1. IS 651: Distributed Systems Blockchain
Sisi Duan
Assistant Professor
Information Systems

2. Recall BFT Consensus problem Mask Byzantine failures 3f+1 vs. f
indistinguishable

3. Key to correctness BFT/Byzantine Quorum 2f+1 out of 3f+1
Another way: If there are n nodes in the system…
Tolerates one-third failures f=(n-1)/3
Quorum (n+f+1)/2

4. PBFT

5. BChain

6. BChain

7. Announcement Project presentation next week HW5 Exam
Remember to register for presentation time
HW5
Next week
Answers will be posted next weekend
Exam
In two weeks
Slides of final review are posted on class website

8. What we’ve learned so far
Consistency
Mostly closed system
Crash fault tolerance
Byzantine fault tolerance
Consensus …

9. Today What is blockchain Permissionless blockchain – Bitcoin
Permissioned blockchain – Hyperledger and BFT

10. What is Blockchain? Consensus A growing list of digital records
cryptography
Decentralized
network
Distributed
database

11. Permissionless Blockchain - Bitcoin
Cryptocurrency
Bitcoin Network
Nodes maintain ledgers
Distributed anonymized nodes
Clients
Pros
No third-party interruptions
Very low transaction fees
Immediate settlement
Traceable historic transactions …

12. Permissionless Blockchain
Blockchain network
Anonymized nodes
Create trust in a naturally distrustful situation
Major projects
Bitcoin
Etherum – Smart Contract
The trust trade-off
High energy consumption

13. Permissioned Blockchain
Blockchain network
Partially trusted nodes
Governing authority
Pros:
Proved secure schemes
Greatly enhanced performance
Reduced computational power
Reduced logistical issues

14. Permissioned Blockchain
Applications
Cryptocurrencies
Supply chain
Food safety
IoT
Etc.
Major product
IBM Hyperledger
Tendermint
JPMorgan Chase QuorumChain
Multichain ……

15. Another way of categorizing blockchains
Private blockchains
Consortium blockchains
Public blockchains

16. Bitcoin A peer-to-peer (open) system First practical cryptocurrency
Any one could join
First practical cryptocurrency

17. Almost 2000 cryptocurrencies…

18. Usual way of sending money
We have a bank account
Balance
Send through the bank
Deduct certain amount from the sender’s account
Increase the receiver’s account
Who does that?
What if we send to another bank?
What if the bank is in another country?

19. Bitcoin: e-cash without a central trusted party
Portable
No need for trusted 3rd party
Anonymous
Cannot repudiate after payment

20. History of cryptocurrency
Hayek. Denationalization of money, free banking and inflation targeting
Satoshi Nakamoto. Bitcoin: A Peer-to-Peer Electronic Cash System

21. Bitcoin Bitcoin The protocol / technology bitcoins
The currency / coin / unit of account
Transaction
Transfer of a coin from one owner to the next, signed cryptographically
Public/Private key
The receiver’s public key is his Bitcoin address
The sender’s private key is used to digitally sign the transaction
Block
Validated collection of transactions over 10 minutes, created through mining
Mining
Generates a block and validates transactions through proof-of-work, creating new bitcoins in the process
Blockchain
Timestamped sequence of linked blocks
The public ledger

22. Bitcoin Overview
Every participant maintains a ledger of all the transactions
Work together to verify transactions
Key components: proof-of-work, blocks, hash chain

23. How Bitcoin Works Ledger
Every one maintains the the history of all the transactions in the network
User
bitcoins
Alice 3
Bob
4.2
Carol
10.3

24. Sending money
Alice->Bob: 1BTC

25. Sending money
Alice->Bob: 1BTC

26. Sending money Alice->Bob: 1BTC
Every one applies to its local copy of the ledger

27. Questions How to make sure the sender actually sends the transaction?
How to make sure the sender does have enough money?
How to ensure the order of the transactions?
Discussion: what consistency model do we nee?
How to ensure which transaction should be processed first?

28. Questions How to make sure the sender actually sends the transaction?
Digital signatures
Two types: asymmetric key based (used in bitcoin) and symmetric key based
As long as the sender does not lose its private key, then the message with the digital signature is generated by the sender

29. Bitcoin Transactions Public key 0xc7b2f68...
Public key 0xa8fc93875a972ea
Signature 0xa87g14632d452cd
Public key 0xc7b2f68...

30. Questions
How to make sure the sender does have enough money?

31. Bitcoin: How to ensure the order of the transactions? Hash chain

32. Questions
How to ensure the which transaction should be processed next?
Every time, one node (leader) proposes the next transaction (or a batch of transactions)
Proof of work
Current leader throws a puzzle and everyone tries to solve it
The one who solves it first will be the next leader

33. Use of Cryptographic Hashes
Proof-of-work
Block contains transactions to be validated and previous hash value.
Pick a nouce such that H(prev hash, nounce, Tx) < E. E is a variable that the system specifies. Basically, this amounts to finding a hash value who’s leading bits are zero. The work required is exponential in the number of zero bits required.
Verification is easy. But proof-of-work is hard.

34. Tie breaking
Two nodes may find a correct block simultaneously.
Keep both and work on the first one
If one grows longer than the other, take the longer one
Two different block chains (or blocks) may satisfy the required proof-of-work.

35. Reverting is Hard
Reverting gets exponentially hard as the chain grows.
2. Recompute nonce
3. Recompute the next nonce
1. Modify the transaction (revert or change the payer)

36. Practical Limitation At least 10 mins to verify a transaction.
Agree to pay
Wait for one block (10 mins) for the transaction to go through.
But, for a large transaction ($$$) wait longer. Because if you wait longer it becomes more secure. For large $$$, you wait for six blocks (1 hour).

37. Other Challenges Scalability
Not really decentralized, about 20 mining pools in total
25% computing power is not that hard to obtain by a single party
Legal issues

38. What’s the relationships between permissionless blockchains and BFT?
They solve the same problem, why?
Same
Linearizability
Different
Fixed leader vs different leaders

39. https://www. mail-archive. com/cryptography@metzdowd. com/msg09997

40. Permissioned Blockchains
Everyone knows the identity of each other
Called private blockchains
Run BFT protocols to reach a consensus

41. Permissionless v.s. Permissioned Blockchains
M. Vukolic 2015

42. Hyperledger Lead by IBM, supported by > 300 organizations
Five major projects
Fabric – PBFT
Burrow
Sawtooth
Indy
Iroha - BChain

43. Look into the consensus protocols
Hyperledger Fabric -- Zab/Paxos -> PBFT
Hyperledger Iroha – Sumeragi (BChain)
Tendermint – variant of PBFT
Symbiont -- BFT-SMaRt (implements PBFT)
Corda – Raft and BFT-SMaRt
Quorum by JPMorgan Chase – QuorumChain and Raft-based Chain
Proprietary protocols - Kadena

44. Hyperledger Fabric

45. Hyperledger Fabric

46. Hyperledger Fabric

47. Discussion Scalability Performance
What are the challenges of BFT consensus in the blockchains?

48. Permissioned Blockchain – Open Problems
Engineering cryptographic systems
Major components/problems
Formal protocol proof and reviews, technical comparisons, etc.
Application-driven implementation
Evaluation and Resilience under actual attacks and network incidents
… blockchain developers should look towards the established experience in
cryptography, security, and the theory of distributed systems for building
trustworthy systems. Otherwise, it might be dangerous to entrust financial
value to new protocols. Open discussion, expert reviews, broad validation,
and standards recommendations should be employed.
Christian Cachin and Marko Vukolic – IBM Research Zurich
Blockchain consensus protocols in the wild.

49. Other topics in blockchains
Smart contract
Off chain contract
Hybrid blockchains

50. Blockchain summary Permissionless blockchains Permissioned blockchains
PoW, proof-of-X, proof-of-stake
A lot of blockchains are hybrid!

51. Reading list (Recommended) https://www.youtube.com/watch?v=Lx9zgZCMqXE
Satoshi Nakamoto. Bitcoin: A Peer-to-Peer Electronic Cash System
Elli Androulaki et. al. Hyperledger Fabric: A Distributed Operating System for Permissioned Blockchains. Eurosys 2018.