An Overview of Blockchain Technologies and Uses Andy Dolan - - PowerPoint PPT Presentation

An Overview of Blockchain Technologies and Uses

Andy Dolan • Computer Science Department • Colorado State University

Outline

• An Introduction to Bitcoin
• The Core Features: What is a Blockchain?
• Distributed Consensus

Image: Jay’s Brick Blog

The Killer App: Bitcoin

Putting blockchain on the map

Introduction

• What is it?: A cryptocurrency
• What is it not?: Blockchain
• How does it work?: Blockchain
• Price per 1 at time of writing:
• $10,217.90

Advantages

• No central authority

○ Self-governed ○ Community driven/maintained

• “Anonymous”

○ In quotes for a reason, as we’ll see later

• Public

○ Auditing ○ Validation

Disadvantages

• No central authority

○ No real “ground truth” regulators

• “Anonymous”

○ Illegal payments made easier

• Massive computational requirements

○ Trading power for distributed trust

A First Transaction

A high level view of how Bitcoin functions

A First Transaction (1/4)

• Alice want to buy coffee from Bob for 1
• We have a few goals

○ Transfer from Alice to Bob the ownership of 1 bitcoin ○ Everyone should agree that this transaction took place and is valid ○ Everyone should be able to audit and validate this transaction

A First Transaction (2/4)

• Alice creates the transaction and

signs it with her private key

○ Now Bob can verify that the transaction was initiated/created by Alice

• Alice also “locks” the funds with Bob’s

public key

○ Now only Bob’s private key can “unlock” them

A First Transaction (3/4)

• Alice tells everyone about this transaction

○ Including Bob, of course

• Peers on the Bitcoin network listen for new

transactions

• Special peers “race” to add this transaction to

a new block

○ “Miners”

• First miner to do it broadcasts the new block
• The block propagates just as the transaction

did

A First Transaction (4/4)

• Everyone now validates the block

○ Appending it to their local copy of the chain

• Bob can now assert that he owns the 1
• ○

He is backed up by the rest of the network ○ Furthermore, everyone can validate that the coin came from Alice ○ And so on

First Transaction Review

• Through this example, we saw:

○ Cryptographic integrity ○ Eventual consistency of distributed data ■ Consensus ○ Immutability (subtle, but present)

• Bitcoin is not Blockchain, but is built
• n Blockchain

Questions so far?

The Core Features

What is a blockchain?

In a Sentence

A blockchain is a distributed data structure that takes the form of an immutable, append-only ledger, maintained by a network of peers that use cryptography and consensus to ensure consistency.

Core Feature Overview

• Immutability
• Ledger

○ Full ○ Append-only

• Distributed

○ Consensus

• Verifiable

Transactions

• “Transaction:” misleading name
• Not necessarily a transfer of some
• wnership
• Just individual instances of some action or

data

• Even further, just log entries

Blocks

• Collections of transactions

○ Can be one, can be one million

• Easily summarized

○ Hash for each and every block ○ Kept with other metadata in block header

• The transactions are really what’s

summarized

• Why process transactions in batches

anyway?

Format of Blocks

• A block is organized for easy verification

○ Merkle tree

• Root hash acts as a summary of the block
• Each block refers to the previous block’s

hash

• Auditors can verify that history hasn’t

changed

Merkle Trees

• Easy verification
• Simple binary search to find where

something invalid is

• This is an optimization

Merkle Tree Example

Why a Chain?

Hash(data) Hash(data) Hash(data)

The Chain - Imaginary View

True Block Format

• Root of Merkle tree: summary of

transactions

• Block header contains reference to parent

(previous) block’s root hash

○ This is just a linked list

• Block header is included in Merkle tree

The Chain - Real View

Why a Chain?

• What happens when we change any

part of any transaction?

• What do validators need to check, at

a minimum?

• What is required to change an old

transaction?

○ Not too hard to do locally, but what about when we consider...

Questions so far?

Distributed Operation

Consensus to provide consistency.

Factors to Consider

• Asynchronous
• Potentially lots of participants

○ IE, lots of transactions

• Imperative to verify everything
• What if there are bad actors?
• Operational efficiency
• Ensure immutability

Creating Blocks

• Unconfirmed transaction pool

○ Not yet “in the chain”

• “Miners” try to create a block:

○ When the time is right ○ When the number of transactions is right ○ Immediately

• Everyone validates a created block

○ And the transactions therein

Distributed Consensus

• No “master copy”
• All peers need to agree
• Transactions may be broadcast constantly
• Blocks too, perhaps less frequently
• How can the network keep up?
• Will peers lie?

Consensus Algorithms

• Incentivize block creation

○ Often tied to the creation/distribution of new tokens

• Keep miners honest

○ Tolerance against misbehavior ○ Byzantine Generals

• Create chain security

○ Present barriers to entry for attacks

• Many different approaches

Proof of Work

• “Solve” a difficult puzzle/math problem

○ This is a little misleading

• Find a solution first, and get a reward
• What if you lie?

○ Validators will throw out your solution ○ You will waste your time and resources

• Can scale with participation
• Large energy costs

The 51% Attack

• Key vulnerability/attack against PoW
• Requirements: own 51% of the network

○ A majority of the computational power

• Feasible?

Proof of Stake

• Back up a vote with some amount of

currency

• Give “investors” more control over chain
• More energy efficient
• Promotes chain security

○ Attacks become extremely expensive

• Chance for monopoly?

○ Defenses

Others

• Practical Byzantine Fault Tolerance
• Proof of Burn
• Proof of Elapsed Time
• Semi-centralized alternatives
• Fully centralized alternatives

Next Time...

• Introduction to smart contracts
• More use cases
• More security implications

Thank you