Blockchain 2

CoinJoin

"Single transaction mixing" 1. Find others who want to mix 2. Exchange input/output address 3. Construct transaction 4. Send TX around, with each user signing after they verify their output is there 5. Broadcast TX

Proof-of-stake

"Virtual mining" - Replace electricity and mining hardware with the currency itself

Bitcoin Core

"model implementation" consensus

Counterparty Risk

"Exit scam", bank not really planning on giving people their bitcoin

Owning bitcoin

1. Control UTXOs sent to some set of addresses and generate new transactions from them 2. Prove said transactions with corresponding secret keys

Memory-bound puzzle

A puzzle in which time to access memory is a limiting factor of computing

Memory-hard puzzle

A puzzle that requires a lot of memory (instead of/in addition to CPU power)

Taint Analysis

A relation between two bitcoin identities (coins from S end up in R many times) assigned a taint score. (avoid by never re-using addresses)

FPGA Mining

Field-Programmable Gate Arrays, offered another order of magnitude over GPUs but prone to failure and costly

Block-withholding attack

Find block, wait to broadcast until you find another block to build on top of that one

Primecoin

Finds Cunningham chains of primes Cunningham chain is taking a prime number, doubling it and adding one to get a new prime

Sybil Attack

Flood network with "bad" peers, new connections only see bad peers

Security Breach

Hacker breaks into exchange and moves bitcoin, no arbiter to determine who owns what

Currency Fork

Hard Fork resulting in a new currency forming. Up until the instance of forking, blockchain of both currencies is identical

Randomness in BTC

Hashes are pretty close to being random but technically pseudorandom

Wallet Software

Hot Storage. Software that keeps track of bitcoin, like a wallet in your pocket. availability=high convenience=high security=low

Hardware Wallet

Hot/Cold Storage. Simple device generates keys but never leave device. Fed in transactions, signed, and output. availability=medium convenience=medium security=high

Address re-use problems

Leaks info on your identity. Might as well use a new address (they are infinite)

Bank/Exchange Runs

People ask for money back at bank, bank doesn't have enough money. Bank is dubbed as insolvent. Everyone tries to cash out.

Secure Timestamping with BTC

Prove you know a block hash shows that a given event occurred after that block

Anonymity

Pseudonymous system which also provides unlinkability

non-outsourceable puzzles

Puzzle which disincentivize pools and collusion. E.g. find block whose hash of signature is below target, with signature computed using PK of recipient address

CPU Mining

Regular desktop can get several tens of millions of hashes per second, this was the original idea

Anonymity set

Set of transactions an adversary cannot distinguish from your own transactions. Adversary WILL know you made a transaction. They will NOT know which one. More transactions = better ability to hide

Deanonymization via side channels

Side channel = indirect leaking of information (off-chain) E.g. Paying for bitcoin in person exposes your body, analyzing usage time can determine time-zone, re-using addresses, etc

Online Wallet

Software running online where you make an account. Enter in key or store it encrypted. They can know your keys, big security worry.

Pseudonymity

System in which you do not have a name, rather you have a psuedo-identity that can be generated

Network-level deanonymization

The first node to inform you of a transactions is probably the source.

Smart Property

UTXO is associated with ownership of something. Transfer a car, prove it with UTXO.

UASF

User-Activated Soft Fork - nodes create soft fork without support of miners (playing chicken, which miners will support it?) SegWit introduced as UASF

Proportional share

every share you submit gives you a higher proportion of bitcoin in next block (no block found, no reward)

Mining Difficulty

next_difficulty = (prev_difficulty * 2016 * 10min)/time_to_mine_2016 difficulty = max_target/target target = max_target/difficulty

Mining Process

1. Listen for transactions 2. Maintain/update blockchain 3. Assemble candidate block 4. Find nonce where H(block) < target 5. Broadcast block 6. Coinbase sent to your address

Benefits of proof-of-stake

1. More efficient 2. Simpler, closed system 3. Decentralized (no hardware so anyone can do it) 4. Everyone has same incentive to mine

Secret Sharing for arbitrary k-of-n splitting

1. Random key 2. determine k and random k-order polynomial intersecting at 0 (the key) 3. determine n random points on function 4. expand indefinitely via Lagrange interpolation

Bitcoin Consensus

1. Rules - How do nodes communicate? What is a valid transaction? 2. History - What is the correct blockchain? 3. Value - What is value of bitcoin that I use?

Drawbacks of proof-of-work

1. Security (people might be able to game the system) 2. 51% attack if they own the currency 3. Not entirely understood 4.Might not work on large scale

Colored Coins

Added metadata to UTXOs which allows for the same security with added functionality for property tracking

Regulatory Risk

Adding illegal content to blockchain

Selfish Mining

After block-withholding attack, all other miners have been wasting time trying to find hash for old blockchain

GPU Mining

Allows for massive parallelization, hashpower increased by order of magnitude and allowed multiple GPUs on single computer

Avoid network-level deanonymization

Always hide your IP with Tor Tor can be blocked and is very slow

ASIC Mining

Application-Specific Integrated Circuits, computers that only mine bitcoin.

Linking

Associating different addresses with a user, different transactions with a user, or sender of a payment with its recipient. All lead to linking an address with the identity of a user

Nothing-at-stake Problem

Attacker tries to create a fork (double spend attack) and there is no opportunity cost. If it fails the money goes back to them

Feather Forking

Attempt to fork that gives up if probability of success is low (percentage of hashpower of entire network)^2.

Bitcoin vs Bitcoin Cash

BCH - No SegWit, increase to 8mb blocks BTC - SegWit, block weight limit

"Big-Blockers"

BTC as Means of exchange big blocks have more room for transactions big blocks are faster for transactions Secondary scaling will lead to centralization More people will want to use Bitcoin so more people run nodes, despite larger size

"Small-Blockers"

BTC as Store of Value bigger blocks is temporary solution large blockchain makes it harder to participate so nodes will centralize Secondary scaling solutions are available Hard fork is an attack on bitcoin

BIP

Bitcoin Improvement Proposal - Major changes must file a BIP

Hot Storage

Bitcoin can directly be spent on the Bitcoin network (node is online)

Cold Storage

Bitcoin cannot be directly spent on Bitcoin network (node is offline)

Punitive Forking

Blacklisting particular addresses, not including or mining on any chain that has them

Overlay Currencies

Certain bitcoin are reused for non-Bitcoin related purposes (you get extra credit if you have a dollar bill ending with a G)

Idioms of Use

Change addresses tend to be fresh addresses Shared spending implies single entity Verification via re-identification attacks

Pay-per-share

Every share entitles you to a flat amount of bitcoin

Brain Wallet

Cold Storage. Remember passphrase and use hash of it as a seed to psuedorandomly generate a keypair. availability=low convenience=low security=high

Paper Wallet

Cold Storage. Generated address/key that is printed out on piece of paper. availability=low convenience=medium security=medium/high

Mining Pools

Collective of miners run by pool manager who takes a small cut, reducing variance

Threshold Signatures

Create partial signatures with actors that can sign a transaction with a key without ever revealing the key

ASIC Resistance

Disinccentivizing the use of custom-built hardware for mining (at least narrowing the gap...)

Drawbacks of Mining

Energy is wasted, vulnerable to attacks

Forking attack

Miner builds upon previous blocks to create alternative chain. Easy to detect with a ton of hashpower

Mining Shares

Miners turn in near misses and hits. Can't generate a miss unless using hashpower. Each entry is a share in the next block reward.

Multi-signature

Multisignature is a digital signature scheme which allows a group of users to sign a single document. Usually, a multisignature algorithm produces a joint signature that is more compact than a collection of distinct signatures from all users.

Is Bitcoin anonymous?

No, it is pseudonymous. Your name is your address/PK

Is ASIC-proof mining possible?

No, some hardware will always be better at mining

Online Exchange

Online wallet PLUS place to buy/sell coins. Promise to give you coins when you ask for it.