Blockchains and Cryptocurrencies

Catheryne NicholsonBlockCypher CEO & Co-foundercatheryne@blockcypher.com

Agenda

•History of money

•Current state of blockchains

•About BlockCypher

•Future of blockchain applications

History of Money

Failureis

Opportunity

Bitcoin Genesis Block

Jan 3, 2009 Headline:

“Chancellor on brink of second bailout for banks."– Satoshi Nakamoto

The Age of Cryptocurrencies

Cryptocurrency

+bitcoin blockchain

Cryptocurrency Market Caps

Why You Can’t Cheat

Bitcoin

Hashing power needed to take over the Bitcoin network (DRAFT)

3500 Petahash per second

OR

CPUs

OR

bitcoin ≠ blockchain ≠ BitcoinThe Technical Innovation

(distributed ledger)Cryptocurrency

(incentive)E.g. ether, bitcoin

Protocol(parameters)

Ethereum, Bitcoin

What’s the difference?

What’s a Blockchain?

Immutable, cryptographically verified, Proof-Of-Work secured accounting ledger

Block 50

PoW: 0026f34d197f

Transactionb39fa6c39b

Transaction7301b5952

Transaction6961d06e4

Block 51

PoW: 0026f34d197f

Transactionb39fa6c39b

Alice => Bob

Transaction6961d06e4

Block 52

PoW: 0026f34d197f

Transactionb39fa6c39b

Transaction7301b5952

Transaction6961d06e4

Unlocks prior TX funds... ...then lock with new rules

What are Transactions?

Blockchains Flavors (DRAFT)

• Open (e.g. Bitcoin, Ethereum)• Permissioned (e.g. Corda, Eris, Hyperledger, Symbiont, etc.)• Private (Beth, BCY, BKCoin, etc.)

Trust (DRAFT)

BlockCypherBlockchain Web Services (BWS)

Ken GoldmanTim Draper Jerry YangNasir Jones Shawn Byers Sanjiva Weerawarana

BlockCypher Investors

Base Protocol (Bitcoin, Ethereum, etc.)

MiningApplications/Services

Users/Usage

Middleware

Blockchain Cake

Infrastructure

Blockchain Client Architecture

Peers

Chain

Pool

Scripting

Validation

StoreWallet

Addresses

Crypto

Miner

Primitive APIs

Wire Format

≈ Running Excel as database

Bitcoin and Ethereum clients

Crypto

P2P

Con

sens

us Smart ContractsProof of Work

Proof of Stake

Key

S

ecur

ity

Proof of ???

Scaling

Lightning

Privacy

zkSNARKs

MimbleWimble

Teechan

HS

Ms

Har

dwar

e W

alle

ts

Bitcoin Script

Serenity

Viper

Dec

entra

lisat

ion

Incentives

Game Theory

Cryptoeconomics

Mechanism Design

Security

Min

ing

Chip Design

Energy Price

GPUs

Data Centers

DD

oSSyb

il A

ttack

s

51%

A

ttack

s

Sel

fish

Min

ing

Light Clients

SPV

Pruning

ShardingElliptic Curve Cryptography

HashingNetwork Layers

Gossip Protocols

DHTs (Chord, Kad)

Block Ciphers

Random OracleHashcash

Staking AttacksAsync I/O (poll, epoll)

Language DesignType Systems

Parsers / Compilers

VMs, Interpreters

RandomnessCiphers: AES, RSA

Secure Enclaves

FIPS 140

PKI

Schnorr SignaturesSegregated Witness

Hash Locked Contracts

Oni

o N

etw

orks

Trusted Execution Environments

Ring Signatures

“Moon Math”Pairing-based Crypto Commitment Schemes

Zero Knowledge

Distributed Computing

Bloom Filters

Replicated State Machines

Merkle/Sum Trees

Stack Languages

Economics

Bayesian Statistics Market DynamicsProtocol History

Logic GatesGeo

ther

mal

/ hy

dro

pow

er

Cooling Systems

Har

drw

are

Pro

cure

men

t

Power Efficiency

Heat Dissipation

Intel SGX

Threat Modeling

Blockchain-as-a-Service (BaaS)

Locally...

The road to production...

(minimum 2 years, $1M)

Use BlockCypher APIs & Services ● Analytics API - queries for blockchain information

● Asset API - issue & handle assets on the blockchain

● Confidence Factor - predictive & real-time analytics for unconfirmed transactions

● Contract API - call contract functions on blockchain over HTTP

● Data Endpoint - place data or a hash on a blockchain

● Microtransaction API - micropayments on-chain

● Multiple Address Wallet API - multiple addresses under single wallet name

● Multiple Blockchains - Bitcoin/Ethereum type; single API call to create new chains

● Multisignature API - multiple signature key management

● Payment Forwarding API - forward, consolidate, add commissions to payments

● Transaction API - build transactions easily

● WebHooks and WebSockets - monitoring & notifications on blockchain events

Scalable Blockchain Architecture

HTTP HTTP HTTP

TCP

TCP

Distributed Datastore

Distributed LocksMessaging

HTTP

Blockchain Layer

Web API Layer

Peer to Peer

BlockCypherCluster

Other Private Cluster

Bitcoin, Ethereum, etc.

BaaS Architecture

BlockCypher Analytics Framework

Bitcoin

Custom

BlockCypher

● Multiple blockchains on same infrastructure

● Multiple datacenters● No single point of failure● Secure & hardened servers● Linear scaling● Uptime 99.999%

Cloud-optimized, enterprise-grade blockchain infrastructure

Blockchain-agnostic infrastructure

Ethereum

BlockCypher Benefits

6+ months faster to market35+% less cost

The Biggest Little Blockchain Company

Customers

CRYPTIV

Blockchain Use Cases

United States Citizenship and Immigration Services.

U.S. Customs and Border Protection.

Federal Emergency Management Agency.

U.S. Immigration and Customs Enforcement.

Transportation Security Administration.

United States Coast Guard.

National Protection and Programs Directorate.

United States Secret Service.

Data Management and Analytics

U.S. Department of Homeland Security

● Machine learning

○ Transaction clustering

○ Spark GraphX for Graph analysis

● Statistical analysis

○ Geographical, origin, relay, transaction size, etc.

● Monitoring for anomalies

● Tracking $70M heist (BitFinex)

○ Largest transactions, transaction shape & origin

Financial Crime

Custom Ethereum-based blockchain:

● Smart contract with ability to call an

external risk management system

during execution

● API-driven, open marketplace

● Private cloud hosted

● Block processing near real-time

● Transaction round-trip cycle time in

milliseconds

● 1000+ Transactions per second (TPS)

w/payload on desktop

Payment Cards

Identity Management

Challenges● High cost of fraud

($B)● Lack of adoption of

security ● Disclosure● Privacy● Ease-of-use

Solution● User manages

identity (e.g. biometrics) on Shocard mobile app

● BlockCypher publishes identity to blockchain

Benefits● 6 months saved in

ramp up time● 35% costs saved in

development● Increased scalability

and reliability ● Improved code

maintenance

Transaction API

Authentication

P2P Payments

Challenges● High transaction fees ● No single P2P

platform● Currency fluctuation● Lack of good testing

environment

Solution● Abra enables person

to send payment to any mobile phone

● BlockCypher provides notifications (e.g. for payments)

Benefits● Users protected from

market volatility● Faster deposits ● Cross-border payments● ~30% development

cost

Deposit $200 (XBT spot at 200)

Send $200 (XBT spot at 160)

Lender(XBT spot at 160)XBT down 20%, Abra holding 1.25 XBT

BCYWebhooks

Machine-to-Machine

Drone, parking meter, remote server, self-driving car, POS, VR device, etc.

Let’s Code a Central Bankcontract Coin {

address minter;

mapping (address => uint) balances;

function Coin() {

minter = msg.sender;

}

function mint(address owner, uint amount) {

if (msg.sender != minter) return;

balances[owner] += amount;

}

function send(address receiver, uint amount) {

if (balances[msg.sender] < amount) return;

balances[msg.sender] -= amount;

balances[receiver] += amount;

}

function queryBalance(address addr) uint {

return balances[addr];

}

}