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The Blockchain land:
Is there Consensus over Consensus?
Vasily Suvorov, VP Technology Strategy
March 18, 2016

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Can we talk about blockchain
without the Hype?

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What is Distributed Ledger Technology? (AKA Blockchain)
Decentralized Data-Sharing Technology that:
 Connects participants in a business ecosystem
without a central entity
or intermediary
 Maintains real-time, add-only,
unchangeable ledger and history of transactions
 Automates business rules execution
Made possible by a unique combination of
Peer-to-peer communications,
Strong encryption,
Distributed consensus and
Smart contracts

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Consensus is the most fundamental part of the DLT/Blockchain tech
and yet
poorly understood

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What I’ll cover
• What is consensus?
• Examples of consensus mechanisms
• PoW, PoS, Byzantine, Federated and Crypto-Based
• The Big Question
• Do we need Consensus Protocols and Distributed Shared Ledgers?
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Back to School Time!
Byzantine Agreement Protocol.
In a synchronous network, let P be a n-player protocol, whose player set is common
knowledge among the players, t a positive integer such that n ≥ 2t + 1. We say that P is an
arbitrary-value (respectively, binary) (n, t)-Byzantine agreement protocol with soundness σ ∈
(0, 1) if, for every set of values V not containing the special symbol ⊥ (respectively, for V = {0,
1}), in an execution in which at most t of the players are malicious and in which every player i
starts with an initial value vi ∈ V , every honest player j halts with probability 1, outputting a
value outi ∈ V ∪{⊥} so as to satisfy, with probability at least σ, the following two conditions:
1. Agreement: There exists out ∈ V ∪ {⊥} such that outi = out for all honest players i.
2. Consistency: if, for some value v ∈ V , vi = v for all honest players, then out = v.
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Let’s Use Pictures Instead!
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PoW – Consensus for a Censorship Resistant Network
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• Ideal for Trustless Environments
• Requires Cryptocurrency
• Needs cheap electricity
• Relies on Game Theory to align incentives
• Highly scalable
• Slow by design
• Transaction finality is not immediate
• Favors infrequent, high-value operations
• Difficult to upgrade
• Privacy?
• Decentralization?

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PoS – Scalable Consensus for Public & Private Ledgers
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• Good for Low-Trust Environments
• Requires Cryptocurrency
• Relies on Complex Rules to align incentives
• Highly scalable
• Theoretically faster than PoW
• Transaction finality is not immediate
• Builds foundation for Governance
• Microtransactions?
• Privacy?
• Decentralization?

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BFT/Federated – Fast Consensus with Finality
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• Requires higher level of trust / identity
• Does not require a Cryptocurrency
• Relies on multiple voting rounds
• Scalability is limited
• Faster than PoW or PoS
• Transaction finality is immediate
• Easy to govern and upgrade
• Privacy?

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Identity/Crypto-Based – Distributed Ledgers without a
Ledger
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• Requires a way to manage identities
• Does not require a Cryptocurrency
• Does not require a shared Ledger
• Relies on Smart Contracts & Message Routing
• Scalability is high
• Fast
• Transaction finality is immediate
• Easy to govern and upgrade
• Highest level of privacy

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Consensus techniques – Overview
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Network Size
Throughput
< 100 tx/s
High
Latency
> 10K tx/s
Network
Latency
< 20 nodes > 1000 nodes
Stellar / Ripple
IOTA
Ethereum PoW
Bitcoin POW
Kadena
Tendermint
Symbiont
Ethereum PoS*

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Next Gen, Decentralized EDI Technology
Making Smart Contracts Enforceable and Data Private
• No Single Blockchain or DLT
• History is maintained by Nodes, Flow(s) manage
relationships between nodes
• Histories can be connected, if deals are related
• Notary & Oracle Services are defined
• Sophisticated Identity Services
• Smart Contracts iterate over state
• Business process (Flow) updates a state
• State transition (input > output) is logged
• Multiple Fin related classes are pre-defined
• Business prose (PDF) is attached
• Consensus is pluggable
• Notaries can be validating or not
• Notaries can run a BFT or CFT (Raft) protocol
• Notaries can be regional or global (Network Map)
Party A Party B
Notary
Oracle
Flow
Flow
Flow
Flow
Corda – network of Ledgers

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Blockchains are inefficient
databases!
The Big Question!
Shall we just go with distributed, crypto based ”Smart Contracts” ?

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Thank You!
&
Questions?