Blockchain Boot Camp

Prof. Kirk W. Cameron

ADH for Research and Engagement
Virginia Tech
Computer Science
What this Boot Camp is not…
• A comprehensive course on Blockchain, crypto, finance, algorithms,…
• A guide to “how to make money from cryptocurrency”
• An endorsement of any particular cryptocurrency, company,
technology related to blockchain
• An endorsement of any particular politics, government, lifestyle
associated with cryptocurrency, blockchain, macro or micro
economics, etc.
• A place for you to raise money for your blockchain startup
What this Boot Camp is…
• (Mostly) Technical discussion of the breadth and potential for
blockchain tech
• An intro to Blockchains
• Coverage of important systems/C++ constructs
• Exposure to local industry experts and emergent technologies
• A place to link up with others interested in blockchain
• An encouragement for you to learn more on your own, with friends,
at Virginia Tech, and beyond
• And some exciting news...
You should be able to…
• Understand the importance of Blockchain technology
• Understand how transactions are processed and validated
• Comprehend basic cryptographic concepts relevant to blockchain
technologies
• Discuss the breadth of use-cases of the blockchain
• Learn where and how to participate in blockchain development
activities
• Understand how to use EOSIO to create your own blockchain
applications
What we assume about your background…
• Many students with background/coursework/experience in computing
(mostly CS/ECE)
• back-end development (Linux, Python, C++)
• front-end development (JavaScript, NodeJS)
• BUT, some folks from many other disciplines
• Industrial, BIT, Finance, Aerospace, Biomedical
• Math, MIT, ME, Physics, Stats
• And some professionals from Region 2 (New River Valley)
• Welcome, part of GO Virginia grant to Virginia Tech!
• Some time set aside for mingling
• Great ideas come from everywhere!
• Chat during breakfast, coffee, lunch
• Chance to recruit folks to work with you
Boot Camp Agenda (Jan 18, 2020)
• 8:30 a.m. – 9:00 a.m. Breakfast
• 9:00 a.m. – 9:30 a.m Welcome from Prof. Cameron (and Dan Larimer)
• 9:30 a.m. – 10:00 a.m. Intro to Blockchain
• 10:00 a.m. – 10:30 a.m. COFFEE BREAK
• 10:30 a.m. – 12:00 a.m. C++ and WASM Intro (Prof. Godmar Back)
• 12:00 a.m. – 12:30 p.m. LUNCH
• 12:30 p.m. – 2:00 p.m. EOSIO Intro (Dr. ”Bucky” Kittenger)
• 2:00 p.m. – 2:15 p.m. BREAK
• 2:15 p.m. – 3:15 p.m. Blockchain DAPP / Web App Development (Jeff)
• 3:15 p.m. – 3:30 p.m. Closing and Networking
A special announcement
Dan Larimer, CTO Block.One
Notes on Challenge
Intro to Blockchain
Skillset needed for Blockchain Development
1. High performance computing 7. Game theory
2. Computer performance 8. Economics
engineering 9. Governance
3. Systems programming 10. Political Science
4. Networking P2P, asynchronous 11. Law
5. Cryptography
6. Databases
Skillset needed for Blockchain Development
1. High performance computing 7. Game theory
2. Computer performance 8. Economics
engineering 9. Governance
3. Systems programming 10. Political Science
4. Networking P2P, asynchronous 11. Law
5. Cryptography
6. Databases

Collaboration is in your future: 1/3 + 1/3 + 1/3

Some caveats before we go further…
• This is an intro from a distributed systems person.
• I have my expertise. I have my biases. Deeper details to come.
• I have a room full of experts across the other areas.
• Target audience skill set balkanized:
• Blockchain, crypto, systems, none of these, etc.
• There are (or will be) semester-long courses on these topics.
• Goal here is coverage of blockchain basics.
Why blockchain?

“Everything you read

on the Internet is
TRUE!”
-Abraham Lincoln
April 12, 1864
Why blockchain?

“Everything you read

on the Internet is
FALSE!”
-Abraham Lincoln
April 12, 1864
Why blockchain?

“Everything you read

on the Internet is
FALSE!”
-Abraham Lincoln
April 17, 1864

In a world of digital (or virtual) “documents”, how do we detect forgeries?

Who cares?
Who cares?

100,000.00
What is a blockchain?

…a consensus-supported, ledger of
cryptographically signed statements that are
recorded in an agreed-upon order (in a
deterministic way). ARGH!
5 Key Developments in Blockchain
• Emergence of Bitcoin
• Separation from Bitcoin
• Smart Contracts
• Proof of Stake
• Scaling blockchain tech

Source: “A brief history of Blockchain Technology,” by Bernard Marr, Forbes. (16 Feb 2018)
Emergence of Bitcoin (Dev1)
• Bitcoin: A Peer to Peer Electronic Cash System by Satoshi Nakamoto
• Describes a purely decentralized currency (2008)
• Potentially transformative and disruptive technology
• Release of Bitcoin to open source community (2009)
• Cryptocurrency is the first “killer app” for blockchain tech
• Ecosystem begins to explode (miners, traders, merchants, consumers…)
• “Blockchain is to Bitcoin, what the Internet is to email. A big
electronic system, on top of which you build applications.”
• Sally Davies, FT Technology Reporter
• Blockchain ≠ Bitcoin
Separation from Bitcoin (Dev2)
• Blockchain can be used beyond cryptocurrency
• A decentralized ledger permanently recording transactions between
parties
• No need for third party authentication (Efficiency! Lower cost!)
• People start to ask, how can blockchain help me?
• Supply chains, healthcare, insurance, transportation, voting,
contracts, …
What is blockchain?
• Hashing
• Block
• Block chain
• Distributed block chain
• …and a dash of crypto
What is hashing?
• A hash is a fingerprint of some input data.
• Can be used to retrieve data _and_ verify that data hasn’t changed.

• A hash function is any function that can be used to map data of

arbitrary size to data of a fixed size.

• SHA = Secure Hashing Algorithm

• SHA256 takes arbitrary data maps to 256 bits (displays as HEX)
• Produces irreversible and unique hashes (used in crypto)
• Compare resulting hash of data rather than comparing original data

Want more? Crypto courses: CS 4264, MATH 4175 + 4176, ECE 5580
256-bit hashing
Digital fingerprint of data. Deterministic. Many to 256 mapping.

Source: https://anders.com/blockchain/ See also: https://www.gizillion.org by Scott Stornetta

What is a block?
• Elements of a block
• Block number: 1
• Nonce: 72608
• Data: <empty>
• Using SHA256 results in:
• HASH: xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx
• What if we know the block number and the data is fixed.
• And we know we want HASH to have 4 leading zeros.
• HASH: 0000xxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx
• Can we find the Nonce to complete the block? YES!
• [i.e., can we ALTER the data and still produce a valid HASH?]

Here, x is a hexadecimal value from 1 to f.

What is the Nonce?
• NONCE = Number used only once
• Nonce is number added to a hashed block that when rehashed meets
difficulty level restrictions of the TARGET HASH.
• Nonce is the number that blockchain miners are searching for.

• TARGET HASH = Number that a hashed block header must be less

than or equal to in order for a new block to be awarded. Can be
adjusted to match desired difficulty level (leading zeros).
 Mining the Nonce
Extend hash idea to block. #+Nonce+dataèhash.

Modify any of (#+Nonce+data) invalidates (breaks) block.

Target hash requires 4 zeros. Zerosèdifficulty.
Takes a lot of “work” to MINE the Nonce.
What is a block in a blockchain?
• A block is a group of transactions
in chronological order
• Each block is made of a Block
Header and a “Block Body.”
• Every block has, as its data, the
hash of the previous block.
• Note: In our examples, a “signed
block” has 4 leading zeros.

First block in chain is called “genesis” block. No previous block.

What is a blockchain?

Can I modify the transaction records in this blockchain? YES, but…

What is a blockchain?
• Each block knows hash of
previous block.
• A linked list of blocks using hash
pointers.
• Signed hash here has 4 leading
zeros.

What happens if I change last block?

What happens if I change an earlier block?
What if I re-mine the last block? Earlier block?
What does it mean to be immutable?
Distributed Blockchain
• How to alter the previous chain?
• Modify the transaction data in the Peer A
block header
• Re-mine the Nonce to get a hash
with 4 zeros
• Do the same for each succeeding Peer B
block (sequentially)
• Distributed Blockchain
• Each PEER has a complete copy of Peer C
the blockchain
Distributed Blockchain
• How to alter a single copy of the chain?
• Modify the transaction data in the block header
• Re-mine the Nonce to get a hash with 4 zeros
• Do the same for each succeeding block (sequentially)
• Distributed Blockchain
• Each PEER has a complete copy of the blockchain
• Example:
• Peers A thru C have exact copy of blockchain
• Peer B changes DATA and re-mines Nonce to get valid 4-leading-zeros hash
• However, Peer B’s hashes don’t match Peers A and C’s hashes. Simple check.
 What happens if I change last block?
What happens if I change an earlier block?
What if I re-mine the last block? Earlier block?
What does it mean to be immutable?
How long does it take to find a mutation?
Immutable
What happens next? Consensus.
• Peers have different “correct” copies of the blockchain.
• But, only one copy has been modified (e.g., change transaction)
• All other peers with copies can vote on which version is correct
• If 51% or more agree on a change to the blockchain, all must update
• Or be left out, unable to participate until agreeing on mods
• Two key CONSENSUS algorithms we will cover
• Proof of Work
• Proof of Stake
 Token ledger example What kind of data does the blockchain track? Example: ledger.

What happens if I change last block?

What happens if I change an earlier block?
What if I re-mine the last block? Earlier block?
What does it mean to be immutable?
How long does it take to find a mutation?

How do we know Darcy has $25.00?

Transaction ledger example

How do we know Darcy has $25.00?

Trace provenance back to origin.
Immutable history of transactions.

How long does it take to find a mutation?

Proof of Work
• Requires users to perform some form of work to participate
• Must be difficult to produce, easy to verify (asymmetry)
• Example: Bitcoin miner nodes compete to solve a puzzle (block)
• First correct solution awarded with a batch of coins
• Earlier example, guess the nonce correctly, fastest
• Difficulty increases proportional to total compute power on network
• Makes for a competitive system with rewards; optimizes verify step
• 51% of compute resources affect acceptance/denial of change in blockchain

Think carrots.
Smart Contracts (Dev3)
• Next Killer App for Blockchain
• Exchange money, property or services without centralized authority
• If-then clauses tied to exchange
• Real estate transaction: You place deposit, I send key by date.
• If no key by date, refund you. If key by date, deposit to me, key to you.
• Blockchain community “judges” the contract validity through consensus.
• Transaction recorded permanently on the blockchain.
Consensus Alternatives?
• Proof of Work Merits
• Widely used
• Robust, working solution for a decade
• “Harder” to hack with scale
• Proof of Work Limitations
• Mining is wasteful
• Tragedy of the commons (when bounties disappear, incentives decrease)
• Smaller network (or oligarchy via collusion) can lead to manipulation
Proof of Stake (Dev4)
• Serves same purpose as Proof of Work
• Adding to blockchain and verification of new blocks by p2p network
• Creator of new blocks deterministic (linked to wealth or stake)
• Chosen from pool of users with stake
• “Miners” take transaction fee for producing blocks
• Penalty is possible loss of stake for bad actors
• 51% threat based on “supply” rather than computing power

Think sticks.
Proof of Stake (Dev4)
• Merits
• Greener and cheaper form of consensus than Proof of Work
• Seen as promising alternative to Proof of work
• “Harder” to hack at scale
• Can be faster to reach consensus
• Limitations
• Not as widespread adoption as Proof of Work (but growing)
• Can potentially be manipulated with collusion
• Extension
• Delegated proof of stake (DPOS)
Transaction ledger example

How do we know who posted transaction?

What is Blockchain?
…a consensus-supported, ledger of cryptographically signed statements that
are recorded in an agreed-upon order (in a deterministic way). ARGH!

• Ledger: Blocks of transaction history (deterministic order)

• Consensus: Proof of Work/Stake
• Cryptographically signed: Public/Private Key Pairs
What’s Next?
• Time to start making some blockchain apps!
A Gentleman’s Guide to Crypto
• Cryptography: Process of communicating securely in an insecure
environment.
• Convert message you want to send to a CIPHER text (gibberish without secret
to unlock)

• Symmetric cryptography
• Implies sender and receiver are in control of the cipher
• Example: Julius Caesar shifted message sent by # letters in alphabet.
• (encrypt: shift right by 1) Kirk Cameron --> ljsl dbnfspo (decrypt shift left by 1)
• Challenges: 1) Can be easy to decrypt; 2) How to tell others the cipher.
Public Key Cryptography
• One asymmetric solution
• RECEIVER: Generates a KEY PAIR (Public + Private)
• Sends Public Key to SENDER
• SENDER: Encrypt message using RECEIVER's Public Key
• Sends encrypted message to RECEIVER
• RECEIVER: Decrypts encrypted message using private key

• Private keys cannot be derived from public keys.

Generate public-private key (RSA-like)
• PICK two prime numbers: P=3, Q=11
CALCULATE N=P*Q=3x11=33
CALCULATE Z=(P-1)*(Q-1)=(3-1)*(11-1)=20
• CHOOSE a prime number K such that K is co-prime to Z
(prime K is coprime to Z if Z is not divisible by K and K is prime)
Pick K=7 (from list of 3, 7, 11, 13, 17, 19)
N=33 and K=7 are Server's PUBLIC KEY
• SOLVE (K*J) MOD Z = 1 for J
(7*J) MOD 20 = (21) MOD 20 = 1; if J=3
N=33 and J=3 are Server's PRIVATE KEY
ECRYPT, SEND, DECRYPT
• ENCRYPT + DECRYPT
ENCRYPT "14”
Use Public Key (K,N)=(7,33) to encrypt
<encoded messg>^K MOD N = 14^7 MOD 33 ==> 20 --> encrypted messg
Send encrypted transmission ”20”
DECRYPT “20”
Use Private Key (J,N)=(3,33) to decrypt
<encrypted messg>^J MOD N = 20^3 MOD 33 ==> 14 --> decrypted messg
Generate public-private key (RSA-like)
• PICK two prime numbers: P=2, Q=7
CALCULATE N=P*Q=2*7=14
CALCULATE Z=(P-1)*(Q-1)=(2-1)*(7-1)=6
• CHOOSE a prime number K such that K is co-prime to Z
(prime K is coprime to Z if Z is not divisible by K and K is prime)
Pick K=5 (from list of 3,5)
N=14 and K=5 are PUBLIC KEY
• SOLVE (K*J) MOD Z = 1 for J
(5*J) MOD 6 = 25 MOD 6 = 1; if J=11
N=14 and J=11 are PRIVATE KEY (J=5 works, but then PUBLIC=PRIVATE)
[J=5,11,17,23,29,35,41,47 all work if J<50]
ECRYPT, SEND, DECRYPT
• ENCRYPT + DECRYPT
ENCRYPT "2”
Use Public Key (K,N)=(5,14) to encrypt
<encoded messg>^K MOD N = 2^5 MOD 14 ==> 4 --> encrypted messg
Send encrypted transmission "4”
DECRYPT "4”
Use Private Key (J,N)=(11,14) to decrypt
<encrypted messg>^J MOD N = 4^11 MOD 14 ==> 2 --> decrypted messg
Normal message exchange
• Alice wants to echange a key with Bob.
• Alice has a pair of keys (kpubA and kprivA)
• Alice sends her public key kpubA to Bob
• Bob picks random key (k), uses F(kpubA,k) to encrypt and send to
Alice
• Alice decrypts F(kpubA,k) using her private key kprivA to find k
Man-in-the-middle attack
• MITM Monitors all transmissions between Alice and Bob
• MITM has a pair of keys (kpubM and kprivM)
• MITM intercepts initial message from Alice to Bob containing public key kpubA
• MITM sends public key kpubM to Bob (pretending to be Alice)
• Bob picks random key (k), uses F(kpubM,k) to encrypt and send to MITM (fake
Alice)
• MITM decrypts F(kpubM,k) using private key kprivM to find k
• MITM uses random key (k), creates F(kpubA,k) to encrypt and send to Alice
• Alice thinks her and Bob are communicating securely with common key k known
only to them
• MITM can now decrypt all messages between Alice and Bob
Stopping MITM Attack
• Trusted 3rd party confirms (for Bob) he has received Alice's public key (e.g., TLS)
• Secure cite anyone can access to READ ONLY anyone else's public key
Bob can simply compare kpubM to Alice's public key to reveal MITM
OR Alice can generate key (k) herself, and double encrypt with Bob's public key
Bob uses his private key to decrypt outer encryption F(kpubB,F(kprivA,k))
Bob then uses Alice's public key to decrypt inner encryption to find k

See the connection to Blockchain yet?

Cryptographically Signed Transactions
Applying YOUR private key to encryption is called "Signing" or a "Digital Signature”

Anything encrypted by YOUR PUBLIC key can only be opened by YOUR private key
Keeps data secured and only viewable by you (or using your private key)

Anything encrypted by YOUR PRIVATE key can only be opened by YOUR public key
Thus proving you locked it in the first place
Transaction ledger example

How to add only valid transactions?

Public-Private Key Pairs

Creation is fast and cheap. Anonymity.

Electronic signature/verification (Gen Pair)
Step 1 for signing a transaction.
Encrypt Message with Private Key
Message + private key à message sig (signed)
Decrypt with Public Key (Verify Sender)
Whoever signed this had access to private key of this public key holder.

Validity of transaction checked with public key.

Signature improperly modified

Validity of transaction checked with public key.

Encrypting Transactions (w/ private)
Verifying with public key
Whoever signed this had access to private key of this public key holder.

Validity of transaction checked with public key and transaction data.

Identifying invalid (modified) transaction

Validity of transaction checked with public key and transaction data.

 Validity of block transaction checked with hash and data.

Cryptographically Signed Transaction

Validity of individual transaction checked with public key and transaction data.
 Validity of block transaction checked with hash and data.

Modified Transaction on Blockchain

Validity of individual transaction checked with public key and transaction data.
 Validity of block transaction checked with hash and data.

Remined/modified Transaction

Validity of individual transaction checked with public key and transaction data.