BLOCKCHAIN
AN INTRODUCTION
CHRIS PRICE
@100pxls
TRADITIONAL BANKING
BITCOIN
BLOCKCHAIN
SCRIPT
LIGHTNING NETWORKS
TRADITIONAL BANKING
REAL-TIME GROSS SETTLEMENT
Blatter
Putin
x
| Blatter |
|
|---|---|
| 20 M | |
|
|
Putin |
|---|---|
| 200 B | |
x
| Blatter |
|
|---|---|
| 20 M | |
| 20 M + x |
|
|
Putin |
|---|---|
| 200 B | |
| 200 B - x |
| Blatter | Central Bank |
|---|---|
| 20 M | 0 |
| 20 M + x | -x |
| Central Bank | Putin |
|---|---|
| 0 | 200 B |
| x | 200 B - x |
| Blatter | Central Bank |
|---|---|
| 20 M | 0 |
| 20 M + x | -x |
| Central Bank | Putin |
|---|---|
| 0 | 200 B |
| x | 200 B - x |
| Bank A | Bank B |
|---|---|
| 0 | 0 |
| x | -x |
DEFERRED NET SETTLEMENT
| Blatter | Central Bank |
|---|---|
| 20 M | 0 |
| 20 M + x | -x |
| Central Bank | Putin |
|---|---|
| 0 | 200 B |
| x | 200 B - x |
| Bank A | Bank B |
|---|---|
| 0 | 0 |
| Blatter | Central Bank |
|---|---|
| 20 M | 0 |
| 20 M + x | -x |
| 20M + x + y |
-x + -y |
| Central Bank | Putin |
|---|---|
| 0 | 200 B |
| x | 200 B - x |
| x + y | 200 B - x - y |
| Bank A | Bank B |
|---|---|
| 0 | 0 |
| Blatter | Central Bank |
|---|---|
| 20 M | 0 |
| 20 M + x | -x |
| 20M + x + y |
-x + -y |
| Central Bank | Putin |
|---|---|
| 0 | 200 B |
| x | 200 B - x |
| x + y | 200 B - x - y |
| Bank A | Bank B |
|---|---|
| 0 | 0 |
| x + y | -x + -y |
COUNTERPARTY RISK
| Blatter | Central Bank |
|---|---|
| 20 M | 0 |
| 20 M + x | -x |
| 20M + x + y |
-x + -y |
| Central Bank | Putin |
|---|---|
| 0 | 200 B |
| x | 200 B - x |
| x + y | 200 B - x - y |
| Bank A Settlement |
Bank B Settlement | Bank A Reserve | Bank B Reserve |
|---|---|---|---|
| 0 | 0 | ||
| x + y | -x + -y |
| Blatter | Central Bank |
|---|---|
| 20 M | 0 |
| 20 M + x | -x |
| 20M + x + y |
-x + -y |
| Central Bank | Putin |
|---|---|
| 0 | 200 B |
| x | 200 B - x |
| x + y | 200 B - x - y |
| Bank A Settlement |
Bank B Settlement | Bank A Reserve | Bank B Reserve |
|---|---|---|---|
| 0 | 0 | ? | > x + y |
| x + y | -x + -y | ? | > x + y |
CUSTOMERS TRUST THEIR BANKS TO ACCURATELY RECORD TRANSACTIONS
But the banks don't trust each other...
ULTIMATELY THE BANKS DELEGATE TRUST TO THE CENTRAL BANK
A highly centralised system!
BITCOIN
- Hippie bug! CC BY-SA 2.0
BITCOIN
DESCRIBE INDIVIDUAL TRANSACTIONS
RECORD THE HISTORY OF TRANSACTIONS
BLOCKCHAIN
- Own work CC BY-SA 3.0
MINING
FORKS
When in doubt, always pick the hardest path
CONSENSUS
Proof of work exists only to enable consensus
DESCRIBE INDIVIDUAL TRANSACTIONS
RECORD THE HISTORY OF TRANSACTIONS
SCRIPT
MINERS CREATE COINS
By including a transaction with zero* inputs and one or more outputs in the mined block
*Not strictly true
USERS TRANSFER COINS
Using transactions with one or more inputs, each referencing a corresponding unspent transaction output (UTXO), and one or more outputs
NO CONCEPT OF ACCOUNT BALANCE
A user's balance is the sum of all UTXOs for which they control the private key
OP_DUP
OP_HASH160
<address/pubKeyHash>
OP_EQUALVERIFY
OP_CHECKSIG
<sig>
<pubKey>PAY-TO-PUBKEYHASH
Output (ScriptPubKey)
Input (ScriptSig)
<sig>
<pubKey>
OP_DUP
OP_HASH160
<address/pubKeyHash>
OP_EQUALVERIFY
OP_CHECKSIG
<EMPTY>Script
Stack
<pubKey>
OP_DUP
OP_HASH160
<address/pubKeyHash>
OP_EQUALVERIFY
OP_CHECKSIG
<sig>Script
Stack
OP_DUP
OP_HASH160
<address/pubKeyHash>
OP_EQUALVERIFY
OP_CHECKSIG
<pubKey>
<sig>Script
Stack
OP_HASH160
<address/pubKeyHash>
OP_EQUALVERIFY
OP_CHECKSIG
<pubKey>
<pubKey>
<sig>Script
Stack
<address/pubKeyHash>
OP_EQUALVERIFY
OP_CHECKSIG
<hashedPubKey>
<pubKey>
<sig>Script
Stack
OP_EQUALVERIFY
OP_CHECKSIG
<address/pubKeyHash>
<hashedPubKey>
<pubKey>
<sig>Script
Stack
OP_CHECKSIG
<pubKey>
<sig>Script
Stack
<EMPTY>trueScript
Stack
SCRIPT ALLOWS SCRIPTING...
Ethereum is essentially script++
DESCRIBE INDIVIDUAL TRANSACTIONS
RECORD THE HISTORY OF TRANSACTIONS
BLOCK CAPACITY
Transaction verification speed
LIGHTNING NETWORKS
MICROPAYMENT CHANNELS
Putin 10 M
Blatter 0 M
30 days
10 M
2-of-2 Multisig
MICROPAYMENT CHANNELS
Putin 10 M
Blatter 0 M
30 days
Putin 4 M
Blatter 6 M
29 days
10 M
2-of-2 Multisig
MICROPAYMENT CHANNELS
Putin 5 M
Blatter 5 M
30 days
Putin 4 M
Blatter 6 M
29 days
10 M
2-of-2 Multisig
Putin 8 M
Blatter 2 M
28 days
MICROPAYMENT CHANNELS
Putin 5 M
Blatter 5 M
30 days
Putin 4 M
Blatter 6 M
29 days
10 M
2-of-2 Multisig
Putin 8 M
Blatter 2 M
28 days
Putin 0 M
Blatter 10 M
<no limit>
MAJORITY OF TRANSACTIONS OCCUR OFF-CHAIN
Look familiar?
DEFERRED NET SETTLEMENT
But without trust!
ADD HASHLOCKS
JUST A ROUTE OPTIMISATION PROBLEM
Ripple similar but requires offline-trust between connected parties
THE FUTURE ALWAYS LOOKS LIKE THE PAST
DON'T SKIP BITCOIN EN ROUTE TO BLOCKCHAIN
BLOCKCHAIN
AN INTRODUCTION
CHRIS PRICE
@100pxls
BLOCKCHAIN - AN INTRODUCTION
By Chris Price
