Blockchain talk open value meetup 31-8-17
- 2. BLOCKCHAIN IN ACTION Disruptive technology under the loop 2 Roy Wasse / Twitter @roywasse
- 3. Encantado ◦ Roy Wasse ◦ Co-Founder OpenValue ◦ NLJUG Board member ◦ Blockchain & cryptocurrency fan 3
- 5. Evolution of digital cash 80’s 1st wave • Digital Tokens • Digicash 90’s 2nd wave • E-gold • Paypal 00’s 3rd wave • Bitcoin & Blockchain 5
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- 8. Issues payment system w/o bank How to guarantee messages arrive at destination How to do prevent manipulation How to make sure a coin is only spend once! 8
- 9. Basic idea: don’t use messenger ◦ Image generals consult a nearby village ◦ 5% chance peasant from village gives wrong info ◦ Asks any 6 peasants, chance 4 giving incorrect information is 0,05 * 0.05 * 0.05 * 0.05 = 0,00000625% ◦ A malicious peasant will not be able to manipulate transaction 9
- 10. 4 key innovations ◦ Peer 2 Peer network ◦ Distributed Ledger ◦ Consensus mechanism ◦ Incentive to process transactions through ‘proof of work’ 10
- 11. Blockchain structure ◦ Every node records all transactions / holds copy ◦ Transactions are collected in a block ◦ Every block links to the previous block ◦ New block should be accepted by the majority of the nodes 11
- 13. Blockchain deep dive: Hash ◦ Input “Hashing is niet ingewikkeld” ◦ Take position in alphabet for each letter, add it all together. : 8+1+19+8+9+14+7+0+9+19+0+14+9+5 +20+0+9+14+7+5+23+9+11+11+5+4 = 240 ◦ Multiply by 1 million ◦ Divide it by Julian date 28 june 2017 = 2457932.922454) ◦ Uitkomst = 97,64302 = Hash 13 Original Hash
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- 15. Buying a cup of coffee with BTC ◦ Julian buys a cop of coffee from Bob the barista and pays with BTC ◦ Bob has to publish his bitcoin address, Julian then signs a transaction wit his private key and sends it over the network and only Bob can redeem the bitcoins send. 15
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- 20. Public/Private key encryption ◦ Encryption: Hello -> position + 1 -> Ifmmp ◦ Asymmetric encryption ◦ Key to read information not the same as one used to decrypt ◦ Elliptic Curve Multiplication used to derive Public key ◦ Lot safer than RSA, which is pretty safe ◦ y2 = x3 + ax + b ◦ Bitcoin address is SHA-256 hash from public key ◦ Base 58 encoded to make it (a bit) more readable ◦ Relatively safe for quantum computing 20
- 21. Simplified Bitcoin Transaction ◦ Sender should acquire public key hash (bitcoin address) from recipient ◦ Sender signs the transaction with his private key and sends it to nodes in the bitcoin network ◦ Network checks if sender is allowed to spent the bitcoins involved ◦ Recipients wallet detects transaction, runs unlockingscript with that proofs he has private key related to public key hash ◦ Transaction is put in a block ◦ Once block is adopted by blockchain, transaction is settled 21
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- 23. Mining & Consensus ◦ Nodes in network are incentivized to process next blocks = mining ◦ Miner solves crypto puzzle to process block = Proof of Work ◦ Other miners check if puzzle is solved correctly ◦ Blockchain is eventually consistent 23 0 1 2 3
- 24. Concept of Proof of work ◦ “Hashing is niet ingewikkeld” ◦ For each letter, take position in alphabet and add: 8+1+19+8+9+14+7+0+9+19+0+14+9+5+20+0+9+14+7+5+23+9+11+11+5+4 = 240 ◦ Multiply with one million ◦ Divide outcome by a missing number causing the result to start with 97 and end with 02: ◦ 240 * 1.000.000 / ? = 97,…02 ◦ Now find ? ◦ If ? = Julian date 28 juni 2017 = 2457932.922454 a correct result is found: 97,64302 ◦ Checking the outcome is easy, finding the missing parameter is hard 24
- 25. Proof of work for bitcoin ◦ Nodes are all trying to process the next block by solving crypto puzzle = Finding correct proof of work hash = mining ◦ The solution must be set in Block Header Field Nonce ◦ This nonce is a SHA-256 hash ◦ Bitcoin protocol dictates required number of leading zero’s for this hash => sets difficulty ◦ Correct hash is based on transactions in the block and other info in the block ◦ Every node checks if proposed block has correct nonce 25
- 26. Exponential growth of Hashing power 26
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- 28. Ethereum 28
- 29. Vitalik Buterin ◦ Son of Russian computer scientists ◦ In 2011 as a 15 yrs old started publishing about bitcoin ◦ Founder of Bitcoin magazine ◦ In 2013 financially secured for life ◦ 7 transaction per second doesn’t cut it ◦ Blockchain has more potential 29
- 30. Blockchain as platform ◦ Blockchain as distributed computer ◦ Founded in 2014, 30 juli 2015 operational ◦ Ether (ETH) instead of Bitcoin ◦ Then: 2000 ETH per BTC. Or $0,30 per ETH. ◦ Now: +/- 10 ETH per BTC. Or +/- $250 per ETH ◦ 12 seconds per block instead of 10 minutes It’s all about smart contracts 30
- 31. Smart contracts ◦ Loop constructs ◦ Turing complete, Gas for transactions ◦ Every node in can execute a contract with the EVM ◦ Code your own (solidity) ◦ Still maturing 31
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- 34. Or trigger another contract 34
- 39. Distributed Anonymous Organization ◦ 100% autonomous organization on the Ethereum blockchain ◦ Goal: Funding commercial & non profit organizations How it works: 1. Anybody can exchange Ether for DAO token and become an investor 2. Everybody can do a business proposal 3. Investors vote for ideas with DAO token 4. Winning proposals get funding 5. Investors become shareholders and recieves share of profit 39
- 40. DAO (2) ◦ Written down in Smart Contracts ◦ In May 2016 $150 million was collected ◦ Unintended use of code in contract…$50 M was stolen ◦ Hard fork applied by Vitalik and core ethereum team ◦ 85% nodes joined. ◦ 15% did not. Went on and became Ethereum classic. Currently +/- 10% of Ether marketcap 40
- 41. Some Ethereum blockchain tokens ◦ TenX, Tokencard & Monacocard: Wallet with cryptocurrency linked with VISA card ◦ Steem. Get paid for publishing content ◦ Trutheum. Marketplace for ‘truth requests’ ◦ EthLance. Freelance opdrachten bemiddelen ◦ Augur. Factoring through blockchain 41
- 42. Altcoins ◦ LiteCoin. Based on BTC code, improved performance ◦ Dash. BTC like. Instant payments, levels of anonimity. Wallet accepted by Apple ◦ IOTA. No blockchain. No fees. Ideally suited for IOT applications such as Drone delivery ◦ RIPPLE. Centrally managed. Optimized for financial institutions. No mining. Verify transaction before its settled 42
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- 44. Private blockchain ◦ As part of Public blockchain as a Sidechain (aka Off chain) ◦ Ethereum popular choice, but does this make sense? ◦ Ether, Gas & mining ‘hardcoded’ in system ◦ Maybe all you need is a distributed ledger ◦ Lots of other options for a private blockchain: ◦ OpenChain ◦ Hyperledger (IBM) ◦ Multichain ◦ Stratis ◦ NEO ◦ Azure BAAS / Coco 44
- 45. Example use cases ◦ Unilever, Nestle, Walmart, Tracking & tracing of food in logistic chain ◦ Bitnation. Record laws, regulations & jurisdictions and provide dispute resolution ◦ Swarm City. Peer2Peer sharing platform ◦ Guts tickets. Prevent theater tickets from being sold in black market. ◦ Land registry. Georgia records land ownership in blockchain. ◦ Rent out your house. In Singapore renting a house is possible though P2P blockchain ◦ Digital ownership. Who owns what music rights ◦ And digital currency. Senegal is considdering a national blockchain currency ◦ …. 45
- 46. “If there’s no central authority to go to, after someone denies data recorded in the blockchain is correct. What are you going to do?” 46
- 47. When to use blockchain ◦ Cut out the middle man or regulator ◦ If central authority is missing, eg. free market trading ◦ Transactions that require audit trails: eg. supply chains ◦ Triggering of events without anyone being responsible. ◦ Guarantee anonimity (e.g. auction) 47
- 48. When not to use ◦If a regular database suffices ◦ Organization wants to have full control over their services and data ◦ Performance is very important ◦ Continuous updating of software is needed ◦ Regulations require specific means of storage 48
- 49. BLOCKCHAIN in your next application? And ready to invest in cryptocoins? 49