Cryptocurrencies bitcoin, blockchain & beyond Roger Wattenhofer - - PowerPoint PPT Presentation

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Cryptocurrencies bitcoin, blockchain & beyond Roger Wattenhofer - - PowerPoint PPT Presentation

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Cryptocurrencies bitcoin, blockchain & beyond Roger Wattenhofer ETH Zurich Distributed Computing Group Cryptocurrencies What is Bitcoin? = + + Technology The Bank of Bitcoin The Bank of Bitcoin User Balance A 2 B 5 C 8

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SLIDE 1

ETH Zurich – Distributed Computing Group

Roger Wattenhofer

Cryptocurrencies

bitcoin, blockchain & beyond

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SLIDE 2
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SLIDE 3

Cryptocurrencies

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SLIDE 4
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SLIDE 5

What is Bitcoin?

+ + =

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SLIDE 6

Technology

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SLIDE 7

The Bank of Bitcoin

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SLIDE 8

The Bank of Bitcoin

User Balance A 2 B 5 C 8

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SLIDE 9

The Bank of Bitcoin

User Balance A 2 B 5 C 8

TX B − → A

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The Bank of Bitcoin

TX B − → A

User Balance A 2 4 B 5 3 C 8

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SLIDE 11

Opening an Account in Bitcoin

Private Key Public Key Address

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SLIDE 12

Transferring Bitcoins

TX: 41b221

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Transferring Bitcoins

TX: 41b221 B

0.1

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Transferring Bitcoins

TX: 41b221 B

0.1

A

4.798

A

4.899

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SLIDE 15

Transferring Bitcoins

TX: 41b221 B

0.1

A

4.798

A

4.899

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SLIDE 16

Transferring Bitcoins

TX: 41b221 B

0.1

A

4.798

A

4.899

Inputs Outputs

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Transferring Bitcoins

TX: 41b221 B

0.1

A

4.798

A

4.899

Inputs Outputs Fee

0.001

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SLIDE 18

Transferring Bitcoins

TX: 41b221 B

0.1

A

4.798

A

4.899

Inputs Outputs Fee

0.001

  • Prev. TX:

a1a53743

4.899

C

... 1

| Outputs

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SLIDE 19

Distributing the Bank

User Balance A 2 B 5 C 8

TX

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Distributing the Bank

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Distributing the Bank

TX

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Distributing the Bank

TX

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Distributing the Bank

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Distributing the Bank

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Let’s Buy a Snack

[Bamert, Decker, Elsen, W, Welten, 2013]

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Doublespending

TX A

1 1

Inputs

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Doublespending

TX A

1 1

Inputs TX’

1

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Doublespending

TX A

1 1

Inputs TX’

1

✓

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Transaction Conflicts

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Transaction Conflicts

TX TX

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Transaction Conflicts

TX TX

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Transaction Conflicts

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Resolving Conflicts

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Resolving Conflicts

Green!

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Resolving Conflicts

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How to Choose a Leader?

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Proof-of-Work

TX TX TX TX

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Proof-of-Work

Block TX TX TX TX

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Proof-of-Work

Block H(Previous Block) TX TX TX TX

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Proof-of-Work

Block H(Previous Block) TX TX TX TX

I H(Block) → fd2e2055f117bfa261b5a6c7e11df367. . .

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Proof-of-Work

Block H(Previous Block) TX TX TX TX Nonce

I H(Block|0) → 094d66aa7c844a9dbb516a41259b5877. . .

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Proof-of-Work

Block H(Previous Block) TX TX TX TX Nonce

I H(Block|0) → 094d66aa7c844a9dbb516a41259b5877. . . I H(Block|1) → f2496854af8bf989171587a9259f634f. . .

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Proof-of-Work

Block H(Previous Block) TX TX TX TX Nonce

I H(Block|0) → 094d66aa7c844a9dbb516a41259b5877. . . I H(Block|1) → f2496854af8bf989171587a9259f634f. . . I H(Block|2) → aec87c0ca2e5eb3f23111092f1089ada. . .

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Proof-of-Work

Block H(Previous Block) TX TX TX TX Nonce

I H(Block|0) → 094d66aa7c844a9dbb516a41259b5877. . . I H(Block|1) → f2496854af8bf989171587a9259f634f. . . I H(Block|2) → aec87c0ca2e5eb3f23111092f1089ada. . . I H(Block|3) → 777f75b2a8ecfdc8026c236fc1d2ffa0. . .

. . .

I H(Block|961127) → 0000014823419622d4c133672a7d657e. . .

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SLIDE 45

The Blockchain

Time

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The Blockchain

Time

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Is Bitcoin stable?

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The Blockchain

Time

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The Blockchain

Time

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Propagation Speed

[Decker, W, 2013] http://bitcoinstats.com

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Propagation Speed

[Decker, W, 2013] http://bitcoinstats.com

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Blockchain Forks

1.69% [Decker, W, 2013]

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Aside: Mining Evolution

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Aside: Mining Evolution

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Aside: Mining Evolution

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500 MW

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Summary

TX Green! Block H(Previous Block) TX TX TX TX Nonce Time
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Stories

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How to Lose 500M

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Addressing Transaction Malleability: MtGox has detected unusual activity on its Bitcoin wallets and performed investigations during the past weeks.

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The MtGox Incident

I July 2010: First trade on MtGox I May 2011: Transaction malleability identified as low priority issue I February 7, 2014: MtGox halts withdrawals I February 10, 2014: MtGox announces loss of 850,000 bitcoins (620

millio USD) and cites transaction malleability as root cause

I February 28, 2014: MtGox files for bankruptcy I March 7 2014: MtGox finds 200,000 bitcoins I August 2015: MtGox CEO is arrested

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Signatures

61 af bb 4d e9 f8 b8 74 86 1e

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Signatures

00 00 61 af bb 4d e9 f8 b8 74 86 1e There are multiple ways to serialize a signature:

I Multiple push operations (1 byte, 2 byte, 4 byte) I Non-canonical DER encodings I Padding I . . .

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Transaction Malleability Attack

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Transaction Malleability Attack

TX TX
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Transaction Malleability Attack

TX TX TX
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Transaction Malleability Attack

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Transaction Malleability Attack

Red! TX?

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Transaction Malleability Attack

Refund

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Incident Timeline

[Decker, W, 2014]

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Incident Timeline

386 BTC [Decker, W, 2014]

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Is Bitcoin Secure?

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Securing Your Bitcoins

[Bamert, Decker, W, 2013]

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Does Bitcoin Scale?

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The Bitcoin Ecosystem is Growing

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Scalability Limits

I Disk space: < 500 transactions per second

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Scalability Limits

I Disk space: < 500 transactions per second I Processing power: < 200 transactions per second

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Scalability Limits

I Disk space: < 500 transactions per second I Processing power: < 200 transactions per second I Network bandwidth: < 100 transactions per second

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Scalability Limits

I Disk space: < 500 transactions per second I Processing power: < 200 transactions per second I Network bandwidth: < 100 transactions per second I Artificial 1MB limit: < 3 transactions per second

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Scalability Limits

I Disk space: < 500 transactions per second I Processing power: < 200 transactions per second I Network bandwidth: < 100 transactions per second I Artificial 1MB limit: < 3 transactions per second

Today:

I Bitcoin: 1 transaction per second I Credit Cards: > 10, 000 transactions per second

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Payment Network

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Payment Network

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Payment Network

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Micropayment Channels

5

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Micropayment Channels

5 5

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Micropayment Channels

5 5 T=100 5

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Micropayment Channels

5 5 T=100 5

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Micropayment Channels

5 5 T=100 5

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Micropayment Channels

5 5 T=100 5 5

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Micropayment Channels

5 5 T=100 5 5 4 1

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Micropayment Channels

5 5 T=100 5 5 4 1 3 2

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Micropayment Channels

5 5 T=100 5 5 4 1 3 2

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Duplex Micropayment Channels

Setup Invalidation Tree Micropayment Channels

T = 100 T = 100 T = 100 T = 99 T = 100 T = 100 T = 99 T = 100 T = 99

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Summary

Red! TX? Refund T = 100 T = 100 T = 100 T = 99 T = 100 T = 100 T = 99 T = 100 T = 99
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Economy

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BTC in USD

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Inflation

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Fungibility

=

?

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Improving Bitcoin?

saver miner payer payee relay

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What is Money?

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What is Money?

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Summary

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Thank You!

Questions & Comments?

www.disco.ethz.ch

Thanks to my co-author Christian Decker