Speaker. Bitcoin: How it works. The problem of digital cash. The problem of digital cash

Transcription

1 Speaker : How it works. A lightweight intro to block chains Ulrich Haböck Kompetenzzentrum für IT-Security, FH Campus Wien October 30, 2017 Ulrich Haböck ulrich.haboeck@fh-campuswien.ac.at PGP-key: 48F796E247BEEDE8. PhD Mathematics (University Vienna) Post-doc TU-Vienna since 2013 at the Competence Centre for IT-Security, FH Campus Wien Lecturer Bachelor Information Technology and Telecommunications as well as Master IT-Security Focus: mathematics and cryptography normal cash: expensive to copy/reproduce. digital cash: copy and paste, even when certified (just a bunch of data!) Value:1.24 U Owner: Mr. Hans Pans Issuer: Bank XYZ Value:1.24 U Owner: Mr. Hans Pans Issuer: Bank XYZ Value:1.24 U Value:1.24 Value:1.24 U Owner: UMr. Hans Pans Owner: Mr. Owner: Hans Issuer: Mr. Pans Hans Bank Pans XYZ Issuer: Value:1.24 Issuer: Bank U XYZBank XYZ Owner: Mr. Hans Pans Issuer: Bank Value:1.24 XYZ U Owner: Mr. Hans Pans Value:1.24 Issuer: U Bank XYZ Owner: Mr. Hans Pans Value:1.24 Issuer: Bank XYZ U Owner: Mr. Hans Pans Issuer: Bank XYZ

2 Introduction Basics Wallets and Transactions Blockchain Consensus How to start? Introduction Basics Wallets and Transactions Blockchain Consensus How to start? One way to prevent double-spending : online log of entire transaction history Double-spending: same certified unit spent twice B A 500 same coin Introduction Basics Wallets and Transactions Value:1.24 U Owner: Mr. Hans Pans Issuer: Bank XYZ C Blockchain Consensus How to start? Inherent issues: centralised reglementation (e.g. Bank): set under pressure easily by powerful players, decentralised reglementation: robust, secure consensus necessary Introduction Basics Transaction To: Ms. Diss From: Mr. Hans Pans Date:2017/1/03 Sig:8a1545cc09a8c027 e93380add5f9818ba143 82c4d78acff5198f6e46 e2b4 Wallets and Transactions Blockchain Transaction To: BC-Computers From: Ms. Diss Date:2017/1/03 Sig:59a6854d3b a3ea c a8a3fed593ff378c81 9bf3 Consensus How to start?

3 is a digital currency (partially) anonymous (pseudonymous) decentralised, based on blockchain technology 1992: E.Hughes, T.May: cipherpunks 1997,98: Proof of work to mitigate spam s (hash cash), W.Dai s b-money, N.Szabo s Bit Gold 2008: S. Nakamoto s white paper on Jan 2009: initial release of bitcoin core (Windows), first bitcoin network in practice

4 wallets Every participant (user) can create a wallet full of random keys ( addresses) e.g. 1D3hJ52SXjZamJDSWHN4w6qPwYYDS6zFxq, or 3J6atJNyitmTCmoE4e26w5tTceVBtYQ7TY, or 1AYDLj29QcTgYNc86umbwdyDV3CgCBvu1f. addresses are not a-priori bound to any value! Transactions Transactions... are distributed over s P2P-network signed with the key of incoming address verified & collected by full nodes in Mempool

5 Blockchain & mining Blockchain & mining new block preprevious block ebc18dd previous block 46c new block f9bf1b found! Hash(.)= ***...* n zero bits so-called miners take s from Mempool in block and solve a block depending puzzle Blockchain & mining Why the hash puzzle?? When nonce found miner distributes Block + nonce over the network. Miner receives reward (newly generated, mined coins) + transaction fees Proof of work is essential for stable and robust consensus + yields the basis of worth for the currency (like gold was for traditional currencies)

6 Difficulty Rule: Truth is defined by the longest chain (minus last five blocks) As of June 2017, hash puzzles have a difficulty of 75 leading zero Bits, e.g. Not valid! -> mining effort worthless h= f47c8785c85cd6 e7dc5e8249ebb7c9ba065408ec03209 Not valid! Stability: forks are not stable! Hence miners always work on longest chain it is the most profit promising otherwise mining effort eventually rewardless FIRST!

7 Stability: forks are not stable! Uh-Oh! Other chain is longer! Robustness: double spending attack not feasible hash race: min. 6 blocks to go Let's move there! in secret ' Not feasible impossible computing power success (% of entire network) probability 50% 1. 40% % % % % Let s have a look at

8 Choose wallet software How to start Where can I buy bitcoins? online marketplaces, e.g. local exchange, e.g. paper wallets Be careful, not all wallets offer same features / security see some links Thank you! A.M. Antonopoulos, Mastering, O Reilly