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Introduction to Blockchain TechnologyCurrent Trends in Artificial Intelligence

Volker Strobel PhD student @ IRIDIA

23 February 2017

Part I:Bitcoin: Idea, Basics, Technology

Part II: Altcoins, Use cases,Blockchain applications

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Part II: Altcoins, Blockchain applications, Use cases

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Bitcoin is a digital currency without the need of banks and governments

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Alice Bob

Bank

Peer 1 Peer 2

Government

transaction

Why would you want to remove the bank?

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save costs

be anonymous

transaction speed

censorship

don’t trust the bank

non-reversible transactions

be able to pay

micropayments

ideological reasons

payments triggered by

eventsflexibility …

Developing a peer-to-peer financial system poses many challenges:

• How to validate transactions?• How to create new money?• How to trust the system?• How to prevent double-spending?• How to reach consensus on who

owns what?• …?

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Understand the Blockchain in Two Minutes by the Institute for the Future (IFTF) (https://www.youtube.com/watch?v=r43LhSUUGTQ&t=70s&pbjreload=10)

https://www.youtube.com/channel/UCfO9dW0L2vLc8s9qgZunUFA

https://www.youtube.com/watch?v=r43LhSUUGTQ&t=70s&pbjreload=10

Every participant keeps his/her own copy of the ledger

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Peer-to-peer network<Financial

Transactions>

<Financial Transactions>







https://bitnodes.earn.com/

https://bitnodes.earn.com/

To transfer Bitcoin tokens,participants publicly announce transactions

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Transaction: Send 3 Bitcoins from

Alice to Bob

Is this transaction really from Alice?

Digital SignaturesPublic-key cryptography

private/secret key (sk)

public key (pk)

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document

signature

sign( , sk) = signature

verify( , pk, signature) = bool

document

document

A quick example of digital signatures

Distribute public key:gpg --armor --output volker.gpg —export

Import public key (on another machine):gpg --import volker.gpg

Create message:echo "hello blockchain" > msg.txt

Sign message:gpg --clearsign -o sig.gpg msg.txt

Send sig.gpg via emailVerify message (on another machine):gpg --verify sig.gpg

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How to ensure that everyone has the same version of <Financial Transactions>?

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Peer-to-peer network<Financial

Transactions>








Majority consensus?=> Sybil attacks

You trust the ledger with the highest amount of computational work(often called the longest chain but it’s rather the strongest chain)

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work: 279work: 280

work: 279

work: 275work: 276

x y

The computational work is calculated based on the expected amount of calculated hashes

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Hash function: any function that can be used to map data (x) of arbitrary size to data of fixed size (y): hash(x) = y

Cryptographic hash function: “non-reversible” hash function (and ideally some other features): “Given y, very hard to find x”

x y

https://anders.com/blockchain/hash.html

https://anders.com/blockchain/hash.html

Find solution to a mathematical puzzle that can only be solved by brute force (trial & error)

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Mining(Proof of Work):

1. Immutability: Set order of transactions (changing anything requires to “re-mine”)

2. Consensus based on amount of mining work

https://anders.com/blockchain/block.html

https://anders.com/blockchain/block.html

Mining is a race:As a miner you want to be the first to find the solution to get a reward (tx fees and block reward)

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<Data><coinbase tx> <Data>PoW

“mining”

The blockchain is build of blocks:chunks of data

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<Data> <Data> <Data>

Block k - 1 Block k Block k + 1Header

Body

prev Hashhash(<Data>)



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https://anders.com/blockchain/blockchain.html

Changing data in a previous block would require an attacker to redo the Proof-of-Work of all later blocks

https://anders.com/blockchain/blockchain.html

In Bitcoin the average block number is 10 minutes

The target value is dynamically adjusted (every 2016 blocks)

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The data in the blocks is created by transactions and sent to peers

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Transaction: Send 3 Bitcoin from

Alice to Bob

Every node in the network checks if a transaction is valid

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• Valid signature • No overspending • No double-spending

transaction

sender public key

sender signature

cryptocurrency

receiver address

hash of prev. tx

How do you ‘own’ a Bitcoin?

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coinbase

transaction miner address

cryptocurrency

A Bitcoin is a chain of signed transactions (i.e. every coin has a history).The owner of a Bitcoin owns the private key corresponding to an unspent transaction output (UTXO).

UTX

O

transaction

sender public key

sender signature

cryptocurrency

receiver address

hash of prev. tx

transaction

sender public key

sender signature

cryptocurrency

receiver address

hash of prev. tx

How to cheat/attack?

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Pool of unconfirmed transactions

transaction

A pays B

transaction

A pays A

Send conflicting transaction

Which own will end up in the blockchain?

Wait for confirmations

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<Data>

Block k Block k + 1

transaction

1 confirmation 2 confirmations

transaction

0 confirmations

Short summary:The main building blocks of Bitcoin are:

- Peer-to-peer network

- Public ledger

- Digital Signatures

- Proof-of-Work (Mining)

- Blockchain

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How to participate in the Bitcoin network?

• Download a wallethttps://bitcoin.org/en/choose-your-wallet

• Get Bitcoins(e.g. from a friend or from an exchange such as kraken.com)

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https://bitcoin.org/en/choose-your-wallet

https://bitcoin.org/en/choose-your-wallet

http://kraken.com


Part II: Altcoins, Use cases, Blockchain applications

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Quite early, people realized that Bitcoin is just one application build on blockchain technology

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Appearance of “Altcoins”

See also https://coinmarketcap.com/

Image source: https://steemit.com/altcoins/@frieswiththat/top-10-sleeper-altcoins

Use cases of Altcoins

• financial records

• domain name registration

• voting

• medical records

• artificial intelligence?

• …

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Peer-to-peer network

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<Data>

<Data>

<Data>

<Data>

<Data>

<Data>

<Data>

<Data>


Image source: https://steemit.com/news/@jesusvmorales/ethereum-eth-the-best-currency-to-buy-and-mine

Ethereum Blockchain 2.0

Bitcoin Blockchain 1.0

Image source: https://bitcoin.org/de/

Arbitrary decentralized applications

Financial transactions

Use case of Ethereum:

Blockchain-based smart contracts:programming code executed via blockchain technology

tamper-proof code “without any possibility of downtime, censorship, fraud or third-party interference” (ethereum.org)

main programming language: Solidity(online IDE at http://remix.ethereum.org)

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http://remix.ethereum.org

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centralized crowdfunding platform (e.g. kickstarter.com)

Project (e.g. smartwatch)

all-or-nothing

“Traditional” crowdfunding

needs trust

- money really send to the project? - transparency - potentially high fees

needs trust

backersImage source:https://www.visa.ca/en_CA/pay-with-visa/cards/credit-cards.html

http://kickstarter.com

Ethereum-based crowdfunding(see https://ethereum.org/crowdsale for an implementation in Solidity)

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decentralized crowdfunding platform

based on Ethereum

backers

Project (e.g. smartwatch)

all-or-nothing

transaction

<Data> <Data> <Data>

Block k - 1 Block k Block k + 1

transaction

transaction

trustless:

- decentralized (no single point of failure) - guaranteed execution of the transfer - transparency - immutable - potentially lower fees

needs trust

https://ethereum.org/crowdsale

Blockchain Technology and AI?

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(Very simplified) comparison betweenAI and Blockchain Technology

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Artificial Intelligence Blockchain Technology

probabilistic deterministic

black box transparent

computationally complex algorithms

lightweight programs

(smart contracts)See also YouTube talk “Blockchain + AI = Decentralized Artificial Intelligence” by Siraj Raval (https://www.youtube.com/watch?v=ogk4DnqXvuA)

https://www.youtube.com/watch?v=ogk4DnqXvuA

How AI might improve blockchain technologyAI Blockchain

• Scalability

• More useful mining algorithm

• Intelligent interfaces

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https://medium.com/@Francesco_AI/the-convergence-of-ai-and-blockchain-whats-the-deal-60c618e3accc

How blockchain technology might improve AIBlockchain AI

• Huge amount of data / easy collection of data

• Transparency(public history of actions — audit trail)

• Increase trust

• Marketplace for data/models

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https://medium.com/@Francesco_AI/the-convergence-of-ai-and-blockchain-whats-the-deal-60c618e3accc

Example Blockchain AI projects(most of these projects are at an early stage of development)

• Decentralized privacy-preserving machine learning:(openmined.org)

• Identity validation of AI Agents (https://botchain.talla.com/)

• AI as a service (monetarize AI) (https://singularitynet.io/)

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http://openmined.org

https://botchain.talla.com/

https://singularitynet.io/

My PhD thesis

Blockchain-based smart contracts for the secure coordination of robot swarms

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A blockchain is a decentralized database where everyone can participate

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A blockchain is a decentralized database where everyone can participate

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Robot peer-to-peer network

Byzantine robots show arbitrary faulty or malicious behavior

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laboratory experiments real-world applications

Motor broken!

Infrared module broken!

Programming code not updated!

GPS connection lost!

Tamper with messages!

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Goal:Develop a framework for programming

secure robot swarms For more details, see: V.Strobel, E. Castello Ferrer, M. Dorigo. 2018. Managing Byzantine Robots via Blockchain Technology in a Swarm Robotics Collective Decision Making Scenario. To appear in Proceedings of the 17th Conference on Autonomous Agents and MultiAgent Systems. International Foundation for Autonomous Agents and Multiagent Systems (AAMAS 2018).

Research ideas / open Research questions

• Can the Proof-of-Work be replaced by something more useful (e.g. training of a neural network)?

• What are use cases for blockchain technology?

• Possibilities and limitations of combining AI technologies and blockchain technology?

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What could you do?

Build a decentralized (AI?) application with Ethereum

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Further material

• Mastering Bitcoin by Andreas M. Antonopoulos(https://github.com/bitcoinbook/bitcoinbook)

• Coursera online course (https://www.coursera.org/learn/cryptocurrency)

• Cryptocurrency news(https://www.coindesk.com)

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https://github.com/bitcoinbook/bitcoinbook

https://www.coursera.org/learn/cryptocurrency

https://www.coindesk.com

[email protected]

Volker Strobel

Thank you!

mailto:[email protected]

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