!

Page 33: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin

The arc of the moral universe is long,

but it bends towards justice.

Page 34: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin

Page 35: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin

Page 36: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin UTXO

Page 37: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

BitcoinN1

N2

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TX2

TX2

TX2

TX2

TX2

TX2

Thanks for the coins!

Page 38: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Bitcoin

● Many more subtle details, but core mechanism is computational race.● Results:

○ Breakthrough consensus mechanism in the permissionless setting● Challenges:

○ Electrical usage of a small country.○ Very slow confirmation times.○ 7 tx/second.

Page 39: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

Ittay Eyal● Postdoc @ Cornell, faculty @ Technion in 2017● Major contributor to Bitcoin community

Emin Gun Sirer● Has sick sunglasses and owns a sick boat● Tells me what to do

Page 40: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

Page 41: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

N1

Rest of Network

TX1

TX2

B2 B3

B2 B3 51%

49%

Page 42: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

Page 43: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 44: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 45: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 46: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 47: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 48: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 49: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 50: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 51: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...

Page 52: Bitcoin & Blockchains - Cornell University · Bitcoin Many more subtle details, but core mechanism is computational race. Results: Breakthrough consensus mechanism in the permissionless

Majority is Not Enough: Bitcoin Mining is Vulnerable

N1

RON

...