• trust
  • decentralized
• proving things
• accountability

“corruption factor”

trust, but verify (trustlessness)

Trust relationships

social -> institutional -> programmable

• medium of exchange
• unit of account
• store of value

Bitcoin §

a prefix-immutable append-log of non-conflicting authenticated events in a decentralized peer-to-peer network

rules:

• prove ownership of balance when you try to spend it
• no transactions that result in you spending more than you have
• unit of value can only be spent once

fixed, full history

public ledger.

• everyone has a copy.

incentives for mining.

Primitives §

Asymmetric Cryptography §

digital signatures.

1. $\mathrm{Gen}$
2. $\mathrm{Sign}$
3. $\mathrm{Verify}$

Signature = Sign(M, k)

Verify(M, Signature, K)

Hash functions: one-way functions. uniq.

“difficult to solve, easy to verify”

Proof of work

Blockchain §

every block includes the hash of the previous block

nakamoto consensus. longest chain wins

honest majority assumption

fault tolerance

probabilistic consensus

Ethereum §

General, as opposed to bitcoin

deterministic FSM

• mining loop
• ledger loop

ethereum virtual machine

decentralized applications. contracts.

Stable coins §

currencies that are meant to hold stable values.

e.g. 1 Tether is pegged to 1 USD

Abstracting blockchains §

• networking — p2p
• consensus
  • leader election
  • chain selection
• ledger — how to store data
• application — construct and apply state transitions

Privacy coins §

Blockchain issues §

• scalability
• interop
• sustainability
• regulatory & legal

Block size, TPS (Transactions per second), and security are interlinked. At smaller block generation times, many blocks will be created and conflict resolution will take longer.

off-chain layer: payment channels, dispute resolution