Blockchain and Virtual Currency and stable coin by Libra Move language and Linear logic

1. Blockchain and
Virtual Currency
- Technical issues -
Kindai University
Shigeichiro Yamasaki
SITIM2019
2019 November 9

2. Gerardus
Mercator

3. Gerardus
Mercator
is a 16th century cartographer.

4. Mercator's World Atlas
Mercator projection
Mercator is known as a inventor of Mercator projection for World Atlas.

5. God knows every events on the earth with First glance
Mercator tried to express God's perspective
God's perspective

6. GAFA Know almost every events on the earth
GAFA are the Processor and Controller of our data
GAFA have this God's perspective

7. we confirm the correctness of the actions we have performed
this is the most important property of Blockchain
In blockchain, We are
the Processor and Controller of our data
confirm
blockchain

8. Bitcoin showed that
this blockchain's
property works
to solve problems

9. was a big issue for electronic money and had not been solved for 20
years
The double-spent problem of electric money
100 10
10
100 10
10
spend
spend
copy
Sender

10. Build with tampered-resistant device
Some trustable entity checks all payments
Traditional compromised solutions
to avoid the double-spent problem

11. Bitcoin solved the double-spent problem of electric money
l Built with software only
l No need for any trustable entity
l Possible to transfer money between individuals
Bitcoin is a technological leap
in electric money technology
public key
transfer transfer
private key private key private key
public key public key
transfer

12. Bitcoins' solution is realized as a ledger audit
l All participants are auditors of ledger records
How did Bitcoin solve the problem ?
Ledger
record
All participants
input
output UTXO
input
output
input
UTXO
UTXO
UTXO
UTXO
audit

13. The confirmed ledger records are stored in an immutable way
The immutable records is called "Blockchain"
Blockchain
confirmed
ledger record
All participants
input
output UTXO
input
output
input
UTXO
UTXO
UTXO
UTXO
blockchain
(immutable records)
block

14. The most important target of the confirmation is that any transaction
does not increase or decrease the total monetary value
Law of conservation of monetary value
input
output UTXO
input
output
input
UTXO
UTXO
UTXO
UTXO
transaction
100 btc 100 btc

15. Bitcoin's P2P
network
In bitcoin all nodes manage the ledger as a server
l Currently there are about 10,000 nodes
l Each node is connected with 8 connections
l It is an extremely symmetric network system
l There are no popular or important nodes

16. Bitcoin nodes of
Yamasaki
laboratory
80 Bitcoin full nodes

17. is a problem of how to make all honest nodes agree on the same value
l If more than 1/3 of the enemies conspire, it becomes impossible to agree
all honest nodes to the same value
Honest node
Enemy nodes
Byzantine agreement problem
M

18. Gottfried
Wilhelm
Leibniz
Philosopher representing the
Baroque era

19. Leibniz thought about Atom and he called it Monad
Leibnitz is one of the inventors of calculus
Monad is also an infinitesimal of calculus
Leibniz's Monad
Monad
dx
dy
Monad
dx
dy

20. Monads don't contact each other
But Monad knows the world through "planned harmony of God"
Leibniz's said Monad has no windows
Monad
dx
dy
X
X
X X
X

21. This is the core of Bitcoin's invention
l Bitcoin nodes do not communicate with each other to obtain agreement
l This agreement is achieved probabilistically
Bitcoin's agreement is realized by
"the Common Prefix Method"
node
B
B
A
A
node
Common Prefix
of BlockchainX
30 minutes ago

22. There is no specific subject to this agreement method,
and it is completed as "planned harmony"
node
B
B
A
A
node
agreement as planed harmony
X
30 minutes ago

23. The content of the agreement exists
beyond the skylight of the Gothic Church
node node node node
skylight of
the Gothic church
content of
agreement
Xwithout specific subject

24. Is Blockchain a magic
technology ?
that solves every social problems
• It provides traceability of the food distribution process
• It provides a more reliable voting system
• It provides a copyright management system that enables
author-sovereign content distribution
• ...
Is it true?

25. Blockchain is not
a magic
technology

26. Conventional trust structure needs vertex
Blockchain based trust does not need it
However, Blockchain may change
the structure of trust
vertex
Blockchain based trust Conventional trust

27. But the change in structure will not be drastic
vertex
Blockchain based trust Conventional trust
X

28. ID federation of Japanese governmental PKI
A typical trust structure is ID federation
root CA
root CA
Ministry of
Economy, Trade and Industry
(MITI)
Ministry of
Internal Affairs and Communications
(MIC)

29. the mutual authentication is done via bridge CA
When a MITI person wants to authenticate a MIC person
the authentication is done via bridge CA
In conventional ID federation
bridge CAroot CA
root CA
Ministry of
Economy, Trade and Industry
(MITI)
Ministry of
Internal Affairs and Communications
(MIC)

30. Will Blockchain-based ID federation
really work?
Ministry of
Economy, Trade and Industry
(MITI)
Ministry of
Internal Affairs and Communications
(MIC)
?
Blockchain based ID federation
mutual authentication

31. Only CA can prove the connection between a person or
an organization of real-world and its public key
Some Trustable CA is indispensable
for identity authentication
CA
relying party
real world
trust
public key
personorganization

32. Blockchain based ID federation
as mutual authentication for CAs
rootCA
rootCA
bridge CA
☓
will work well
and does not require bridge CAs

33. But does this really work?
Blockchain based ID federation
as mutual authentication for Electric Moneys

34. However, There will be many problems to overcome
Blockchain may change
the structure of trust
Blockchain based on trust

35. Technical
issues of
blockchain
• Scalability
• Throughput
• Transaction fee
• Computational load of nodes
• Attack resistance of smart
contracts

36. Blockchain applications are not as free as regular applications
l Blockchain has limitations on storage capacity and processing load
There are essential restrictions
on blockchain applications
Dapp
ICO
Dapp
game
DeFi

37. Layering
• is the separation of game-
theoretic applications and
blockchain
• solves Scalability, Throughput and
Transaction fee problems
• Lightning network is a typical
example of it

38. is a game-theoretic solution to construct payment channel as layer 2
Lightning Network
Bitcoin block chain
Lightning Network
Layer 1
（on chain）
Layer 2
(off chain)
payment channel
Locked Funds
Locked Funds

39. Lightning Network
Lightning Network is already a practical technology
In Fukuoka City, I was able to drink sparkling wine with the payment
of the lightning network

40. Turing-complete smart contract systems are difficult to defend due to
large attack surface
Attack resistance of smart contracts
Turing-complete
smart contract
Single -
function
smart
contract
Attacks Attacks
Dapp
game
DeFi
Dapp
ICO

41. Simplified functionality to minimizing attack surfaces
Reduce computational load and compact storage
There is a regression to a single function
blockchain for the safety of smart contracts
Single -
function
smart
contract
Attacks
Single -
function
smart
contract
Attacks
Single -
function
smart
contract
Attacks
Dapp
game DeFi
Dapp
ICO

42. The Future
of
Blockchain
Technology
• Layering
• Isolation as a layer of
applications and storage
• Simplified functionality
• Minimizing attack surfaces
• Reduce computational load
and compact storage

43. In order to realize a new decentralized
financial system over the blockchain
it is necessary to have a method of ledger
expansion other than cash accounts

44. Ledger expansion method
can represent not only in cash accounts
but also debt and credit accounts
l ERC20 (Ethereum）
l OpenAssets Protocol (Bitcoin）
cash account
debt/credit accountinput
debt
output
cash
output
credit
input
cash
input
credit
output
debt
transaction

45. The law of conservation of monetary value must
hold even in an extended ledger
input
debt 100
output
cash
output
credit 70
input
cash
input
credit 100
output
debt 50
input
debt 50
output
cash
output
credit
input
cash
input
credit 30
output
debt
input
debt 50
output
cash
output
credit
input
cash
input
credit 70
output
debt
credit 30
debt 50

46. But neither ERC20 nor
Open Assets Protocol
have the functionality to
guarantee it
Data type of assets are
integer only

47. Libra Move Language
• is designed for an extended
ledger description

48. Libra Move Language
• has type system inspired by
Linear Logic
• What is the Linear Logic ?

49. Linear Logic
is a logic for composition and decomposition
Todd Mclellan Things Come Apart: A Teardown Manual for Modern Living 2013

50. Libra uses Linear Logic
to prove the entire mass is preserved
while composition and decomposition
Todd Mclellan Things Come Apart: A Teardown Manual for Modern Living 2013

51. Inference rules of Linear logic

52. An important point of Linear Logic's
inference rules is the lack of two rules
Linear logic does not include weakening and contraction rules
l It means that any rules cannot add or reduce its terms
Contraction left
Weakening rightWeakening left
Contraction right

53. Libra Move language can check the
balance of complex assets
Todd Mclellan Things Come Apart: A Teardown Manual for Modern Living 2013

54. Typical
application
of Linear
logic is
proof of
chemical
reaction
equation
Chemical
reaction
formula
2H2 + O2 = 2H2O

55. Proof of conservation law
for chemical composition and decomposition
by linear logic
The expression of chemical reaction formula by Linear Logic looks
like this
H2⊗H2⊗O2 ⊸ H2O⊗H2O
H2O⊗H2O ⊸ H2⊗H2⊗O2

56. Proof of conservation law
for chemical composition and decomposition
synthesis︓ H2 + O2 → H2O
resolution︓ H2O → H2 + O2
H2
O2
2H2O 2H2O
O2
H2

57. How to compose stable coin
from base currencies
composition rule : 2¥2 ⊗ £2 ⊸ 2¥2£
2¥2£
(yenpound)
£2
2¥2

58. How to decompose stable coin
into base currencies
decomposition rule : 2¥2£2 ⊸ ¥2 ⊗ £2
2¥2£
£22¥2

59. "Zenisashi" is
13th century Japanese stable coin
• A bunch of 28
different Chinese coins
at a constant ratio
• This bundle was
distributed with the
coin ratio maintained

60. Ratio of 28 Chinese coins of "Zenisashi"
Hitoshi Okada, Libra Nikkei Publishing Inc. 2019

61. How to compose Libra stable coins?
Combining base currency at a certain ratio
Libra
€18
$50
¥14
£11
S$7

62. The minimum unit of "Zenisashi" is
a bunch of 97 coins
Zenisashi

63. can be very small unit like a molecule
while maintaining the ratio of currency combinations
The minimum unit of Libra
€18
$50
¥14
£11
S$7
Libra

64. Libra as a currency of measure of values
Libra can be a scale of values

65. But Libra is controlled by facebook

66. Who should do it?
Is the federation of multiple currencies really
feasible?
€
$
¥
£S$

67. This agreement should exists
beyond the skylight of the Gothic Church
node node node node
skylight of
the Gothic church
content of
agreement
Xwithout specific subject
€$ ¥
£S$ ¥
₽

68. this is the most important property of Blockchain
We should aim to develop blockchain
technology that retains this property
In blockchain, we are the Processor and
Controller of our data
confirm
blockchain