eGov2017Keynote

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Bitcoin and blockchain in eGovernment
Svein Ølnes, Vestlandsforsking, eGov/ePart 2017
ITMO University, St. Petersburg, 04.09.2017

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Blockchain is a hot topic!

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 Located in Sogndal, by the Sognefjord, est. 1985
 Research areas:
 Climate change
 Tourism
 Technology and society
 Around 25 researchers
 Part of the research infrastructure in Norway
Western Norway Research Institute

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 Researcher at WNRI since 1996
 Main research field: eGovernment
 Discovered Bitcoin in 2011
 fascinated by the technology since then..
 my interest is primarily in the intersection of tech., economy and
society
 MSc in Digital Currencies (2017) at the University of Nicosia
 Disclosure: Own bitcoin and several other crypto currencies
About me

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Content
 Short history of Bitcoin and blockchain development
 Introduction to Bitcoin and blockchain technology
 Myths and facts
 Bitcoin/blockchain as a platform and possible infrastructure
 Use cases for public sector
 Q&A

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Bitcoin – «mother of all blockchains»
Published 31.10.2008 (Halloween Day)
Launched 03.01.2009
Running continually since

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Lukewarm reception, apart from..

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A classic innovation
 Building on decades of ground research in cryptography
 All components known on beforehand
 Put together in a novel way
 Solved decades of failed attempts to solve the double-
spending problem in a decentralized way
(the Byzantine Generals’ Problem)

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Bitcoin builds on
 David Chaum’s blind signatures and work with Digital Cash
 Adam Back’s HashCash and Proof of Work
 Hal Finney’s RPOW (Reusable Proof of Work)
 Wai Dei’s b-money
 Nick Szabo’s BitGold

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Back to start: Distributed Internet
Paul Baran: «On Distributed Communications Network»
[Baran invented packet switching, together with (and ind.p. of) Donald Davies, UK]

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From client-server to peer-to-peer
Traditional web technology
Equal peers, no server

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Cryptographic underpinnings
 Public key cryptography and digital signatures
 Hashing algorithms
 Merkle trees (of hashes)

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Bitcoin definition
 Bitcoin is proof of ownership without the need for a third-party
 ownership of currency (bitcoin)
 ownership of any physical or digital object that this currency represents

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Bitcoin’s core architecture
 Peer-to-peer technology
 Blockchain as a storage structure
 Consensus mechanisms (Nakamoto Consensus)
 Nodes for validating transactions and blocks
 Miners with PoW for securing transactions (avoid double-spending)
 The Nakamoto Consensus is the real disruptive part!
(not the blochchain!)

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Nakamoto Consensus
 The process by which a number of computers come to agree
on some shared set of data and continually record valid
changes to that data (Van Valkenburgh, 2016)

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Cross-disciplinary

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The Bitcoin blockchain structure
Important! Tamper evident vs. tamper proof!

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Bitcoin i praksis

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Bitcoin constituencies
 Bitcoin users
 Full node: Those who download the whole blockchain and participates in
validation
 Lightweight nodes: Mobile apps
 Miners
 Secures the blockchain
 Developers
 Maintenance and further development of the open source software
 Exchanges
 Exchanging between crypto currencies and fiat money and betw. CCs
 Merchants
 Those who accept crypto currencies for goods and services

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Myths about Bitcoin and blockchain technology
 «Blockchain» is a pretty meaningless concept by its own
 Need to specify what type of blockchain
 Open/Closed, security model
 Bitcoin only for criminals and shady affairs
 Recent research shows this is no longer the case (Tasca et al., 2016)
 Need to distinguish between open and closed blockchains
 Blockchain as a universal solution
 Blockchain techn. makes sense in many situations and scenarios
 However, must always ask: Why not a tradional (DB) solution?

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Open vs. closed blockchains
Open
(permissionless)
Closed
(permissioned)
Who can update Everybody with
enough resources
Selected people/org.
Who prod. data Everybody participat. Customers of org.
Incentive to follow rules Direct economic
(carrot & stick)
Reputation
Storing Distributed Centralized
Trust in central actors No Yes
Transaction costs - +
Speed (trans./sec.) - +
Immutability + -
Currency/»token» Yes No
Example Bitcoin, Ethereum HyperLedger, Corda (?)

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What is genuine with (open) blockchains?
 Immutability
 «tamper proof» vs. «tamper evident»
 .. but not in itself (ref. Ethereum and The DAO)
 Censor-ship resistant
 «unwanted» transactions will also be processed as long as they
follow the consensus rules
 Open for all and at the same time protect privacy

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Bitcoin as a platform
Network/Protocol
layer
Currency/token
Application

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Blockchain layered structure

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Internet and blockchain technology stacks
Support infrastructures

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Open or closed blockchains in public sector?
 Openness should be the main rule in public sector
 However, cannot rule out the benefits of closed/private BCs
 Blockchain technology should be perceived as a platform-
enabling technology
 as a platform technology for public sector, it should be open
 as an information infrastructure, it needs to be open
 Look at the development of blockchain technology the same
way as the development of the Internet
 gradually developed to an open network
 the web also developed into an open platform (remember the
extranets?)

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Bitcoin and blockchain technology in public sector
 Authentication of documents
 badges, course certificates, CVs
 other certificates and licenses
 ++
 Proof of ownership
 property
 +++
 Security and privacy
 secure, decentralized identity management
 enhanced privacy
 Think of Bitcoin/blockchain as a new Internet-based platform!

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Certificates (birth cert. ++) on the blockchain

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Domain name and password on the blockchain
 «One password to rule them all»
 Secure web (HTTPS)
 Domain names registered directly on the blockchain
(e.g. NameCoin)

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Relevant literature

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More literature..
 «Bitcon – A Peer-to-Peer Electronic Cash System»
Satoshi Nakamoto, 2008
 «Open Matters - Why Permissionless Blockchains are
Essential to the Future of the Internet”
Peter van Valkenburgh, Coin Center
 «Beyond Bitcoin – Enabling Smart Government Using
Blockchain Technology»
 Svein Ølnes, eGov 2016, Springer LNCS
 «Deja vú all over again: Thinking through law & code, again
Lawrence Lessig, https://vimeo.com/148665401

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Other resources
 News about Bitcoin and blockchain technology
 CoinDesk (www.coindesk.com)
 Coin Telegraph (www.cointelegraph.com)
 Bitcoin Magazine (www.bitcoinmagazine.com)
 + many more
 Bitcoin blockchain (and other BCs) in real time
 www.bitcoin.info
 www.tradeblock.com/bitcoin
 https://data.bitcoinity.org
 www.statoshi.info
 + many more

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Thank you for your attention!
Email: sol@vestforsk.no
This presentation:
http://www.slideshare.net/sveino/eGov2017
Bitcoin-addresse:
171cQgAyEkrMn2xntQfARz4XFeWzNHK8iZ

eGov2017Keynote

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