Lecture 4 Flashcards
How does a soft fork arise?
when 2 minors solve a block at the same time
How is it decided which block is accepted?
Longest chain rule, whichever block has another block created on its chain first
What is an orphan block?
the invalid block that is not going to continued to be mined on
What is a mempool?
where transactions are stored and sorted before being added to the new block
What are the limitations of bitcoin?
- size of the block, limits transactions per second (7 a second compared to visa 1700)
- Concern of EDSA and SHA-56 may be broken in the future
How do they want to change the protocol?
introduce features on how bitcoin works
How is the change in protocol funded and who is their supporter?
Sponsership programme, MIT
What is the challenge of the changes of protocol?
Some nodes upgrade, others don’t leading to blockchain forks
What is a Bitcoin improvement proposal (BIP)?
the formal process used by the Bitcoin community to propose ideas, suggest changes, and make improvements to Bitcoin
Who can propose a BIP?
Anyone, anywhere in the world
What is included in the process of a BIP?
Submission, discussion, copy-editing, acceptance then publication on GitHub
What does acceptance of a BIP depend on?
User/ Minor adoption
What are the characteristics of a soft fork?
-backwards compatible
- non-upgraded nodes will recognise new blocks as valid
- my require a minimum rate of adoption to take effect (51%)
What are the characteristics of a hard fork?
- not compatible with older software
- non-upgrades nodes will not recognise new blocks as valid
- they are mandatory
What is the purpose of Segwit soft fork?
Addresses malleability and scalability issues, expected to double throughput of network
How is Segwit soft fork enabled and what did it contribute to between 2018 and 2020?
enabled by removing transaction signatures from blockchain, contributed to transaction fees dropping
What changes did the Taproot soft fork bring in?
- Schorr signatures (rather than ECDSA)
- Smart contacts
- Updates script coding language to transcript
What happened in the bitcoin hard fork and what was the consequence?
Bitcoin core upgraded from 0.7 to 0.8, Gavin Anderson disagreed and went back to 0.7 creating a hard fork.
consequence was a case of £10,000 double spending and £26,000 block rewards foregone by minors who worked on 0.8
What are the key differences between bitcoin and bitcoin cash?
- bitcoin has 1MB max, cash has 8MB
- Signatures can be discarded from bitcoin chain, on cash must be validated and secured on chain
- Bitcoin has single centralized development team, cash has multiple independent development teams
- BTC has off-chain payment channels, cash has on-chain transactions
What is are the 3 elements of the management triangle?
Price, Quality and speed, can only have 2/3
What are the 3 elements of the scalability triangle?
Distributed, Fast and Secure, can only have 2/3
What are the 3 blockchain categories?
- Public blockchains - anyone can read, send transactions and participate in consensus process
- Consortium blockchains - consensus process controlled by pre-selected set of nodes
- Fully private blockchains - write permissions centralized to one organisation
What are the advantages of open blockchains?
- protect users from developers
- organic democracy
- code-law
What are the advantages of private blockchains?
- Rules of blockchain can be easily changed
- Validators are known
- Cheaper transactions (fewer node verifications needed
What are the 2 main arguments for why code-law may be a good idea?
- Cost savings - more transparency and better security
- reduces freedom of choice
- prevents the market from deciding on optimal amount of consumer protection - places responsibility on parties to monitor reducing moral hazard issues
What are the questions that code-law has trouble answering?
- Who is liable when a hack or mistake occurs?
- who is responsible for recourse and restitution
- who has a contractual obligation to validate
- who can enforce rulings of disputes
What is a 51% attack?
an attack on a blockchain by a group of miners who control more than 50% of the network’s mining hash rate. Attackers with majority network control can interrupt the recording of new blocks by preventing other miners from completing blocks.
What are the strategies to organise a 51% attack?
- brute force - invest enough to double existing CPU power (costs £200m)
- Artifice - create a false code that looks like the real one
- Splintering - create lots of forks quickly, causes irreversible chaos
- Temptation - incentivize people to use a malicious version of the code
