Bitcoin explained
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The document discusses the challenges and mechanics of Bitcoin, including issues like double spending, maintaining anonymity, and ensuring owner authenticity through private/public keys. It explains the process of broadcasting transactions, building blocks through proof-of-work, and the consensus needed to validate transactions on the blockchain. Key threats outlined include the 50% honesty threshold attack, negative balances, and the potential for multiple blockchain branches, emphasizing the importance of waiting for block confirmation.
Bitcoin explained
- 1. S Bitcoin explained Benjamin Fuentes – March 2016 The opinions and views expressed at or through this slide are the opinions of the designated authors and do not reflect the opinions or views of any of their clients or law firms or the opinions or views of any other individual.
- 2. Challenges S 50% honesty threshold attack S Keep anonymity S Negative balances S End of block ambiguity S Remove the trusted 3rd party S Avoid double spending problem S Owner authenticity proof attack S Cannot rewrite the past
- 3. Remove the trusted 3rd party S There are owners S Owners do transactions S Owners have private key (like a password) to sign S Owners have public key for others to verify their signature S A block can contain multiple transactions
- 4. Network flow 1.Broadcast new new transactions 2.Build a block and try to find proof-of-work 3.First to find proof-of-work broadcast the block to the others 4.Test acceptance and double spending. If ok => keep the block using its hash If ko => reject block
- 6. Solution S Be aware of ALL transactions S Consensus agreement of voters to validate transaction order UNIQUE HISTORY OF ORDERING CAN DETECT DOUBLE SPENDING NOW
- 7. Owner authenticity proof attack HashN-1 + Private key Signatur e Public key = I AM BOB Verify + Yes ! It is a certificate from “I AM BOB”
- 8. Cannot rewrite the past Hack this block !!! Honest blockchain Hacker blockchain
- 9. 50% honesty threshold attack S Do not trust IP as voters ! Anyone can duplicate IPs S Voters are CPU based S If > 50% voters agree on a chain, is it the official one S To modify a past block, an attacker would have to redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the work of the honest nodes
- 10. Keep anonymity
- 11. Negative balances History of ownership Balance 0 -1 1 … ?
- 12. Negative balances S We have to check all the chain from the origin to calculate the last balances S We cannot have negative balances S Balance = sum(inputs) – sum(outputs)
- 13. End of block ambiguity S Everyone has its own version of the blockchain S A block could be resolved at the same time by 2 different peers A blockchain could have several branches at the same time before it gets stabilized / ordered Mathematical race ensures that the oldest block are more trustable than newest. So wait a little bit before considering last blocks trustable Last best performance done by BTC guild is about resolving 6 blocks in a row. So wait at least 6 blocks ?