BitcoinConfHK

1. State of Ethereum
And Mining

2. ● People want features
○ Issue coins
○ Decentralized exchange
○ Financial contracts
● Solution: feature coins
● Problem: what if people want to do
more?
Cryptocurrency in 2013

3. ● Generalized cryptoledger
● Built-in programming language
● Create any feature that you want
● Also supports DACs/DAOs/DAs
Ethereum

4. ● Special type of account
● Has:
○ Code
○ Ether
○ Storage (key/value database)
Contracts

5. ● Idea: when a message is sent to a
contract, code executes
● Code can:
○ Read/write storage
○ Send ether
○ Send other messages (ie. recursive VM)
Contracts

6. Name registry: Currency:
Examples

7. The Ethereum Blockchain

8. Ethereum in 2014
● Decentralized applications (Đapps)
● More than just money

9. ● HTML/JS webpage, ETH JS API
Đapps: contracts with GUIs

10. ● Whitepaper
● Protocol fully implemented
● 4 clients (Go, C++, Py, Java)
● 2 clients compatible for 1900 blocks
● Serpent, LLL, Mutan
● Basic browser
● Fully functional third-party dapps
Progress so far (technical)

11. ● Financial
○ Kickstarter (38 LoC)
○ Denny’s Lotto
● Academic Publishing
○ CryptoSwartz
● Governance
○ People’s Republic of ĐOUG
○ Project Eris
○ BitVote
Third-Party Development

12. Progress so far (non-technical)
● CCRG prelim (Toronto, Waterloo, Texas,
Nicosia)
● Regulatory (Swiss, almost US)
● Sale website, cold storage policy
(almost)
● 40+ meetup groups

13. What needs to be done (technical)
● EtherBrowser
○ Likely Chromium-based
● Efficiency upgrades
○ JIT compilation
● Security audits
● Light client implementation
● Mobile implementation

14. What needs to be done (non-technical)
● Finalize pre-sale tasks
● CCRG formal setup
● Education resources
● Translation
● 960 more meetup groups?

15. Conclusion
● Ethereum at halfway point
● Current version theoretically near-
viable but buggy (eg. 2009 BTC)
● “Hard” work still remains
(we’re only half-done…)

16. Decentralization, n. The security assumption that a
nineteen year old in Hangzhou and someone maybe in
the UK, and maybe not, have not yet decided to
collude with each other.
Mining

17. ● I have 100 BTC
○ Tx 1 sends 100 BTC to A
○ Tx 2 sends 100 BTC to B
● Both are published, which one confirms?
● Correct answer: the one that appears
first
● Problem: need distributed timestamp
● Solution: blockchain
Blockchain

18. Mining
● Miners attempt to produce blocks
● Each block references previous block
● Block making function 1/1020
success rate
● One random miner succeeds every 10 min
● Longest blockchain (one with most PoW)
wins

19. 51% Attacks
● Problem: one entity has >50% hashpower
● Attack 1: reverse transactions
● Attack 2: exclude others, monopolize
○ Weaker version at 25%: selfish-mining
● Attack 3: censor transactions

20. Pools
● Mining is a lottery
● One ASIC has 15% chance of success
● Pools: mine for me, I pay you 0.00025 BTC
per block
● Problem: pool centralization

21. Pools

22. ● Bad argument: no, majority miner has
aligned incentives
● Better argument: users can quit pools
○ Unknown: will they?
Is centralization bad?

23. ● Problem: centralized pools allow mining
without validation
● Idea: protocol requires blockchain
accesses
● Goal: make P2Pool economically viable
Solution 1: force blockchain storage

24. ● Problem: small pools have high variance
● Idea: users mine into multiple pools
simultaneously
● Goal: allow even small pools to fully
absorb variance
Solution 2: Multi-PPS

25. ● Original intent: mining decentralized,
democratic
● Problem: specialized hardware
● Now: mining hardware all produced by a
few centralized firms
ASICs

26. ● 25% of hashpower made in one factory in Shenzhen
● First floor: 25% of Litecoin hashpower
How bad?

27. ● Argument: CPU production very
centralized too
● Counterpoint: CPU usage and control still
local
● ASIC production now centralized, usage
still decentralized
● Will this change?
Is this a problem?

28. The First Grand Equation

29. ● Centralized maintenance, storage cheaper
● Decentralized energy free… up to a point
ASIC Decentralization: The Argument

30. ● 2011: Scrypt
○ Problem: memory-hard to verify
● 2013 Oct: Momentum
○ Problem: Pollard cycle finding algo
● 2013 Dec: Dagger
○ Problem: shared memory
● Now: Cuckoo (length-42 cycles)
Anti-ASIC 1: Memory-Hardness

31. ● Strategy: randomly generate a mining
function every block
● Idea: optimal ASIC for “any function” IS a
CPU
● Problem: how
● Problem 2: some specialization always
possible
○ But: does that matter?
Anti-ASIC 2: Generalized Computation

32. The Second Grand Equation
● Idea: use of computer hardware free… up
to a point

33. End