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A Blockchain-free Approach for a Cryptocurrency

12 October 2016 Mario Larangeira 5 mins read

A Blockchain-free Approach for a Cryptocurrency - Input Output HongKong

A Blockchain-free Approach for a Cryptocurrency

A major technical challenge of the cryptocurrencies is to find a way to safely increase the throughput of the system in terms of number of transactions. An approach to tackle this limitation is to review the role of the blockchain, or even to take that data structure out of the picture completely. In this post, we will comment a paper by Boyen, Carr and Haines named Blockchain-Free Cryptocurrencies: A Rational Framework for Truly Decentralized Fast Transactions which proposes the latter approach.

Before describing the idea of the paper, and where the main contribution is, it is helpful to give an overview of how we can generally split the main components of a cryptocurrency protocol, or what is commonly known as the consensus protocol. The three main components are:

  • the protocol itself, the routine that every node follows;
  • the blockchain data structure; and
  • the Proof of Work (PoW) paradigm.

Here we are clearly giving the emphasis on the Bitecoin like systems which rely on the PoW idea. The reader should keep in mind that not all systems rely on it (as for example Proof of Stake based protocol).

We start by reviewing the second item above: the blockchain.

The Blockchain

The reader familiar with decentralized cryptocurrencies is aware that the blockchain is a data-structure which is kept by the network players, which are often called *miners* in Bitcoin jargon.

Each smallest part of such structure is called block, hence the name, which is where the transactions are described. There are different ways of building the actual structure (for example, Bitcoin-NG and GHOST, however in the end, the pace of the the block generation (including its addition in the structure) is the heartbeat of the whole system.

That is, with each new added block, containing brand new transactions, we are sure that the system is "alive" and making progress. However here also lies a problem.

The Scalability of the Blockchain

In the pace of the whole system lies the fundamental constrain of the growth speed of the blockchain. Nakamoto was aware of it as well as its implications, as stated in the Bitcoin seminal [Nakamoto’s whitepaper](/research/library/#2VPKGNSS).

A major implication of this limitation is the regulated speed of block generation using the difficulty level. That is the hash value that the player needs to find in order to generate a new block in PoW. That value is carefully set within the Bitcoin network to keep just the right balance between the block generation time and the block spread time over the network.

In a different setting, say, with an arbitrarily low difficulty level, there would be a higher block generation rate for sure. However, due to the competitive nature of the PoW and the blockchain addition, the forks will become more frequent, therefore increasing the risk of attacks. One should expect this because the miners are competing against each other, in order to generate new valid blocks.

In other words, the scalability constraints derive from the blockchain centralized setting.

A Blockchain-free Approach

The main idea behind the study of Boyen et al. is to substitute the blockchain by a directed graph of **transactions**, not blocks.

In that setting the system is not required to make progress by the pace of a single data structure like the blockchain. In fact, there is not a notion of block in their idea. The obvious direct consequence is that there is no race among the players of the system to generate the new block. The players are allowed to choose in which point in the graph they want to expand it.

Instead of the previous competitive blockchain environment, the players cooperatively expand the directed graph by adding new nodes, i.e., transactions, to it. We stress that every new node in the graph is a new transaction. And the action of attaching the transaction into the graph validates the transactions where the new one is attached to, i.e., the parent nodes (the new node has two parent nodes in the graph).

In order to incentivize the players to keep the progress of the system, every new transaction specifies a fee, which is decided by the issuer of the transaction. Consequently every new node which is later attached to that transaction (as described earlier) does two actions: (1) validate the transaction represented of its two parents (the number of parents is fixed by their framework) and (2) collects the fee from its parents.

Differently from the blockchain setting, there is not a notion of rounds (or epochs), i.e., the new block generation. However, due to the collection of fees, the players are incentivized to keep adding transactions to the system, therefore making the transaction history evolve. Another advantage is that the issuer of a transaction can increase the speed of the validation by offering a higher fee.

This framework reverses the competitive nature of the miners to a more cooperative approach to validate transactions in the system.

Other papers describing scalability issues within blockchain based protocols can be found here:

  • On Scaling Decentralized Blockchains
  • Inclusive Block Chain Protocols

A Brief Note on Provable Security in Cryptocurrencies

22 September 2016 Mario Larangeira 5 mins read

A Brief Note on Provable Security in Cryptocurrencies - Input Output - HongKong

A Brief Note on Provable Security in Cryptocurrencies

This post tries to give a short overview of provable security in cryptocurrencies.

Provable Security

Provable security is a relatively new area within the cryptography discipline. The first papers in the modern cryptography (the one that starts from the seventies until now) do not have a rigorous security analysis. That is, with the exception of citation of concrete attacks, there is no attempt to meticulously formalize the adversary power and capabilities.

For example, the paper "New Directions in Cryptography" by Whitfield Diffie and Martin Hellman, which is considered by most the beginning of modern cryptography (at least the public and civilian one), does not provide such rigorous analysis.

The publications from the cryptographic research community of today illustrate a startling difference from that era. In almost every relevant conference or journal, it is required from the authors a security analysis. With special care when the work proposes a new cryptographic scheme or claim improvements. Today, a new scheme or protocol without a proof of security in its original publication will hardly be accepted.

In the context of cryptocurrencies such evolution can be observed too. However, before going to that topic, it is convenient to review briefly what we mean by "adversary power and capabilities" mentioned earlier.

Class of Attacks

A somewhat naive approach is to rely on the observation of the impossibility of a concrete attack. Unfortunately, provable security is a subtle topic. Such approach would just be true for that particular concrete attack. In other words, it does not necessarily tell us anything about small variants or maybe different parameter values involved in the attack.

A more systematic, and therefore more preferable, approach is to design a formal model of the adversary capabilities. The goal of such a design is to construct a model attack as inclusive as possible. That is, a model which would capture as much concrete attacks as possible. Thereby giving us, in fact, a class of attacks.

The construction of such a model is not the end. What we actually want is to show (and prove) an upper bound in the probability of success of the adversary in that class of attacks. Needless to say, that the proof should show that such bound is small (more theoretical people should argue about what "small" means, but let skip this discussion in this post).

The way of computing such a bound is in fact what has been developed for the past decades for numerous cryptographic schemes and it involves computation assumptions, primitive models information theory and etc (and it is better drop it here, because it deserves a post on its own right). Needless to say that in this process some degree of generalization and simplification takes place. In the end the result is often called "the model."

The model is what ultimately is going to be analyzed not the system. Therefore, the construction of the model and the assurance that it is reasonable, i.e., is based as close as possible on reality, is of prime importance in provable security.

As an example, in the case of the public-key encryption schemes, one classic attack model is named CPA, which stands for Chosen-Plaintext Attack. This class of attacks embraces all the attacks that the adversary can obtain, somehow, ciphertexts from any plaintexts of its (finite) choices. By the end of that interaction, the adversary is assumed to output some value under a certain probability. For example, the correct secret-key or a valid ciphertext.

The reader should keep in mind that CPA is only one class. Other models can be devised and indeed have been proposed already, i.e., when the adversary has access to encrypted texts (instead of the plaintexts) given its choice of plaintext, as happens in the CCA (Chosen-Ciphertext Attack) a more powerful class of attacks. And there are several others.

Adversary Model in Cryptocurrency

While the public-key encryption scheme is a cryptographic primitive, a cryptocurrency is a protocol. Furthermore, a ledger based cryptocurrency imposes to the participants that they agree on the ledger state in order to validate transactions. Here, once again, to give a proper treatment in the study the security of the protocol means to explicitly model the adversary power and capabilities.

The comparison between protocols and primitives brings us a couple of differences, which should be taken into account. For example, a protocol requires the participants to exchange messages over the network, hence it is necessary to take a closer look on how the adversary behaves in the presence of these messages. The adversary can see the contents of the message? Can it block them for some time or indefinitely? All these particular cases translate into different constrained scenarios which ultimately gives us different capabilities of the protocol.

Good examples of these research variants are The Bitcoin Backbone Protocol: Analysis and Applications and Analysis of the Blockchain Protocol in Asynchronous Networks. They respectively study proof-of-work in the synchronous (the messages cannot be blocked) and asynchronous (can be blocked for some time) settings. A more recent work is about the formalization of the proof-of-stake based protocol A Provably Secure Proof-of-Stake Blockchain Protocol in synchronous.

For further reading on models and provable security, we refer the reader to a few more papers with a heavy load of cryptography theory.

Random Oracles in Constantinople: Pratical Asynchronous Byzantine Agreement Using Cryptography

Zero Knowledge in the Random Oracle model, Revisited