1 \documentclass[dvipsnames,14pt,t]{beamer}

     2 \usepackage{../slides}

     3 \usepackage{../graphics}

     4 \usepackage{../langs}

     5 \usepackage{../data}

     6 

     7 \usetikzlibrary{shapes}

     8 

     9 % beamer stuff 

    10 \renewcommand{\slidecaption}{SEN 08, King's College London}

    11 \newcommand{\bl}[1]{\textcolor{blue}{#1}}

    12 

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    27 

    28 

    29 \begin{document}

    30 

    31 

    32 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

    33 \begin{frame}[t]

    34 \frametitle{%

    35   \begin{tabular}{@ {}c@ {}}

    36   \\

    37   \LARGE Security Engineering\\[-3mm] 

    38   \end{tabular}}\bigskip\bigskip\bigskip

    39 

    40   \normalsize

    41   \begin{center}

    42   \begin{tabular}{ll}

    43   Email:  & christian.urban at kcl.ac.uk\\

    44   Office: & S1.27 (1st floor Strand Building)\\

    45   Slides: & KEATS (also homework is there)\\

    46   \end{tabular}

    47   \end{center}

    48 

    49 \end{frame}

    50 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%     

    51 

    52 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

    53 % student prticipation

    54 %\begin{frame}

    55 %\frametitle{Bitcoins}

    56 %

    57 %P2P, 21 Mio, $10^-8$, Mt~Gox, value decreased?, anonymity, 

    58 %Silk Road, verification incentive, puzzle, SHA-256, slow 

    59 %transactions, 

    60 %

    61 %\end{frame}

    62 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

    63 

    64 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

    65 \begin{frame}[t]

    66 \frametitle{Recall: Bitcoins}

    67 

    68 \begin{itemize}

    69 \item a crypto currency by Satoshi Nakamoto

    70 \item mined by solving special puzzles involving hashes

    71 \item transaction history (ledger/blockchain) is P2P distributed (12 GB)

    72 \item surely a scam/ponzi scheme!

    73 \end{itemize}

    74 

    75 \begin{textblock}{7}(6.5,8.5)

    76 \includegraphics[scale=0.26]{../pics/bitcoin_ledgers.png}

    77 \end{textblock}

    78 

    79 \end{frame}

    80 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

    81 

    82 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

    83 \begin{frame}[t]

    84 \frametitle{Bitcoin Keys}

    85 

    86 \begin{center}

    87 \includegraphics[scale=0.9]{../pics/bitcoin-keys.png}

    88 \end{center}

    89 

    90 \begin{itemize}

    91 \item \bl{k} private key: 256 bits (randomly chosen)

    92 \item \bl{K} public key: generated from \bl{k}

    93 \item \bl{A} bitcoin address: 160 Bit/20 Byte number: 

    94 \[\bl{A \dn RIPEMD160(SHA256(K))}\]

    95 

    96 \footnotesize RIPEMD160, SHA256 are hash functions

    97 \end{itemize}

    98 

    99 

   100 \end{frame}

   101 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   102 

   103 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   104 \begin{frame}[t]

   105 \frametitle{Bitcoin Addresses}

   106 

   107 The ``human readable, checked version'' of \bl{A}:

   108 

   109 \begin{center}

   110 \begin{tikzpicture}[scale=1]

   111   \node (A) at (0,0)  [draw=black, rectangle, 

   112      very thick, minimum height=10mm, minimum width=20mm] 

   113      {\Large\bl{A}};

   114   \node (B) at (0,-2)  [draw=black, rectangle, 

   115      very thick, minimum height=10mm, minimum width=20mm] 

   116      {\Large\bl{A}};

   117   \node (B2) at (-2,-2)  [draw=black, rectangle, 

   118      very thick, minimum height=10mm, minimum width=20mm] 

   119      {\large\bl{Prefix}};

   120   \node (B3) at (-4,-0.5) {1 for P2PKH};      

   121   \node (C) at (0,-4)  [draw=black, rectangle, 

   122      very thick, minimum height=10mm, minimum width=20mm] 

   123      {\Large\bl{A}};

   124   \node at (-2,-4)  [draw=black, rectangle, 

   125      very thick, minimum height=10mm, minimum width=20mm] 

   126      {\large\bl{Prefix}};

   127   \node (C2) at (3,-4)  [draw=black, rectangle, 

   128      very thick, minimum height=10mm, minimum width=40mm] 

   129      {\large\bl{CheckSum}}; 

   130   \node (D) at (0,-5.8)  [draw=black, rectangle, 

   131      very thick, minimum height=10mm, minimum width=20mm] 

   132      {\large\bl{Base58Check(Prefix + A + CheckSum)}};

   133  

   134   \draw[<-, line width=0.5mm] (B2.north west) -- (B3);

   135   \draw[->, line width=2mm] (A) -- (B);

   136   \draw[->, line width=2mm] (B) -- (C);

   137   \draw[->, line width=2mm] (C) -- (D);

   138   \path[->, line width=2mm] (B.east) edge[bend left] node[right] 

   139   {\small{}\bl{\begin{tabular}{l}SHA256\\

   140                              SHA256\\

   141                              first 4bytes\\[6mm]\end{tabular}}} (C2);

   142 \end{tikzpicture}

   143 \end{center}

   144 

   145 \only<2->{

   146 \begin{textblock}{2.5}(1,10)

   147 \begin{bubble}[10cm]

   148 Example address (Base58):\medskip

   149 

   150 \bl{1DSrfJdB2AnWaFNgSbv3MZC2m74996JafV}\bigskip

   151 

   152 \mbox{}\hfill\small{}(does not contain 0OlI)

   153 \end{bubble}

   154 \end{textblock}}

   155 \end{frame}

   156 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   157 

   158 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   159 \begin{frame}[t]

   160 \frametitle{Transaction Graph}

   161 

   162 \mbox{}\hspace{3cm}older \hspace{3cm} current

   163 

   164 \begin{center}

   165 \includegraphics[scale=0.52]{../pics/blockchain.png}

   166 \end{center}

   167 

   168 \end{frame}

   169 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   170 

   171 

   172 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   173 \begin{frame}[t]

   174 \frametitle{Types of Transactions}

   175 

   176 \begin{itemize}

   177 \item pay-to-public-key-hash (so far: Alice pays Bob)\pause

   178 \item pay-to-script-hash

   179 \[\bl{RIPEMD160(SHA256(script))}\]\pause

   180 

   181 \item Each transaction, including P2PKH, contains a

   182       \alert{locking} and an \alert{unlocking} script (locking

   183       from output; unlocking from input).

   184 \item The scripts are written in a Forth-like language (stack

   185       based).

   186 \item Running both scripts has to evaluate to True.

   187 \end{itemize}

   188 

   189 \end{frame}

   190 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   191 

   192 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   193 \begin{frame}[t]

   194 \frametitle{Pay-to-Public-Key-Hash}

   195 

   196 \begin{itemize}

   197 \item Alice pays Bob:

   198 

   199 \begin{center}

   200 \begin{tabular}{ll}

   201 \scode{<Bob's signature>} & {\small(unlocking script from input)}\\

   202 \scode{<Bob's PKey>}\medskip\\

   203 \scode{OP_DUP} & {\small(locking script from output)}\\

   204 \scode{OP_HASH160}\\

   205 \scode{<Bob's PKey Hash>}\\

   206 \scode{OP_EQUALVERIFY}\\

   207 \scode{OP_CHECKSIG}

   208 \end{tabular}

   209 \end{center}

   210 \end{itemize}

   211 

   212 \end{frame}

   213 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   214 

   215 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   216 \begin{frame}[c]

   217 \frametitle{A Transaction Msg}

   218 \small

   219 \lstinputlisting[language=Scala,

   220                  numbers=none, 

   221                  xleftmargin=-6mm]{msg}

   222                  

   223 \only<2->{

   224 \begin{textblock}{2.5}(4.8,2)

   225 \begin{bubble}[8cm]

   226 Question: Sender and receiver are the same; same amount

   227 (no time stamps).\medskip

   228 

   229 Can 2 transactions be exactly the same?

   230 \end{bubble}

   231 \end{textblock}}                 

   232 \end{frame}

   233 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   234 

   235 

   236 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   237 \begin{frame}[c]

   238 \frametitle{Pay-to-Script-Hash}

   239 

   240 Bob wants to implement a multi-key/signature scheme in his 

   241 company:

   242 

   243 \begin{itemize}

   244 \item Bob tells Alice the hash of a locking script:

   245 \item Alice sends the payment to this ``hash address''\bigskip

   246 \item Bob has to supply the locking script matching this hash, 

   247 and the unlocking script\pause\bigskip

   248 \item Bob can use this payment to implement 2-out-of-3 

   249 signature procedures

   250 \end{itemize}

   251 

   252 \end{frame}

   253 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   254 

   255 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   256 \begin{frame}[t]

   257 \frametitle{Blockchain (Public Ledger)}

   258 

   259 \begin{center}

   260 \includegraphics[scale=0.5]{../pics/bitcoinblockchain0.png}

   261 \end{center}

   262 

   263 \begin{itemize}

   264 \item each block is hashed and contains a reference to

   265 the earlier block; ``validates'' potentially more than one

   266 transaction

   267 \end{itemize}

   268 

   269 \end{frame}

   270 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   271 

   272 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   273 \begin{frame}[t]

   274 \frametitle{Proof-of-Work}

   275 

   276 The idea is counterintuitive and involves a combination of two

   277 ideas:

   278 

   279 \begin{bubble}[10cm]

   280 \begin{itemize}

   281 

   282 \item to (artificially) make it computationally costly for

   283       network users to validate transactions, and

   284 

   285 \item to reward them for trying to help validate transactions

   286 \end{itemize}

   287 \end{bubble}\pause

   288 

   289 \small

   290 this is called mining: whoever validates a transaction will be awarded with

   291 50 bitcoins --- this halves every 210,000 transactions or

   292 roughly every 4 years (currently 25 BC); no new bitcoins after 2140 -- then only 

   293 transaction fees

   294 \end{frame}

   295 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   296 

   297 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   298 \begin{frame}[t]

   299 \frametitle{Solving Puzzles}

   300 

   301 Given a string, say \code{"Hello, world!"}, what is the 

   302 \alert{salt} so the hash starts with a long run of 

   303 zeros?\bigskip

   304 

   305 \begin{bubble}[10cm]

   306 \footnotesize\code{h("Hello, world!0") =}\\

   307 \;\;\scriptsize\pcode{1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64}\\

   308 \pause

   309 \footnotesize\code{h("Hello, world!1") =}\\ 

   310 \;\;\scriptsize\pcode{e9afc424b79e4f6ab42d99c81156d3a17228d6e1eef4139be78e948a9332a7d8}\\

   311 \pause

   312 \ldots\\

   313 \footnotesize\code{h("Hello, world!4250") =}\\ 

   314 \;\;\scriptsize\pcode{0000c3af42fc31103f1fdc0151fa747ff87349a4714df7cc52ea464e12dcd4e9}

   315 \end{bubble}

   316 

   317 \end{frame}

   318 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   319 

   320 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   321 \begin{frame}[t]

   322 \frametitle{Hardness}

   323 

   324 If we want the output hash value to begin with 10 zeroes,

   325 say, then we will need, on average, to try $16^{10} \approx

   326 10^{12}$ different salts before we find a suitable nonce. 

   327 

   328 Hardness can be controlled by setting a \alert{target} (maximum

   329 number).

   330 

   331 \begin{center}

   332 \includegraphics[scale=0.37]{../pics/blockchainsolving.png}

   333 \end{center}

   334 

   335 \end{frame}

   336 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   337 

   338 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   339 \begin{frame}[t]

   340 \frametitle{How to Adjust the Target?}

   341 

   342 \begin{itemize}

   343 \item every 2016 blocks the hardness is adjusted\\ (app 2 weeks)

   344 \end{itemize}

   345 

   346 \begin{center}

   347 \includegraphics[scale=0.37]{../pics/blockchainsolving.png}

   348 \end{center}

   349 

   350 \small

   351 \[

   352 \bl{\begin{array}{@{}l@{}}\text{New}\\ \text{Difficulty}\end{array} \dn

   353 \begin{array}{@{}l@{}}\text{Old}\\ \text{Difficulty}\end{array} 

   354 * \frac{\text{Actual time for the last 2016 blocks}}{20160}}

   355 \]

   356 

   357 \end{frame}

   358 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   359 

   360 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   361 \begin{frame}[t]

   362 \frametitle{Hardness}

   363 

   364 \begin{itemize}

   365 \item for example block \#277,316 has the hardness 

   366 

   367 \[\scode{0x1903a30c}\]

   368 \end{itemize}

   369 

   370 where \scode{19} is the exponent and \scode{03a30c} is the 

   371 coefficient.

   372 

   373 \[

   374 \bl{target \dn coeffcient * 2^{8 * (exponent - 3)}}

   375 \]

   376 

   377 in this example the hash has to be smaller that

   378 

   379 \footnotesize

   380 \[

   381 \begin{array}{l}

   382 \scode{0x0000000000000003A30C000000000000}\\

   383 \qquad\qquad\scode{00000000000000000000000000000000}

   384 \end{array}

   385 \]\pause

   386 

   387 It is fun to see that nowadays mining equipment is so 

   388 efficient that the hardness is closely related to the 

   389 cost of electricity.

   390 \end{frame}

   391 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   392 

   393 

   394 

   395 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   396 \begin{frame}[t]

   397 \frametitle{Bitcoin Schedule}

   398 

   399 \begin{itemize}

   400 \item every 210000 blocks the amount of bitcoins to be 

   401   mined halves (``reward era'')

   402 \end{itemize}

   403 

   404 \begin{center}

   405 \begin{tikzpicture}

   406 \begin{axis}[

   407     xlabel={\footnotesize year},

   408     ylabel={\footnotesize \% of total bitcoins},

   409     ylabel style={yshift=0.0em},

   410     enlargelimits=false,

   411     xtick={2009,2011,...,2025},

   412     xmin=2009,

   413     xmax=2026,

   414     ymax=105,

   415     ymin=0,

   416     ytick={0,20,...,100},

   417     scaled ticks=false,

   418     axis lines=left,

   419     width=9cm,

   420     height=6cm,

   421     legend entries={\footnotesize plan,\footnotesize in reality 2\% ahead},  

   422     legend pos=south east,

   423     legend cell align=left,  

   424     y tick label style={font=\footnotesize}, 

   425     x tick label style={font=\footnotesize,/pgf/number format/1000 sep={}} 

   426     ]

   427 \addplot

   428   table {bitcoinestimate.data};

   429 \only<2>{\addplot[red] 

   430   table {bitcoinactual.data};}

   431 \end{axis}

   432 \end{tikzpicture}

   433 \end{center}

   434 

   435 \end{frame}

   436 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   437 

   438 

   439 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   440 \begin{frame}[t]

   441 \frametitle{Order of Transactions}

   442 

   443 If we don’t have such an ordering at any given moment 

   444 then it may not be clear who owns which Bitcoins.

   445 

   446 \begin{center}

   447 \includegraphics[scale=0.38]{../pics/bitcoin_unconfirmed.png}

   448 \end{center}

   449 

   450 \small

   451 Say, miner David is lucky and finds a suitable salt

   452 to confirm the transactions. Celebration!\pause \hspace{5mm}??

   453 

   454 \end{frame}

   455 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   456 

   457 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   458 \begin{frame}[t]

   459 \frametitle{Forks}

   460 

   461 Typically the blockchain will look as follows

   462 

   463 \begin{center}

   464 \includegraphics[scale=0.65]{../pics/block_chain1.png}

   465 \end{center}

   466 

   467 \pause

   468 But every so often there is a fork

   469 

   470 \begin{center}

   471 \includegraphics[scale=0.65]{../pics/block_chain_fork.png}

   472 \end{center}

   473 

   474 \small

   475 \ldots{}bugger this is exactly what we are trying to avoid

   476 \end{frame}

   477 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   478 

   479 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   480 \begin{frame}[t]

   481 

   482 The tie is broken if another block is solved

   483 

   484 \begin{center}

   485 \includegraphics[scale=0.4]{../pics/bitcoin_blockchain_branches.png}

   486 \end{center}

   487 

   488 \small

   489 The rule is: if a fork occurs, people on the network keep

   490 track of all forks. But at any given time, miners only work

   491 to extend whichever fork is longest in their copy of the block

   492 chain.

   493 

   494 \end{frame}

   495 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   496 

   497 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   498 \begin{frame}[t]

   499 \frametitle{Double Spending}

   500 

   501 So if Alice wants to fake it, she needs to produce

   502 a longer chain:

   503 

   504 \begin{center}

   505 \includegraphics[scale=0.4]{../pics/bitcoin_blockchain_double_spend.png}

   506 \end{center}

   507 

   508 \end{frame}

   509 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   510 

   511 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   512 \begin{frame}

   513 \frametitle{Racing Against the World}

   514 

   515 \begin{columns}

   516 \begin{column}{4.5cm}

   517 \includegraphics[scale=0.3]{../pics/bitcoin_doublespend_blockchain_race.png}

   518 \end{column}

   519 \begin{column}{5.5cm}

   520 \includegraphics[scale=0.3]{../pics/bitcoin_transaction_order_race.png}

   521 \end{column}

   522 \end{columns}\bigskip\bigskip\pause

   523 

   524 \small

   525 A transaction is ``confirmed'' if:\smallskip

   526 

   527 (1) it is part of a block in the longest fork, and (2) at

   528 least 5 blocks follow it in the longest fork. In this case we

   529 say that the transaction has ``6 confirmations''.\bigskip

   530 

   531 \footnotesize (might take 1h+\ldots but for creditcards you have 

   532 6 months chargeback)

   533 \end{frame}

   534 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   535 

   536 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   537 \begin{frame}[c]

   538 \frametitle{Mining Pools}

   539 

   540 \begin{bubble}[10cm]

   541 On average, it would take several years for a typical computer

   542 to solve a block, so an individual’s chance of ever solving

   543 one before the rest of the network, which typically takes 10

   544 minutes, is negligibly low.

   545 \end{bubble}\pause

   546 

   547 \small

   548 Many people join groups called mining pools that collectively

   549 work to solve blocks, and distribute rewards based on work

   550 contributed. These act somewhat like lottery pools among

   551 co-workers, except that some of these pools are quite large,

   552 and comprise more than 20\% of all the computers in the

   553 network.\medskip

   554 

   555 \footnotesize

   556 BTCC, the largest mining pool, has limited its members to 

   557 not solve more than 6 blocks in a row.

   558 \hfill\url{https://blockchain.info/pools}

   559 

   560 \end{frame}

   561 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   562 

   563 

   564 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   565 \begin{frame}[t]

   566 \frametitle{Bitcoins for Real}

   567 

   568 \begin{itemize}

   569 \item you need a public-private key (the hash of the 

   570 public key to determines your bitcoin address) 

   571 

   572 \item if you want to receive bitcoins, you publicise 

   573 this address

   574 

   575 \item there are $2^{160}$ possibilities\\ 

   576 (no check for duplicates)\bigskip\pause

   577 

   578 \item transactions contain ``payment scripts''

   579  (non-Turing-complete scripting language)\bigskip

   580  

   581  \small simplest script: pay-to-public-key

   582 \end{itemize}

   583 

   584 \end{frame}

   585 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   586 

   587 

   588 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   589 \begin{frame}[t]

   590 \frametitle{Multi-Signature Addresses}

   591 

   592 \begin{itemize}

   593 \item \ldots Bitcoin Improvement Proposal\bigskip\pause

   594 \item pay-to-public-key (explained so far)

   595 \item pay-to-script-hash (since 2012)\bigskip\pause

   596 

   597 can specify: requires \bl{M} out of \bl{N} signatures\medskip

   598 

   599 {\small for example\\

   600 1-of-2: me and my wife, or\\

   601 2-of-2 in banking/companies}

   602 

   603 \end{itemize}

   604 

   605 \end{frame}

   606 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   607 

   608 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   609 \begin{frame}[t]

   610 \frametitle{Dispute Mediation}

   611 

   612 \begin{itemize}

   613 \item say, client and (online) merchant do not trust 

   614   each other\bigskip\pause

   615 

   616 \item 2-of-3: mutually trusted escrow service

   617   \begin{enumerate}

   618   \item client sends money to 2-of-3 transaction

   619   \item merchant sends out goods

   620   \item if goods are OK, client sends signed transaction

   621     to merchant, merchant can sign and receive the money

   622     (publish in blockchain)

   623   \item if goods are defective, merchant sends signed transaction

   624     to client, client can sign and receive the money back

   625   \item if client and merchant disagree, then they ask escrow

   626   servive who signs a transaction and sends it to ``winning''

   627   party 

   628  \end{enumerate}

   629 \end{itemize}

   630 

   631 \end{frame}

   632 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   633 

   634 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   635 \begin{frame}[t]

   636 \frametitle{A Block in the Blockchain}

   637 

   638 \begin{center}

   639 \includegraphics[scale=0.38]{../pics/bitcoin_unconfirmed.png}

   640 \end{center}

   641 

   642 \begin{itemize}

   643 \item each block is hashed and contains a reference to

   644 the earlier block

   645 \item contains the ``salt'' and address of whoever solved the 

   646 puzzle

   647 \end{itemize}

   648 

   649 \end{frame}

   650 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   651 

   652 

   653 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   654 \begin{frame}

   655 \frametitle{Transaction History}

   656 

   657 you can follow back the transaction history until

   658 you reach either

   659 

   660 \begin{itemize}

   661 \item the genesis block (a transaction without input of

   662 50 bitcoins), or

   663 \item a coinbase transaction (this is the reward of the

   664 miner who validated a block of transactions in the blockchain)

   665 

   666 \end{itemize}

   667 

   668 \end{frame}

   669 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   670 

   671 

   672 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   673 \begin{frame}[t]

   674 \frametitle{Lost Bitcoins?}

   675 

   676 \begin{itemize}

   677 \item somebody needs to be able to generate a key-pair

   678   for the signature (for this you need the private 

   679   key)\bigskip

   680 

   681 \item somebody spends your bitcoins fraudulently

   682   (you cannot charge them back)\ldots{} bad luck

   683 

   684 \item you can send bitcoins to a ``non-existing'' address

   685   (Mt.~Gox)

   686 \end{itemize}

   687 

   688 \end{frame}

   689 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   690 

   691 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   692 \begin{frame}[t]

   693 \frametitle{Good Points}

   694 

   695 An attacker can't:

   696 

   697 \begin{itemize}

   698 \item reverse other people's transactions

   699 \item change the number of coins generated per block

   700 \item create coins out of thin air

   701 \item send coins that never belonged to an attacker

   702 \item you cannot meddle with the ``history''

   703 \end{itemize}\bigskip

   704 

   705 The system can be scaled to all world transactions. 

   706 

   707 \end{frame}

   708 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   709 

   710 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

   711 \begin{frame}[t]

   712 \frametitle{Take Home Points}

   713 

   714 

   715 \begin{itemize}

   716   \item Don't gamble! I am not a first mover in such things.

   717   \item Cool idea, but I am sure there will be a Bitcoin~2.0.

   718   \item It still depends on a lot of old-fashioned security 

   719   (e.g.~keeping private-keys secret)\bigskip

   720 

   721   \item Having now the knowledge how it works, go back

   722   and listen to what people/media make of it. 

   723 \end{itemize} 

   724 

   725 \end{frame}

   726 %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 

   727 

   728 

   729 \end{document}

   730 

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