Bitcoin 2.0 and OP_RETURN - The Blockchain as TCP/IP?

Metadata in the Blockchain: The OP_RETURN Explosion

Coin Sciences Ltd http://coinspark.org/

If Bitcoin = Gold 2.0 then …

What is the intrinsic value of a bitcoin?

Coin Sciences Ltd Metadata in the Blockchain http://coinspark.org/

What has gone wrong? (1)


Early Internet growth


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Gartner hype cycle




3% (PayPal)

What is bitcoin for?


A hypothesis…

Bitcoin as communication


What can we send?


An expensive way to encode information

Fake addresses


Permanent burden on unspent output list

Multisig addresses (1 of …)


Temporary burden on unspent output list

The OP_RETURN decision


https://bitcoinfoundation.org/2013/10/core-development-update-5/

OP_RETURNs


Provably prunable, no unspent output

OP_RETURN size limit


OP_RETURNs vs TCP/IP

OP_RETURNs TCP/IP Ratio

Address space 2160 (collisions) 232 → 2128 1×

Latency 5 seconds 1 second 5×

Packet size 40 bytes 1.5 KB 36×

Bandwidth ~100 bytes/s (50% of network!)

5 MB/s (50% of 100 Mbps)

50,000×

Cost $850,000/GB (at $315/BTC)

$0.10/GB 10,000,000×


So why use bitcoin?

Asynchronicity?

Bitcoin TCP/IP Email

Asynchronous Synchronous Asynchronous


Notarization


Bitcoin TCP/IP

Blockchain None

Message chaining


Bitcoin TCP/IP

Directed acyclic graph

Request-response only

Privacy

Bitcoin TCP/IP

Addresses Pseudonymous but transaction chain analysis

IP geolocation, traceable to

individual via ISP

Payloads Naked in public Private but seen by ISPs, switches


Payment model


Bitcoin TCP/IP

Per message, with message

Subscription or pay-per-use, separate

So bitcoin is suitable for…

•  Tiny payload •  High value

– Hashes in general

•  Public broadcast •  Permanently recorded •  Non-instant •  Pay-as-you-go


Financial transactions


Document notarization


Bitproof, BlockSign, LaPreuve, Proof of Existence, Stampd, Stampery

Historical records

•  Blog post about stuff in blockchain


Lots more: http://www.righto.com/2014/02/ascii-bernanke-wikileaks-photographs.html

Email with scarcity?


Universal family tree?

•  Show a family tree (DAG)


http://recursivediscursion.blogspot.com/2011/04/gentle-introduction-to-graph-theory.html

0.0

0.5

1.0

1.5

2.0

2.5

3.0

25xxxx

26xxxx

27xxxx

28xxxx

29xxxx

30xxxx

31xxxx

32xxxx

33xxxx

34xxxx

35xxxx

Bitcoin block numbers (each column ~70 days)

OP_RETURNs per block


Bitcoin 0.9 released 19th March 2014 (block 291xxx)

OP_RETURNs to block 353900


31%

10%

9% 8% 6%

3%

33%

Open%Assets%Proof%of%Existence%CoinSpark%Factom%Ascribe%BlockSign%Other%

Where’s the DNS?


1NXckgtwL3i8yXKC3exFPcdpsQmFbL4WTF

CoinSpark

CoinSpark

•  Rich OP_RETURN protocol – Multiple metadata per OP_RETURN

•  Version 1.0 — September 2014 – Assets = lightweight scalable colored coins – Payment references

•  Version 2.0 — February 2015 – Transaction attachments / messaging

•  Version 3.0: simpler addressing, …


CoinSpark assets

•  Assets via OP_RETURN metadata – Not connected to bitcoin quantity

•  Genesis metadata: – Quantity, issuer transaction fees – Compressed web page URL – Hash of contract and key params

•  Transfer metadata: – Reference to genesis, quantity, outputs


CoinSpark assets for users

•  Lightweight wallet •  Asset web page

– View in browser – Hidden metadata – Domain authenticates issuer

•  Asset contract – Ready US + UK templates – Customizable


SparkBit wallet


Asset web page


Asset contract


Bitcoin transaction model

Signed by Alice

Alice 10.000 Bob 2.000

Alice 7.999

Miner 0.001


CoinSpark asset model

•  Multiple assets per output – Low burden on network – No accidental loss

•  Default: all assets to last output •  Metadata sends to other outputs

– 40 bytes: up to 3 assets, unlimited outputs

•  Asset independence ⇒ scalability –  Issuer provides tracking server for SPV


Example asset transaction

Signed by Alice

Alice 0.007

Bob 0.001

Alice 0.005

OP_RETURN

Miner 0.001

A B C

B

A C

B

Output 1


150

60

60

90

CoinSpark messages

•  Attach text and/or files to a bitcoin or CoinSpark asset transaction

•  Message discovery via OP_RETURN – Compressed URL / IP of delivery server – Outputs for which message intended – Hash of message + salt

•  Open source delivery server – Federated, non-centralized model


CoinSpark messages vs email

•  Hash proves message authenticity •  Notarization of message on blockchain

– Contracts, invoices, digital delivery

•  Also: public messages – Broadcast content + proof of existence

•  Future: message encryption – Requires public key, not just bitcoin address

•  Challenge: identity (Openname?)


CoinSpark OP_RETURN format


53 50 4B CoinSpark marker (“SPK”)

61 FF — Last metadata opcode

···· Last metadata (until end of script)

01 60 Length of this metadata section —

61 FF — Metadata opcode

···· Metadata (up to 95 bytes) ＊

Metadata opcodes


61 7F —

67

72

74

80 EF —

Reserved for CoinSpark

Asset genesis (“g”)

Payment reference (“r”)

Asset transfer (“t”)

Your application?

6D Message pointer (“m”)

Every byte is sacred


Only encode surprises

000 = omit fields. If this is the first color transfer, assume input and output indices of 0. Otherwise take the indices from the previous color transfer. 001 = omit fields. If this is the first color transfer, assume input index 0 and output index 1. Otherwise take the indices from the previous color transfer and increment the output index only. 010 = omit fields. If this is the first color transfer, assume input index 1 and output index 0. Otherwise take the indices from the previous color transfer and increment the input index only. 011 = omit input index and use 1 byte for output index. If this is the first color transfer, assume input index 0. Otherwise use the same input index as the previous color transfer. 100 = omit output index and use 1 byte for input index. If this is the first color transfer, assume output index 0. Otherwise use the same output index as the previous color transfer. 101 = use 1 byte for input index, 1 byte for output index. 110 = use 1 byte for input index, 2 bytes for output index. 111 = use 2 bytes for input index, 2 bytes for output index.


Mantissa and exponent


625 trillion = 625×1012

??11001001110001

Common domain strings www. .at .au .be .biz .br .ca .ch .cn

.co.jp

.co.kr

.co.uk

.co.za .co

.com.ar

.com.au

.com.br

.com.cn

.com.mx

.com.tr

.com.tw

.com.ua .com .cz

.de

.dk .edu .es .eu .fr .gov .gr .hk .hu .il .in

.info .ir .it .jp .kr .me .mx .net .nl .no .org .pl

.ps

.ro

.ru

.se

.sg

.tr

.tv

.tw

.ua

.uk

.us

.vn


More domain name compression

•  38 valid characters – 0 to 9, a to z, -‐ .

•  Two terminator characters ⇒ 40 – http:// vs https://

•  403 = 64000 < 65536 = 216 – So 3 characters per byte pair

•  Special case: IPv4 address – Obvious encoding in 4 bytes


Variable hash length ≥ 96 bits


350,000,000 × 109 × 86400 × 365 × 7178 = 296

CoinSpark for Developers

•  Fully open source (MIT/AGPL) •  Multilingual libraries

– C/C++, Go, Java, JS, PHP, Python, Ruby

•  Fully decentralized – Server-side elements federated

• Let’s do for bitcoin what the web did for TCP/IP


Back to the start…

What is the intrinsic value of a bitcoin?


0.0

0.2

0.4

0.6

0.8

1.0

1.2

2011 2012 2013 2014 2015 2016 2017 2018 2019

Average block size (MB)


Current limit: 1 MB

Economic prehistory

Economic reality

What happens then?

•  Transactions compete for confirmation – Bidding via miner fee, paid only in bitcoin

•  Real price discovery – Econ 101: until supply = demand

•  If enough transactions (notarization?) are worth $10 to sender, all will cost that – No more cups of coffee!

•  Increase to 20MB blocks just delays this


So: bitcoin = global bidding power for embedding data in

the blockchain.


Bitcoin 2.0 and OP_RETURN - The Blockchain as TCP/IP?

Technology

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