Wednesday, September 23: Checkup 2 (was originally scheduled for Monday, September 21)

Readings (should be completed by Monday, September 21 at the latest; covered by Checkup 2):

Note: ink markings may not appear in the embedded viewer. To see them, download the slides.

Blockchain in the News

Blockchain initiative backed by 9 large investment banks, Financial Times, 15 Sept 2015.

Nine of the World’s Biggest Banks Form Blockchain Partnership, Re/Code, 15 Sept 2015.

Bitcoin Is Only The Beginning For Blockchain Technology, Forbes, 15 Sept 2015.

Bitcoin’s Shared Ledger Technology: Money’s New Operating System, Forbes, 9 Sept 2015.


What are valid sources of trust?

What are potentially misleading sources of trust?

What mechanisms have humans evolved or constructed to enhance trust among strangers?

Distributed Consensus

How well does the 2-out-of-3 network consensus public ledger protocol work?


Cynthia Dwork and Moni Naor. Pricing via Processing or Combatting Junk Mail, CRYPTO 1992.

Pricing Function: (f) - moderately easy to compute - cannot be amortized - computing f(m1), …, f(ml) costs l times as much as computing f(mi). - easily verified: given x, y easy to check y = f(x).

Adam Back. Hash Cash Postage Implementation

Interactive Hashcash:
1. Sender to Receiver: Hello
2. Receiver to Sender: r (random nonce)
3. Sender to Receiver: x, Mail where x = f(r).
4. Receiver verifies x = f(r).

How well does this protocol work for sending mail?

How can we make this protocol non-interactive?

Bitcoin Mining

Proof-of-work: Find an x such that: SHA-256(SHA-256(r + x)) < T/d.

d is the “difficulty” (varies).
T is a fixed target (256-bit number).
r depends on hash of previous block, transactions, and other information.

What does it mean for the bitcoin difficulty to go down?

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