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Building Security into Blockchain Technologies
- 1. BLOCKCHAIN, SMART CONTRACTS, AND ICOS: BUILDING SECURITY INTO THE DECENTRALIZED DIGITAL ECONOMY dejavusecurity.com IN PARTNERSHIP WITH:
- 2. BLOCKCHAIN, SMART CONTRACTS, AND ICOS: BUILDING SECURITY INTO THE DECENTRALIZED DIGITAL ECONOMY Akshay Aggarwal CEO, Peach Tech Security Landscape of Blockchain Technologies dejavusecurity.com
- 3. Security Landscape of Blockchain Akshay Aggarwal
- 4. Former Microsoft Director MS CS UC Davis 20 years in Security Founder, Deja vu Security Akshay Aggarwal CEO, Peach Tech A Security Analysis of the Bitcoin Mining Ecosystem - Mick Ayzenberg, Adam Cecchetti, Akshay Aggarwal Securing the Enterprise Blockchain*: Research Note - Akshay Aggarwal
- 5. Blockcha in numbers 13-15 Transactions per second capacity of ETH 64 use cases For blockchains In survey of 200 companies by McKinsey & Co. 135 Number of startups with ICOs since 2014 by CB Insights 701,834Highest number of daily ETH transactions on December 4, 2017 by Etherscan $400MM Investment by Banking sector by 2019 by McKinsey & Co $20B Estimated size of Blockchain market by 2024 by TMR 9 out of 10 Position of Seattle in top 10 cities for blockchain development in 2016 by Deloitte 15% Of banks using blockchain in 2017 according to IBM
- 6. Blockchain security issues have often caught organizations unaware! The List 1RETURN in Bitcoin creates 184 Billion Bitcoins Mt. Gox lost $460MM to transaction malleability* Gatecoin hacked using server disruption and reboot Recursive attack against DAO resulting in $50MM loss and hard fork 1.2 million in Bitcoins hijacked in 'social engineering’ attack input.io CoinDash ICO hacked by address manipulation with $7 million stolen Veritaseum Ether wallet hacked with $8 million stolen by thwarting 2FA Blockchain (In)Security
- 8. Key aspects of blockchain Distributed Ledger Database 1 Decentralized peer to peer communication 2 Transparent with pseudonymity* 3 Irreversible** Records 4 Computational logic 5
- 9. Foundational Technology Decentralized & Distributed Ledger Public Key Cryptography Proof of work*/stake
- 10. Wonders of the blockchain Removing infinite reproducibility of digital assets realizes value-exchange
- 11. The blockchain promises to Frees capital flow Speeds processes Lowers transaction cost Provides security Enhances trust Eliminate the middle man
- 12. Cross border B2B payments Trade finance Escrow Services Initial Coin Offerings Smart Contracts Supply Chain Management USE CASES FOR BLOCKCHA IN Primary focus on financial services (~40%) and cost reduction (~70%) Source: McKinsey & Co. and expert
- 14. Risk Criteria Legal & regulatory Foundational Technical implementation Operational integrity Scalability Future proofing
- 15. ICOInitial coin offering (ICO) is an unregulated and controversial means of crowdfunding via use of cryptocurrency, which can be a source of capital for startup companies Legal & regulatory - PlexCorps Foundational Technical implementation Operational integrity - CoinDash Scalability Future proofing
- 16. Smart Contractsare self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. Legal & regulatory Foundational Technical implementation Operational integrity Scalability Future proofing
- 17. Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Legal & regulatory Foundational Technical implementation Operational integrity Scalability Future proofing
- 18. Supply Chain ManagementA blockchain application use case for the enterprise Legal & regulatory Foundational Technical implementation Operational integrity Scalability Future proofing
- 19. The promise of tomorrow
- 20. Predications for the future 5 years before blockchain reaches full potential Implementation of proof of stake or membership Massively scalable blockchain Enterprise adoption with a 20-30 viable use cases Establishment of legal & regulatory framework More hard forks
- 21. 3TOTF – evil thoughts of the future The (Im)perfect audit trail Smart contract triggers & forced reconciliation Blockchain temporal segmentation A virtual commit with no physical commit My timing or yours The offer expires in (predictive commits) Optimization attacks on private blockchains The ghost town
- 23. BLOCKCHAIN, SMART CONTRACTS, AND ICOS: BUILDING SECURITY INTO THE DECENTRALIZED DIGITAL ECONOMY Akshay Aggarwal CEO, Peach Tech Security Landscape of Blockchain Technologies dejavusecurity.com
Editor's Notes
- Introductions, turn out
- Outline for talk The Basics – Anything but the math Wonders of the BC – Value of BC, Use cases Mapping BC Risk The future
- $20B; https://www.prnewswire.com/news-releases/worldwide-blockchain-technology-market-is-anticipated-to-exhibit-a-cagr-of-587-between-2016-and-2024-elimination-of-third-parties-improves-demand-and-security-of-online-transactions--tmr-611067345.html 64 use cases https://bravenewcoin.com/news/mckinsey-sees-blockchain-technology-reaching-full-potential-in-5-years/ - 135: https://www.cbinsights.com/research/blockchain-ico-tokens-startup-market-map-expert-research/ 80% of 3000 : https://securityintelligence.com/news/ibm-study-blockchain-adoption-on-the-rise/ 15%: http://fortune.com/2016/09/28/blockchain-banks-2017/ 693808 https://etherscan.io/chart/tx
- Key takeaway : Not just attacks on BC Attacks on how BC are orchestrated, implemented, and operated
- How Blockchain Works Here are five basic principles underlying the technology. 1. Distributed Database Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary. 2. Peer-to-Peer Transmission Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes. 3. Transparency with Pseudonymity Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses. 4. Irreversibility of Records Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network. 5. Computational Logic The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.
- Value-exchange: The use of a blockchain removes the characteristic of infinite reproducibility from a digital asset. It confirms that each unit of value was transferred only once, solving the long-standing problem of double spending. Blockchains have been described as a value-exchange protocol. This blockchain-based exchange of value can be completed more quickly, more safely and more cheaply than with traditional systems.
- Uses Frees capital flow, speeds processes, lowers transaction cost, provides security, enhances trust
- Emerging technologies, rapidly evolving use cases need a way for us to understand inherent risk
- Enterprise blockchains may be Distributed, Permissioned and Secure
- 1. Proof of stake instead of proof of work for scalability. Next block creator assigned by random selection and other criteria that include stake in system. Suffer from “nothing at stake” problem.