Slides for the talk given @ Blockchain Hackathon Moscow (Nov '16)

1. Blockchain Hackathon, Nov `16
Blockchain For Developers
Alexander Chepurnoy
(aka kushti)
@chepurnoy
IOHK Research

2. Background
● Nxt core developer
● smartcontract.com cofounder (left)
● Scorex since late 2014
● IOHK Research

3. The talk is about
● How a developer can view a blockchain system
● What are open problems in blockchains

4. Environment
● P2P network
● No central party
● Probabilistic broadcast

5. P2P network
● Each node has own view
● The goal is to have replicated subset of it across the
network
● In the presence of Byzantine adversaries!
● (so only honest nodes agree on the state)
● (and only eventually)

6. A transaction
● Atomic state modifier
● Authenticated

7. Minimal State
● Can answer the question „whether a transaction is valid
and so applicable“
● apply(min_state, tx): (MinimalState | Error)
● apply(apply(min_state, tx), tx) is always Error
● In Bitcoin UTXO set

8. Minimal State
● Transaction application is deterministic
● There's some initial (genesis) state hardcoded
● By applying the same sequence of transactions to the
genesis state, two honest nodes got the same minimal
state
● Thus we need for a guarantee every pair of honest nodes
is eventually applying the same sequence of transactions!

9. Blockchain
● Transactions packed into blocks
● Blocks are linked

10. Blockchain

11. Block Generator Election
● random party
● sybil-resistant
● efficient(min communication)
solution
● each party has limited queries to random oracle
● random oracle answers „yes“ with adjustable probability
● replace random oracle with a hash function

12. Bitcoin's Proof-of-Work
● hash(blockheader) < target
● target T = 1 / difficulty

13. GKL Model
● „The Bitcoin Backbone Protocol:Analysis and Applications“
by Garay / Kiayias / Leonardos
● slides: https://bitcoinschool.gr/slides/session2.pdf
Bitcoin consensus protocol properties:
● Common Prefix
● Chain Quality
● Chain Growth

14. Common Prefix
no matter the strategy of the adversary, the chains of two
honest parties will fork in the last k blocks with probability
exponentially decreasing with k

15. Chain Quality
any sequence of blocks in an honest party’s chain will
contain some number of honest blocks with overwhelming
probability

16. Chain Growth
honest party's chain grows with some minimal pace with
an overwhelming probability

17. Bitcoin
● digital cash
● transaction is a set of token transfers

18. Bitcoin: Transaction

19. Bitcoin Script
output: OP_DUP OP_HASH160 <pubKeyHash>
OP_EQUALVERIFY OP_CHECKSIG
input: <sig> <pubKey>

20. Bitcoin: UTXO set
● unspent outputs set
● enough to validate any transaction
● application is about removing outputs spent and add new
ones

21. Memory Pool
● contains unconfirmed transaction
● inconsistent across a network

22. Vault (Wallet)
● node-specific information
● e.g. transactions for selected pubkeys

23. Node view
(MinimalState, Blockchain, MemoryPool, Wallet)
(MinimalState, Blockchain) is eventually the same for all
the honest nodes

24. What app developer should know
● Rollbacks are possible!
● Transaction is always visible before inclusion
● Frontrunning / replay attacks
● Malleability

25. Modifications
● alternative consensus protocols (Proof-of-Stake etc)
● richer transactional models (NameCoin, Ethereum, ZCash)
● alternative log structures (Bitcoin-NG, GHOST,
TwinsChain)
● incentivization of certain activities (Permacoin, Rollerchain)

26. Scalability

27. Bitcoin's Troughput (TPS)
● 7 ??? no
● 2-3 in fact
● 1/600 in worse case
https://www.reddit.com/r/Bitcoin/comments/3cgft7/large
st_transaction_ever_mined_999657_kb_consumes/

28. Basic assumption
● It should be possible to run a fullnode on a commodity
hardware
● HDD
● 1-2 GB RAM
● 1 Mbps at most
● Ethereum lost
● Bitcoin is doing hard to hold the assumption

29. Better throughput
● Bitcoin-NG
● GHOST/SPECTRE

30. Blockchain Pruning

31. Rollerchain
● Chepurnoy, Larangeira, Ozhiganov
http://arxiv.org/abs/1603.07926
„Rollerchain, a Blockchain With Safely Pruneable Full
Blocks“

32. Rollerchain
● Only last n full blocks to be stored collectively
and n state snapshots
● Each miner stores k state snapshots

33. Rollerchain
● New node can download a historical snapshot
● Fullblocks not needed for mining could be thrown away
● Blockheaders are to be stored forever, so must be small

34. Unload the chain
● Move things off-chain
● Sidechains
● Avoid all the transactions execution(RsCoin)

35. Offchain
● Lightning Network
● Offchain contracts(SMC/SMP)

36. Smart Contracts
● Ethereum isn't scalable
● Hawk
● Enigma

37. Dark side of an open blockchain

38. Slowing down processing
● Bitcoin: CVE-2013-2293 (fetching outputs from hdd)
● Ethereum: most of recent attacks (fetching account states)

39. Asymmetric schemes
● Not neccessary to hold the whole state
● Full security guarantees
● Reyzin, Meshkov, Chepurnoy, Ivanov
„Improving Authenticated Dynamic Dictionaries, with
Applications to Cryptocurrencies“
https://eprint.iacr.org/2016/994

40. Asymmetric vs Symmetric

41. AVL+ trees vs Ethereum‘s tries

42. Rational Behaviour
● Why store blocks for years after processing?
● Why to validate blocks (in PoW)?
● Why to work on a single chain (in PoS)?

43. Validationless (SPV) mining
● Start to mine on a header
● Trust other nodes regarding transactions
● https://bitcoin.org/en/alert/2015-07-04-spv-mining - 6
blocks starting with an invalid one

44. If no block reward
Carlsten, Kalodner, Weinberg, Narayan
„On the Instability of Bitcoin Without the Block Reward“
http://randomwalker.info/publications/mining_CCS.pdf

45. Questions?
Twitter: @chepurnoy
Mail: kushti@protonmail.ch