Blockchain Momentum - Part 2 of 2

, Yoshinori Oe, Blockchain

The Beginning of Bitcoin

  • The Bitcoin’s White Paper was disclosed by Satoshi Nakamoto on October 31st, 2008 and the Genesis Block was mined on January 3rd, 2009.
  • Bitcoin has never been tampered for nine years as of 2018
  • Bitcoin can be used for only cryptocurrency transaction, but people think the technology of a chain of blocks (Blockchain) is fourth innovation following by language, law, and currency. And Blockchain technology continues to evolve now.

How Bitcoin’s Blockchain (Ecosystem) works

bitcoin blockchain economy

Four layers for Bitcoin works

  • Transactions
    • State Transition Function
    • UTXO (unspent transaction outputs)
    • Take 60 minutes (6 blocks) until the transaction fixed
  • Blocks
    • Contains a timestamp, a hash of previous block, a merkle root, a difficulty target and a nonce in header
    • Contains one coinbase transaction, and the order of transactions
    • Target adjustment - changing difficulty target per two weeks (2016 blocks).
  • Nodes (Miners)
    • Try to find the nonce value to reach the difficulty target
    • Write one coinbase transaction to earn bitcoin rewards when a miner find the nonce.
    • Can start to use the bitcoin rewards after passing 100 blocks from mining succeed
  • Bitcoin Economy
    • Several exchanges trade to Bitcoin Economy directly and people use them to exchange each fiat currency to Bitcoin

Key Definitions of Bitcoin

  • Rule (Smart Contract) – Bitcoin transaction as Application Logic
  • Uniqueness (Fixed Tx) – PBFT (Nakamoto Consensus) as Consensus Algorithm
  • Proof of Existence – “Hash Chain” and “Proof of Work” as Distributed timestamp
  • Validity (Transparency) – UTXO as Ledger Structure

Why a malicious attacker cannot tamper with Bitcoin Ecosystem

  • Need machine which can calculate 40 Exa Byte hashrate per second as of June 2018.
    • Also need to make six blocks for committing the tampering transaction.
  • No economical incentive even succeeding tampering with it, because the value of Bitcoin will be decreased after tampering.

Problems of Bitcoin

  • Slow Transaction Speed
  • Electric Power Consumption
  • Only handle Bitcoin transaction
  • Only public network (Cannot choose private network)
  • No Scale out, only Scale up

Approaching Protocol layers to resolve the Bitcoin problems

  • On-Chain (On-Bitcoin network)
    • Segwit
    • Sidechain (Liquid, RSK, Drivechain)
    • Big Block
  • Off-Chain (Off-Bitcoin network)
    • Payment Channel
    • Lighting Network (eclair, c-lighting, lnd, ptarmigan)

After the Bitcoin innovation, Blockchain and Ledger technology is emerging

    People think the Bitcoin concept is awesome, and the even Blockchain technology is much innovative to use any other fields beside crypto currency.

blockchain technology and concept

Blockchain Frameworks

  • Namecoin
  • Colored Coin (Open Assets Protocol)
  • Ethereum

Distributed Ledger Technology (Hyper Ledger framework products)

  • Fabric (IBM)
  • Sawtooth (Intel)
  • Iroha (Soramitsu)

Characteristics of each of Public Blockchain, Private(Consortium) Blockchain, and Distributed Ledger Technology

blockchain character private public

People can select one of them such as “Public”, “Private(Consortium)” or “Do Not use” Blockchain by using the questionnaire chart

blockchain questionnaire

(Source : World Economic Forum)

Ethereum Based on Blockchain technology

Approaching Protocol layers to resolve the Ethereum problems

  • On-Chain (On-ethereum Network)
    • Sharding (Zilliqa, Gormos)
    • Sidechain (Plasma, Loom Network, Dogethereum)
  • Off-Chain (Off-ethereum Network)
    • State Channel (Counter Factual, Pisa, Force-Move Game)
    • Raiden Network
    • TrueBit

Ethereum Ecosystem


ethereum ecosystem horizontal

(Source : Dr. Gavin Wood Presentation)

Vertical (from Protocol layers to App layers)

ethereum ecosystem vertical

(Source : Ginco Magazine in Japanese)

How transaction works on Ethereum Blockchain

ethereum transaction

(Source : Abhishek Chakravart @ Hackernoon)

Explanation of each phrases

  • Ether : Currency of Ethereum economy
  • EOA (External Owned Account) : User Account
  • Contract Account (Internal Account) : Execute Smart Contract
  • Transaction : Call from EOA
  • Message : Call from Contract (Call another Contract)

Distributed Ledger Technology Based on Blockchain Concept

blockchain hyperledger

(Source : Hyper Ledger framework products )

  • Not same as Bitcoin and Ethereum, but it’s a platform based on Blockchain Concept
  • Use cases of Hyper Ledger

    • Financial assets (assets)
      • Direct access (no mediation required), settlement within agreed real time, description of business rules, control of confidentiality
    • Corporate behavior
      • Execution in real time such as stock split, capital reduction / consolidation, stock transfer / exchange, merger, third-party allotment capital increase and confidentiality control
    • Supply Chain
      • Record and search from material traceback and production / storage to sales
    • Master Data Management
      • Only authorized persons can update it, and the designated verifier approves it
    • Sharing Economy and IoT
      • Smart City / Town, traffic, under circumstances where credit is not necessarily established, Architecture, education etc (implicitly real time)
  • Requests of Hyper Ledger

    • Represent and manage various assets
    • Private transaction, confidential contract
    • Identity and audit possibility
    • Immediacy and finality (Transactions can be finalized = complete or irreversible)
    • Scalability and interoperability
    • Portability (Application to various environments · Adaptability)

A case of how to start and run a practical project

(Source : ALIS Project)

Steps to start a project

  1. Decide the theme of social problem or idea
  2. Consider whether need to use Blockchain or Not (Public Blockchain, Private Blockchain, or No Blockchain)
  3. Draw White Paper (Smart Contract, Economic Incentive, Proof of xx)
  4. Develop MVP (Minimum Viable Product) as Mockup product
  5. Announce ICO (Initial Coin Offering)
  6. Consider the technological stacks
  7. (Keep running a project)

White Paper

Technology Stack

blockchain alis tech stack

(Source : ALIS technology stack in Japanese)


blockchain alis architecture

(Source : ALIS server side architecture in Japanese)