Demystifying Blockchains

Henning Diedrich & Vlad ZamfirBlockchain Workshops • London 2015

Bitcoin and the blockchain

● power● hype● reality

Bitcoin’s innovations

● blockchains● economic consensus

Projects

● Bitcoin● Ripple● Stellar● Hyperledger● Ethereum● Eris● Tendermint

What is Consensus?

● Consensus protocols are used to make ONE reliable computer out of many unreliable or untrusted computers

What is Consensus?

● They are used in real-life applications○ processors○ databases○ flying cars

Traditional Consensus Protocols

● Clients in these protocols only change their state when a supermajority approves of the changes, or elects a leader who proposes the changes

tc

Traditional Consensus Protocols

tc● Coordinate on changes to the state● Changes are never reverted● They “just stop” if too many nodes go offline

● Blockchains are consensus protocols that come to consensus through compromise

● “Fork-choice rule”

What is a blockchain?

BC

Why a blockchain?

● They are available in the event of network partitions

● Blockchains are more decentralized than traditional consensus protocols

BC

“Maintain a shared, trusted computer even though we don’t trust each other because we know that screwing it up would cost us a lot of money.” - The Joker

What is Economic Consensus?

eeconomic

● Public consensus● Guarantees correctness

○ even for private consensus○ “trustless”

“Maintain a shared, trusted computer even though we don’t trust each other because we know that screwing it up would cost us a lot of money.” - The Joker

Why Economic Consensus?

eeconomic

How do we make faults expensive?

● Proof-of-work○ Make changing the state expensive

● Proof-of-stake○ Use security deposits to punish nodes who propose

competing updates to the consensus

eeconomic

Blockchain projects

● Bitcoin● Ripple● Stellar● Hyperledger● Ethereum● Eris● Tendermint

Bitcoin disintermediate banks & currencies

ZerocashanonymousBitcoin

Ripple

replace SWIFT

Stellarbank the unbanked

Hyperledgerinter-bank clearing

Ethereumpublicsmart contractplatform

public smart contractplatform

Tendermint

Eris

privatesmart contractsplatform stack

Core Design❏ private❏ public

❏ traditional consensus protocol❏ decentralized blockchain

❏ transaction network❏ virtual machine

Bitcoin disintermediate banks & currencies

public, decentralized blockchain+ virtual machine

replace SWIFT

Ripple

private transaction networkwith built-in currency conversions

bank the unbanked

Stellar

private transaction networkwith built-in currency conversions

Hyperledgerinter-bank clearing

private consensus protocol

Ethereumpublicsmart contractplatform

public, decentralized blockchain+ virtual machine

Tendermint

public, decentralized blockchain+ virtual machine

public smart contractplatform

Eris

privatesmart contractsplatform stack

private consensus+ virtual machine

Smart Contracts

● Virtual machine ...● … with transaction capacity (token)● Oracle input from outside world

Smart Contracts

Bitcoin Ethereum Tendermint Eris

Smart Contracts

Bitcoin VM Ethereum Virtual Machine (EVM)

Bitcoin Ethereum Tendermint Eris

“Maintain a shared,trusted computereven though we don’t trust each other because we know that screwingit up would cost us a lot of money.”

What is Economic Consensus?

eeconomic

Bitcoin disintermediate banks & currencies

public, decentralized blockchain+ virtual machine

eeconomic

BC

non-economic

eRipple

replace SWIFT

private transaction networkwith built-in currency conversions

bank the unbanked eStellar

private transaction networkwith built-in currency conversions

non-economic

enon-economic

inter-bank clearing

private consensus protocol

tc

eHyperledger

non-economic

publicsmart contractplatform

Ethereum

public, decentralized blockchain+ virtual machine

eeconomic

BC

Tendermint

public smart contractplatform

public, decentralized blockchain+ virtual machinetc

eeconomic

Eris

privatesmart contractsplatform stack

private consensus+ virtual machine

enon-economic

tc

enon-economic

Thank You!

Questions!

Credits

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