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WSO2Con USA 2017: Keynote - The Blockchain’s Digital Disruption

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Almost a decade ago, little-known open-source cryptocurrency called Bitcoin made its debut with little fanfare. Its underlying technological innovation has now caught the world’s attention; developers, startups, corporations, academic institutions, and governments are all examining what blockchain technology can solve. Currency, assets, identity, trade settlement, cross-border payments, privacy and regulation are areas being explored. This session will explore the past, present, and future of blockchain technology and how it may influence your business.

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WSO2Con USA 2017: Keynote - The Blockchain’s Digital Disruption

  1. 1. Blockchains and Cryptocurrencies Catheryne Nicholson BlockCypher CEO & Co-founder catheryne@blockcypher.com
  2. 2. Agenda •History of money •Current state of blockchains •About BlockCypher •Future of blockchain applications
  3. 3. History of Money
  4. 4. Failure is Opportunity
  5. 5. Bitcoin Genesis Block Jan 3, 2009 Headline: “Chancellor on brink of second bailout for banks." – Satoshi Nakamoto
  6. 6. The Age of Cryptocurrencies
  7. 7. Cryptocurrency + bitcoin blockchain
  8. 8. Cryptocurrency Market Caps
  9. 9. Why You Can’t Cheat Bitcoin
  10. 10. Hashing power needed to take over the Bitcoin network (DRAFT) 3500 Petahash per second OR CPUs OR
  11. 11. bitcoin ≠ blockchain ≠ Bitcoin The Technical Innovation (distributed ledger) Cryptocurrency (incentive) E.g. ether, bitcoin Protocol (parameters) Ethereum, Bitcoin What’s the difference?
  12. 12. What’s a Blockchain? Immutable, cryptographically verified, Proof-Of-Work secured accounting ledger
  13. 13. Block 50 PoW: 0026f34d197f Transaction b39fa6c39b Transaction 7301b5952 Transaction 6961d06e4 Block 51 PoW: 0026f34d197f Transaction b39fa6c39b Alice => Bob Transaction 6961d06e4 Block 52 PoW: 0026f34d197f Transaction b39fa6c39b Transaction 7301b5952 Transaction 6961d06e4
  14. 14. Unlocks prior TX funds... ...then lock with new rules What are Transactions?
  15. 15. Blockchains Flavors (DRAFT) • Open (e.g. Bitcoin, Ethereum) • Permissioned (e.g. Corda, Eris, Hyperledger, Symbiont, etc.) • Private (Beth, BCY, BKCoin, etc.)
  16. 16. Trust (DRAFT)
  17. 17. BlockCypher Blockchain Web Services (BWS)
  18. 18. Ken GoldmanTim Draper Jerry YangNasir Jones Shawn Byers Sanjiva Weerawarana BlockCypher Investors
  19. 19. Base Protocol (Bitcoin, Ethereum, etc.) Mining Applications/Services Users/Usage Middleware Blockchain Cake Infrastructure
  20. 20. Blockchain Client Architecture P e e r s Chain Pool Scripting Validation Store Wallet Addresses Crypto Miner Primitive APIs Wire Format ≈ Running Excel as database Bitcoin and Ethereum clients
  21. 21. Crypto P2P Consensus Smart ContractsProof of Work Proof of Stake Key Security Proof of ??? Scaling Lightning Privacy zkSNARKs MimbleWimble Teechan HSMs Hardware Wallets Bitcoin Script Serenity Viper Decentralisation Incentives Game Theory Cryptoeconomics Mechanism Design Security MiningChip Design Energy Price GPUs Data Centers DDoS Sybil Attacks 51% Attacks Selfish Mining Light Clients SPV Pruning Sharding Elliptic Curve Cryptography Hashing Network Layers Gossip Protocols DHTs (Chord, Kad) Block Ciphers Random Oracle Hashcash Staking Attacks Async I/O (poll, epoll) Language Design Type Systems Parsers / Compilers VMs, Interpreters Randomness Ciphers: AES, RSA Secure Enclaves FIPS 140 PKI Schnorr Signatures Segregated Witness Hash Locked Contracts OnioNetworks Trusted Execution Environments Ring Signatures “Moon Math” Pairing-based Crypto Commitment Schemes Zero Knowledge Distributed Computing Bloom Filters Replicated State Machines Merkle/Sum Trees Stack Languages Economics Bayesian Statistics Market Dynamics Protocol History Logic Gates Geothermal/hydro power Cooling Systems Hardrware Procurement Power Efficiency Heat Dissipation Intel SGX Threat Modeling
  22. 22. Blockchain-as-a-Service (BaaS) Locally... The road to production... (minimum 2 years, $1M)
  23. 23. Use BlockCypher APIs & Services ● Analytics API - queries for blockchain information ● Asset API - issue & handle assets on the blockchain ● Confidence Factor - predictive & real-time analytics for unconfirmed transactions ● Contract API - call contract functions on blockchain over HTTP ● Data Endpoint - place data or a hash on a blockchain ● Microtransaction API - micropayments on-chain ● Multiple Address Wallet API - multiple addresses under single wallet name ● Multiple Blockchains - Bitcoin/Ethereum type; single API call to create new chains ● Multisignature API - multiple signature key management ● Payment Forwarding API - forward, consolidate, add commissions to payments ● Transaction API - build transactions easily ● WebHooks and WebSockets - monitoring & notifications on blockchain events
  24. 24. Scalable Blockchain Architecture
  25. 25. HTTP HTTP HTTP T C P T C P Distributed Datastore Distributed Locks Messaging HTTP Blockchain Layer Web API Layer Peer to Peer BlockCypher Cluster Other Private Cluster Bitcoin, Ethereum, etc. BaaS Architecture
  26. 26. BlockCypher Analytics Framework
  27. 27. B i t c o i n C u s t o m BlockCypher ● Multiple blockchains on same infrastructure ● Multiple datacenters ● No single point of failure ● Secure & hardened servers ● Linear scaling ● Uptime 99.999% Cloud-optimized, enterprise-grade blockchain infrastructure Blockchain-agnostic infrastructure E t h e r e u m
  28. 28. BlockCypher Benefits 6+ months faster to market 35+% less cost
  29. 29. The Biggest Little Blockchain Company Customers
  30. 30. CRYPTIV
  31. 31. Blockchain Use Cases
  32. 32. United States Citizenship and Immigration Services. U.S. Customs and Border Protection. Federal Emergency Management Agency. U.S. Immigration and Customs Enforcement. Transportation Security Administration. United States Coast Guard. National Protection and Programs Directorate. United States Secret Service. Data Management and Analytics U.S. Department of Homeland Security
  33. 33. ● Machine learning ○ Transaction clustering ○ Spark GraphX for Graph analysis ● Statistical analysis ○ Geographical, origin, relay, transaction size, etc. ● Monitoring for anomalies ● Tracking $70M heist (BitFinex) ○ Largest transactions, transaction shape & origin Financial Crime
  34. 34. Custom Ethereum-based blockchain: ● Smart contract with ability to call an external risk management system during execution ● API-driven, open marketplace ● Private cloud hosted ● Block processing near real-time ● Transaction round-trip cycle time in milliseconds ● 1000+ Transactions per second (TPS) w/payload on desktop Payment Cards
  35. 35. Identity Management Challenges ● High cost of fraud ($B) ● Lack of adoption of security ● Disclosure ● Privacy ● Ease-of-use Solution ● User manages identity (e.g. biometrics) on Shocard mobile app ● BlockCypher publishes identity to blockchain Benefits ● 6 months saved in ramp up time ● 35% costs saved in development ● Increased scalability and reliability ● Improved code maintenance Transaction API Authentication
  36. 36. P2P Payments Challenges ● High transaction fees ● No single P2P platform ● Currency fluctuation ● Lack of good testing environment Solution ● Abra enables person to send payment to any mobile phone ● BlockCypher provides notifications (e.g. for payments) Benefits ● Users protected from market volatility ● Faster deposits ● Cross-border payments ● ~30% development cost Deposit $200 (XBT spot at 200) Send $200 (XBT spot at 160) Lender (XBT spot at 160) XBT down 20%, Abra holding 1.25 XBT BCY Webhooks
  37. 37. Machine-to-Machine Drone, parking meter, remote server, self-driving car, POS, VR device, etc.
  38. 38. Let’s Code a Central Bank contract Coin { address minter; mapping (address => uint) balances; function Coin() { minter = msg.sender; } function mint(address owner, uint amount) { if (msg.sender != minter) return; balances[owner] += amount; } function send(address receiver, uint amount) { if (balances[msg.sender] < amount) return; balances[msg.sender] -= amount; balances[receiver] += amount; } function queryBalance(address addr) uint { return balances[addr]; } }

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