Daily Archives: 2015-01-26

Financial Cryptography 2015

I will be trying to liveblog Financial Cryptography 2015.

The opening keynote was by Gavin Andresen, chief scientist of the Bitcoin Foundation, and his title was “What Satoshi didn’t know.” The main unknown six years ago when bitcoin launched was whether it would bootstrap; Satoshi thought it might be used as a spam filter or a practical hashcash. In reality it was someone buying a couple of pizzas for 10,000 bitcoins. Another unknown when Gavin got involved in 2010 was whether it was legal; if you’d asked the SEC then they might have classified it as a Ponzi scheme, but now their alerts are about bitcoin being used in Ponzi schemes. The third thing was how annoying people can be on the Internet; people will abuse your system for fun if it’s popular. An example was penny flooding, where you send coins back and forth between your sybils all day long. Gavin invented “proof of stake”; in its early form it meant prioritising payers who turn over coins less frequently. The idea was that scarcity plus utility equals value; in addition to the bitcoins themselves, another scarce resources emerges as the old, unspent transaction outputs (UTXOs). Perhaps these could be used for further DoS attack prevention or a pseudonymous identity anchor.

It’s not even clear that Satoshi is or was a cryptographer; he used only ECC / ECDSA, hashes and SSL (naively), he didn’t bother compressing public keys, and comments suggest he wasn’t up on the latest crypto research. In addition, the rules for letting transactions into the chain are simple; there’s no subtlety about transaction meaning, which is mixed up with validation and transaction fees; a programming-languages guru would have done things differently. Bitcoin now allows hashes of redemption scripts, so that the script doesn’t have to be disclosed upfront. Another recent innovation is using invertible Bloom lookup tables (IBLTs) to transmit expected differences rather than transmitting all transactions over the network twice. Also, since 2009 we have FHE, NIZLPs and SNARKs from the crypto research folks; the things on which we still need more research include pseudonymous identity, practical privacy, mining scalability, probabilistic transaction checking, and whether we can use streaming algorithms. In questions, Gavin remarked that regulators rather like the idea that there was a public record of all transactions; they might be more negative if it were completely anonymous. In the future, only recent transactions will be universally available; if you want the old stuff you’ll have to store it. Upgrading is hard though; Gavin’s big task this year is to increase the block size. Getting everyone in the world to update their software at once is not trivial. People say: “Why do you have to fix the software? Isn’t bitcoin done?”

I’ll try to blog the refereed talks in comments to this post.