Intro to Cryptocurrencies & Blockchains w Patrick McCorry

okay I'm just gonna start this though I don't need a microphone do I okay guys I'm gonna start there so hey guys my name is Patrick McGorry London and today what I'm going to present about is more an introduction to the Wolves I'd been doing research on this five years at coin I could have come here presented my research what I realized is that when you go through the talks everyone's going to talk about what I talk about anyway but I noticed when I was looking at better seen again oh no 44% of people here are new period it would be really nice it's fun give everyone of France on this work and two of you already know how cryptocurrencies work maybe I can remove some misconception there is your haunt of you're deep in this okay you guys are okay I wanna highlight first is I could 2013 when I started looking at coin there was twenty dollars in this so who was in this a 25 it was doing working in 20 what do you guys think think that money it was a sky there you go is sky everyone thought it was this table dark money for the still accrued Vicky her leg hottie if you've figured thing in your week I'm gonna get a duty that ain't air to be honest is one of the so when I got into it I realized actually there under there so many cool I want to look at it from several different perspective to begin with why is you know cryptocurrencies interesting but the additional okay but let's consider this really naive example we have Bob over the building and Bob has a data be always comes along and say it says Bob I want to audit your daughter beer on a verify that everything's correct I can always do that how can Barb actually prove that his data be as active all the rack chords are what they hey what he could do is if always the entire Tobias Brownback says and Allah's can start looking at it that doesn't prove that the interface is correct so it just gives us access to the in from you but what we could do is is there a hitter structure or a protocol that would allow all of us to recompute the entire database or then she can confirm that bulbs database is actually watching you know this is actually why the blockchain itself is you loftiness just a cryptographic daughter-in-law it doesn't do anything else that's why people are really excited about this think ranae's e okay so if if Bob is opted in his database as a nice sample he'll opted in every ten minutes when he does that he'll create a new block good to be locked and this now can act as a cryptographic daughter mode this is exactly how Bob computer his database over what Bob can do is the standard his block in the our Alice can recompute the entire data pious herself using this one final block and is recreated the exact same database that bob has now is he can just compare the two databases in confirm yep other exactly what Bob started business so now I understand exactly why his daughter be insisted not on the big issue comes as bad how do we know that alice is looking at the block chief I'm Bob just didn't make it up in this but maybe Bob has computed this random block chaining give at the Alice this will all should be confident that you know at the database of it so this is where distributed system will Constanta critical how can we convince everyone in the world that this is the one true function the question is what is a consent basically there's a set of computers that won't to reach agreement about a single decision or a new item okay you get more than five six computers in some warehouse and now the classical problem that always paid both by coins or did always pay Caroline five coins they run this through some consensus protocol made you come up with the decision that Allah's pad bulb five coin per nice trip forward but traditionally Prosecco census protocols of a trade-off between Steve Ivan it this is sort of the fight to get a consent in me fifty ends the mean everyone should agree to a decision and then never forget about it or change them once we've decided Balthasar Alice's Bob you never change our mind about that I'm this food me or pretty much mean and many peers have to be online in August where we can consider the decision final okay that everyone has reached agreement on the waves is interesting for the block chamber if we consider classical consensus protocols for about thirty or forty years this is what they look like their small skill they only tend to focus on a fixed set of nodes five six seven eight any handle one-third fall what I mean by that is that thirty only 30 percent of computer drop 33 percent of computers coming Ollis before we briefed the condemned there because they focus on CFD and provided we should always reach a decision but we've made that decision ever achieved our mine and finally there's no in front and also incentive these classical consensus protocols we set up the computers they just do it because they've been told to there's no reason why they're participating this is why Bitcoin in etherium and Nakamoto consensus were interesting because it basically flipped the table and she is how we consider we considered designing I mean by this um Nakamoto consensus works on a global scale royal using a coin in a theorem today there's a mechanism the update our database do we all agree about the current state of the net I can also handle is Nathan a percent fall what do I mean by that this is because Nakamoto consensus focuses on live in it or tolerance although others will minor making blocks we will always reach a decision it will always get liveness the blocks will keep it meant it will keep you know running the consensus food and this works because we no longer focus on see we can make a decision we can forget about the decision make a completely different decision than a short period of time that's really good you can actually tolerate Forks and tolerate decisions being forgotten about or remade with initial what's really cool is that there's actually a financial incentive to run the consensus protocol and participate of you guys who's tried the mind bet corner at the Orion book there you go there you go did you guys ever try to run B PFT oh there's no financial incentive to for here guys are making money from mining Bitcoin in aetherium I'm by participating in the content what's really good with this ribbon is it and what are they recent agreement on obviously the whole point of Nakamoto fences is that they'll eventually agree upon a single blocking anyone in the world can download the blockchain they can re-execute every transaction now they can recompute the CM database as everyone else in the world there's a replication network grab a kid all the data and everyone can rican now because of the way Nakamoto consented our time we it roads in this new security paradigm called trust but verify that we still have to trust miners they love the trusted people involved in Nakamoto contain we trust them to include transaction in the blockchain but they have a financial incentive to do that because they give me I trust miners you always extend the longest year but we will have custom to do that but they have a financial incentive to do that anyway does they make money oh we don't have to trust the miners at all we can volunteer every new Block bakery if they create a block piston followed we just rejected the whole point of Nakamoto consensus is that we can hold a managed accountable they act out of order they try to keep we can just ignore them and only trust our only follow the honor what's really cool now once we have this global ledger or this public bulletin board what can we build with that you know assuming everybody in the world can see the same bulletin board or the key here to peer electronic gosh it was a solution the double thing this is me at 2013 the excited a big but I remember when I first book to be a theater of developers back in 24th they told me about aetherium and I got super excited by a theater this a little bit further instead of just financial transaction why don't we deploy program on this global network and then why don't we execute the program on the global map what's really cool now is are conceptually there's a single program out of reach of any human interference and everybody can see it everybody can interact with it we don't have to trust anyone to run them now we've given these global center shippers it programs what can we build with that now I'm interested in cryptographic food for 30 to 40 years there's lots of research papers about building really cool of the graphic protocol auction without auctioneers avoiding without an Italian Authority you need to do Mountain poker on the blockchain way but none of these protocols have ever been built but they all assumed there was either a public bulletin board or an offender Kedah broadcast John this is exactly what a theorem gives them a theorem one of the first platforms would actually allow us to build and run cryptographic protocol and of course we can also okay you want to Tamagotchi you guys have a crypt okay okay we got one we can breathe and breed we can auction them that's what we want to do okay that's the whole point we can eyeball these cryptic our cryptographic protocols thanks to the block she and I research the security engineering I think they tried to design secure protocols I like to build him the way I'm cryptocurrencies in nasty dirty perspective there are the largest bug bounties in the world there are 40 nights of cool oh sorry and they hold millions of dollars of offset that's an example Dow I'm pretty sure move people in here in no other Dow was back in 2015 there was 49 zip code but basically like a Kickstarter crew um where people can deposit money once a house enough funding anyone in the world could submit a proposal it gets enough vote that proposal gob unit funded of course horribly I got hacked now hacker found a bug they started draining 50 million dollars from the contract I'm historically that was reversed but the whole point here is that the some random person in the world who stole 50 million dollars because he exploited a single acted at the same time air palm beach were also dreaming the contract that cop hacker was stealing the money here and abs discovered it thank you trying to show the money pretty fun that's the point you know contract one bug you lose 50 million dollars now as developers you're probably not going to work on this more contract you're going to be building the exchanges the web wallace the hardware wallets this is also a fun place for security it tends to be large scale like GOx lost 108 coin though cruel laws 170,000 Bitcoin that Phenix lost 120,000 a point in 26 this is 2016 mystery patient never have lost this for them free but this is really cool as well if you're building on the wider ecosystem give a responsibility that have an adversity reminder Einstein you're not careful and what could happen fill your private key to steal all of your money so you've got a responsibility to hover so who thinks this all sounds into it raise your how do we think this is in everyone so this is all tied together a little bit because I think most people here have a rough idea with but as everyone's aware we have a private public you have a private public air private key is what you do but and your public key is your identity but I can compute this on my computer and give anyone here Maya theorem account and you can send me money and all these cryptocurrencies the transaction format looks roughly like this that could be one of yours here Macau are con there's some volume action if we're going to reward the miner hiriam for the or contract Boyet or when you want to call a function at a high level is about the transact and what you've got a transaction how do you get it across the network and into the box here I've got my 19 fishing lines it broad causes it now this gets sent to appear on the net what this pier will do is it will get his local copy of the database that represents the Calista work so give the transaction offensive you just checked those this time we'll have enough coins to pay for this keep a copy off it and they possible and every pair will do the exact same it's across the network eventually every single pair in the network has heard about your tongue back why are we doing this for what was the point of sending an unconfirmed transaction across the entire computer well let them reach the piers you're running the consensus the miners they're solving the proof-of-work the crea blocks in the update everyone okay and what did the block actually it's an ordered list of transaction I receivable if block is just an order the minor doesn't really care what they do as long as they pay this performs I bought shop deal on the net yeah but basically the block gets empty every computer on the network no I'll get their database according to that block and the question is what a blocks come from they come from these okay I want to get you guys to be miners you're all miners and you're all incompetent you're all gonna try to solve a puzzle let me check my okay awesome okay girl miners and you're all gonna compete the win summer I think once countdown book it would English Steve you know countdown yes okay there's no generator yes what no okay Oh okay so what you guys are gonna do is using any combination fishing subtraction multiplication or division I want you guys to read read the paper if the first person to solve it you know raise your hand yell out the answer guys yeah yep the other option I need the other answers or well yes okay awesome what's really cool here is that we have multiple solutions to the puzzle now not every solution this is where the difficulty of the quality of this week the better this solution so maybe they only accept puzzle solution and will only use operators but it's not good enough for the principle another property is that there's puzzle to time this all the ones you've solved the puzzle anybody can verify this that's sort of the property we want does now we can ensure it take ten minutes to create a block but when I get the block it's quick for me to verify the pollution another probabilistic there could be more than once as oh so here we had about four solution now you're all competing the window of the prize fifty-five thousand pounds or 12.5 think the journey will solution the not minor gets the multiple solution you're not all in competition what's really cool well they send the puzzle out to the network every peer gets the block they check is valid active proven work yep enough they update their database every peer does exactly the same and now we've effectively performed a batch update on the network we've updated everyone's database how there's now one key point is that every single computer has a list of deterministic rules or consensus rule and every block must conform to these rules you create a block that for example it's 182 million coins out of thin air then that will be considered an invalid block although with actually happening there that wasn't a concern now putting the pieces together you're kind of pulling thumbs actions probably get across a piece of here now miners block don't need a block OPA form the pop that's pretty much it now if you liked this introduction introductory lecture what I do in London is that I run a cryptocurrency class per day now as I initially built the quarter xx student when I decided to do was to pick a lecture theatre in the evening and just see here with sure and our biggest class had 350 people that was really exciting they're all new to the specimen running about how are these topics any other way we cover blocked in of the data structure I'll be a strategy Auto peer-to-peer network better we talked about you know future honey all chimp that work on those work a coin on the theorem of the most risk with world I don't know about time for question there's videos as well Kenny started this so he wanted to be literally two weeks before I had the start I decided I never plan to running back to university the way putting it together I'll leave you all [Applause]