The three blockchain The three blockchain technology technology - PowerPoint PPT Presentation

The three blockchain The three blockchain technology technology generations? generations?

Hello! Hello! I I am Mark van der Pasch am Mark van der Pasch Master student TU/e Blockchain internship @ Rabobank Fintech & Innovation, BAL

‘How to qualify public unpermissioned blockchain technologies and why are these not wide- scale adopted for business use - cases?’ “

Who is allowed to validate in the consensus Blockchain types Blockchain types process? Permissionless Permissioned Public Who is allowed to access and participate in the network? Private

Characterisation framework: Characterisation framework: Service characteristics: Technology characteristics: Public permissionless blockchains: Functionality Internal design considerations: Network design Level of Privacy Consensus mechanism Level of Trust State machine architecture Level of Interoperability Level of Scalability Complementary protocols: 2 nd layer solutions Governance

How to qualify Bitcoin as a set How to qualify Bitcoin as a set of technology characteristics: of technology characteristics: Network Design Distributed peer-to-peer Complementary protocols (2 nd layer): Consensus mechanism Interchain: i.e. decentralized PoW based on SHA-256 exchanges Offchain protocols: Lightning State machine architecture: (state channel protocols) Coding language: Golang, C++ Smart contract execution: Native Data structure: transaction based (UXTO) Block size: 1MB, 1,8 MB for SegWit block. Block release time: ~600 seconds Block header data structure: Binary merkle tree with SegWit support

How to qualify Bitcoin as a set How to qualify Bitcoin as a set of services characteristics: of services characteristics: Functionality Level of Scalability Level of Trust: Native: Cryptocurrency, Maximum throughput: 3.3 Security: High Turing incomplete smart – 7 tx/sec contracts and SegWit Finality: No absolute Latency: ~10 minutes finality Add-on: i.e. Lightning, Transaction costs: ~1.1 USD Decentralized exchanges Liveness: High (25-4-18) Level of Privacy: Level of Interoperability: Governance Currently poor native User level privacy: Incentives: depends per Pseudonymous interoperability stakeholder type. Transaction level privacy: Mechanism for coordination: Open and accessible Off-chain BIP & mailing list, On-chain Miners to implement changes.

How to qualify Ethereum as a set How to qualify Ethereum as a set of technology characteristics: of technology characteristics: Network Design Distributed peer-to-peer Complementary protocols (2 nd layer): Consensus mechanism Interchain: i.e. decentralized Ethash PoW mechanism exchanges Offchain protocols: i.e. State machine architecture: Raiden network (state channel protocols) Coding language: Solidity, Serpent, LLL, Vyper & Bamboo Smart contract execution: EVM Data structure: State (account-Block release timbased), Transactions and Receipts Block size: ~8000000 gas Block release time: ~12 seconds Block header data structure: Merkle patricia trees and uncle blocks

How to qualify Ethereum as a How to qualify Ethereum as a set of services characteristics: set of services characteristics: Functionality Level of Scalability Level of Trust: Native: Ether Maximum throughput: Security: High Cryptocurrency, Turing 31.66 Tx/sec complete smart contracts Finality: No absolute Latency: ~12 seconds finality Add-on: endless Transaction costs: ~.50 applications Liveness: High USD (25-5-18) Level of Privacy: Level of Interoperability: Governance Poor native interoperability User level privacy: Incentives: depends per Pseudonymous stakeholder type. Transaction confidentiality: Mechanism for coordination: Open and accessible but Off-chain: EIPs and ERCs, zkSNARKs On-chain: Gas limit voting

What are the challenges of What are the challenges of Ethereum? Ethereum? Functionality Level of Scalability Level of Trust: Native: Ether Maximum throughput: Security: High Cryptocurrency, Turing 31.66 Tx/sec complete smart contracts Finality: No absolute Latency: ~12 seconds finality Add-on: endless Transaction costs: ~.50 applications Liveness: High USD (25-5-18) Level of Privacy: Level of Interoperability: Governance Poor native interoperability User level privacy: Incentives: depends per Pseudonymous stakeholder type. Transaction confidentiality: Mechanism for coordination: Open and accessible but Off-chain: EIPs and ERCs, zkSNARKs On-chain: Gas limit voting

st layer method to solve the st 1 layer method to solve the challenges: (Casper) challenges: (Casper) Ethereum Casper PoS implementations Transformation PoW  PoS Pros: Level of Trust 2 step process: Finality Casper Friendly Finality Gadget (FFG): Level of scalability Hybrid PoW/PoS Lower electricity cost > Lower Implemented on alpha testnet since 1 st of Januari 2018. network costs Each 50 th block is finalized by PoS. Casper Correct by Construction (CBC): Cons: PoS consensus mechanism Centralized validation <1500ether BFT by-block consensus mechanism minimum stake.

st layer method to solve the st 1 layer method to solve the challenges: (Sharding) challenges: (Sharding) Ethereum Sharding implementations Node Hierarchy: Hierarchical way of splitting network resources ● Super-full node: This type of node downloads the complete chain including all shards. This node should Pros: validate everything. Level of scalability ● Top-level node: This type of node processes all main Higher throughput chain blocks, and has light-client access to all shards. Load balancing It can still check whether a new transaction is valid in all shards. Cons: ● Single-shard node: This type off node acts like a top- Longer finality time for low-level level node, but also downloads a complete shard shards chain and can validate blocks on that chain. ● Light-node: This type of node works like a current light-client, and only verifies all block headers and main-chain blocks.

nd layer method to solve the 2 nd layer method to solve the challenges: (Payment channels) challenges: (Payment channels) Raiden Network (Ethereum) Lightning Network (Bitcoin) Pros: Level of Scalability a c Low cost transactions d High Throughput e b Settlement on-chain Higher level of Privacy Level of Interoperability Cross chain atomic swaps Cons: Block Block Block Block Block 0 Block N N-4 N-3 N-2 N-1 Current centralized operators Depends on availability

nd layer method to solve the 2 nd layer method to solve the challenges: (Plasma) challenges: (Plasma) Plasma -> design pattern for scalability on top of Ethereum. Pros: Level of Scalability Ultra high throughput Settlement in smart contract Applications specific plasma chains. on-chain Level of Privacy Cons: Centralized plasma operator* Block Block Block Block * limit power of Block 0 Block N N-4 N-3 N-2 N-1 plasma operator

What are the challenges of What are the challenges of Ethereum? Ethereum? Functionality Level of Scalability Level of Trust: Native: Ether Maximum throughput: Security: High Cryptocurrency, Turing 31.66 Tx/sec complete smart contracts Finality: No absolute Latency: ~12 seconds finality Add-on: endless Transaction costs: ~.50 applications Liveness: High USD (25-5-18) Level of Privacy: Level of Interoperability: Governance Poor native interoperability User level privacy: Incentives: depends per Pseudonymous stakeholder type. Transaction confidentiality: Mechanism for coordination: Open and accessible but Off-chain EIPs and ERCs, zkSNARKs On-chain: Gas limit voting

Generations Blockchain: Generations Blockchain: ◉ Generation 1  (Cryptocurrency) Blockchains ◉ Generation 2 -> (Universal) Blockchain Platforms ◉ Generation 3 or beyond-> (Universal) Blockchain Platforms with some form of governance regulation?

Debating topics: Debating topics: ◉ Are governance challenges currently influencing the wide-scale adoption of blockchain for business use-cases? ◉ How should these governance challenges be solved? i.e. on-chain, off-chain or by external “Third-parties” ◉ Others…..