Schedule
Readings (should be completed by Monday, September 21 at the latest; covered by Checkup 2):
Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008. The is the original bitcoin paper, which is quite readable and historically interesting.
Chapter 6: The Bitcoin Network and Chapter 7: The Blockchain from Andreas Antonopoulos’ book.
Chapter 2: How Bitcoin Achieves Decentralization and Chapter 5: Bitcoin Mining from Arvind Narayanan, Joseph Bonneau, Edward Felten, Andrew Miller, Steven Goldfeder. Bitcoin and Cryptocurrency Technologies.
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.
Trust
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?
Proof-of-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?