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The Blockchain land:
Is there Consensus over Consensus?
Vasily Suvorov, VP Technology Strategy
Dec 6, 2016
www.luxoft.com
Blockchain Confusion – the Hype
Media creates public perception
2
Decentralized
Immutable
Anonymous
Trustle...
www.luxoft.com 3
www.luxoft.com
An honest view on Blockchain Challenges
Hype makes customers cynical
No platform consolidation yet
Platform...
www.luxoft.com 5
Can we talk about blockchain
without the Hype?
www.luxoft.com
What is Distributed Ledger Technology? (AKA Blockchain)
Decentralized Storage Technology that:
 Connects p...
www.luxoft.com
Blockchain 101
7
TRANSACTIONS
SEQUENCE
UNIQUE
FINGERPRINT
MAGIC NUMBER
TRANSACTIONS
SEQUENCE
UNIQUE
FINGERP...
www.luxoft.com
TRANSACTIONS
SEQUENCE
UNIQUE
FINGERPRINT
MAGIC NUMBER
TRANSACTIONS
SEQUENCE
UNIQUE
FINGERPRINT
MAGIC NUMBER...
www.luxoft.com
Application-Specific Parts of Blockchain
9
DATA/STATE SYNCHRONIZATION
TRANSACTIONS
SEQUENCE
UNIQUE
FINGERPR...
www.luxoft.com
Platform Selection and Business Mapping Framework (4C Model*)
10
CONTENT
CONSENSUS
COMMUNICATIONS
CONTRACT ...
www.luxoft.com
4C Model applied to Technology Selection (Example)
11
P2P TCP
Proof of Work / Permissionless
Chain of Block...
www.luxoft.com 12
Consensus is the most fundamental part of the DLT/Blockchain tech
and yet
poorly understood
www.luxoft.com 13
www.luxoft.com
Consensus – Technical Meaning
14
Consensus Reached
state state
www.luxoft.com
Consensus – Technical Meaning (contd.)
15
State Replication Techniques for Distributed Systems
Impossible t...
www.luxoft.com
Consensus – Computer Science to the Rescue
16
Lots of prior art (from ca 1978)
And new research
Paxos (1998...
www.luxoft.com
Consensus techniques – What do we know?
17
Node Scalability
Performance
< 100 tx/s
High
Latency
> 10K tx/s
...
www.luxoft.com
Revisiting Performance – PoC in domestic interbank payments
18
Japanese Blockchain Study Group
• Actual dai...
www.luxoft.com
Tendermint BFT
(source: http://tendermint.com/intro/consensus-overview)
• Validators are permissioned/curat...
www.luxoft.com
Chain of Ledgers on Curated Network
Key Characteristics
• BFT up to 20% of nodes
• 2 phase process
• Multip...
www.luxoft.com
Evolution of permissionless Blockchain Performance
Removing the need for PoW through Game Theory
Main idea:...
www.luxoft.com
Public DLT where all nodes are ‘miners’
Enabling economic ecosystem for devices
• No Blocks and No Chain – ...
www.luxoft.com
Next Gen, Decentralized EDI Technology
Making Smart Contracts Enforceable and Data Private
• No Single Bloc...
www.luxoft.com
 Blockchain Tech (or DLT) is not magical!
 Many useful applications are possible but
need proper design t...
www.luxoft.com
Thank You!
&
Questions?
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Structured approach to blockchain and consensus techniques

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An overview of history and available research on various consensus techniques, blockchain and DLTs design. Bitcoin, Tendemint, Ripple, Ethereum, IOTA and Corda were used as examples.
These slides were originally presented at CryptoValley meetup on Dec 6, 2016 in Zug.

Publicada em: Software
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Structured approach to blockchain and consensus techniques

  1. 1. www.luxoft.com The Blockchain land: Is there Consensus over Consensus? Vasily Suvorov, VP Technology Strategy Dec 6, 2016
  2. 2. www.luxoft.com Blockchain Confusion – the Hype Media creates public perception 2 Decentralized Immutable Anonymous Trustless Public Instant Free Eliminates Middleman Reduces Risks New Internet
  3. 3. www.luxoft.com 3
  4. 4. www.luxoft.com An honest view on Blockchain Challenges Hype makes customers cynical No platform consolidation yet Platforms are often immature Lack of balanced advice: - Appropriateness of blockchain - Platform selection - Application design Currently @investment stage 4 THE BLOCKCHAIN ‘HYPE-CYCLE’
  5. 5. www.luxoft.com 5 Can we talk about blockchain without the Hype?
  6. 6. www.luxoft.com What is Distributed Ledger Technology? (AKA Blockchain) Decentralized Storage Technology that:  Connects participants in a business ecosystem without a central entity or intermediary  Maintains real-time, add-only, unchangeable ledger and history of transactions  Automates business rules execution Made possible by a unique combination of Peer-to-peer communications, Strong encryption, Distributed consensus and Smart contracts
  7. 7. www.luxoft.com Blockchain 101 7 TRANSACTIONS SEQUENCE UNIQUE FINGERPRINT MAGIC NUMBER TRANSACTIONS SEQUENCE UNIQUE FINGERPRINT MAGIC NUMBER TRANSACTIONS SEQUENCE UNIQUE FINGERPRINT MAGIC NUMBER
  8. 8. www.luxoft.com TRANSACTIONS SEQUENCE UNIQUE FINGERPRINT MAGIC NUMBER TRANSACTIONS SEQUENCE UNIQUE FINGERPRINT MAGIC NUMBER TRANSACTIONS SEQUENCE UNIQUE FINGERPRINT MAGIC NUMBER The key to Confusion - Consensus 8 <send Bob 10BTC> <Bob has +10 BTC>
  9. 9. www.luxoft.com Application-Specific Parts of Blockchain 9 DATA/STATE SYNCHRONIZATION TRANSACTIONS SEQUENCE UNIQUE FINGERPRINT MAGIC NUMBER CONTENT RE-USABLE DIGITAL SIGNATURES TRANSACTION VALIDATION CONSENSUS SPECIFIC
  10. 10. www.luxoft.com Platform Selection and Business Mapping Framework (4C Model*) 10 CONTENT CONSENSUS COMMUNICATIONS CONTRACT How can we animate the immutable record so that events trigger actions? How can we agree the immutable record of transactions? What kind of assets will be in the transactions? Which entities create and propagate transactions? SHARED LEDGER SHARED LEDGER APPLICATIONS CONSENUSCOMPUTER (*Source: Consult Hyperion 2015)
  11. 11. www.luxoft.com 4C Model applied to Technology Selection (Example) 11 P2P TCP Proof of Work / Permissionless Chain of Blocks (UTXO, Merkle tree) Simple Scripts (Opcodes) gRPC (bi-directional streaming) PBFT (SIEVE) / NoOP / PKI Ledger (World State, Blocks) Chaincode (any language, VM)CONTRACTS CONTENT COMMUNICATIONS CONSENSUS DISTRIBUTED LEDGER TECHNOLOGY
  12. 12. www.luxoft.com 12 Consensus is the most fundamental part of the DLT/Blockchain tech and yet poorly understood
  13. 13. www.luxoft.com 13
  14. 14. www.luxoft.com Consensus – Technical Meaning 14 Consensus Reached state state
  15. 15. www.luxoft.com Consensus – Technical Meaning (contd.) 15 State Replication Techniques for Distributed Systems Impossible to guarantee consensus using a deterministic algorithm in asynchronous systems even if only one node is faulty Consensus is required to guarantee consistency among different replicas (Fischer, M. J.; Lynch, N. A.; Paterson, M. S. (1985).
  16. 16. www.luxoft.com Consensus – Computer Science to the Rescue 16 Lots of prior art (from ca 1978) And new research Paxos (1998) Raft (2013 ) PBFT (1999) SIEVE (2016) BASE (2003) CBASE (2004) UpRight (2009) Tangaroa (2016) Zyzzyva (2007) Ripple (2014) BFT-SMaRt (2013) XFT(2015) Stellar(2015) BlockDAG(2015) Tangle (2016) Tezos (2014) Casper(2015) Rex (2014) Kadena (2016)
  17. 17. www.luxoft.com Consensus techniques – What do we know? 17 Node Scalability Performance < 100 tx/s High Latency > 10K tx/s Network Latency < 20 nodes > 1000 nodes XFT Parallel BFT Optimistic BFT Hybrid BFT Randomized BFT Stellar BlockDAG (inclusive BC) Bitcoin-NG GHOST PoW Bitcoin POW (Source: The Quest for Scalable Blockchain Fabric: Proof-of-Work vs. BFT Replication, IBM Research 2015) Research is Needed! Kadena/ScalableBFT Tendermint
  18. 18. www.luxoft.com Revisiting Performance – PoC in domestic interbank payments 18 Japanese Blockchain Study Group • Actual daily volume of interbank payments in 2012 was about 1.35 billion transactions • Requires at least 216 TX/s • 1500 TX/s Achieved ( few seconds latency) • bitFlyer developed a PBFT like consensus (Source: Report on Practical Experiment of Blockchain Technology in Japanese Domestic Interbank Payment Operation, 30/11/16) • PoC scope • Simple Payment Operations • Same Day Credit Transfer • (customer & Interbank) • Post-Dated Credit Transfers • Reports on transfers • Clearing and Settlement out of Scope Max 144 Banks
  19. 19. www.luxoft.com Tendermint BFT (source: http://tendermint.com/intro/consensus-overview) • Validators are permissioned/curated • Mostly Asynchronous* • < 1/3 Byzantine Nodes • >1000 TX/s (14K Tx/s @ 4Val, 1Fault) • Generic State Replication Engine • TSMP API for developing apps (* timeouts for proposal, skip validator) Used by: • Monax (Eris Industries) Example of a BFT Consensus
  20. 20. www.luxoft.com Chain of Ledgers on Curated Network Key Characteristics • BFT up to 20% of nodes • 2 phase process • Multiple Rounds Voting • Ledger publishing • Heuristics (timers, etc) • Time to vote is adjusted • 5 sec avg Ledger Conf Time • Network is Curated • Trusted Validators Sets(UNL) • Quorum is maintained • Network partitions • Faulty Nodes Pruning • Payment fee spiking • Respond to load • Consesus process is logged Final 50% 60% 70% 80% Candidate Ripple Consensus Overview
  21. 21. www.luxoft.com Evolution of permissionless Blockchain Performance Removing the need for PoW through Game Theory Main idea: shift economic burden to an Attacker • Only Validators with a stake can vote • All stakes make a rewards ‘fund’ • Trust only the current set of ‘bonded’ Validators • Clients need to keep track of the list • Consensus Process is logged • Bad behavior is punished (slashing) • Censorship / Cartel* • Non-Convergence • Reversion • Invalidity Casper SC Pick a Val. Reward/Penalty Finality Bet. Pay Stake Chain with most money-at-loss Casper Proof of Stake (PoS)
  22. 22. www.luxoft.com Public DLT where all nodes are ‘miners’ Enabling economic ecosystem for devices • No Blocks and No Chain – Tangle! • History is stored in Directional Acyclical Graph (DAG) • Designed for Micropayments and Data Transfer/Integrity • Consensus Process is probabilistic • Liveliness is ensured via Game Theory • To send own transactions a node must ‘mine’ • Select two Tips* and approve • Run PoW & Broadcast result • Bad behavior is punished • Non-active nodes are dropped • ‘Lazy’ miners’ transactions are ignored* Tip Tip (*Note: Assuming Markov Chain Monte Carlo ‘walker’ algorithm is used) Tangle – the DLT for IoT
  23. 23. www.luxoft.com Next Gen, Decentralized EDI Technology Making Smart Contracts Enforceable and Data Private • No Single Blockchain or DLT • DLT is maintained by Nodes, Flow(s) manage relationships between nodes • DLTs can be connected, if deals are related • Notary & Oracle Services are defined • Sophisticated Identity Services • Smart Contracts iterate over state • Business process (Flow) updates a state • State transition (input > output) is logged • Multiple Fin related classes are pre-defined • Business prose (PDF) is attached • Consensus is pluggable • Notaries can be validating or not • Notaries can run a BFT or CFT (Raft) protocol • Notaries can be regional or global (Network Map) Party A Party B Notary Oracle Flow Flow Flow Flow Corda – network of DLTs
  24. 24. www.luxoft.com  Blockchain Tech (or DLT) is not magical!  Many useful applications are possible but need proper design tradeoffs  Further research and co-operation is needed to avoid fail fast, fail forever outcome  Don’t re-invent the wheel – build on existing knowledge and contribute back! The Future is decentralized but It’s still a work in progress Summary
  25. 25. www.luxoft.com Thank You! & Questions?

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