Blockchain

Distributed Ledger Technology & Smart Contracts

Doctoral Researcher @ Institute for Internet Security
- Head of Blockchain Research Lab
Consultant @ Styrascosoft GbR
Testcontainers Maintainer and Open Source Enthusiast
Oracle Groundbreaker Ambassador
GitKraken Ambassador
Organizer Software Crafting Meetup Ruhr

Kevin Wittek @kiview

Historic Context

From Time-Sharing Systems to the World Computer

Ken Thompson [seated] types as Dennis Ritchie looks on in 1972, shortly after they and their Bell Labs colleagues invented Unix. - The Strange Birth and Long Life of Unix, https://spectrum.ieee.org/tech-history/cyberspace/the-strange-birth-and-long-life-of-unix

Trust

"We have proposed a system for electronic transaction without relying on trust."
Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008

Trust Architectures

Reflections on Trusting Trust

"To what extent should one trust a statement that a program is free of Trojan horses? Perhaps It is more Important to trust the people who wrote the software." - Ken Thompson, Turing Award Lecture, 1984

https://dl.acm.org/doi/10.1145/358198.358210

History of Utility Computing

1964: Multics Time-Sharing OS - MIT, Bell Labs...
- Vision of modelling computing resources after telephone and electrical utilities
1969 - 1989: ARPANET, Internet / World Wide Web
- 1974: Project Xanadu & Docuvers
2006: Cloud Computing, AWS EC2
2009: Bitcoin network - Decentralized state machine
2015: Ethereum network - Turing complete virtual machine & decentralized state machine

Blockchain

The Invention of Bitcoin and the Rise of Cryptocurrencies

Pre Bitcoin era: Hashcash

Invented by Adam Back in 1997
- http://www.hashcash.org/hashcash.pdf
System for throttling abuse of unmetered internet resources
- Example: E-Mail spam
Client needs to solve CPU intensive puzzle before a valid connections is established
- Try to find counter value, so that SHA1(header) starts with 5 leading zeros

ver:bits:date:resource:ext:rand:counter

X-Hashcash: 1:20:1303030600:adam@cypherspace.org::McMybZIhxKXu57jd:ckvi

Bitcoin: A Peer-to-Peer Electronic Cash System

2008: Paper published by Satoshi Nakamoto on "The Cryptography Mailing List"
January 2009: Genesis block was mined

By Ladislav Mecir - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=83020772

Bitcoin as a Cryptocurrency

https://www.coindesk.com/price/bitcoin

List of Cryptocurrencies

https://www.coinlore.com/all_coins

Technical Properties

Decentralized p2p network
Public Distributed Ledger (DLT) implemented as a blockchain
Proof-of-Work based "consensus"
- Based on hashcash's PoW algorithm
- Not BFT, but similar resilience properties
- Longest chain wins
- 51% attack possible (also happened in the past)
Incentivized by dynamic transaction fees

Byzantine Generals Problem

Makrakis, Georgios Michail. (2018). Evaluating the performance of Distributed Ledger - Blockchain technologies in IoT environment. 10.13140/RG.2.2.23024.10248.

Transactions

Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008

Multiple Inputs/Outpus

Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008

BTC Blockchain Data Structure

Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008

Merkle Tree

By Azaghal - Own work, CC0, https://commons.wikimedia.org/w/index.php?curid=18157888

BTC Actual Data Structure

By Matthäus Wander - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=26816937

Proof of Work

Hash block header
Guess/Increment nonce until hash < target is found
Bitcoin: SHA256(SHA256(Block_Header))
- Protect against length-extension attacks, SHA-256d
- No protection against birthday attacks!
(Extra nonce as part of merkle tree, but ignored in this example)

block_version = "01000000"
hash_prev_block = "81cd02ab7e569e8bcd9317e2fe99f2de44d49ab2b8851ba4a308000000000000"
hash_merkle_root = "e320b6c2fffc8d750423db8b1eb942ae710e951ed797f7affc8892b0f1fc122b"
time = "c7f5d74d"
target = "f2b9441a" # in bits format
nonce = get_next_nonce()

while calc_block_hash(block_version \
  + hash_prev_block \
  + hash_merkle_root \
  + time \
  + target \
  + nonce) < target:
  nonce = get_next_nonce()

The Five Pillars of Open Blockchains

Open
Borderless
Neutral
Censorship-Resistant
Public

Types of Blockchain Networks

https://medium.com/coinmonks/public-vs-private-blockchain-in-a-nutshell-c9fe284fa39f

Consensus Algorithms

Smart Contracts

When Code is Law?

Code Is Law

On Liberty in Cyberspace

"[...] We should interrogate the architecture of cyberspace as we interrogate the code of Congress.

Unless we do, or unless we learn how, the relevance of our constitutional tradition will fade. The importance of our commitment to fundamental values, through a self-consciously enacted constitution, will fade. We will miss the threat that this age presents to the liberties and values that we have inherited. The law of cyberspace will be how cyberspace codes it, but we will have lost our role in setting that law." - Lawrence Lessig, https://harvardmagazine.com/2000/01/code-is-law-html

Joi Ito [CC BY (https://creativecommons.org/licenses/by/2.0)]

Origin of Smart Contracts

Concept and term first mentioned in 1997 paper by Nick Szabo
- Formalizing and Securing Relationships on Public Networks (https://firstmonday.org/ojs/index.php/fm/article/view/548)
Derived article "The Idea of Smart Contracts", 1997
- "A canonical real-life example, which we might consider to be the primitive ancestor of smart contracts, is the humble vending machine."
- Unlocking cryptographic keys for accessing properties (e.g. cars) as another example.

Ethereum

First described in whitepaper by Vitalik Butekin in 2013
- Current version: https://github.com/ethereum/wiki/wiki/White-Paper
Motivated by lack of scripting capabilities in Bitcoin
Yellow paper defining Ethereum Virtual Machine written by Gavin Wood in 2014
- Solidity as first programming language for EVM SCs
- Executes EVM byte code
- Turing complete
- Different implementations in different languages exist
Infrastructure for building DApps