FITE3011

Distributed ledger and blockchain

Lecture 1 Introduction (Part II)
Classifications of blockchain platforms
Bitcoin is not the only blockchain platform. There
are many, say Hyperledger, Ethereum, Ripper,
Corda etc.

1. Generic or not
2. Is it a public chain or not
3. What kind of consensus models/algorithms it
uses
-Recall that “proof of work”
-Affects efficiency/scalability (i.e., how many
transactions can be handled in a second/how
many users can use it at the same time)

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4. Whether it provides “smart contract” (talk
later)
5. Whether the platform comes with a cyber
token (cryptocurrency)?

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1. Generic or not
Generic:
- The design of a platform is not for a particular industry.
- Can be used for developing applications for any industry.

Industry specific:
-The design of a platform is focused on a particular
industry.
-E.g. Bitcoin – for transactions of this cyber currency
only, Corda – financial industry; Openchain – digital
asset management
-Features: only fit for that industry, e.g. Corda allows you
to write programs on legal expression

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2. Public or not
Original design
- Public (or a fancy term: permissionless)
- Everybody can join without verifying your identity)
- E.g. Bitcoin.

Big enterprises:
- Only trusted parties/parties with certain identity can join (why?)
- Or even can control who can see what
- High scalability/transaction speed

Þ Permissioned blockchain
• Only entities who pass a verification process can join
• Not “fully decentralized”.

Another extreme: private (owner controls everything)

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Public resting area (permissionless)
Vs
Bedroom in your apartment (private)
Vs
Waiting room in an office building (permissioned)

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3. Consensus model/algorithm
Recall: “proof of work”
- Miners need to compute a hard math problem.
-Fairness <= randomness
-Allow fake transactions exist, but take the majority to rule out fake
transactions
-The longest chain
<< Most of participants are honest >>
Issue:
1) It takes time for miners to do the calculation (efficiency and waste of
resources)
2) At any time slot, there can be different versions of blockchain.
Þ When to confirm if a transaction is really settled.
Þ Wait until the chain gets stable => slow

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In many applications, it is not acceptable.
=> Other consensus model and algorithms.
E.g. proof of stake
- Let the wealthy guy to make the decision.
- More precisely, the one who holds more coins has a higher chance to
make the decision.
- Randomness to avoid the richest always have the control.
- Many variations: e.g. check how long you hold the coins

There are many others:

E.g. Ripple has its own RPCA (Ripple Protocol
Consensus Algorithm); some using voting
=> Affect the efficiency.
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4. Smart contract
Original design of blockchain for bitcoin – not
programmable, i.e., people cannot write
programs/applications on top.

Smart contract proposed in Ethereum in 2013

ÞBlockchain 2.0
ÞAllow users to write programs and create new
applications
Note: Smart contact good for application
development, but also bring a lot of security
problems.

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5. With a cyber currency or not?
Most of cyber currency is created for money
raising (in particular, ICO we mentioned, can you
find out what ICO is?).
Cyber currency is used as a token to be spent, paid
on transactions
e.g. otherwise why the miners want to work for
you.
Not all platforms have their own cyber
currencies, e.g. Hyperledger, Corda, nor they
have the capability of creating a new token

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 Common Blockchain Platforms
TPS Consensus Smart-Contract Smart Contract Type Currency Launch Date
Language
Bitcoin 7 POW Limited/none The Script Public BTC 9 Jan 2009
Ethereum 15 PoW/PoS Turing-complete Solidity Public ETH 30 July 2015
Hyperledger Fabric 200 - 250 Various Turing-complete Go/ Java Consortium N/A 11 July 2017 (v1.0)
11 Jan 2019 (v1.4
LTS)
Corda 1000-1800 Notary Turing-complete Kotlin Consortium N/A 30 Nov 2016

Bitcoin: Generic, public, PoW, no smart contract, bitcoin

Ethereum: Generic, public, PoW=>PoS, Yes (SC), Ether
(ETH)
Hyperledger: Generic, permissioned, Pluggable, Yes (SC),
No token capability.
Blockchain Trilemma
› Coined by Ethereum founder Vitalik Burerin, the
blockchain trilemma states that at a fundamental level,
blockchains cannot achieve all three properties
Not
simultaneously affordable
– Decentralization
– Security (aka consistency)
– Scalability
New convenient

Analogy:
Spacious
Not to confuse with CAP Theorem
› CAP Theorem:
– Consistency
– Availability
– Partition Tolerance
› Any distributed system can only achieve 2 of the above 3
properties

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We will also cover the followings later in details:
- Security & privacy issues
E.g. 1 Can blockchain guarantee 100% your privacy
protected?
E.g. 2 Security issues in smart contracts

E.g. 3 Security issues in cryptocurrency exchange (do you

know what it is?)

E.g. 4 Wallet Security

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- Evil side of blockchain (in particular, bitcoin)
Ransomware
Money laundry
Cyber currencies for investment?
Phishing smart contract
……

- Future research topics in blockchain

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