By Dr Craig S Wright Contents: • Bitcoin as a base layer • A Bitcoin Layered Network (BLN) • Simplified Payment Verification (SPV) & Network Clients • Users & the Mobile Cloud • Ordering & Timestamping in a BLN • Bitcoin in a World of Global Trade

1. Bitcoin Overlays and
Cloud Security in a World
of Global Trade
DR CRAIG WRIGHT – CHIEF SCIENTIST – NCHAIN GROUP
26.05.22

2. Bitcoin as a Base Layer

3. Bitcoin as a Base Layer
Example of a layered network
BITCOIN OVERLAYS AND CLOUD SECURITY
Key:
Node
Node
Node
Intra-layer
Ancestor
Core Ancestor

4. Example of a layered network
BITCOIN OVERLAYS AND CLOUD SECURITY
Bitcoin as a Base Layer
Key:
Node
Node
Node
Intra-layer
Ancestor
Core Ancestor

5. Example of a layered network
BITCOIN OVERLAYS AND CLOUD SECURITY
Key:
Node
Node
Node
Intra-layer
Ancestor
Core Ancestor
i= 2
i= 1
i= 3
i= 2
i= 4
i= 3
i= 5
i= 4
Bitcoin as a Base Layer

6. A Bitcoin-Layered Network (BLN)

7. A Bitcoin-Layered
Network (BLN)
BITCOIN OVERLAYS AND CLOUD SECURITY
A mandala network consists of layers.
The first layer forms a near-complete graph.
In Bitcoin, we refer to the central core of mining nodes as the
giant node.
Each successive layer has a similar degree of connection.
Outer layers, including service providers and users, can be
connected to more than the central core node.
Each layer brings with it a corresponding degree of connection.
Beyond Mandalas

8. BITCOIN OVERLAYS AND CLOUD SECURITY
Layer 1: Miners
Nodes form a near-complete graph.
Layer 2: Service providers
Service providers connect to nodes in the
central core.
Layer 3 and above: Users
Clients connect to service providers.
A Bitcoin-Layered
Network (BLN)
Beyond Mandalas

9. BITCOIN OVERLAYS AND CLOUD SECURITY
Communities
Devices that are connected to the same
subset of core mining nodes belong to
the same community.
A community can take advantage of
economies of scale and leverage
service-level agreements, based on
applications or geographical areas,
including metropolitan area networks
(MANs).
The network is managed through Miner
ID and digital certificates.
A Bitcoin-Layered
Network (BLN)
Beyond Mandalas
Red
Community
Blue
Community
Yellow
Community

10. Simplified Payment Verification (SPV) and
Network Clients

11. Simplified Payment
Verification (SPV) and
Network Clients
BITCOIN OVERLAYS AND CLOUD SECURITY
Outer layers of a BLN form an SPV-like connection to the core.
They can:
• send a transaction to a core node;
• ask a core node if a transaction has been accepted in its
candidate block;
• ask for the Merkle proof of a transaction that has been named
in a block; and
• ask for an updated list of block headers.
Lightweight network clients will only need SPV-like
connectivity.
Commercial service providers may require the core to actively
serve them more data, including transactions of specific criteria,
and put in place service-level agreements.

12. Users and the Mobile Cloud

13. Users and the Mobile
Cloud
BITCOIN OVERLAYS AND CLOUD SECURITY
SPV clients and users form the edges of the network.
Every mining node is densely connected with other mining
nodes through at least one connection, and has at least 11,000
edges.
The mining systems maintain connectivity across the entire
network.
Users can safely and directly exchange digital assets and data
peer-to-peer (P2P), and enjoy a fully scalable experience.
Using SPV and IP-to-IP connectivity on a global scale, we can
prevent the loss of data while protecting user privacy and
identifying information.
Leveraging IPv6, Bitcoin brings a new level of security and
mobility to existing cloud services.

14. Users and the Mobile
Cloud
BITCOIN OVERLAYS AND CLOUD SECURITY
• Integration of payment and control into
one network
• Using existing infrastructure to
piggyback messages regarding device-
state changes
• Faster user-device interaction
IoT systems generate large volumes of data and require systems
with:
• network scalability;
• strong cybersecurity;
• reliable connectivity; and
• minimal network latency.
P2P architectures offer an efficient solution, whereby
neighbours interact directly with one another.
Blockchain technology is the foundation for secure P2P
communication and the development of cloud-based IoT
systems.

15. Ordering and Timestamping in a Bitcoin-
Layered Network

16. Ordering and
Timestamping in a
BLN
BITCOIN OVERLAYS AND CLOUD SECURITY
A timestamping service creates a
sequence of key pairs 𝑃1, 𝑃2, 𝑃3,…
We can sign a chain of transactions 𝑇𝑥0 →
𝑇𝑥1 → 𝑇𝑥2 → 𝑇𝑥3 → ⋯
The OP_RETURN payload of each
transaction contains an ordered list of all
the data items generated within a certain
interval (e.g. 1 second).
𝑑𝑎𝑡𝑎1 = 𝐷1, 𝐷2, 𝐷3, …
If required, there may also be a
transaction for every data item.

17. Ordering and
Timestamping in a
BLN
BITCOIN OVERLAYS AND CLOUD SECURITY
Using a BLN and threshold signatures, we can meet the
requirements for record-keeping and document destruction in a
digital world, including:
• the sequence of data-mutation requests in a database;
• the state and performance of a contract; and
• log files of a certificate authority.
For additional security, data elements can
be chained together and form a provable
order using:
• a hash chain;
• a chain of derived public keys and
signatures (X.509-compatible); and
• a chain of R-Puzzles.
Index Data Hash chain element
1 𝐷1 𝐻1 = 𝐻(𝐷1)
2 𝐷2 𝐻2 = 𝐻(𝐷2 ∥ 𝐻1)
3 𝐷3 𝐻3 = 𝐻(𝐷3 ∥ 𝐻2)
⋮
𝒏𝟏 𝐷𝑛1 𝐻𝑛1
= 𝐻 𝐷𝑛1
∥ 𝐻𝑛1−1

18. Bitcoin in a World of Global Trade

19. Accounting is boring.
And yet, it isn’t…
BITCOIN OVERLAYS AND CLOUD SECURITY
Monty Python – Accountancy Shanty (Meaning Of Life)
Up, up, up your premium
Up, up, up...
It's fun to charter an accountant
And sail the wide accountan-cy
To find, explore the funds offshore
And skirt the shoals of bankrupty.
It can be manly in insurance:
We'll up your premium semi-annually,
It's all tax-deductable,
We're fairly incorruptible,
We're sailing on the wide accountant-cy!

20. Bitcoin in a World of
Global Trade
BITCOIN OVERLAYS AND CLOUD SECURITY
A permanent record matters…
I have a vision of a system that…
…scales to billions of transactions a second.
…is open to anyone globally.
…is completely traceable and works within the existing legal
structures.
…and costs no more than a thousandth of a cent for a standard
transaction of 250 byte, no matter where you are in the world
and no matter what you are doing.
Bitcoin can provide an indelible record of global trade.
[The rich] are led by an invisible hand to
make nearly the same distribution of the
necessaries of life, which would have
been made, had the earth been divided
into equal portions among all its
inhabitants, and thus without intending it,
without knowing it, advance the interest
of the society, and afford means to the
multiplication of the species. When
Providence divided the earth among a few
lordly masters, it neither forgot nor
abandoned those who seemed to have
been left out in the partition.
-- Adam Smith, The Theory of Moral
Sentiments (1759), Part IV, Chapter 1

21. THANK YOU

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