Alternative Consensus & Enterprise Blockchain
- 1. Alternative Consensus & Enterprise Blockchain Mahir Jethanandani and Tobias Disse
- 2. Alternative Consensus -Alternative consensus: other methods of verification other than proof of work (PoW). -Created after downsides of PoW discovered: ● Massive electricity devouring ● Total performance in 2012 surpassed the most productive supercomputer
- 3. Alternative Consensus Proof of Stake (PoS) -PoS requires users to provide ownership stake in currency, i.e. PeerCoin. -Saves energy vs. proof of work methodology, lowering computing processes and power required. -Stake in currency provides “collateral” of trust in network and block creation. -Higher the stake, higher the collateral.
- 4. Alternative Consensus Proof of Activity (PoA) -Hybrid between PoS and PoW. PoW mechanisms used as checkpoints for block creation. -Blocks are generated through PoW methods, with PoS-type signatures to certify blocks. -Just a theory, little development.
- 5. Alternative Consensus Proof of Burn (PoB) -Lottery system where coins are burned to win chance of mining a block. -Digital coins deposited do not burn until accepted for block rewards.
- 6. Byzantine Generals Problem Background: -Consensus decision made by all generals. Traitorous generals can sabotage plan, also send out purposeful miscommunication. -If there’s a tie, the final (traitorous) general can send two separate messages. -Physical separation. -(Null), or no response, can have predefined value (retreat). -Generals are computers, messengers are digital communication systems.
- 7. Byzantine Fault Tolerance Mechanics: -Impossible to solve if ⅓ or more of generals are traitorous. -Most difficult of failure modes in fault-tolerant computer systems. Not a fail-stop mechanism. -Direction of “truth” as network grows → more difficult to oppose (Satoshi white paper: final section). -Applies to hashcash mechanism used in bitcoin.
- 8. Alternative Consensus Ripple -Payment protocol, trading with fiat currency and Ripple currency (XRP). -Infrastructure for payments between financial institutions and “market makers”. -Rippled trust system, makes use of internal ledger. All assets are held as debt obligations.
- 9. Alternative Consensus Stellar -Payment system with better technology than Ripple. More peer-to-peer use. -Accounts stored in ledger, with network of computers creating global value exchange network. -Selected public trustworthy nodes, use of quorum slices to create ripple effect. -Two to four second constant consensus. ~80% consensus.
- 11. Blockchain Blockchain 1.0 - Currency - Bitcoins - Altcoins - IoM (Internet of Money) Blockchain 2.0 - Contracts - Smart Property - Smart contracts (Programmable money) - Dapps, DAOs, DACs, DASs
- 12. Smart Contracts & Property Block 0 Block 2 Block 3 Block 4 “Smart contracts as smart contract code” (a) Expressing Business logic as a computer program (b) Representing the events which trigger that logic as message to program (c) Using digital signatures to prove who sent the message (d) putting all above on the Blockchain Contract codeContract Timestamp Signature Blockchain
- 13. Smart Contract - Example BobAlice Tobias Max
- 14. Smart Contract - Example BobAlice Tobias Max So if Max wants to make a change the whole chain gets a message. Everybody needs to approve.
- 15. Smart Contact - Example BobAlice Tobias Max
- 16. Pros: - It is secure, if somebody wants to change a contract everybody gets a warning - Self executing, - Distributed/Decentralized - M2M (Machine to Machine) Cons: - Scalability of the chain - Difficult for legal contracts, which need human interpretation - Computation power - Difficult to update a smart contract Pros / Cons
- 17. Decentralized applications (Dapps) - Is an application that runs on a network in a distributed fashion with participant information securely protected and operation execution decentralized across network nodes. Decentralized Autonomous Organizations & Corporations (DAOs & DACs) - In a DAO/DAC, there are smart contracts as agents running on Blockchains that execute ranges of prespecified or preapproved tasks based on events and changing condition. - Storj, Smart Contracts operated, decentralized file storage Decentralized Autonomous Societies (DASs) - For in the future this can be a DAS where a fleet of smart contracts, or entire ecosystems of Dapps, DAOs, DACs operating autonomously Dapps, DAOs, DACs, DASs
- 18. Reward DAO - DASH A decentralized autonomous organization (DAO), sometimes labeled a decentralized autonomous corporation (DAC), is an organization that is run through rules encoded as computer programs called smart contracts. A DAO's financial transaction record and program rules are maintained on a blockchain. - Dash formerly known as Darkcoin and XCoin, rebranded in 2015 - People who communicate via a network protocol Two principles: 1. Consensus 2. Execution What makes it so special? → Miners - Generate the Blockchain Masternodes - Privatesent Instant sent All other Job that is necessary 45% 45% 10%
- 19. Blockchain Blockchain 1.0 - Currency - Bitcoins - Altcoins - IoM Blockchain 2.0 - Contracts - Smart Property - Smart contracts (Programmable money) - Dapps, DAOs, DACs, DASs Blockchain 3.0 - Justice applications (Beyond currency, economics and market) - New model of organizing (consensus) - Digital ID Verification - IP Protection - Media Management - Virtual Notary, Bitnotar, Chronobit - Government and Healthcare
- 20. Applications What do we mean by enterprise blockchain? Healthcare - Patient registration - Fake pharmaceuticals - Medical Research data Government - ID Registration - Tax payments Finance & Investments - Transactions - Bonds - Commodity trading - Internal transactions
- 21. Healthcare - user cases - Epic is a large provider of Software in the Healthcare - Only without blockchain, so everything is centrally stored Let’s apply blockchain to Healthcare: Medical records
- 22. The futureWhat to expect?....
- 23. Private vs. Open blockchains
- 24. Blockchains… Public Blockchain - A public blockchain is a blockchain that everybody in the world can read, anyone in the world can send transactions to and expect to see them included if they are valid, and anyone in the world can participate in the consensus process. Consortium Blockchain - A consortium blockchain is a blockchain where the consensus process is controlled by a preselected set of nodes; for example, one might imagine a consortium of 15 financial institutes, each of which operates a node and of which 10 must sign every block in order for the block to be valid. Fully Private Blockchain - A fully private blockchain is a blockchain where write permissions are kept centralized to one organization. Read permissions may be public or restricted to an arbitrary extent.
- 25. Public (open) vs. Private Blockchain (closed) Public Private Access Open read/write access to database Permissioned read/write access to database Speed Slower Faster Security Proof-of-Work/ Proof-of-State Pre-approved participants Identity Anonymous/Pseudon ymous Known identities Asset Native Assets Any asset Costs Expensive Cheaper
- 26. Limitations - Technical challenges - Throughput - Latency - Size and Bandwidth - Security - Usability - Versioning, Hard forks, Multiple chains - Business Model Changes - Government Regulations - Privacy Regulation
- 29. R3 - Project (Private) 1. Software/Platform 2. Consortium of 50 of the largest banks in the world 3. Corda Project - the distributed ledger for all 50 banks Let’s watch a video!
- 31. Chain.com (Private) Delivers three different options for companies: 1. Open Standaard - Financial Asset registration 2. Chain Core - An enterprise-grade distributed system that powers secure, scalable, and highly available blockchain networks. Enterprise software in the blockchain. 3. Chain Sandbox - private blockchain network designed for rapid prototyping. It allows development teams to begin building blockchain applications in a hosted environment without deploying Chain Core on-premise.
- 32. Chain Core
- 34. Join the Blockchain Association!!!!! If you are interested sent me an email at: Tobiasdisse@berkeley.edu Or call/text at: (510) 701-3274
- 35. Next Week: Game Theory & Network Attacks BAB Announcements: ● Blockchain Division starting up - email Tobias ○ bit.ly/2dyTahE sign up!!! ○ tobiasdisse@berkeley.edu ● General meeting next Monday 10/10 ○ 7pm @ 356 Barrows ● Lead Platform Engineer of BitGo speaking at Berkeley Bitcoin Meetup 10/17 ○ 7pm @ 356 Barrows Homework: 1/2 page paper; Prompt sent out tonight Readings: ● Princeton Chapter 5.4 - "Mining Pools" ● Princeton Chapter 5.5 - "Mining Incentives and Strategies" ● (Optional) Paper: "Majority is not enough: Bitcoin mining is vulnerable" ○ https://arxiv.org/pdf/1311.0243v5.pdf ● (Optional) On Stake ○ https://blog.ethereum.org/2014/07/05/stake/ ● (Optional) Proof of Stake: How I Learned to Love Weak Subjectivity ○ https://blog.ethereum.org/2014/11/25/proof-stake-learned-lov e-weak-subjectivity/