understanding blockchains - carnegie mellon … › asset_files › presentation › ...• some...

Understanding Blockchains Qinghua Lu | Senior Research Scientist @ AAPLen Bass |Adjunct Faculty @ CMU

April 2018

Len Bass

© Len Bass 2018 2

Topics

• Blockchain network and platforms• Blockchain variants• Pieces of Blockchains• Applications

© Len Bass 2018 3

Quick definitions

• Blockchain = data + contract +immutability + encryption

• Blockchain platform =distributed +high availability +consensus mechanism

© Len Bass 2018 4

Topics


© Len Bass 2018 5

Public Blockchain Network

5 |

• Network• Gossip protocol for

propagation• Every node hosts a replica

• Good availability • Efficient reading

• Node content• A sequence of blocks of

transactions for which consensus has been reached.

• Each node has a set of outstanding transactions

Blockchain | Xiwei (Sherry) Xu

© Len Bass 2018 6

Platforms

• Bitcoin • Ethereum • Hyperledger Fabric• Multiple others in development or use

© Len Bass 2018 7

Bitcoin

• Used only for bitcoin cryptocurrency

© Len Bass 2018 8

Ethereum

• The Ethereum platform supports a Turing complete programing langage

• You write a “smart contract” in this programming language that specifies the rules of your contract.

• There are other rules for using the platform that govern costs and fees.

Blockchain | Xiwei (Sherry) Xu8 |

© Len Bass 2018 9

Hyperledger Fabric• Open source platform supported by IBM• Contracts are written in Chaincode• Chaincode is a program, written in Go, node.js, and

eventually in other programming languages such as Java, that implements a prescribed interface.

• Turing Complete• Plug ins exist for different variants


© Len Bass 2018 10

Topics


© Len Bass 2018 11

Blockchain variants• Trust (consensus) model• On chain/off chain• Public/private• Customizability • Incentive model• Permissioned/permissionless

• We will introduce variants here and expand on them as appropriate


© Len Bass 2018 12

Consensus models• Distributed consensus• Superusers


© Len Bass 2018 13

Distributed Consensus• Each node collects new transactions into a

block• In each round, a random node gets to

broadcast its block• Other nodes accept the block only if all

transactions in it are valid • Other nodes implicitly accept/reject the block

• Extending it• Ignoring it and extending chain from an earlier

block


© Len Bass 2018 14

Accepting block• All users have copy of blockchain.• Any user can propose a new block with new

transactions. Must be a valid transactions• Valid transactions are restricted by computational

difficulty. Proposed transactions are easy to verify, difficult to generate.

• If competing proposals, vote by users.• In Bitcoin and Ethereum votes are weighted to

prevent flooding user pool with artificial users• Proof of stake• Proof of work

© Len Bass 2018 15

Superusers

• Additions must be verified by small group of superusers

• Rules to prevent rogue superusers

© Len Bass 2018 16

On chain/off chain• All data on chain or some data off chain?

• On chain data is immutable • Off chain data must have provisions to verify

integrity• Performance trade off. Whole chain is copied for

availability and integrity reasons.• May go off chain

• to retrieve data stored in database, for example.• Because data is voluminous

© Len Bass 2018 17

Public / Consortium / Private • Anyone can use a public blockchain network

• Public Bitcoin or Public Ethereum• Public networks have incentives for people to join and fees for use• Better transparency and auditability, bad performance

• Consortium blockchain is used cross-organizations• Controlled by pre-authorized nodes

• Private blockchain is within a single organization

• Consortium/private instantiation of public blockchain• Blockchain platform is (mostly) open source• Network layer access control – firewall


© Len Bass 2018 18

Customizability

• Some blockchains have hard coded transaction rules– e.g. Bitcoin or other non government backed digital currencies.

• Other blockchains allow you to set up your own transaction rules. E.g. Ethereum has a Turing complete language to specify transaction rules. • Programs in these languages are called

“smart contracts”


© Len Bass 2018 19

Incentive structure for public networks

• Creating a new block in Bitcoin is computationally difficult. This is referred to as “mining”

• In public networks, some of the power of blockchain is due to replication and having new blocks validated.

• The incentive structure is intended both to incentivize creation of new blocks and to replicate existing blocks.• If you are a successful miner, you are allocated

new Bitcoins• Collected fees are also allocated to encourage

participation.


© Len Bass 2018 20

Permissionless / Permissioned

• Consortium/Private networks require permissions to access• More suitable for regulated industries

• Know-Your-Customer (KYC) • Other permissions

• Permission to initiate transactions• Permission to mine• Fine-grained permission: permission to create a particular

asset• Public networks can be used for private purposes

• E.g. executing a smart Ethereum contract to manage a supply chain.

• Public networks that are used for private purposes require permissions to access the private portions.


© Len Bass 2018 21

Topics


© Len Bass 2018 22

Quick definitions


• Blockchain platform =distributed +high availability +consensus mechanism

© Len Bass 2018 23

Data in Blockchain

• A blockchain consists of an linked list of transactions on a blockchain platform.

• Sometimes called a ledger

Block 2Block 1 Block 3 Block 4

© Len Bass 2018 24

Adding new transaction

• Adding new transaction depends on trust model• Consensus model• Superuser model

© Len Bass 2018 25

Quick definitions

• Blockchain = data + contract +immutability + encryption +consensus mechanism

• Blockchain platform =distributed +high availability

© Len Bass 2018 26

Blockchain contract

• A contract is a specification of how individuals or entities can interact with the blockchain and their obligations and rewards from this interaction.

• Contracts can be • explicit or implicit • hard coded into the platform or programmable

• Smart contracts are written in a language within the platform for specifying the contract.

26 |

© Len Bass 2018 27

Bitcoin contract• Hard coded• Key concepts:

• Accounts – an individual may have one or more accounts within the bitcoin network

• Spending – an individual owning an account can transfer bitcoins to another account

• Mining – a new bitcoin can be created by finding a valid new block (complicated process)

• Consensus validation. A transaction is not “accepted” until it has been validated by participants in the network.


© Len Bass 2018 28

Ethereum contract

• Similar to Bitcoin for cryptocurrency• Specified in smart contract for other

applications

© Len Bass 2018 29

Hyperledger contract

• Specified in Chaincode• Hyperledger is a private platform

© Len Bass 2018 30

Quick definitions

• Blockchain = data + contract +immutability + encryption +consensus mechanism

• Blockchain platform =distributed +high availability

© Len Bass 2018 31

How to make ledger immutable

• Immutability rests on two foundations• Hash functions• Difficulty of modifying blockchain

© Len Bass 2018 32

Hash Function• Hash functions

• Takes any string as input• Fixed-size output (for example, 256 bits)• Efficiently computable

• Security properties • Collision-unlikely

32 | Blockchain | Xiwei (Sherry) Xu

xy

H(x) = H(y)

© Len Bass 2018 33

Hashing linked list

Block 1

Hash of genesis block

Block 2

Hash of Block 1

Genesis block

Block 3

Hash of Block 2

Any change to Block N requires changing all subsequent blocks

© Len Bass 2018 34

What prevents someone from changing the whole blockchain?

• It depends on the trust model• Consensus model. • Superuser model.

34 |

© Len Bass 2018 35

Change models

• Consensus model• Any user can recognize change• Validation of change depends on voting by

users• Superuser model

• Changes must be validated by superuser

© Len Bass 2018 36

Merkle tree

• A Merkle tree is a data structure that supports rapid validation that a linked list (blockchaindata) has not been modified

• Binary tree where node is hash of children and leaf nodes are hashes of blockchain blocks. then hashing the hash

© Len Bass 2018 37

Merkle tree for four block chain

© Len Bass 2018 38

Quick definitions


• Blockchain platform =distributed +high availability +Consensus mechansm

© Len Bass 2018 39

Building blocks of cryptography with Zerocash example

• NP completeness• Zero Knowledge proofs• Quadratic Span Programs

• Very complicated – you don’t need to understand cryptographic portions of blockchain to understand uses of blockchain


© Len Bass 2018 40

NP completeness

• An NP complete problem is one in which there is no way to locate a solution in polynomial time.

• It may be possible, however, to verify a solution in polynomial time.


© Len Bass 2018 41

Boolean satisfiability• The Boolean satisfiability problem is NP complete.

• Given a statement in Boolean logic, finding an assignment of True or False to the variables in that statement that makes the statement evaluate to True is computationally difficult.

• Verifying that a particular assignment evaluates to True is computationally easy.

© Len Bass 2018 42

Zero Knowledge Proofs

• We begin with the Diffie Hellman algorithm

• Diffie Hellman is the basis of the SSH protocol.


© Len Bass 2018 43

Diffie-Hellman (intuitively)• Alice and Bob agree on a

common color • Each chooses a secret color • Each mixes their secret color

with the common color• Each sends their mixture to

the other• Each now adds their secret

color• Alice and Bob end up with

the same color but decoding it is difficult

• This color is the shared key for symmetric encryption

© Len Bass 2018 44

Moving to Zero Knowledge (ZK) proofs

• Alice generates two keys using techniques similar to Diffie Hellman. One she keeps secret and one she shares with Bob.

• Alice claims knowledge of some fact and encodes that knowledge using her secret key. She shares the encoding with Bob.

• Bob uses the shared key to verify the truth of the fact that Alice is claiming.


© Len Bass 2018 45

Security • It is not possible for Bob to derive Alice’s fact

from their communication without either factoring large numbers (an NP complete problem) or knowing Alice’s secret key.

• That is, Alice can convince Bob that she knows the fact in question without divulging the fact – zero knowledge proof.

• More importantly, there is an efficient way to generate zero knowledge proofs for any NP complete problem.


© Len Bass 2018 46

Quadradic Span Programs


contract Key Generator

Prover token

Verifier token

Prover – I have complied with all elements of the

contract under my control

Compliance Token

Compliance Token

Verifier –Prover has (has not) complied

© Len Bass 2018 47

Roles

• Prover (Alice in prior examples). • Verifier (Bob).


© Len Bass 2018 48

Generating prover/verifier tokens

• Input Boolean expression into the key generator. Output is two publicly available tokens– one for the prover, one for the verifier

• Tokens are based on secret choices. These choices must be kept secret.

contract Key Generator

Prover key

Verifier key

© Len Bass 2018 49

Proof/verification• Prover uses prover token to assert a particular string

is true for the Boolean expression.• Verifier uses verifier token to check prover’s assertion


Prover – I have complied with all elements of the

contract under my control

Compliance Token

Compliance Token

Verifier –Prover has (has not) complied

© Len Bass 2018 50

Cheating

• Prover cannot cheat because then their assertion cannot be verified.

• Verifier cannot cheat because verifier token is public, verifier algorithm is public, and assertion is public. Anyone can verify if assertion is true.


© Len Bass 2018 51

How do quadratic span programs work?

• Key idea – for any Boolean expression can generate a function that will determine whether an input satisfies that expression.• Function can work in linear time• Function does not find satisfying input, only verifies if

a given input satisfies• Function is derived by generating vectors that span

possible inputs and modeling each gate in Boolean circuit associated with Boolean expression as a vector.

• Two different functions – one for input wires (for proving) and one for internal wires (for verification)


© Len Bass 2018 52

Applying encryption - 1• Boolean satisfying problem is NP complete

so there exist Zero Knowledge proofs to determine validity. This is a part of creating a quadratic span program.

• A key generator creates the tokens based on choice of large primes. These primes must be kept secret but are only used in the generation phase.

52 |

© Len Bass 2018 53

Applying encryption - 2• Prover asserts particular string is true. Verifier uses

verifier token to verify but because quadratic span proofs and verification are zero knowledge, no information about the string is available to the Verifier (or anyone else).

© Len Bass 2018 54

Zerocash

• Zerocash (Zcash) is a crypto currency (like bitcoin) such that transactions can be verified without disclosing any information about the person initiating the transaction or the recipient of the transaction.


© Len Bass 2018 55

What is a transaction? • A transaction describes the transfer of

money from one account to another. It has the following items:• From account• To account• Amount of money to transfer from sender

to recipient• Verification that the from account has

sufficient funds• Verification that the person initiating the

transaction owns the from account


© Len Bass 2018 56

Pieces of zerocash• Setup – create public tokens• CreateAddress – open an account• Mint – create a new zerocash coin • Verify transaction – verify that a

reported transaction satisfies conditions

• Pour – spend coins• Receive – add spent coins to your

account


© Len Bass 2018 57

Zerocash properties

• Relies on the public tokens• Relies on an immutable public ledger• Keeps private (encrypted) all of the elements

of the transaction• Account identifiers – from and to• Owners of accounts• Amount of accounts• Amount of transaction


© Len Bass 2018 60

Observation

• All of the proposed uses of blockchainrequire agreements between multiple users and organizations

• Why has this not happened already without blockchain?

© Len Bass 2018 61

Blockchain qualities• Blockchains are architectural design choice

• Functionally, they are a kind of database and computational execution engine

• Using a blockchain impacts non-functional properties • (+) Integrity, Non-repudiation • (-) Modifiability• (+) Availability• (-) Confidentiality, Privacy

• Solution: Cryptography• (- write / + read) Latency• (-) Throughput

• Solutions: Increasing block size, Lightning network, Segregated witnessBlockchain | Xiwei (Sherry) Xu61 |

© Len Bass 2018 62

Blockchain vs. Shared Database


Blockchain Shared DatabaseOperations Insert (Append Only) Create/Read/Update/Delete

(CRUD)Replication Full replication on every peer • Master-slave

• Multi-masterConsensus • Majority of peers agree on

the outcome of transactions

• Tolerant of Byzantine Generals’ problem

• Distributed transactions (2 Phase Commit, Paxos)

• Synchronization

Validation Global rules enforced on the whole blockchain

Local integrity constraints

© Len Bass 2018 64

Cotton Supply Chain• Grown• Harvested• Sent to gin mill• Packaged in bales• Loaded on train• Shipped to port• Loaded on ship• Unloaded at destination port• Trucked to cloth manufacturer

• Finished cloth sent to clothing manufacturer

• …• You buy shirt

© Len Bass 2018 65

Problems with current supply chain practice

• Multiple organizations• Lack of transparency• International currency exchange• Quality control• …

© Len Bass 2018 66

Blockchains in a supply chain

• Public blockchain• Transactions are transparent• Currency exchange can be built into

transactions• Every step is recorded publicly• No central control

© Len Bass 2018 67

Why now?• Every organization has to agree on details of using

blockchain• Previously the overhead of getting agreement and

software products was too high for organizations involved

• Vendors offering integrated products to support whole process• Open source blockchain software• Use of public blockchain platforms

© Len Bass 2018 68

Business Process Models• CMU MSE project• Input description of

business process in BPMN

• Output code that executes business process on Hyperledger

• Allows easy transition from existing business models to blockchain

© Len Bass 2018 69

• Blockchains are heavily hyped• Variants for different contexts• Blockchains are a distributed data

ledger (database)• Blockchains are being tested in a

variety of domains

Summary


understanding blockchains - carnegie mellon … › asset_files › presentation › ...• some...

Documents