An incomplete comparison of cryptosystems

and the consequences for distributed applications

Max Kaye

http://xk.io

Oct 2014

Looking At

• Bitcoin
• Ethereum
• Meta-coins
• Augmented Bitcoin

Bitcoin

Apps

• money

Bitcoin

Blockchain

Basic platform for decentralised ordering

• distributed non-controversial ordering
• authenticated (somewhat)
• validated (optional in general)

Bitcoin

Programmable

User designed scripts & functions

• Limited operations
• Runs in a virtual machine
• Low cost, sometimes free

Bitcoin

Scalability

Performance when under load (users) or aged

• Size - grows with transactions and time
• Single chain
• Global requirements - grows with size and users
  • everyone knows everything
• Over all - Average (after block size hard-fork)

Bitcoin

Authenticated

There is proof data is allowed to be included

• Proof of work
• Rate limiting (via PoW)
• Requires valid data structure
• Aids SPV

Bitcoin

Public Concensus

Everyone knows when consensus breaks

• Mutually incompatible forks
  • easily detected
• Provides confidence, security

Bitcoin

Existence => Validity

If a transaction exists, then it is valid

• Only valid transactions allowed into chain
• Allows validity testing through existence testing
• Enables functional SPV, trustless mobile clients

Bitcoin

Detectable Existence

Easy and efficient way to check for transactions (and other things) trustlessly

• Need to search the whole blockchain
• Incompatible with SPV

Bitcoin

Ethereum

Apps:

• Anything (well, most things)
• Everything?

Ethereum

Blockchain

• Yes, Ethereum has one
• Microchains?

Ethereum

Programmability

• Turing Complete
• Compulsory Fee
• Dapps not created equal

Ethereum

Dapp limitations

Non-standard crypto (I.E. no dedicated operations) is required to be run inside the VM which is expensive and slow.

This means it is unlikely non-standard crypto will ever be used.

Ethereum can run anything,
but will never run everything.

Scalability

• Microchains
  • Allows for future expansion
  • Can allow raw data to be stored off chain till needed
• Single chain (currently -- microchains allow for later expansion)
• Computational burden may hinder dapps

Ethereum

Authenticated

• Like Bitcoin - PoW, etc

Ethereum

Public Consensus

• Like Bitcoin, yes

Ethereum

Existence => Validity

• Yes, data struct is authenticated, like Bitcoin

Ethereum

Detectable Existence

• ½  (sort of)

• Account balances can be looked up
• Cannot disprove a tx took place
• Cannot prove all txs associated with an account

Ethereum

I could be wrong on these if things have changed recently.

Metacoins

Apps

• Arbitrary local asset ledger
• 'distributed' exchange
• Money

Metacoins are:

• Hosted on other blockchains
• Usually involved in arbitrary asset issuance, management, and trading
• E.G. Mastercoin, Counterparty, Open Assets (coloured coins)

Metacoins cont.

• Transactions are embedded in host transactions
• Probably requires full validation of host chain
• Currently requires full validation of metacoin ledger

Metacoins

Metacoins

Metacoins

Blockchain

• Hosted on another blockchain
• Have to fit within host's validation rules

Metacoins

Programmable

• Not currently
• Possible
  • Dubious utility

Metacoins

Scalability

• Strictly worse than host chain currently
• All the regular problems and more
• On the whole: Bad

Metacoins

Authenticated

• Not at all
• Host chain used like notice board

Metacoins

Public Concensus

• Undetectable

Metacoins

Existence => Validity

• Validity not assured

Metacoins

Detectable Existence

• None currently, but possible

Metacoins

Augmented Bitcoin

Apps

• Anything
• Everything

Note: Ethereum can be augmented in the same way

Augmentations

• Sidechains
• Ultimate Blockchain Compression

Augmented Bitcoin

Blockchain

• Similar to Bitcoin
• Sidechains
  • Less secure than main chain

Aug. Bitcoin

Programmable

• Create arbitrary networks
• Practically limitless

Aug. Bitcoin

Scalability

• Medium-High scalability
• Can move coins between chains
• Miners have to validate any mined chains
• Half parallel-isation

Aug. Bitcoin

Authenticated

• Yes, like Bitcoin
• Sidechains authenticated in the same way

Aug. Bitcoin

Public Consensus

• Yes, like Bitcoin

Aug. Bitcoin

Existence => Validity

• Yes, like Bitcoin

Aug. Bitcoin

Detectable Existence

• Yes, through ultimate blockchain compression
• Merged mined chain holds the unspent outputs by address
  • Not a sidechain: no 1:1 peg or coin interaction

Aug. Bitcoin

Applications & Suitability

Voting

Simple:

• Only need to cast vote publically
• Essentially need just a notice board
• Any blockchain
• Metacoin

Complex:

• Transferable, live voting
• Need to validate votes and transfers
• Need to process zero conf and revocation
• Ethereum

Distributed Exchange

• Lots of weird crypto operations for SPV
  • Expensive if scripted in a VM
  • Better to use dedicated chain
• On a dedicated chain only users wanting to trade with that currency execute the code
  • Means it can be free or near-free
• Sidechain or dedicated network

Custom Assets + Exchange

Shares

• rarely transferred
• long term (high security desired)
• Metacoin

Reward Points

• Often transferred, short term
• Small, low security transactions
• Mobile clients
• Ethereum

Thanks

Questions?

Max Kaye, m@xk.io