Intro to Bitcoin Research or Why Bitcoin is a full employment act - - PowerPoint PPT Presentation

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Feb 22, 2024 416 likes •752 views

Intro to Bitcoin Research or Why Bitcoin is a full employment act for security engineers Joseph Bonneau CITP, Princeton Thanks to Andrew Miller, Arvind Narayanan, Jeremy Clark, Joshua Kroll, Ed Felten Part I: Bitcoin in 6 easy steps

SLIDE 1

Intro to Bitcoin Research

Joseph Bonneau CITP, Princeton

“Why Bitcoin is a full employment act for security engineers”

Thanks to Andrew Miller, Arvind Narayanan, Jeremy Clark, Joshua Kroll, Ed Felten

SLIDE 2

Part I: Bitcoin in 6 easy steps

SLIDE 3

Double spending: why ecash is hard

BANK Alice Bob SignA(Transfer X to B) Charlie SignA(Transfer X to C) SignZ(Transfer X to A) Redeem X? Redeem X?

SLIDE 4

Step 1: Make the bank a global log

SignA(Transfer X to C) ... SignA(Transfer X to B) ... SignA(Transfer X to C)

(the block chain)

SignatureBANK SignatureBANK SignatureBANK SignatureBANK

SLIDE 5

Step 2: Participants vote on blocks

SignatureA SignatureB SignatureC ... SignatureA SignatureB SignatureC ... SignatureA SignatureB SignatureD ...

SLIDE 6

Step 3: A random user picks

N-2 N-1 SignA(Transfer X to C)

SignatureB SignatureA

SignatureC

N C

SLIDE 7

Step 4: Resolve conflicts by forking

SignA(Transfer X to B)

SignatureB SignatureA

SignA(Transfer X to C)

SignatureC SignatureD SignatureE

SLIDE 8

Step 5: Incentivise correct blocks

SignatureB SignatureA SignatureC SignatureD SignatureE

Mint(X, A) Mint(X, B) Mint(X, D) Mint(X, E) Mint(X, C)

SLIDE 9

Step 6: Choose by hash power!

Mint(X, A) Mint(X, B) Mint(X, C) SHA-256(BlockN-1, n) = 0x00000000000000003f89... SHA-256(BlockN-1, n) = 0x00000000000000008c71... Mining difficulty Mining difficulty

SLIDE 10

Preventing double spending

SignA(Transfer X to B) SignA(Transfer X to C) SignA(Transfer X to B)

Longest chain wins

SLIDE 11

Transaction confirmation (~6 blocks)

SLIDE 12

Bitcoin is transaction-based

IN: scriptSig ... scriptSig ... OUT: scriptPub A, 5.9 ... ... IN: scriptSig A OUT: scriptPubB, 5.0 scriptPubA, 0.9 IN: scriptSig A scriptSig A OUT: scriptPubC, 10.0 IN: scriptSig ... OUT: scriptPubA, 9.2 ...

SLIDE 13

Part II: Mining & Consensus

SLIDE 14

51% attacks

Goldfinger Attack?

SLIDE 15

Checkpointing

Bitcoin is not fully decentralized

SLIDE 16

Selfish mining

Observation: for 0.33 < x < 0.5, a fraction x of selfish miners can earn greater than a fraction x of rewards [Eyal, Sirer 2013]

Attempt to fork here Try again here Putative fork Putative fork Succesful fork!

SLIDE 17

Mining difficulty

bitcoinwisdom.com

SLIDE 18

Difficulty adjustment

bitcoinwisdom.com 10 minutes 2 weeks

SLIDE 19

Mining rewards

Brian Warner

SLIDE 20

Total network capacity

264 hashes per block (every 10 minutes!)
275 hashes in 2013

○ In exchange for ~US$250M

SLIDE 21

Bitcoin mining hardware

SLIDE 22

Why would anybody mine bitcoins?

Chilkoot pass, Klondike 1898

SLIDE 23

Mining pools

SLIDE 24

Part III: Bitcoin as a currency

SLIDE 25

Why does Bitcoin have value?

Consensus

Consensus in state (blockchain)
Consensus in payment
Consensus in rules

[Kroll, Felten 2013]

SLIDE 26

Price during 2013

SLIDE 27

Black Markets

Silk Road: US$14M in Revenue in 2012 [Christin 2012]

SLIDE 28

Capital controls

SLIDE 29

E-commerce

SLIDE 30

Bitcoin exchanges

Around half of all exchanges have collapsed [Moore, Christin 2012]

SLIDE 31

Geographic distribution of nodes (as of Dec 2013) getaddr.bitnodes.io - 2013 Addy Yeow

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