9 - Distributed Ledger Technology Flashcards

1
Q

Distributed Ledger Technology

A

Distributed Ledger Technology (DLT) enables the realization and operation of distributed ledgers , where benign nodes, through a shared consensus mechanism , agree on an (almost) immutable record of transactions in the presence of Byzantine failures and eventually achieve consistency.

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2
Q

Relational Databases

A
  • Clearly defined tables
  • Dependencies between those tables
  • Four Operations (CRUD): Create, Read, Update, Delete
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3
Q

Centralized databases

A
  • reside on a single storage device

- Better and easier to maintain but less availability

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4
Q

Decentralized databases

A
  • no central storage; data are simply stored on multiple storage devices connected with one another
  • organized in a hierarchical structure with a set of
    nodes communicating with a particular node,
    which can be a node of a superordinate set of nodes
  • incorporate multiple, hierarchically organized, centralized databases
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5
Q

Distributed Database

A

A distributed database is a type of database where data are replicated across multiple storage devices (nodes) with equal rights

  • increasing availability and avoiding performance issues
  • allows requests to be distributed across the storage devices and be processed in parallel
  • To achieve consistency between all the nodes, the stored data need to be identical on each of the distributed database replications (complex)
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6
Q

consensus mechanism

A

A consensus mechanism is designed to achieve an agreement on a single state of a data value (e.g., the replication of stored data) among nodes of a distributed database under consideration of network failures.

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7
Q

Which two consensus mechanisms are there?

A
  • Probabilistic consensus mechanism: current state is assumed and can be changed post hoc
  • Finality preserving consensus mechanism: nodes agree on particular state which cannot be reverted
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8
Q

Byzantine fault

A

A Byzantine fault is a condition of a particularly distributed computer system, where components may fail and there is imperfect information on whether a component has failed.

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9
Q

Forms of Byzantine faults (3)

A

1) A node can be determined as crashed or not reachable over the network as the node does not respond anymore
2) A monitoring system may not be able to determine the status of a certain node, which can occur when the node crashes or network failures result in inconclusive responses from the node.
3) Nodes may follow malicious intentions such as trying to store incorrect data into the distributed database

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10
Q

Distributed ledger

A

A distributed ledger is a type of distributed database that assumes the presence of nodes, which have malicious intentions. A distributed ledger incorporates multiple replications of a ledger, where data can only be appended or read

-> Anyone can contribute to the distributed ledger and assure that stored data is not corrupted!

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11
Q

Blockchain 1.0 (2008) features (3)

A
  • Bitcoin Blockchain
  • Solution of the Double Spending problem
  • Focus on digital currencies
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12
Q

Blockchain 2.0 features (3)

A
  • Turing complete smart contracts
  • Additional flexibility
  • Initial coin offerings (ICOs) are possible
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13
Q

Blockchain 3.0 features (3)

A
  • Use of directed, acyclic graphs (DAG)
  • Improvements in performance, security, and confidentiality
  • Development of applications on DLT
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14
Q

Blockchain as a service

A

DLT designs provided as a cloud service
(SAP Leonardo, IBM Watson IoT, Microsoft Azure,
HyperLedger Fabric)

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15
Q

DLT concept

A

provides description of the architecture of a DLT and the organization of transactions
- Block-based directed acyclic graphs (blockDAG)
- Transaction-based directed acyclic graphs (TDAG)
Example: Bitcoin and Ethereum employ the DLT concept blockchain

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16
Q

DLT design

A

is the concrete implementation of a DLT concept

17
Q

DLT property

A

forms a group of related DLT characteristics, which is featured by all DLT designs

18
Q

DLT characteristic

A

is a granular component of a DLT property, which can be used to define application requirements for DLT

19
Q

DLT Properties (7)

A
Community
Flexibility
Law & Regulation
Transparency
Performance
Security
Usability
20
Q

Public Permissioned DLT design

A
  • Public network
  • Only few trusted nodes validate transactions
  • Anybody can join the DLT design
21
Q

Public Permissionless DLT design

A
  • Public network
  • Anybody can join the DLT design
  • Anybody can participate in mining, and validation
22
Q

Private Permissioned DLT design

A
  • Private network
  • Foreign parties cannot access the DLT design
  • Only few trusted nodes validate transactions
23
Q

Private Permissionless DLT design

A
  • Private network

- Any included device is allowed to access (read, write), and validate transactions

24
Q

Hash functions

A

injective functions used to map data blocks of an arbitrary size to data of a defined, fixed size
- enable the use of digital signatures and the verifying of data integrity
- deterministic: hash function produces never differ in respect of a specific input
- Hash functions must not reveal the original data
h = hash(d) reconstructing the data value d has to be extremely difficult

25
Q

Merkle Tree

A
  • used for the efficient verification of data blocks’ integrity
  • parentnode: labeled with the hash value, which is the hashed concatenation of its childrens’ hash values
  • root hash: can be used to verify the integrity of multiple data blocks and large data structures
  • main used in peer-to-peer networks, such as Bitcoin and Tor
26
Q

Public Key Infrastructure (PKI)

A
  • comprises hardware, software, policies, procedures, and roles that are used for the secure electronic
    transfer of data over an insecure network such as the Internet
  • uses a public and a private key
27
Q

PKI Certification Authority

A
  • CA signs the issued digital certificates digitally by using a private key
  • CA’s public key is mandatory to verify all the digital certificates that it has signed
28
Q

PKI Registration authority

A
  • only permitted to issue digital certificates for specific uses
29
Q

PKI Repositories

A

a database of digital certificates; save requests for digital certificates, as well as already issued and revoked digital certificates

30
Q

Encryption

A
  • data are encrypted using the data receiver’s public key

- encrypted data can only be decrypted by using the private key matching the public key

31
Q

Consensus Mechanism: Proof of Work (PoW)

A

• node must solve a computationally difficult challenge before new transactions can be included in the ledger.
• reward is given to the node that first solves the particular challenge and contributes computational power
(coins)
• Fork: two nodes issue blocks almost simultaneously, allowing the network nodes to accept different blocks as the correct successor of the last block
• Fork resolution rule (for Bitcoin): keeps the version of the distributed ledger that required the most work and replicates it on all nodes
• energy consuming/bad performance

32
Q

Consensus Mechanism: Proof of Stake (PoS)

A

• requires much less computational power in terms of mining
• likelihood of a node mining the next block is closely linked to the balance of the miner’s held tokens
• In Cryptocurrencys: various combinations of random selection and the stake’s wealth or age
• randomized block selection: lowest hash value, in combination with the size of the stake that a particular
node holds, predicts the next block miner
• Coin-age-based selection: combines randomized block selection with the “coin age” concept
• Delegated PoS: the system uses a limited number of nodes to propose and validate blocks to be appended
to the blockchain

33
Q

Practical Byzantine Fault Tolerance (PBFT)

A
  • Is used in private, permissioned DLT designs (unlike PoW and PoS)
  • Enables the implementation of high-performance Byzantine fault-tolerant replicated state machines (RSM)
  • Handles f Byzantine faults in a system with 3f+1 nodes
  • all nodes in the PBFT model are arranged in order, with one node called the primary node p, and the others backup nodes
34
Q

The Bitcoin Blockchain

A

Blockchain is a DLT concept comprising a chain of cryptographically linked, chronologically ordered,
‘blocks’ containing batched transactions

35
Q

Bitcoin architecture

A
  • accounts with a unique Bitcoin address, which are used to define a receiver of transactions (produced by each user’s public key)
  • digital keys in a user’s wallet are completely independent of the Bitcoin protocol
  • While miners store a full replication of the distributed ledger, wallets are predominantly light nodes that only store transactions related to the relevant user
  • Bitcoin is based on a public peer-to-peer network (each node maintaining a list of a few other Bitcoin nodes (neighbored nodes))
36
Q

Bitcoin blockchain process

A
  1. When users initiate a new transaction, their wallets send the transaction to the distributed ledger
  2. When a node receives a new transaction, it validates the transaction
  3. Validated transaction is broadcasted to ledger network and included to storage
  4. Include transaction into new block
  5. Mining: Generation of a nonce, which in concotenation with the block data generates a hash value less than t
  6. Node generated a new block, which is broadcasted to the ledger network and added to the local ledger
37
Q

Smart Contracts

A

computer programs in which a business logic is formalized; they therefore allow secure transaction issuance without the need for third parties

38
Q

Applications of DLT

A
  1. Payments
    - Cryptocurrencies
  2. Health Care
    - MedRec is a decentralized record management system that handles Electronic Health Records (EHRs) by means of blockchain technology and aims to reduce the efforts required to obtain a full representation of a particular patient’s EHR to ensure the best possible treatment
    - patients are in control of who views their data
  3. Supply Chain Management
    Product Tracking via Digital Twins
    - more transparency in supply chains
    - Assigning a digital twin unambiguously to a real-world entity