This document summarizes the key building blocks of Bitcoin's blockchain, including cryptographic hash functions, hash pointers, the Merkle tree, digital signatures, and transaction scripts. It discusses how hash functions are used to link blocks together in the blockchain and ensure data integrity. Transaction scripts allow for advanced applications like multisignature escrow, green addresses for third-party exchanges, and efficient micropayments. The challenges of bootstrapping consensus, 51% attacks, and changing the blockchain protocol through hard or soft forks are also outlined.

1. Bitcoin’sBlockchain
fromhashestoescrow
andbeyond
Grzegorz Gawron
Arini Labs
marketics at arini.biz

2. AGENDA
- basic building blocks
- (cryptographic) hash functions
- hash pointers
- merkle tree
- digital signatures
- practicalities
- bootstrapping
- 51 pct attack
- forking
- beyond simple transactions
- scripts
- escrow, green addresses, micropayments

3. basicbuildingblocks

4. hashfunctions
● any size input
● fixed size output
● efficient computation

5. cryptographichashfunctions
● collision resistance
○ infeasible to find x,y with same hash output
○ what is guaranteed way of finding a collision?
○ what’s the time-cost?
● hiding
○ given hash it’s infeasible to find the message
○ example: coin flip?
○ with the ‘random’ nonce
● puzzle-friendliness
○ given a set of hashes it’s infeasible to find the message

6. CryptoHashApplications
● message digests
● commitments
○ com = commit(msg, key)
○ ver = verify(com, msg, key)
● search puzzle
○ for a set Y find x that H(x || r) belongs to Y

7. MerkleTree
* 7/1/2016 wikipedia

8. Digital
Signatures
* 7/1/2016 wikimedia

9. Blockchain
* 7/1/2015 https://21.co/learn/bitcoin-mining/#the-merkle-root
digital
signatures
crypto hash
pointers
merkle tree

10. Transactions
* Bitcoin: A Peer-to-Peer Electronic Cash System, Satoshi Nakamoto
scriptPK
scriptSig

11. Transaction:combine/split
* Bitcoin: A Peer-to-Peer Electronic Cash System, Satoshi Nakamoto

12. Practicalities

13. Bootstrappingishard
security
healthy
mining
ecosystem
stable
value

14. ChangingtheProtocol
HARD FORKS
new client’s blocks
rejected by old
SOFT FORKS
new client’s blocks
accepted by old

15. 51PercentAttack
● what an attacker can hope for?
○ steal?
○ suppress transactions?
○ change block reward?
○ destroy confidence?

16. transactionscripts

17. Scripts
● pay to public key hash
● pay to script hash
○ multi signature

18. paytopublickeyhash
* https://en.bitcoin.it/wiki/Transaction
script to run = scriptSig scriptPubKey
scriptPubKey: OP_DUP OP_HASH160 <pubKeyHash> OP_EQUALVERIFY OP_CHECKSIG
scriptSig: <sig> <pubKey>

19. paytoscript(m-of-nmultisignature)
* https://en.bitcoin.it/wiki/Transaction
script1 to validate = scriptSig scriptPubKey
script2 to run = <serialised script>
scriptPubKey: OP_HASH160 <scriptHash> OP_EQUAL
scriptSig: ...signatures... <serialized script>
0 <sig1> <sig2> ... <sigM> OP_m <pubKey1> ... OP_n OP_CHECKMULTISIG

20. Scripts’Applications
● escrow (alice, bob, 3rd party)
● green addresses (alice, bob, bank)
● efficient micro-payments (alice, bob)

21. TRANSACTION
10 BTC
from Alice
to MULTISIG
(2 out of 3)
Escrow
Arbitrator
Alice
2x sign
Bob
sign
2x sign
1 2a
2c 2b

22. Bob
TRANSACTION
10 BTC
from Bank
to Bob
GreenAddresses
Alice
‘Bank’
1
sign
2
3
4

23. Bob
TRANSACTION B
<lock time>
1 BTC
from TRANS A
to Alice
Micropayments
Alice
2a
sign
TRANSACTION k
0.0001 BTC
from TRANS A
to Bob
TRANSACTION 2
0.0002 BTC
from TRANS A
to Bob
TRANSACTION 3
0.0003 BTC
from TRANS A
to Bob
TRANSACTION A
1 BTC
from Alice
to MULTISIG
(2 out of 2)
1
sign
sign
2b
3
sign
sign
sign
4 5
6

24. References
- Bitcoin: A Peer-to-Peer Electronic Cash System, Satoshi
Nakamoto
https://bitcoin.org/bitcoin.pdf
- Princeton University:
‘Bitcoin and cryptocurrency technologies’
https://www.coursera.org/course/bitcointech
- https://bitcoin.org/en/developer-guide
- https://en.bitcoin.it/wiki
- https://21.co/learn/#reference-21-bitcoin-org
- wiki*edia

25. ThankYou
Grzegorz Gawron
Arini Labs
marketics at arini.biz