Ethereum 2.0 an Introduction
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Casper the Friendly Finality Gadget
Casper the Friendly Finality Gadget Vitalik Buterin and Virgil Griffith Ethereum Foundation Abstract We introduce Casper, a proof of stake-based finality system which overlays an existing proof of work blockchain. Casper is a partial consensus mechanism combining proof of stake algorithm research and Byzantine fault tolerant consensus theory. We introduce our system, prove some desirable features, and show defenses against long range revisions and catastrophic crashes. The Casper overlay provides almost any proof of work chain with additional protections against block reversions. 1. Introduction Over the past few years there has been considerable research into “proof of stake” (PoS) based blockchain consensus algorithms. In a PoS system, a blockchain appends and agrees on new blocks through a process where anyone who holds coins inside of the system can participate, and the influence an agent has is proportional to the number of coins (or “stake”) it holds. This is a vastly more efficient alternative to proof of work (PoW) “mining” and enables blockchains to operate without mining’s high hardware and electricity costs. There are two major schools of thought in PoS design. The first, chain-based proof of stake[1, 2], mimics proof of work mechanics and features a chain of blocks and simulates mining by pseudorandomly assigning the right to create new blocks to stakeholders. This includes Peercoin[3], Blackcoin[4], and Iddo Bentov’s work[5]. The other school, Byzantine fault tolerant (BFT) based proof of stake, is based on a thirty-year-old body of research into BFT consensus algorithms such as PBFT[6]. BFT algorithms typically have proven mathematical 2 properties; for example, one can usually mathematically prove that as long as > 3 of protocol participants are following the protocol honestly, then, regardless of network latency, the algorithm cannot finalize conflicting blocks. -
Beauty Is Not in the Eye of the Beholder
Insight Consumer and Wealth Management Digital Assets: Beauty Is Not in the Eye of the Beholder Parsing the Beauty from the Beast. Investment Strategy Group | June 2021 Sharmin Mossavar-Rahmani Chief Investment Officer Investment Strategy Group Goldman Sachs The co-authors give special thanks to: Farshid Asl Managing Director Matheus Dibo Shahz Khatri Vice President Vice President Brett Nelson Managing Director Michael Murdoch Vice President Jakub Duda Shep Moore-Berg Harm Zebregs Vice President Vice President Vice President Shivani Gupta Analyst Oussama Fatri Yousra Zerouali Vice President Analyst ISG material represents the views of ISG in Consumer and Wealth Management (“CWM”) of GS. It is not financial research or a product of GS Global Investment Research (“GIR”) and may vary significantly from those expressed by individual portfolio management teams within CWM, or other groups at Goldman Sachs. 2021 INSIGHT Dear Clients, There has been enormous change in the world of cryptocurrencies and blockchain technology since we first wrote about it in 2017. The number of cryptocurrencies has increased from about 2,000, with a market capitalization of over $200 billion in late 2017, to over 8,000, with a market capitalization of about $1.6 trillion. For context, the market capitalization of global equities is about $110 trillion, that of the S&P 500 stocks is $35 trillion and that of US Treasuries is $22 trillion. Reported trading volume in cryptocurrencies, as represented by the two largest cryptocurrencies by market capitalization, has increased sixfold, from an estimated $6.8 billion per day in late 2017 to $48.6 billion per day in May 2021.1 This data is based on what is called “clean data” from Coin Metrics; the total reported trading volume is significantly higher, but much of it is artificially inflated.2,3 For context, trading volume on US equity exchanges doubled over the same period. -
Validation of Smart Contracts Through Automated Tooling
Faculty of Sciences and Tecnology Department of Informatics Engineering Validation of Smart Contracts Through Automated Tooling Tom´asMorgado de Carvalho Concei¸c~ao Internship Report in the context of the Master in Informatics Engineering, Specialization in Software Engineering advised by Professor Raul Barbosa and Eng. Jo~aoBarbosa and presented to the Department of Informatics Engineering / Faculty of Sciences and Technology January 2019 Acknowledgements I would first like to thank Professor Raul Barbosa, my advisor at the University of Coimbra, for, with his valuable experience and insights, guiding me through this process and always challenging me to do better. I would like to thank my advisor, Jo~aoBarbosa, not only for his technical contributions to this dissertation but for always ensuring that I had my priorities straight and was managing my time properly. Thank you for pushing me to always make healthy choices regarding my work-life balance. I want to thank the members of my jury, Professor Fernando Jos´eBarros and Professor C´esarAlexandre Domingues Teixeira, for their input and suggestions for improvement, and their constructive criticism. I would like to thank Whitesmith and Blocksmith, and in particular Gon¸caloLouzada, Maria Jo~aoFerreira and Rafael Jegundo, for accepting me on this internship, providing me with all the tools and conditions to achieve my goals and for inviting me to take part on other projects during this year. I would also like to thank my co-workers, who, since the first day and without exception, made me feel welcome and at home. I have learned something new with every single one of you. -
Proof of 'X' and Hash Functions Used
Top 20 Cryptocurrencies on Aggregate market value - Proof of ‘X’ and Hash functions used - 1 ISI Kolkata BlockChain Workshop, Nov 30th, 2017 CRYPTOGRAPHY with BlockChain - Hash Functions, Signatures and Anonymization - Hiroaki ANADA*1, Kouichi SAKURAI*2 *1: University of Nagasaki, *2: Kyushu University Acknowledgements: This work is supported by: Grants-in-Aid for Scientific Research of Japan Society for the Promotion of Science; Research Project Number: JP15H02711 Top 20 Cryptocurrencies on Aggregate market value - Proof of ‘X’ and Hash functions used - 3 Table of Contents 1. Cryptographic Primitives in Blockchains 2. Hash Functions a. Roles b. Various Hash functions used for Proof of ‘X’ 3. Signatures a. Standard Signatures (ECDSA) b. Ring Signatures c. One-Time Signatures (Winternitz) 4. Anonymization Techniques a. Mixing (CoinJoin) b. Zero-Knowledge proofs (zk-SNARK) 5. Conclusion 4 Brief History of Proof of ‘X’ 1992: “Pricing via Processing or Combatting Junk Mail” Dwork, C. and Naor, M., CRYPTO ’92 Pricing Functions 2003: “Moderately Hard Functions: From Complexity to Spam Fighting” Naor, M., Foundations of Soft. Tech. and Theoretical Comp. Sci. 2008: “Bitcoin: A peer-to-peer electronic cash system” Nakamoto, S. Proof of Work 5 Brief History of Proof of ‘X’ 2008: “Bitcoin: A peer-to-peer electronic cash system” Nakamoto, S. Proof of Work 2012: “Peercoin” Proof of Stake (& Proof of Work) ~ : Delegated Proof of Stake, Proof of Storage, Proof of Importance, Proof of Reserves, Proof of Consensus, ... 6 Proofs of ‘X’ 1. Proof of Work 2. Proof of Stake Hash-based Proof of ‘X’ 3. Delegated Proof of Stake 4. Proof of Importance 5. -
Short Selling Attack: a Self-Destructive but Profitable 51% Attack on Pos Blockchains
Short Selling Attack: A Self-Destructive But Profitable 51% Attack On PoS Blockchains Suhyeon Lee and Seungjoo Kim CIST (Center for Information Security Technologies), Korea University, Korea Abstract—There have been several 51% attacks on Proof-of- With a PoS, the attacker needs to obtain 51% of the Work (PoW) blockchains recently, including Verge and Game- cryptocurrency to carry out a 51% attack. But unlike PoW, Credits, but the most noteworthy has been the attack that saw attacker in a PoS system is highly discouraged from launching hackers make off with up to $18 million after a successful double spend was executed on the Bitcoin Gold network. For this reason, 51% attack because he would have to risk of depreciation the Proof-of-Stake (PoS) algorithm, which already has advantages of his entire stake amount to do so. In comparison, bad of energy efficiency and throughput, is attracting attention as an actor in a PoW system will not lose their expensive alternative to the PoW algorithm. With a PoS, the attacker needs mining equipment if he launch a 51% attack. Moreover, to obtain 51% of the cryptocurrency to carry out a 51% attack. even if a 51% attack succeeds, the value of PoS-based But unlike PoW, attacker in a PoS system is highly discouraged from launching 51% attack because he would have to risk losing cryptocurrency will fall, and the attacker with the most stake his entire stake amount to do so. Moreover, even if a 51% attack will eventually lose the most. For these reasons, those who succeeds, the value of PoS-based cryptocurrency will fall, and attempt to attack 51% of the PoS blockchain will not be the attacker with the most stake will eventually lose the most. -
Creation and Resilience of Decentralized Brands: Bitcoin & The
Creation and Resilience of Decentralized Brands: Bitcoin & the Blockchain Syeda Mariam Humayun A dissertation submitted to the Faculty of Graduate Studies in partial fulfillment of the requirements for the degree of Doctor of Philosophy Graduate Program in Administration Schulich School of Business York University Toronto, Ontario March 2019 © Syeda Mariam Humayun 2019 Abstract: This dissertation is based on a longitudinal ethnographic and netnographic study of the Bitcoin and broader Blockchain community. The data is drawn from 38 in-depth interviews and 200+ informal interviews, plus archival news media sources, netnography, and participant observation conducted in multiple cities: Toronto, Amsterdam, Berlin, Miami, New York, Prague, San Francisco, Cancun, Boston/Cambridge, and Tokyo. Participation at Bitcoin/Blockchain conferences included: Consensus Conference New York, North American Bitcoin Conference, Satoshi Roundtable Cancun, MIT Business of Blockchain, and Scaling Bitcoin Tokyo. The research fieldwork was conducted between 2014-2018. The dissertation is structured as three papers: - “Satoshi is Dead. Long Live Satoshi.” The Curious Case of Bitcoin: This paper focuses on the myth of anonymity and how by remaining anonymous, Satoshi Nakamoto, was able to leave his creation open to widespread adoption. - Tracing the United Nodes of Bitcoin: This paper examines the intersection of religiosity, technology, and money in the Bitcoin community. - Our Brand Is Crisis: Creation and Resilience of Decentralized Brands – Bitcoin & the Blockchain: Drawing on ecological resilience framework as a conceptual metaphor this paper maps how various stabilizing and destabilizing forces in the Bitcoin ecosystem helped in the evolution of a decentralized brand and promulgated more mainstreaming of the Bitcoin brand. ii Dedication: To my younger brother, Umer. -
Arxiv:1907.02434V1 [Cs.CY] 4 Jul 2019 1 Introduction
Cryptocurrency Egalitarianism: A Quantitative Approach Dimitris Karakostas1,3, Aggelos Kiayias1,3, Christos Nasikas2,4, and Dionysis Zindros2,3 1 University of Edinburgh 2 University of Athens 3 IOHK 4 “ATHENA” Research Center Abstract. Since the invention of Bitcoin one decade ago, numerous cryptocurrencies have sprung into existence. Among these, proof-of-work is the most common mechanism for achieving consensus, whilst a num- ber of coins have adopted “ASIC-resistance” as a desirable property, claiming to be more “egalitarian,” where egalitarianism refers to the power of each coin to participate in the creation of new coins. While proof-of-work consensus dominates the space, several new cryptocurren- cies employ alternative consensus, such as proof-of-stake in which block minting opportunities are based on monetary ownership. A core criti- cism of proof-of-stake revolves around it being less egalitarian by making the rich richer, as opposed to proof-of-work in which everyone can con- tribute equally according to their computational power. In this paper, we give the first quantitative definition of a cryptocurrency’s egalitarian- ism. Based on our definition, we measure the egalitarianism of popular cryptocurrencies that (may or may not) employ ASIC-resistance, among them Bitcoin, Ethereum, Litecoin, and Monero. Our simulations show, as expected, that ASIC-resistance increases a cryptocurrency’s egalitar- ianism. We also measure the egalitarianism of a stake-based protocol, Ouroboros, and a hybrid proof-of-stake/proof-of-work cryptocurrency, Decred. We show that stake-based cryptocurrencies, under correctly se- lected parameters, can be perfectly egalitarian, perhaps contradicting folklore belief. arXiv:1907.02434v1 [cs.CY] 4 Jul 2019 1 Introduction In 2008, Satoshi Nakamoto proposed Bitcoin [25], the first and most suc- cessful cryptocurrency to date. -
A Regulatory System for Optimal Legal Transaction Throughput in Cryptocurrency Blockchains
A Regulatory System for Optimal Legal Transaction Throughput in Cryptocurrency Blockchains Aditya Ahuja Vinay J. Ribeiro Ranjan Pal Indian Institute of Technology Indian Institute of Technology University of Michigan Delhi Bombay Ann Arbor, USA New Delhi, India Mumbai, India [email protected] [email protected] [email protected] ABSTRACT correctness of the underlying computational principles, which are a Permissionless blockchain consensus protocols have been designed basis of the efficacy of these economies. More specifically, in order primarily for defining decentralized economies for the commercial to sustain these cryptocurrency based decentralized economies, trade of assets, both virtual and physical, using cryptocurrencies. blockchain consensus protocols serve as a technical foundation. In most instances, the assets being traded are regulated, which man- Existing blockchain protocols for cryptocurrencies address one dates that the legal right to their trade and their trade value are of (or any combination of) the following system goals: speed, se- determined by the governmental regulator of the jurisdiction in curity and decentralization. Unfortunately, these system goals are which the trade occurs. Unfortunately, existing blockchains do not necessary but insufficient. Illegal activities propelled through the formally recognise proposal of legal cryptocurrency transactions, as strategic use of blockchain based cryptocurrencies, is a serious part of the execution of their respective consensus protocols, result- problem staring at the face of many world governments today ing in rampant illegal activities in the associated crypto-economies. [47]. These illegal activities exploit the permissionless nature of In this contribution, we motivate the need for regulated blockchain the blockchain networks for illegal trade, to strategically defeat consensus protocols with a case study of the illegal, cryptocurrency regulation by obfuscating the jurisdictions of the blockchain users based, Silk Road darknet market. -
Incentives in Ethereum's Hybrid Casper Protocol
Incentives in Ethereum’s Hybrid Casper Protocol Vitalik Buterin∗, Daniel¨ Reijsbergeny, Stefanos Leonardosy, Georgios Piliourasy ∗Ethereum Foundation ySingapore University of Technology and Design Abstract We present an overview of hybrid Casper the Friendly Finality Gadget (FFG): a Proof-of-Stake checkpointing protocol overlaid onto Ethereum’s Proof-of-Work blockchain. We describe its core functionalities and reward scheme, and explore its properties. Our findings indicate that Casper’s implemented incentives mechanism ensures liveness, while providing safety guarantees that improve over standard Proof-of-Work protocols. Based on a minimal-impact implementation of the protocol as a smart contract on the blockchain, we discuss additional issues related to parametrisation, funding, throughput and network overhead and detect potential limitations. Index Terms Proof of Stake, Ethereum, Consensus I. INTRODUCTION In 2008, the seminal Bitcoin paper by Satoshi Nakamoto [50] introduced the blockchain as a means for an open network to extend and reach consensus about a distributed ledger of digital token transfers. The main innovation of Ethereum [16] was to use the blockchain to maintain a history of code creation and execution. As such, Ethereum functions as a global computer that executes code uploaded by users in the form of smart contracts. Like Bitcoin [31], [32], Ethereum’s block proposal mechanism is based on the concept of Proof-of-Work (PoW). In PoW, network participants utilise computational power to win the right to add blocks to the blockchain. However, the alarming global energy consumption of PoW-based blockchains has made the concept increasingly controversial [22], [45], [65]. One of the main alternatives to PoW is virtual mining or Proof-of-Stake (PoS) [1], [5], [46], [55]. -
The Amazing Story of Ethereum and the $55 Million Heist That Almost
One he clock above baggage claim at Toronto’s Pearson Airport read 21:45 as Vitalik Buterin, six years old, played with a rubber Tducky. A gift from the Lufthansa flight attendant on the long journey from Moscow, it would become one of his favorite bath toys in the years ahead. As the towheaded, blue-eyed boy looked around this new place, COPYRIGHTEDhe thought about recently celebrating MATERIAL his birthday with his parents and grandparents in Kolomna, the ancient Russian city southeast of Moscow where the Moskva and Oka rivers meet. A few days later, when he was told they were going to Canada, he asked if it was for a week or a month. No, zaya, it’s for good, he was told. Vladimir Putin would soon be president in Russia, and his parents were seeking better opportunities – as well as some adventure – abroad. There are few bigger 27 Leising602934_c01.indd 27 8/12/2020 8:20:50 AM 28 out of the ether changes in a life than moving across an ocean, and like anyone, the skinny six-year-old felt afraid of the unknown he now faced. He carried fond, but few, memories of Russia with him. He remem- bered living with his grandparents while his mom and dad were busy with their careers, and as they worked out the details of an amicable divorce. His mother’s parents had an apartment in Kolomna as well as a dacha where his grandmother tended a vegetable garden. The nearby forest was his favorite place to play. He remembered it being cold. -
Building Applications on the Ethereum Blockchain
Building Applications on the Ethereum Blockchain Eoin Woods Endava @eoinwoodz licensed under a Creative Commons Attribution-ShareAlike 4.0 International License 1 Agenda • Blockchain Recap • Ethereum • Application Design • Development • (Solidity – Ethereum’s Language) • Summary 3 Blockchain Recap 4 What is Blockchain? • Enabling technology of Bitcoin, Ethereum, … • Distributed database without a controlling authority • Auditable database with provable lineage • A way to collaborate with parties without direct trust • Architectural component for highly distributed Internet-scale systems 5 Architectural Characteristics of a Blockchain • P2P distributed • (Very) eventual consistency • Append only “ledger” • Computationally expensive • Cryptographic security • Limited query model (key only) (integrity & non-repudiation) • Lack of privacy (often) • Eventual consistency • low throughput scalability • Smart contracts (generally – 10s txn/sec) • Fault tolerant reliability 6 What Makes a Good Blockchain Application? • Multi-organisational • No complex query requirement • No trusted intermediary • Multiple untrusted writers • Need shared source of state • Latency insensitive (e.g. transactions, identity) • Relatively low throughput • Need for immutability (e.g. proof • Need for resiliency of existence) • Transaction interactions • Fairly small data size “If your requirements are fulfilled by today’s relational databases, you’d be insane to use a blockchain” – Gideon Greenspan 7 What is Blockchain being Used For? digital ledger that tracks and derivatives post- verifiable supply chains supply chain efficiency protects valuable assets trade processing Keybase Georgia government Identity management verified data post-trade processing records 8 Public and Permissioned Blockchains Public Permissioned Throughput Low Medium Latency High Medium # Readers High High # Writers High Low Centrally Managed No Yes Transaction Cost High “Free” Based on: Do you need a Blockchain? Karl Wüst, Arthur Gervaisy IACR Cryptology ePrint Archive, 2017, p.375. -
Algorand: Scaling Byzantine Agreements for Cryptocurrencies Yossi Gilad, Rotem Hemo, Silvio Micali, Georgios Vlachos, Nickolai Zeldovich MIT CSAIL
Algorand: Scaling Byzantine Agreements for Cryptocurrencies Yossi Gilad, Rotem Hemo, Silvio Micali, Georgios Vlachos, Nickolai Zeldovich MIT CSAIL ABSTRACT open setting: since anyone can participate, an adversary can create an arbitrary number of pseudonyms (“Sybils”) [21], Algorand is a new cryptocurrency that confirms transactions making it infeasible to rely on traditional consensus proto- with latency on the order of a minute while scaling to many cols [15] that require a fraction of honest users. users. Algorand ensures that users never have divergent views of confirmed transactions, even if some of the users Bitcoin [41] and other cryptocurrencies [23, 53] address are malicious and the network is temporarily partitioned. this problem using proof-of-work (PoW), where users must In contrast, existing cryptocurrencies allow for temporary repeatedly compute hashes to grow the blockchain, and forks and therefore require a long time, on the order of an the longest chain is considered authoritative. PoW ensures hour, to confirm transactions with high confidence. that an adversary does not gain any advantage by creating Algorand uses a new Byzantine Agreement (BA) protocol pseudonyms. However, PoW allows the possibility of forks, to reach consensus among users on the next set of trans- where two different blockchains have the same length, and actions. To scale the consensus to many users, Algorand neither one supersedes the other. Mitigating forks requires uses a novel mechanism based on Verifiable Random Func- two unfortunate sacrifices: the time to grow the chain byone tions that allows users to privately check whether they are block must be reasonably high (e.g., 10 minutes in Bitcoin), selected to participate in the BA to agree on the next set and applications must wait for several blocks in order to of transactions, and to include a proof of their selection in ensure their transaction remains on the authoritative chain their network messages.