COMPSCI 316 (Network Security)

Blockchain

Manoranjan Mohanty

m.mohanty@auckland.ac.nz

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Exam

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Total 50 multiple choice questions

38 questions from Week 7 – Week 12 (excludingguest lecture material!)

12 questions from Week 1 – Week 6

Calculators allowed

Blockchain Definition

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“A blockchain is a decentralized,distributed, and oftentimespublic, digital ledger that is usedto record transactions acrossmany computers so that anyinvolved record cannot bealtered retroactively, withoutthe alteration of all subsequentblocks.” – Wikipedia

https://www.signifytechnology.com/blog/2018/03/what-is-blockchain-by-klint-finley

Bitcoin is not Blockchain

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Blockchain is the technology behindbitcoin Bitcoin is the digital currency.

Blockchain used to keep track of whoowns bitcoin Blockchain can be used (for

providing trust) in other areas Health record, governance, Insurance,

etc.

Will discuss bitcoin blockchain

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Bitcoin a public, proof-of-work-based blockchain Blockchain is completely open and allows anyone to

participate (permissionless blockchain)

Private blockchain are also available In private blockchain, there is restriction on who is

allowed to participate and for what transactions(permissioned blockchain) These types of blockchain can suit enterprises

Blockchain Beyond Bitcoin

Motivation Behind Blockchain

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Transaction in Physical World

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Lisa transfers the“ownership” of booksto Bob

Bob transfers the“ownership” of 10dollar to Lisa

Motivation Behind Blockchain Cont.

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What is the problemwith it?

Motivation Behind Blockchain Cont.

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What is the problemwith it?

Double spending

Motivation Behind Blockchain Cont.

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Transaction in Digital World

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Digital transactionthrough trusted third-party (e.g., bank)

The third-party hasto be paid a fee

Motivation Behind Blockchain Cont.

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Transaction in Digital World

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How to use technologyto provide trust andintegrity for transactionswithout a trusted third-party?

Basically, the ledger tobe managed usingtechnology withoutrequiring a third-party

Goal

Blockchain – Main Idea

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For providing trust and integrityto transactions

1. Group transactions into blocks2. Make changing a block

computationally expensive (hashpuzzle)

3. Chain the blocks so thatmodifying any block willinvalidate all subsequent blocks

4. (2) and (3) make modification ofblocks almost infeasible

https://objectcomputing.com/expertise/blockchain-solutions/what-to-share-with-board-of-directors-about-blockchain

Blockchain Data Structure

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Blockchain Basics: A Non-Technical Introduction in 25 Steps

Genesis Block

Head

A new block has to be added here by storing B2 in its header

Chain

Blockchain Data Structure

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Blockchain Basics: A Non-Technical Introduction in 25 Steps

Chain of Blocks: Block 2 has to be re-created if anything in Block 1 changes

Merkle Tree

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A hash of block is created by solving a “hash puzzle”so that the hash creation takes some time Find a hash with certain “difficulty level” (with certain

number of leading zeros) Example: B2 = Hash of Block header 2 should contain five

leading zeros

Hash Puzzle – Expensive Block Changing

B2 must be found using bruteforce method (Try1, Try2, ….Try1_million…)

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Hash Puzzle – Expensive Block Changing

N

Nonce that can change values with different tries

Goal: Find the value of nonce for which the hash having five leading zeros

Try Nonce Hash

1 1 FDEGH1211455

2 2 0AXI46445446A

1 million 1 million 00000ACDEG475

This process requires a lot ofcomputer resources – Blockchainmining

= B2

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Blockchain is based onpeer-to-peer networkWhen a new peer joins, it

gets a copy of all the blocks sothat it can create a localblockchain and also verify itsintegrity

Any peer node can proposeto add new transactions aspart of a new block

How Blockchain Works – Proof of Work

Transaction 3 and 4 to be added to existing blockchain data structure

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A Merkle tree from the newtransactions is created

Merkle tree from Transaction 3 and 4

How Blockchain Works – Proof of Work

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A new block header (whichcontain a reference to itspreceding header and theroot of the Merkle tree) forthe new transaction created

Block Header 2 created

How Blockchain Works – Proof of Work

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B2 is new Head

The Head of the wholeblockchain data structure isupdated with the hashreference of new block

How Blockchain Works – Proof of Work

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All peers are competing to add this new block. Theone who submits a quality (correct) block first, wins

How correctness is checked?When a peer submits a new blocks, other peers validate it

(by checking transactions and also block header) Consensus: When the peer gets “yes” by majority ofnetwork’s computing power, the submitted block isvalidated and the peer is rewarded

How Blockchain Works - Consensus

Slides are based on the following book and its accompanying slides Blockchain Basics: A Non-Technical Introduction in 25 Steps by

Daniel Drescher

Some images are taken from Google Images

Acknowledgement