Introduction to Blockchain

Introduction to Blockchain
Muhammad Moinur Rahman <moin@bofh.im>

Blockchain != Bitcoin/Cryptocurrency

Overview
●
Prologue: A chess-by-mail analogy
●
What problem does a blockchain solve?
●
How do they work?
– Hash chains
– Deciding what blocks are valid on the chain
– Deciding whether we have the current chain
●
Permissioned blockchains, proof of work, etc.
●
Wrapup
●
Handson on Blockstack

Warm-up: A chess game by mail
●
Alice sends Bob “1 e4”
●
Bob sends back “1 ... e5”
●
Alice sends Bob “2 Nf3”
●
...
●
Each of these messages is one move in the game
●
What’s necessary for them to be able to play the
game?

Agree on the state of the board
●
If they don’t agree on the state of the board,
they can’t play a game!
– Both know the starting positions of the board.
– Both know the sequence of messages so far.
– Those messages make up a transcript of the game.
– Thus, they can reconstruct the state of the board.
●
If we agree on history, we agree on the present
state of the world!

How blockchain plays?
●
We have some distributed system
●
We need to all agree on the state of some system
●
We all agree on the initial state of the system
●
A blockchain contains a history of individual transactions
●
Thus: We can all agree on the current state of the
system
●
A blockchain lets mutually-distrusting entities agree on
history… which lets them agree on the state of the
system now.

Why is this important?
●
Example: Bitcoin
●
Suppose I want to transfer 10 BTC to you.
●
You need to know whether my account has 10 BTC
in it.
●
For that, you need to know the current state of the
system.
●
Note: You need to know the current state. If you’re
looking at an old state of the system, I might be
paying you with money I’ve already spent!

What problem are addressed?
●
A blockchain lets us agree on the state of the system, even if we
don’t all trust each other!
●
Ultimate goal: We all need to agree on the state of some system.
– How much BTC in each account?
– Who owns which property?
– What’s the current state of my program?
●
We can all agree on that if we agree on history.
– Starting state + history => current state
●
We don’t want a single trusted arbiter of the state of the world.
– We want some level of decentralization—not a single point of failure or
compromise.

Trusted Arbiter
●
If we had a completely trusted arbiter, we wouldn’t
need a blockchain!
●
We could just define reality as whatever TA said it was.
●
For a payment system, imagine TA as the bank
– Bank provides the official sequence of transactions and
account balances
– When you want to spend your money, you send a message
to bank
– Bank permits transaction if you have money, and updates
account balances.

One trusted arbiter, then?
●
Single point of failure
– If the TA goes down for a week, the system stops
working!
●
Concentration of power
– “He who controls the past, controls the future”
– TA can censor transactions, impose new conditions
to get transactions included in history, etc.
●
Maybe there’s nobody we all trust

What does blockchain gives us?
●
Distributed system
●
We don’t all trust each other or any single entity
●
We want to agree on history
●
...so we can agree on the state of our system...
●
...so we can do something.
●
We get the functionality of a trusted arbiter …
without needing a trusted arbiter

How blockchain works?
●
A blockchain is a sequence of hash-chained records
– Once you’ve seen record N, you can’t change anything in the past.
●
Some procedure for adding blocks to blockchain
– Who gets to add blocks? How is it done?
●
Validity conditions for new blocks
– Are transactions valid? Are digital signatures correct? Etc.
– Enforced by consensus-–chains with invalid blocks won’t be accepted.
●
Some procedure for deciding between alternative candidate
blockchains.
– When Alice and Bob have different pictures of history, there’s some way
for them to eventually come to agreement about who is right.

Building Block:
Cryptographic hash functions
A cryptographic hash function:
– Takes any bitstring as an input* (Like a 10 MB file)
– Produces a fixed-length output (Typically 256 or 512
bits)
– Nobody can find collisions.
– Examples: SHA256, SHA512, SHA3-256, RIPEMD-
160, X11, Ethash, Cryptonite, Nist5
●
* Sometimes there’s a (really huge) maximum
input length.

Collision
●
Suppose I can find two different inputs X and Y
so that Hash(X) = Hash(Y)
●
That’s a collision.
●
For a cryptographic hash function to be any
good, it needs to be collision-resistant.
●
That just means it’s impossible in practice to
find colliding inputs.

Why is collision resistance useful?
●
If nobody can find X != Y such that Hash(X) == Hash(Y),
●
...then we can use hash(X) as a kind of message digest of X.
– Digital signatures actually sign hash(message) instead of message.
●
Nobody can change X without changing hash(X)
– If they could do that, they can find collisions for hash()
●
hash(X) also commits to X.
– Once I’ve seen hash(X), later, you can show me X, and I’ll know it’s
the value you committed to
– ...you can’t show me some other X*, because it won’t have the
same hash.

Building block: Hash chains
A hash chain is a sequence of records in which each
record contains the hash of the previous record in the
chain, and the hash of all the current record’s contents.
A sequence of records linked together; each record
contains the hash of the previous record.

What does Hash Chain gives us?
●
We’re using a cryptographic hash function like
SHA256.
●
That means nobody can find two inputs with the
same hash value.
●
...and that means that record N contains a
commitment to record N-1
●
...which contains a commitment to record N-2,
which contains a commitment to record N-3, and
so on.

Figure: Achange in one record in the hash chain propagates forward to change the hashes
in all future records.

Hash Chain vs Blockchain
●
Hash chains have the property that every record contains a
commitment to all previous records.
– If you change record N, this changes the final hashes of records
N+1, N+2, ...
●
Result: Once we all accept record N, we have locked in the
contents of record 1, 2, 3, ..., N-1 as well.
●
Blockchains use hash chains as a component
●
Hash chains are also useful in a lot of other contexts
– For example, a system with a trusted arbiter can use a hash chain
to limit the arbiter’s power—even the arbiter can’t change history.


Each block in the chain commits to
all previous blocks and transactions
Hash10
Hash10
Trans
11
H
Hash11
Nonce12
Trans
1
2
H
Hash12
Nonce13
Trans
1
3
H
..
.
H
..
.
Figure: Ablock chain containing three blocks, each containing the hash of
the previous block, and each containing a sequence of transactions and a
nonce.
The Blockchain

Building Block: Validity
conditions
What will the world accept as the next block?
●
We don’t have some trusted entity to decide what may be added to
block chain
●
...so we have to decide what blocks are valid.
●
Example: Bitcoin
– Signatures needed for moving BTC from an account
– Not allowed to leave a negative balance in an account
– Block must contain correct proof-of-work
●
A proposed additional block that doesn’t meet these conditions won’t
be accepted by the rest of the network.
●
Enforced by consensus

Forked Chains
●
Blockchains are used in distributed systems
●
It’s possible for different parties in the system to have a
disagreement
– There’s no trusted arbiter to decide who is right!
●
Any blockchain must deal with this issue somehow!
●
Suppose Alice and Bob no longer agree on the state of the
world
– (because they don’t agree on history)
●
How do they come to an agreement on who’s right?
– Several different techniques to resolve disagreements

Adding new blocks to the chain
●
Any blockchain system has to determine who can add
new blocks to the chain, and how it’s done.
●
Two main ideas we’ll discuss below
– Proof of work
– Permissioned blockchain
●
Also more ideas I’m not going to talk about
– Proof of stake
– Proof of storage
– Probably several more I’ve never heard of

Building Block: Proof of Work
●
I want you to do a big computation.
– I want you to prove you did it.
– I don't want to do much work checking the proof.
●
Why is this useful?
– Limits the rate of new blocks
– Makes attempts to add invalid blocks to the chain expensive
– Provides a clear way to decide between competing chains when
there is a disagreement—the one with the most work wins.
●
Note: Not all blockchains use proof of work

Hash-based proof of work
●
I give you challenge C and limit L = 2^220.
●
Ask you to find N such that
●
SHA256(C||N) < L
●
Expected work = 2^36
●
Each new N has prob 2^-36 of success
●
When you succeed, it only takes me one hash to
check.
●
This is more-or-less Adam Back's hashcash scheme

Hash
10
Nonce
11
Tran
s
1
1
H
Hash
11
Nonce
12
Tran
s
1
2
H
Hash
12
Nonce
13
Tran
s
1
3
H
..
.
H
..
.
Choose
this
value...
.
To make
this value
less than
L
Figure: Three blocks in a block chain. The nonce in the first block is chosen to force its hash
value (which appears in the second block) to be less than L.
Proofs of work in every block

Proofs of work solve some
problems...
 We can resolve disagreements.
 When chain forks, take fork with most work.
 When there’s a tie, keep working till one of the chains
has the most work.
 Discourage people trying to add invalid blocks to
chain.
 You spend money adding a block to chain...
 ...but if it’s not valid, nobody accepts it.
 Part of how Bitcoin’s very clever design of incentives
works.

...but introduce others
●
Expensive—lots of energy used do generate proofs
– Done by “miners” in Bitcoin
– Use special-purpose mining rigs optimized for doing proofs of work.
– Environmental impact—uses lots of power, accomplishing no useful
goal except keeping blockchain working
●
Slow—proof of work seems to put a limit on transaction
speed
– Even more when you consider need to resolve potential
disagreements
– Bitcoin rule of thumb is wait 6 blocks (about an hour) to be sure of
transaction

Permissioned blockchains
●
An alternative to proof-of-work
●
We have set of somewhat-trusted entities who can work
together to add records to the blockchain.
●
For example, we could have five trustees, and if any 3/5 vote in
favor of accepting a block on the chain, then the block is
added.
●
Validity condition for adding a block = 3/5 signatures
●
Resolution for conflicting chains = look for longest chain (aka
most votes)
– With 3/5 there shouldn’t be any forked chains—someone would have
to vote for two competing blocks!

Incentive design
●
The real genius in Bitcoin’s design is the way incentives are aligned
– Untrusted, self-interested miners keep the system working
– They have a big incentive to follow the protocol
– They have substantial capital invested in Bitcoin, so they also have an
– incentive to avoid any attack that would undermine their investment
– This all works because Bitcoin is all about moving money around, so it’s
easy to build payoffs into the protocol.
●
Other blockchains (especially permissioned ones) have to find
alternatives to incentives
– Not so obvious how to build a payoff into a protocol to store medical
records

Why do we trust trustees?
●
Existing business or legal arrangements?
●
Incentives for playing fair?
●
Reputation?
●
We have the “And then you go to jail”
problem....

“And then you go to jail”
●
It’s usually a bad idea to build crypto protocols that rely on
outside enforcement mechanisms
– Sending misbehaving users to jail
– Suing people who don’t follow the protocol
– Assuming that damage to someone’s reputation will convince
them to behave properly.
●
Lots of examples of these things not working
– Even if they do work, they tend to be slow
●
This is something any permissioned blockchain has to
solve

Wrapup 1: Blockchains let us
agree on history
●
We don’t have to trust each other
●
We don’t have to have a trusted third party
●
System is distributed
●
Agreeing on history => agreeing on state of
system

Wrapup 2: Blockchains and hash
chains
 The Nth record in the hash chain commits to all
previous records.
 Can’t change any previous record without making hash
chain invalid.
 A blockchain is a hash chain with some other stuff
added
●
Validity conditions
●
Way to resolve disagreements

Wrapup 3: Permissioned vs
Proof-of-work
●
Most blockchains in use now use proof-of-work
●
Many new proposals use permissioned
blockchains
– Some set of somewhat-trusted entities
●
There are other ways to do it
– Proof of storage
– Proof of stake
– Probably more I don’t know about

Questions
●
Reference
●
Introduction to Blockchain, John Kelsey

What is Blockchain?
●
A distributed Database
●
Decentralized

What is Blockchain? - Continued
●
Mainly list of records
●
Always growing

What is Blockchain? - Continued
●
Tamper proof and Revision proof
●
Open, permission less and public
●
Byzantine Fault Tolerant

How Blockchain Works?
●
A growing list of records called blocks
●
Each block contains
– A timestamp
– A link to previous block
●
Can be managed
– Publicly or autonomously
●
Peer-to-peer network
●
Distributed Time-stamping
– Privately

Uses of Blockchain
●
Recording of events
●
Medical Records
●
Identity Management
●
Transaction processing
●
Documenting
provenance
●
Financial Transactions
●
Marketplace
●
Smart Contracts
●
Digital Products
Marketing
●
Property Records
●
Voting
●
Cloud Storage

History of Blockchain
●
1991 – Stuart Haber & Scott Stornetta
●
1996 – Ross J. Anderson
●
1997 – Michael Doyle
●
1998 – Bruce Schneier
●
1998 – Nick Szabo – Bit Gold
●
2008 – Satoshi Nakamoto
●
2014 – Blockchain 2.0

Internet
●
A 30 years old technology
●
Based on IP routing and DNS
●
Primary purpose was to share
abundance of Data
●
Now under mass surveillance
●
Now censored by different
governments to capitalize
political benefits
●
Always requires DNS
information to make full
communication

Internet
●
Centralized by the so called ROOT DNS servers
●
Secured by DNSSEC
●
Web trust system is broken
●
Under the control of around 1200+ CA
●
Most of the https are weakly configured
●
Prone to catastrophe, zombie apocalypse, alien
invasion, Government shutdown

Words from ..
●
“We didn’t focus on how you could wreck this
system intentionally,” - Vinton G. Cerf.
●
"I invented the web. Here are three things we
need to change to save it
– We’ve lost control of our personal data
– It’s too easy for misinformation to spread on the web
– Political advertising online needs transparency and
understanding” - Sir Tim Berners Lee

DNS
●
A decentralized database maintained by root
servers
●
Secured implementation by DNSSEC(Hardly
implemented by Domain owners)
●
Web anchor of trust is based on CA(Run by
large Companies, Controlled by Governments)

DNS in a Distributed Blockchain
●
Censor-free
●
Distributed, hard to knock down by a single
attack or Government
●
Supported by TOR or I2P
●
Private

DNSchain - Implementation
●
Namecoin – Bit DNS
●
OKTurtle
●
Emercoin – EMCDNS
●
And more ..

Data storage in Blockchain
●
Privacy at stake for major Cloud Storage
providers
●
Personal information stored in clouds
●
Accessible by Providers/Governments
– With Warrant
– With Subpoena
●
Encrypted Storage
●
Ransomware

Data storage in Blockchain - Implementation
●
storj
●
sia.tech

Traffic Routing
●
Always goes through an ISP
●
Running Deep Packet Inspection
●
National Firewall
●
DNS Cache Poisoning
●
Plain traffic is intercept-able
●
Caching Data poisoning
●
Comes with Privacy Demolished

Blockchain in routing(BGP) – What
if
●
Voting capability to avoid bad routes
●
Overlay Network with Path Performance
Computation
●
A DHT maintaining RemyCC (Remy Congestion
Control)
●
Prefixes are added/removed/modified by DPKI

SDN in Blockchain
●
SDN – Cutting Edge Technology
●
Uneducated wrong configured Infrastructures
●
API/Programmability is vulnerable
●
Flow Table can be modified remotely

SDN in Blockchain – What if ..
●
Flowtable is maintained in a blockchain
●
Modification of flowtable is authenticated against
KSI(Keyless Signature Infrastructure or DPKI)
●
Saving the events in a blockchain to track it
down to its root
●
Easier Log readability
●
Authenticate agents, messages, control
interfaces, devices, state of a service

IoT in Blockchain
●
A trillion dollar Industry
●
Billions of devices will be connected
●
Interact in between them
●
Going to be the most vulnerable systems from
the prying eyes
●
Decentralization is required, considering
centralized infrastructure

IoT in Blockchain – What if
●
Billions of ongoing transactions will be stored in
blockchain
●
Rather than centralizing the Data storage
●
A single fail-proof network
●
No MITM attack
●
A single Tamper proof DHT(Distributed Hash Table)
●
Blockchain is already a proven technology with
billions of Dollar market for Cryptocurrencies

BlockStack
●
Decentralized Internet
●
A Full Stack of Apps
– Identity
– Storage
– Payments
●
With the possibility of
– Decentralized Social Network
– P2P Marketplace
– Community Run Voting
●
Blockchain

BlockStack - Details
●
Blockchain Layer
●
Virtual chain Layer
●
Discovery Layer
●
Storage Layer
– Any Cloud Storage Provider
– Personal Storage at your bunker
●
BNS
●
ATLAS Network

End Goal
●
A Censorship free Internet
●
Freedom of Speech
●
Privacy in the Digital Age

Introduction to Blockchain

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