blockchain

A Cryptographic Design Perspective of Blockchains: From Bitcoin to Ouroboros

How does one design a blockchain protocol? Back in 2013, while in Athens, I set out to design a non-proof-of-work-based blockchain protocol motivated by the debt crisis in Greece, looming bank liquidity problems and the increasing discussions about the possibility of having a parallel currency. The new protocol had to be based on proof of stake to make sure that it can run even on cellphones and be secure independent of any computational power existing that is external to it.

Very soon it became clear that the problem was going to need much more than a few months’ work. Fast-forward three years to 2016: I was at the University of Edinburgh and had joined forces with IOHK whose CEO, Charles Hoskinson, was poised to solve the same problem. The protocol, “Ouroboros” as it would be eventually named, was there but the core of the security proof was still elusive when my good friend Alexander Russell visited me.

Together, we tackled the problem of proving the security of the system. Whiteboards were filled over and over again until we felt we mined a true gem: a clean combinatorial argument that enabled us to argue mathematically the security of the scheme. 

Diving Into the Mindset of a Cryptographer

Security is an elusive concept. Take a system that is able to withstand a given set of adverse operational conditions. When can we call it secure? What if it collapses in the next moment when it is subjected to a slightly different set of conditions? Or when it is given inputs different from any that have been tried before?

Security cannot be demonstrated via experiment alone since attacker ingenuity can rarely be completely enumerated within any reasonable timeframe. Cryptographic design, thus, has to somehow scale this “universal quantifier”: the system should be called secure only if it withstands all possible attacks.

In response to this fundamental problem, “provable security” emerged as a rigorous discipline within cryptography that promotes the co-development of algorithms and (so-called) proofs of security. Such proofs come in the form of theorems that, under certain assumptions and threat models that describe what the attacker can and cannot do, establish the security of cryptographic algorithms. In this fashion, modern cryptographic design pushes the “burden of proof” to the proposer of an algorithm.

In the world of academic cryptography, gone are the days when someone could propose a protocol or algorithm and proclaim it secure because it was able to withstand a handful of known attacks. Instead, modern cryptographic design requires due diligence by the designers to ensure that no attack exists within a convincing and well-defined threat model.

This approach has been a tremendously powerful and inspiring paradigm within cryptography. For instance, the notion of a secure channel has been studied for more than 40 years. This is the fundamental cryptographic primitive that allows the proverbial Alice and Bob to send messages to each other safely in the presence (and possibly active interference) of an attacker. Today’s provable security analysis, even using automated tools, has unearthed attacks against secure channel protocols like TLS that were unanticipated by the security community.

Back in 2009 though, the blockchain was a concept that was presented outside regular academic cryptographic discourse. A brief white paper and a software implementation were sufficient to fuel its initial adoption that expanded rapidly. In retrospect, this was perhaps the only way for this fringe idea to ripple the waters of scientific discourse sufficiently and force a paradigm shift (in the sense of Thomas S. Kuhn’s “Structure of Scientific Revolutions”) in terms of how the consensus problem was to be studied henceforth.

As the shift settled though, a principled approach became direly needed. The newly discovered design space appears to be vast and the avenues of exploring it too numerous. The “burden of proof” needs to return to the designer.

Blockchain protocols need to become systematized, as they have gradually become one of the dominant themes in distributed consensus literature. The blockchain is not the problem; it is the solution. But in this case, one may wonder, what was the problem?

In 2014, jointly with Juan Garay and Nikos Leonardos, we put forth a first description of “the problem” in the form of what we called a “robust transaction ledger.” Such a ledger is implemented by a number of unauthenticated nodes and provides two properties, called persistence and liveness. Persistence mandates that nodes never disagree about the placement of transactions once they become stable, while liveness requires that all (honestly generated) transactions eventually become stable. Using this model, we provided a proof of security for the core of the Bitcoin protocol (a suitably simplified version of the protocol that we nicknamed the “bitcoin backbone”).

Given this proof, a natural question a cryptographer will ask is whether this protocol is really the best possible solution to the problem. “Best” here is typically interpreted in two ways: first, in terms of the efficiency of the solution; and second, in terms of the relevance and applicability of the threat model and the assumptions used in the security proof.

Efficiency is a particular concern for the Bitcoin blockchain. With all its virtues, the protocol is not particularly efficient in terms of processing time or resource consumption. This is exactly where “proof of stake” emerged as a possible alternative and a more efficient primitive for building blockchain protocols.

So, is it possible to use proof of stake to provably implement a robust transaction ledger? By 2016, with our Bitcoin backbone work already presented, this was a well-defined question; and the answer came with Ouroboros: our proof-of-stake-based blockchain protocol.

Ouroboros

The unique characteristic of Ouroboros is that the protocol was developed in tandem with a proof of security that aims to communicate in a succinct way that the proposed blockchain protocol satisfies the properties of a robust transaction ledger. Central to the proof is a combinatorial analysis of a class of strings that admit a certain discrete structure that maps to a blockchain fork. We called “forkable” those strings that admit a non-trivial such structure, and our proof shows that their density becomes minutely small as the length of the string grows.

With this argument, we showed how there is an opportunity for the nodes running the protocol to converge to a unique history. The protocol then dictates how to take advantage of this opportunity by running a cryptographic protocol that enables the nodes to produce a random seed, which, in turn, is used to sample the next sequence of parties to become active. As a result, the protocol facilitates the next convergence step to take place; in this way, it can continue ad infinitum following a cyclical process that was also the inspiration for its name. Ouroboros is the Greek word for the snake that eats its tail, an ancient Greek symbol for re-creation.

Having the protocol and its proof in hand gave us the unique opportunity for peer review, i.e., asking fellow cryptographers to evaluate the construction and its associated security proof as part of the formal submission process to a major cryptology conference.

Peer reviewing at the top cryptology venues is a painstakingly rigorous process that goes on for months. Papers are first reviewed independently by at least three experts, and afterward a discussion for each paper rages on as the three reviewers, as well as other members of the scientific committee, get involved and try to converge on the intellectual merits of each submission.

As a result of successfully passing this rigorous peer review process, Ouroboros was accepted and included in the program of Crypto 2017, the 37th annual cryptology conference. Crypto is one of the flagship conferences of the International Association for Cryptologic Research (IACR) and is one of the most exciting places for a cryptographer to be, as the program always contains research on the cutting edge of the discipline.

Furthermore, Ouroboros will be the settlement layer of the Cardano blockchain to be rolled out by IOHK in 2017, making it one of the swiftest technology transfer cases from a basic research publication to a system to be used by many thousands in just one year.

While all this may seem like a happy conclusion to the quest for a proof-of-stake blockchain, we are far from being done. On the contrary, we are still, as a community, at the very beginning of this expedition that will delve deep into blockchain design space. There are still too many open questions to solve, and new systems will be built on the foundations of the research that our community is laying out today.

The views expressed in this op ed are those of its author, Aggelos Kiayias , and do not necessarily reflect those of Bitcoin Magazine or BTC Media.

Ouroboros image courtesy of Wikimedia Commons.

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Blockstream Satellite: Broadcasting Bitcoin from Space

Yesterday a video teaser from blockchain technology company Blockstream created waves of excitement among enthusiasts of both cryptocurrencies and space. Most participants speculated that Blockstream was about to implement the idea, promoted by Bitcoin developer Jeff Garzik (among others), of a satellite system that streams the Bitcoin blockchain to the whole planet from space. The speculations were, indeed, correct.

Today, the company is announcing Blockstream Satellite, a new service that broadcasts real-time Bitcoin blockchain data from satellites in space to almost everyone on the planet. Blockstream Satellite covers across two-thirds of the Earth’s land mass and, according to the company, additional coverage areas will soon come online to reach almost every person on the planet by the end of the year.

“Bitcoin is a powerful and transformative internet native digital money that has blazed a trail of disruption, with its full potential yet to unfold. Because it’s permissionless, Bitcoin enables anyone to freely create new financial applications and other innovations that use the blockchain that haven’t been possible before,” said Blockstream co-founder and CEO Adam Back.

“Today’s launch of Blockstream Satellite gives even more people on the planet the choice to participate in Bitcoin. With more users accessing the Bitcoin blockchain with the free broadcast from Blockstream Satellite, we expect the global reach to drive more adoption and use cases for Bitcoin, while strengthening the overall robustness of the network.”

The Blockstream Satellite network currently consists of three geosynchronous satellites at various positions over Earth that cover four continents: Africa, Europe, South America and North America. Blockstream is leasing bandwidth on existing, commercial, geosynchronous satellites: Galaxy 18 (covering North America), Eutelsat 113 (covering South America) and two transponders on the Telstar 11N satellite (one covering Africa and one covering Europe).

Ground stations, called teleports, uplink the public Bitcoin blockchain data to the satellites in the network, which then broadcast the data to large areas across the globe. Additional satellites and teleports are being added to achieve worldwide coverage by the end of the year.

Blockstream_Satellite_Phase1+2_Coverage_Areas.jpgBlockstream_Satellite_Phase1+2_Coverage_Areas.jpg

The Blockstream service is expected to be especially useful to people in remote regions of developing world with poor internet connectivity.

“When I first heard of Blockstream Satellite, I immediately recognized its great potential to bring Bitcoin to regions of the world where internet access is either unavailable or expensive,” said Tim Akinbo, who runs the only bitcoin node in West Africa. “Not to mention providing redundant access when internet access is temporarily unavailable.”

Blockstream Satellite uses GNU Radio, an open-source software development platform for Software-Defined Radio (SDR), expected to reduce costs and streamline development by eliminating the need for specialized hardware. Blockstream Satellite utilizes the Fast Internet Bitcoin Relay Engine (FIBRE), an open-source protocol backed by several years of history operating and studying the Bitcoin Relay Network. “Together, these open-source technologies power the Blockstream Satellite network enabling Blockstream to provide this free service reliably and cost effectively,” noted the Blockstream press release.

“Anyone can receive the signal with a small satellite dish (similar to a consumer satellite TV dish) and a USB SDR (software-defined radio) interface,” notes the Blockstream Satellite FAQ. “The total equipment cost for a user is only about $100. The software is free. The software interface is the open-source GNU Radio software, which is the receiver. GNU Radio will send data to the FIBRE protocol, which is the Bitcoin process and is where the blocks reside.”

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NEO rebrand part 2

On June 22, Bitcoin Magazine reported that Antshares was embarking on a new rebranding strategy as part of its effort to lead blockchain development in China and around the world.

Now, on August 8, NEO Blockchain, China’s first original public chain project, has announced the completion of rebranding efforts from its former Antshares identity. Furthermore, NEO has upgraded its blockchain nodes, technical documents, social media, official site and exchange name worldwide, representing the transition from Antshares 1.0 to the NEO smart contract system 2.0.

NEO now is the top 10 cryptocurrency in terms of market value. It hopes to capitalize on its Chinese connections by calling to mind the success stories of other Chinese behemoths like Alibaba and Tencent. Whereas a month ago NEO may have been trying to “steal the spotlight from Ethereum,” it now seems to be trying to carve its own path forward.

Compared with Ethereum, NEO claims its smart contracts perform better in terms of determinism, high scalability and compatibility. The developers of smart contracts can use JAVA, C/C# and GO to write smart contracts without the need to learn new languages like Solidity, making it attractive to the global developer community.

Powered by the Community

In the press conference held on June 22, Antshares announced its rebranding of “NEO” with an emphasis on upgrading itself to a smart economy platform with an integration of digital assets, digital identity and smart contracts. It has also introduced notable new features like a cross-chain protocol, quantum-resistant cryptography, a distributed storage protocol and a secure communication protocol.

Other new additions include PC web and mobile apps, as well as an introductory video about the project.

Da Hongfei, the founder of NEO, told Bitcoin Magazine:

“NEO’s development hinges on two important teams: one is the Shanghai-based development and management team, while the other is an international team called “City of Zion,” purely supported by the community, thanks to a huge number of volunteers for NEO.

“The community just volunteered to translate the video and other materials into multiple languages. Furthermore, the technical white paper has also been translated by the community into English, Spanish, Japanese and Korean. We are especially grateful to the community, which will remain the core of NEO’s development in the future.”

New Partnerships Underway

SInce its successful upgrade, NEO has added full smart contract support, attracting a range of blockchain startups to work with its platform. Bancor, Coindash and Agrello are among some of the first to have reached agreements for technical cooperation with NEO.

Meanwhile, Red Pulse and other projects have announced that they will join the NEO ecosystem and adopt its smart contracts.

Red Pulse, an event-driven Chinese market research company, will build a research sharing platform built on the NEO 2.0 smart contract platform. It will allow readers to guide market research and to use digital currency to reward analysts and contributors directly and fairly, disrupting the current financial research market models. The project will also release a new token, $RPX, powered by the NEO platform.

Elastos, launched by Rong Chen, Jihan Wu and Feng Han, is a new blockchain-powered operating system. According to an announcement made in July of 2017, in cooperation with NEO, Elastos will “explore the technological values and applications of blockchains in the new internet operating systems to further the development of a Smart Economy.” Elastos plans to become an “OS for the blockchain,” while NEO will enable developers to create blockchain applications quickly and easily.

Furthermore, the Nest Smart Fund, based on NEO smart contracts, will be a brand-new form of investment fund that will eliminate (as much as possible) the high thresholds, high risks, inefficiencies and moral hazards often associated with traditional fund intermediaries. Backed by blockchain technology, Nest will allow anyone to participate transparently and easily in the Nest fund.

As NEO Council Secretary General Tony Tao told Bitcoin Magazine:

“The core of the platform-level blockchain lies in the establishment of the ecosystem. For the next step, we will launch the NEO Seed Project, hoping to inspire the global community and to encourage traditional technology developers to use the NEO Smart Contract platform.”

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Bloq Outlines Blockchain Solutions for Trade Finance and Supply Chain Management

Bloq, a Chicago-based blockchain developer and software startup, is now developing blockchain platforms and best practices for one of the most promising use cases for blockchain technology: trade finance and supply chain management.

Interest in the use of blockchain for trade is growing rapidly as companies and organizations like IBM, Microsoft, Hyperledger, JP Morgan and Walmart recognize that antiquated trade systems are long overdue for a complete restructuring and that blockchain technology has the potential to revolutionize the systems that make up global trade.

A common problem with current trade systems is fraud. The trip from farm or factory to store shelves involves numerous opportunities to falsify shipping documents and alter shipping container records or contents with little accountability.

“Global supply chain management has drastically changed in the last 10-15 years,” William Nieusma, Vice President, Government Strategy at Bloq told Bitcoin Magazine: “Regulatory mandates, operational complexity and data security concerns have ramped up the pressure to overhaul these outdated systems.”

Nieusma is one of the authors of Bloq’s recently released white paper, “Accelerating Global Trade Processes with Blockchain,” designed to introduce their new project to develop a model blockchain network for companies involved in trade.

“But it’s not all doom-and-gloom; adopters of blockchain-based systems can cut costs, improve customer service and find new, verified business partners,” added Nieusma.

Alan Cohn, attorney and consultant and advisor to Bloq told us:

“Global trade is an area where blockchain can play a transformative role, not just for industry but also for government.”

Nieusma noted that Bloq believes that in the future, the most significant and valuable business systems, including trade, will run on blockchains.

IBM has recognized the potential of blockchain and trade. In partnership with seven European banks, it is building a pilot blockchain trade program with Hyperledger to enable companies like Walmart and Maersk to use blockchain technology to better track the movement of farm and factory products to the store shelves.

Microsoft is also building a model trade program using the Ethereum blockchain in a pilot project with JPMorgan.

Blockchain Tech and Trade Are a Perfect Fit

Trade finance and supply management lend themselves well to the particular advantages of blockchain technology. The Bloq white paper states:

Blockchain technology holds considerable promise to substantially improve supply chain security and transparency. Blockchain’s inherent architectural attributes solve several weaknesses in current trade IT systems and processes to ensure information immutability and transaction auditing, thereby increasing trade value capture and value creation.

Bloq’s model trade platform promises companies high levels of cybersecurity, reduced waiting times, transparency, ease of revenue payments, low infrastructure investment, easily auditable transactions, efficient accommodation for additional participants, immutability and automatic bonding and payments through smart contracts.

Bloq plans to build a “permissioned, federated network” built on the Bitcoin blockchain that, depending on the client’s needs, will also support Ethereum and Hyperledger. Nieusma said:

“Bloq believes that the future is a multi-chain, multi-network world and that interoperability is a guiding principle in network buildout.”

The Bloq program will connect all parties involved in a trade including buyers, banks, sellers and transporters so that information about a shipment is distributed among all involved parties at the same time.

As the white paper states:

“Trade can be safer, more secure, and more profitable with less human error. We hope this discussion leads to an evolution in trade that benefits all stakeholders.”

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Kazakhstan Seeks to Become Regional Hub for Cryptocurrency IndustryThe Kazakhstan government has announced its intentions to make the country host to “the most favourable business climate” for cryptocurrency and fintech companies. The announcement comes from Kazakhstan’s Astana International Financial Center (AIFC), which plans to operate in collaboration between Deloitte, Waves, Kesarev Consulting, and Ukrainian law firm Justcutum in order to develop a “highly progressive

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PR: ACT Is NGO 2.0 - Bringing Power Back to the PeopleThis is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com does not endorse nor support this product/service. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release. ACT, an Ethereum blockchain based social action platform, is powered by

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Moby DickA Twitter user named LaurentMT has been battling his very own “Moby Dick.” He implied the White Whale has come in the form of a spam attack on the network, which has caused blocks to consume too many utxos (unspent transaction outputs) in the system in recent weeks. The user commented on Twitter in a series of charts, primarily containing information

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SummitOn September 9, 2017, blockchain enthusiasts from all around the world will attend the ‘BTC & Blockchain International Summit’ taking place in Beijing, China. The event will be hosted by the Bitcoin-focused data and trading services provider, Bitkan at the gorgeous Sofitel Wanda Beijing Hotel in the Chaoyang District. Also read: Bitcoin.com Podcast Episode with

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W3C Launches Global CrowdsaleThis is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com does not endorse nor support this product/service. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release. Digital coin designed for the financially underserved markets PRAGUE, Czech Republic

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FalconOn July 12 the Switzerland-based private bank Falcon Group announced the bank will offer bitcoin asset management for their customers. Through a partnership with Bitcoin Suisse AG, the bank’s clients will be able to purchase and store the decentralized currency using their account funds. Also read: Japanese Bitcoin Exchange Bitpoint Expands into Mainland China, Hong Kong and

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