ITU Workshop on “Security Aspects of Blockchain”

(Geneva, Switzerland, 21 March 2017)

Blockchain’s Brave New World

Haydn Jones Managing Director, Blockchain Hub,

haydn@blockchainhub.comGeneva, Switzerland, 21 March 2017

Agenda

• What makes a blockchain special in terms of inherent security? 

• When could a blockchain become insecure / unstable? Examples and implications

• Novel use cases exploiting a blockchain's inherent security 

• When could a blockchain pose a cyber threat?

Geneva, Switzerland, 21 March 2017

What makes a blockchain special?

Scope

Geneva, Switzerland, 21 March 2017

• Blockchain in its purest sense • Storage • Relying on pure cryptography

• Blockchain in the context of Bitcoin & Cryptocurrencies • Cryptographic work as a store of value and reward • Incentivised to further secure the transaction set • Security implications of such a protocol

What makes a blockchain special?

The Power of the Hash Function

Geneva, Switzerland, 21 March 2017

• One way • Collision Resistant - Infeasible to find a collision for x and y, where H(x) = H(y) • Puzzle Friendly - No solving strategy exists which is better than trying random values

H( ) = B6096533C201C009D4A930A1EBC264CAA4B2D30B1D0F20CAEE9D4D302D34AD2D

H(ITU) = 95FC203CAEC2063213593B1159EDED34A825403D8C1775A13FF0ACFD5ADF9081

176 pages

A simple immutable store of data

Blockchain’s Inherent Security

Geneva, Switzerland, 21 March 2017

Time

H(Data) = Digest

• Cumulative Aggregation of the Digest • Parallel Digest Capture

Digest(1) Digest(2) Digest(N)

What makes a blockchain special?

Cryptographic Primitives Combined

Geneva, Switzerland, 21 March 2017

Time

Digest(1) Digest(2) Digest(n)

Transaction Set

• The addition of the nonce puzzle, creates cryptographic work • Public keys become identities • Signing with your private key allows the movement of value • Digital tokens as a reward framework for providing additional security

H (Digest(1) + nonce) = 000000xxxx

Reward

What makes a blockchain special?

The Net Result (1)

Geneva, Switzerland, 21 March 2017

Immutability is blockchain’s main proposition

• No single point of failure - distributed synchronised nodes • Disintermediation of central trusted counterparties allowing trustless

exchange • Enhanced data quality - validated - a single correct distributed copy • Removal of multiple tiers of ledgers, with inherent vulnerabilities • Whilst a centralised database can be corrupted, requiring third party

oversight - similar to how a central bank maintains confidence in the currency - blockchains create a “trust fabric”

• Public blockchains incent participation via digital tokens, issued upon the completion of cryptographic work, and create an additional dimension of security - consensus.

When could a blockchain become insecure / unstable?

Edge Vulnerabilities

Geneva, Switzerland, 21 March 2017

• Bitcoin, per se, has never been hacked • Quality vulnerabilities still exist

• Fully distributed networks are in the hands of a community

• Very much an experiment

What makes a blockchain special?

The Net Result (2)

Geneva, Switzerland, 21 March 2017

Secure More Secure

Blockchain

Blockchain +

Cryptographic Work +

Store of valuePredictable Outcomes

Use cases exploiting blockchain's inherent security 

Secure Data Storage

Geneva, Switzerland, 21 March 2017

Blockchain as a Cyber Threat

Geneva, Switzerland, 21 March 2017

• The Bitcoin protocol has a virus like quality.

• “It’s Impossible to Kill Bitcoin”- Former Chief of Govt-Owned Bank of China

• Could a blockchain based cyber virus emerge requiring an infeasible amount of cryptographic work to neutralise it?

What makes a blockchain special?

In summary…

Geneva, Switzerland, 21 March 2017

• Nascent technology • Application not understood • Therefore security story not understood • Cryptographic work to secure the network comes

at a price in the form of energy consumption and throughput

• Predictable vs. non-predictable outcomes • Community Grade vs. Enterprise Grade • It’s an all or nothing solution