Blockchain and smart contracts, what they are and why you should really care about as a developer

Title: Blockchain and smart contractsWhat they are and why you should really care about ad developer
Author: @maeste, Stefano Maestri
CODEMOTION MILAN - SPECIAL EDITION
10 – 11 NOVEMBER 2017

Who is Stefano?
● A young enthusiast open source developer
● Red Hat Principal software engineer
● https://www.linkedin.com/in/maeste/
● https://twitter.com/maeste
● https://github.com/maeste/
● http://www.onchain.it/
My matching pairs game: Java & JBoss, Open Source & Red Hat,
Blockchain & Ethereum

Today’s Agenda
● Brief introduction to blockchain concepts
● Cryptocurrencies and why they have monetary value
● Smart contracts and why you should care about
● Developing smart contracts on ethereum blockchain

What is the block chain?
The Guardian: Blockchain is a digital ledger that provides a
secure way of making and recording transactions,
agreements and contracts – anything that needs to be
recorded and verified as having taken place.
Wikipedia: A blockchain is a continuously growing list of records,
called blocks, which are linked and secured using cryptography.
Each block typically contains a hash pointer as a link to a previous
block, a timestamp and transaction data. By design, blockchains
are inherently resistant to modification of the data. A blockchain
can serve as "an open, distributed ledger that can record
transactions between two parties efficiently and in a verifiable and
permanent way."

What is a blockchain...a nice bullet list
● It’s a ledger of transactions and datas
● It’s persistent, secure and unmodifiable
● It’s based on computational trust
● It’s distributed and unstoppable
● Transaction parties are anonymous, but tx are public and verifiable
● It’s transactions could be about values (cryptocurrency)
● It’s trustless about nodes and users

What is a blockchain...a nice bullet list
● It’s persistent, secure and unmodifiable
● Transaction parties are anonymous, but tx are public and verifiable
Live Demo

It’s distributed and unstoppable

Has those cryptocurrencies a real economic
value? And why?
In economy “intrinsic value” concept doesn’t exist at all. We give value to money
by convention, and more general anything gain value almost for 3 reasons (not
strictly needed, but true in almost cases at least)
● It’s rare
● It’s hard to reproduce
● It could be exchanged
● Someone want to buy it (law of supply and demand)

Has those cryptocurrencies a real economic
value? And why?
In economy “intrinsic value” concept doesn’t exist at all. We give value to money
by convention, and more general anything gain value almost for 3 reasons (not
strictly needed, but true in almost cases at least)
● It’s rare
● It’s hard to reproduce
● It could be exchanged
● Someone want to buy it (law of supply and demand)
1 Euro
Fontana’s paint ~ 8M Euro
~ 7K Euro Manzoni’s artist's shit: ~275K Euro

Traditional payments
And isn’t ok to simply trust in a Bank?
What could happen?
Lehman Brothers…..

So...what is the solution?
Grandmum solution?

So...what is the solution?
Grandmum solution?
Could be at least unpractical...

The solution is the blockchain
● It’s persistent and secure
● Transaction parties are anonymous, but transactions are public

The solution is the blockchain
● It’s persistent and secure
● Transaction parties are anonymous, but transactions are public
Am I going to transfer my money without trusting anyone?

What does trustless mean?
You are not trusting in peers of transaction or even in nodes of the network, you
are trusting in the protocol itself. In other words you are trusting blockchain and
cryptocurrency itself and not people owning them….moreover they are
anonymous…
Does it recall anything you well known and use everyday?

What is a smart contract?
A contract is a voluntary arrangement between two or more
parties that is enforceable by law as a binding legal
agreement
A smart contract is a computer protocol intended to facilitate,
verify, or enforce the negotiation or performance of a
contract.

Real world smart contracts
With the present implementations]
"smart contract" is
general purpose computation that takes place on a
blockchain

Smart contracts: unstoppable Dapp
● Distributed
● Can transfer money/assets
● Unmodifiable state history

Ethereum: a blockchain for smart contracts
● Every node run a built in Virtual Machine (EVM)
● It provide a compiler from high level languages to EVM
● 2 different kind of accounts:
○ Externally owned account (EOAs), controlled by
private keys
○ Contract accounts, controlled by code

Ethereum Virtual Machine
Internals
● TURING COMPLETE VM
● Stack based byte code (push,
jump)
● Memory
● Storage
● Environment variables
● Logs
● Sub-calling
High level languages
● Solidity (c-like)
● Viper (python like)
● LLL (lisp inspired)
● Bamboo (experimental
morphing language influenced
by Erlang)
Everyone compiling to EVM code

EVM code execution
● Transaction sent to a contract address
● Every full node of ethereum run the code at this address
and store the state
● Smart contract code can:
○ Could run any program (turing complete machine)
○ Read/write state
○ Call another contract
○ Send ETH to other address (both EOA and contract)

Ethereum GAS
Halting problem: determine if the program will finish running or continue to run
forever. Classic NP-hard problem
Ethereum solution: GAS, a fee per computational step
GAS is not a currency is just a unit of measurement of computational step
In Tx you have “maximum GAS” you would give to the miner and “GAS price” to
determine how much you will actually pay.
If Tx complete successfully you pay just for effective GAS used.
It the Tx would consume all GAS the TX will be revert, but you still pay for GAS
Ethereum hasn’t block size limit, but Gas Limit (6.7M currently, but voted by miners)

Solidity
● C/Java-like syntax
● Statically typed
● Support inheritance (multiple)
● Complex user defined types (struct)
● Polymorphism
● Overriding
● …..
http://solidity.readthedocs.io/en/develop/index.html#

Our development environment
● testRPC (local in memory ethereum blockchain)
● Truffle (maven-like tool to compile and deploy contract)
● A bit of javascript (npm) for some raw Dapp interface
● Metamask to inject ethereum protocol in our
html/javascript Dapp
● Intellij to edit solidity and javascript
More info: http://truffleframework.com/

SmartNotary
● The easiest contract notarizing a document
● Receiving document hash and owner name It will write them in the
blockchain state
● Giving the hash it will return the owner name
● It’s a pet project just to play with code
Talk is cheap….show me the f****ing code (Linus Torvalds)
https://github.com/onchainit/SmartNotary/tree/baseExample

SmartNotary 1.1: using EOA
We are using current EOA (from metamask) as owner.
It will give us the opportunity to play a bit with metamask
https://github.com/onchainit/SmartNotary/tree/baseExample

SmartNotary 2.0: paying for notarization
We are adding money transfer.
Basically the user will pay in ether the service of
notarization.
The ethers are stored in contract balance, and only contract
creator could withdraw them in his EOA
https://github.com/onchainit/SmartNotary/tree/pay4Notarization

Contract security - reentrancy attack
// INSECURE
mapping (address => uint) private userBalances;
function withdrawBalance() public {
uint amountToWithdraw = userBalances[msg.sender];
require(msg.sender.call.value(amountToWithdraw)());
// At this point, the caller's code is executed, and can call withdrawBalance again
userBalances[msg.sender] = 0;
}
https://consensys.github.io/smart-contract-best-practices/

Contract security - reentrancy attack
// VERY SIMPLIFIED MALICIOUS CODE (WOULD NEED CONSIDERATION ON BLOCK MAXIMUM GAS)
function() payable {
vulnerable.withDraw();
}

Contract security -reentrancy attack solution
mapping (address => uint) private userBalances;
function withdrawBalance() public {
uint amountToWithdraw = userBalances[msg.sender];
userBalances[msg.sender] = 0;
require(msg.sender.call.value(amountToWithdraw)());
// The user's balance is already 0, so future invocations won't withdraw anything
}
Or just using primitive send() instead of .call.value which limit gas to 2300 (pure
transfer)
https://consensys.github.io/smart-contract-best-practices/

SmartNotary 3.0: paying for notarization and
notarized document market
A bit more complex example
More money transfer
Blind auction
https://github.com/onchainit/SmartNotary/tree/marketplace

Who is behind ethereum?
A Very young….extremely focused guy

Who is behind ethereum?
A Very young….extremely focused guy
Don’t you recall another very young
extremely focused guy?

Thanks for coming
0x41a6021A6Dc82cbB0cd7ee0E3855654D225F48C6
I’ll use ethers only for beers :)
● https://www.linkedin.com/in/maeste/
● https://twitter.com/maeste
● https://github.com/maeste/
● http://www.onchain.it/

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