Category Archives: “Smart contracts”

A Quantum-Safe Blockchain?

I noted earlier that the arrival of quantum computing (QC) is a dire threat to the Internet in general and cryptocurrency in particular. Despite the rhetoric about how groundbreaking the Nakamotoan blockchain [2] was, the implementation of Bitcoin is hardly technically cutting edge. Based on easily available cryptography currently used on the Internet, there was no consideration of the expected arrival of QC. It has arrived [3], and Bitcoin is obsolete.

What is to be done? That is not clear. There are no known ways to make the current Bitcoin protocol and data structures “quantum safe” let alone secure the rest of the Internet that Bitcoin relies on.

Last week there was excitement about an announcement from the Russian Quantum Center, which reports that they have developed “the first quantum safe blockchain” [1]. I’m far from expert on Quantum Key Distribution (QKD), but the basic idea is to replace public key based digital signatures with QKD. This addresses the greatest vulnerability in the blockchain. (I’m not positive that this addresses all the vulnerabilities, but I really don’t understand this technology very well.)

This is a good idea, indeed, an obvious approach. Problem solved!

Actually, it’s not clear that this theoretical solution is even relevant to Bitcoin in the real world.

First of all, QKC is a method for sharing keys between trusted parties (and it is rare and expensive).   This is great at the root of networks, where there are a relative handful of peers and steps can be taken to establish trust. The current PKI systems, on the other hand, are open source, ubiquitous, and equally available to everyone. We don’t need any “root” to be able to establish trust between us.

It’s not clear how soon we’ll all be able to exchange keys with each other via QKC. Until then, this technology is controlled by the big boys. That’s quite a problem for the decentralized philosophy of Nakamotoan blockchains. If we have to trust the root key managers, then we might as well have centralized servers, no?

Maybe the quantum internet will be deployed quickly, though IPV6 still isn’t fully deployed after 25 years, and there is a whole lot more “net” than there used to be. Depending on what this new architecture looks like, it might or might not be the right stuff for peer-to-peer protocols to run on, anyway.

The system described in the paper is essentially a whole new protocol. I’m not sure how it could be retrofitted on a system which already has zillions of records stored. Even if things were “quantum safe” from now on, would the old transactions be secure and trusted? I dunno.

Regardless of the ultimate usefulness of this or any other “quantum safe” blockchain, it is hard to see how it could ever be adopted by Bitcoin. For the past two years, we have seen Bitcoin thrash, unable to implement a very simple technical upgrade to deal with block sizes.  How in the world will it implement something even more radical, something that may require new hardware and fundamental changes to the system? I’m not holding my breath.

My own guess is that Bitcoin and other similar cryptocurrencies with come down with a sudden crash when quantum equipped hackers break in and steal everything. The end will be swift and irreversible.

It is more likely that this QKD technology will appear in private blockchains, running on private networks. On the other hand, if you have already built a trusted network with QKD, then you may not actually get much benefit from using a blockchain. I dunno. We’ll have to see.


  1. E.O Kiktenko., N.O. Pozhar, M.N. Anufriev, A.S. Trushechkin, R.R. Yunusov, Y.V. Kurochkin, A.I. Lvovsky, and A.K. Fedorov, Quantum-secured blockchain. 2017. https://arxiv.org/abs/1705.09258
  2. Nakamoto, Satoshi, Bitcoin: A Peer-to-Peer Electronic Cash System. 2009. http://bitcoin.org/bitcoin.pdf
  3. National Security Agency, Commercial National Security Algorithm Suite and Quantum Computing FAQ. National Security Agency CNSS Advisory Memorandum MFQ U/OO/815099-15, 2016. https://cryptome.org/2016/01/CNSA-Suite-and-Quantum-Computing-FAQ.pdf

 

Cryptcurrency Thursday

Blockchain Use Cases: Theme Parks?

Jegar Pitchforth writes in Coindesk about “5 Ways Theme Parks Could Embrace Blockchain” [1]. His basic idea is that theme parks are historically “early adopters” and pioneers of technology, and should pioneer the use of blockchain technology.

He specifically identifies five use cases:

  1. Ticketing
  2. “Fastpass tickets” (i.e., specific deals)
  3. Theme Park Currency (Branded)
  4. Audience Surveys
  5. Pay audience to advertise

Hmm.

These are scarcely new ideas. Indeed, the entire article refers to existing programs. The point must be, and the question is, what does blockchain technology bring to the table? How would a blockchain be better than current technology?

Let’s look at his use cases to see what value blockchain brings, if any.

In the case of ticketing, it seems that the main advantage is that a blockchain system can be securely accessed by any smartphone.   Current systems work fine, as far as I know, and wearable technology makes it even more convenient than a smartphone.

The “Fastpass” use case has the potentially interesting wrinkle of using “smart contracts” to implement markets for these ‘rights’. Guests could trade and bargain for seats on rides, and so on.  Or there could be various conditions attached (“You can ride if you and 3 of your friends show up in 15 minutes….”)

Assuming that this kind of activity is a desirable feature (and for some fantasy worlds, I’m not sure that you want people diverting attention to such matters), it isn’t clear that blockchain is any better or worse than any other technology. After all, so called “smart contracts” are really, really simple logic, which can easily be built into a conventional database.

The idea of Theme Park Currency is nothing more or less than digital tokens or coupons, with a ton of general purpose overhead. Since these ‘coins’ are essentially private tokens issued by the park, they aren’t “decentralized” at all. In that sense, blockchain is a terrible choice, completely incongruent with the use case.

The last two hinge on using the cryptocurrency as loyalty points to incentivize the victims guests. This may or may not be desirable thematically (and is certainly ethically problematic when children are involved), but you don’t need a blockchain or private cryptocurrency to make it work.

Overall, there is little technical or logical reason why blockchain technology is especially well suited for any of these use cases. Indeed, to the degree that blockchain is generic and invites attention to commerce it is interfering with the effort to create a magic world and to command total attention and immersion.

It is true that a blockchain-based solution might be cheap and easy compared to creating a secure private network. However, much of the cost and effort must go into the user experience not the back end details, so I’m not sure if there would be much cost savings.

Most of the features of the blockchain are actually irrelevant to these use cases. The data systems of a theme park are extremely private and highly localized. What is the advantage of using an open, internet-wide data system?

Above all, the entire theme of a “theme park” is trust. We hand over part of our life to the designers, trusting them to give us a safe and enchanting experience. Ticketing, tokens, and whatever else must all be integrated to be part of this trusted experience. What is the advantage of using a “trustless” technology to implement this deeply trustful system?

Overall, it looks to me like you could use blockchain technology, but there is hardly a compelling case to do so. And if you do, it will be necessary to integrate it into the overall magic, which likely will mean that the blockchain should be invisible. If it is done right, you’ll never know it is there.

Actually, a successful deployment would be very good for blockcahin technology in general, because it would have to create a safe and wonderful user experience.  To data, the “user experience” with blockchains is very, very weak. A Disney quality interface would lift all boats.

For example, a blockchain system requires guests (including children?) to manage cryptokeys  In the theme park this must be safe, intuitive, and generally invisible.  Developing cool metaphors and UI to do this would be a great thing to see, and would advance the whole field.


  1. Jegar Pitchforth, 5 Ways Theme Parks Could Embrace Blockchain (And Why They Should) May 16 2017, http://www.coindesk.com/5-ways-theme-parks-embrace-blockchain/

 

Cryptocurrency Thursday

A Bad Idea Implemented with A Bad Idea

Let’s be clear. I find gambling to be boring and stupid myself, and I don’t admire gambling businesses that are built the weaknesses of people. Casino and other on-site gambling is a bad idea, but at least it gets people out in the world a little bit. Online gambling is a really, really bad idea, enabling people to feed their worst inclinations in the privacy of their own home.

You won’t b surprised that I’m not a big fan of the new initiative by an opaque company called Better Gaming, who are building an Ethereum Slot Machine: a slot machine that uses Ethereum smart contracts.

The innovation here is that this game is running entirely in a smart contract. No servers are required to operate the game, unlike existing online casinos.

Running “entirely in a smart contract” isn’t quite accurate: there is no server, but much of the logic runs on your local device.  However the logic of the gambling machine is implemented with smart contracts, which is the main point.

Readers of this blog know that I have a low opinion of “smart” contracts, Ethereum or otherwise. So, I’m especially excited to see this poorly designed technology used to implement the inherently bad idea of a slot machine. Not.

Obviously, the game itself isn’t innovative. They have gone to great trouble to replicated the behavior of these ubiquitous one-armed bandits. The “innovation” is to eliminate the server, in a fully decentralised and provably fair.” system.

For once, this Distributed App (Dapp) is actually solving a real problem: trusting your online gambling provider not to cheat is, well, a gamble. Gamblers can’t win, but they want to lose honestly.

The game’s logic has to be wholly processed within the smart contracts so that anyone who wants to can see that the game is playing by the rules and can’t cheat

Of course, they are also “solving” another problem, how to run an unregulated gaming operation, “off shore” from everywhere. Cryptocurrency is, if nothing else, a perfect digital “poker chip”, easy to move around, and not tracked by annoying tax agencies or vice squads. This slot machine isn’t taxed or regulated, and all the money goes…who know where it goes?

To give them their due, there are a couple of legitimate technical innovations in this product (at least according to their write up).

First of all, they made the user app asynchronous from the blockthain. It’s extremely important to give instant gratification to the lab rat gamer, and the blockchain has too much latency to always respond instantly. So they worked out protocols to mask the delay, presumably with caching on your local device. This is a significant achievement, and certainly caught Corin Faife’s attention in Coindesk. If this is successful, it may be a model to emulated by every Dapp.

A second technical feature is the random number generation (RNG). As Donald Knuth pointed out all those years ago, “Random numbers should not be generated with a method chosen at random.” [2] This group uses the blockchain with its pseudorandom hash in its random umber generation. I’m not sure what their method is, exactly, but this is a rather clever idea because the hashes are already very solid pseudorandom numbers.

 

Overall, this is yet another example of how bad ideas sometimes inspire brilliant software. This sounds like it will be a very solid implementation of a bad idea (a digital slot machines), and it will make excellent use of a bad idea (Distributed apps using Ethereum contracts), with some creative technical wrinkles. Sigh.

One sign that this is technology whose time has come: the Better Gaming  folks are already making legally licensed online games, and presumably making money.  Yet they believe it is worth building with this new tech, even though they are well aware that the powers-that-be will not easily approve it.  They should get credit for a gutsy technical gamble, and it shows just how promising this technology is.

it’s so new that we don’t expect regulators to fully grasp nor appreciate the implications overnight and there will need to be lots of discussion and negotiation before existing gaming jurisdictions license such activity.”


  1. Corin Faife, Watch This Ethereum Slot Machine Make Payouts in Real Time. Coindesk.April 21 2017, http://www.coindesk.com/watch-ethereum-slot-machine-video/
  2. Donald Knuth, The Art of Computer Programming: Vol. 2: Seminumerical algorithms (3 ed.). Boston, Addison-Wesley, 1997.
  3. Jez San, 1st Demonstration of real-time casino games built with Ethereum Smart Contracts, in Medium. 2017. https://medium.com/@aerobatic/1st-demonstration-of-real-time-casino-games-built-with-ethereum-smart-contracts-165ba72be02e

 

Cryptcurrency Thursday

More Bogosity From Matchpool

I looked at Matchpool earlier. Actually, it is fair to say that I scowled at this project, raising a number of questions and objections. My view is that they don’t understand what they are doing, and are offering a non-solution to a misstated problem.

I concluded

It is early days, so no one is really using this cunning app yet. We’ll have to see, but I’m not expecting it to work very well.

Evidently, this logically shaky project has had a rocky execution as a company as well.

Corin Faife describes “The ICO ‘Scandal’ That Wasn’t”, walking through a couple of news items that he explains aren’t as “scandalous” as some have said.

Much of the fuss seems to be the departure of one of the founders. On the way out the door, he complained about a less-than-completely-transparent transfer of funds, over $1 million worth, out of the ICO account.

Faife tells us that this was actually a transfer from Ethereum into Bitcoin, as a “currency hedge” against the volatility of Ethereum. This isn’t an implausible story, though one wonders whether this kind of volatility it is a great sign for a business that is built on Ethereum.

A second issue is that the transfer itself required three signatures (keys), which is intended to prevent simple theft. It turns out that the remaining founder has two keys (!), partly subverting this security mechanism. He found one other person, and they just did it.

Perhaps multisignature wallets are not quite the silver bullet that some think they are. Anyway, this seems at least a bit “scandalous” to me, that large amounts of cash are sloshing around with little effective accountability.

Faife comments that, if not actually scandalous, the departure of a founder from a brand new company is certainly a bad sign. He reports that the company claims that he left because he submitted code that was rejected and had to be rewritten. (His code was “fired”, so the code quit?)

The story doesn’t explain what kinds of “errors” were flagged, though it is said to be “smart contract code”, which is the stuff that brought down The DAO, and which is notoriously iffy  even when done well.

If this story is true, then it is kind of scandalous that such a poor coder was allowed anywhere near the code base in the first place. It also suggests that this founder probably doesn’t know as much as he believes he does about smart contracts.

Overall, I have to wonder if these people actually have any idea at all what they are doing. These are silly, rookie errors that suggest they really don’t deserve the confidence of investors or users. On top of their fundamental misunderstanding of the real world problems they aim to “fix”, they don’t seem to be able to run a software development project.

The article includes an unintentionally revealing “endorsement”, by project advisor Joe Shapira of Jdate,

I think that Matchpool will be a very beneficial venture for its founders and the investors in its currency.” (quote from Shapira)

Whoa! A dating service that is very beneficial to the founders and investors, but has nothing to say to the actual users? Is that really the right idea?  I don’t think so.

To the extent that this project is focused on investors and not on customers, it is absolutely guaranteed to fail. Assuming it even gets to release. At the rate they are going, I wouldn’t bet on it.


  1. Corin Faife, Matchpool: The ICO ‘Scandal’ That Wasn’t. Coindesk.April 15 2017, http://www.coindesk.com/the-matchpool-ico-scandal-is-all-smoke-and-no-fire/

 

Cryptocurrency Thursday

Bitcoins Not so smart contracts

Garrett Keirns reports in Coindesk on a new paper about “Smart Contract-Based Bribes”, which “threaten” Bitcoin Mining Pools.

My first thought was, “duh!” Any kind of bribes in the blockchain expose miners to possible liability. It hasn’t happened yet, but it’s only a matter of time before someone, somewhere hauls a Bitcoin miner into court, charging them with abetting criminal activity by processing the records of illicit transactions.

But this isn’t what Kairns is talking about. He refers to a paper by Yaron Velntner, Jason Teutsch, and Loi Luu [2].  What the researchers are actually talking about something more nefarious, and actually quite amusing.

Their idea is basically to offer a corrupt payment to miners, enticing them to “work slower”, reducing the yield of the whole pool. Presumably, this benefits other miners who will beat out the hobbled pool.

The authors do a lot of careful work to show how to make it work, and I don’t completely understand the details. But clearly executable contracts are ideally suited for this and many other kinds of automated skimming. The paper notes a number of other examples.

This particular scam is one of the oldest tricks in the book (bribe the bank clerk to “lose” the records for a time), utilizing the 21st century technology and the peculiar “trustless” nature of cryptocurrencies. In the physical world, this kind of shenanigan is defeated by, well, trust.

The amusing part is that the  clever bit is the amount of work they do to make this dead simple scam work as a decentralized program, i.e., where no one actually knows or trusts any of the others involved. It is fascinating to watch this fetish for technology in action, working out proofs and algorithms that have little value except to prove that the fantasy world of “trustless” systems can simulate yet another kind of transaction. In this case, yet another undesirable kind of transaction.

(As an aside, I note that the report is published in something called the Cryptology ePrint Archive, an unrefereed repository patterned after arXiv and other preprint services.  A bit of a cargo cult, no?)

It would be so much simpler to just bribe or threaten the miner into colluding, and I’m sure that happens all the time. But it is fascinating to watch this fetish for technology in action.


  1. Garrett Keirns, Could Smart Contract-Based Bribes Threaten Bitcoin Mining Pools. Coindesk.2017, http://www.coindesk.com/smart-contract-bribes-bitcoin-mining-pools/
  2. Yaron Velner, Jason Teutsch, and Loi Luu, Smart Contracts Make Bitcoin Mining Pools Vulnerable. Report 2017/230, Cryptology ePrint Archive, 2017. http://eprint.iacr.org/2017/230

 

Cryptocurrency Thursday

Ethereum Developer’s Conference: Unstoppable Zombie Technology

The Ethereum Developers conference was in Paris a few weeks ago, and despite a really, really bad year, optimism seemed to be high.

I haven’t really sorted through all the proposals floated at this conference, but Coindesk reports on several “improvements”, include private blockchains, “supercharged” contracts, and fundamental changes to the basic protocol. These ideas mostly have been seen before, and we’ll see if Ethereum development is any more agile than Bitcoin. (Ethereum certainly has a track record of quick, if disastrous evolution.)

More remarkable and possibly alarming, Alyssa Hertig reports that, “[d]espite the spectacular demise of The DAO, developers are still excited about the concept”. As Hertig trenchantly comments that these ”developers see such promise in a system whereby businesses decisions are automated to a degree that power and bureaucracy can be limited.”

Sigh.

Given the utter catastrophe of The DAO, many of the efforts have rebranded to avoid that particular term, which keeping the same bogus technology. The folks who brought you The DAO even have a new project, supposedly for charity. Old wine, new bottle.  Who can possibly take this seriously??

A similar idea comes from “Aragon” which hopes to be a platform for “unstoppable companies”. (I guess these people probably like the idea of cars with no brakes.)

Luis Cuende of Aragon gushes that, “The blockchain removes intermediaries by making trust obsolete.” (Really?)

Actually, Cuende’s manifesto is unintentionally brilliant throughout, clearly stating some of the often hidden fallacies underlying this whole enterprise. For example, he claims that, “One of the most basic needs in humans’ lives is to transact.” Actually, not, unless you are a fictional human living in an undergraduate microeconomics textbook.

He let’s that cat out of the bag with his analysis of all those pesky overheads companies have to pay because of “the system”.

“Today, companies spend a huge part of their time and capital just dealing with the system.

“Dealing with compliance, know your customer, tax filings, payroll, international payments, cap table management, board approvals…

“And they also spend a notable chunk of their capital in taxes.”

As he says, “Death to paperwork. Avoid useless intermediaries.” Only chumps follow the law or pay taxes. He imagines that executable contracts will somehow be offshore from everywhere.

Another cunning plan is “Colony ” a “task management” system using Ethereum (for payments) and “smart contracts” to run the show. It looks tome like a pretty vanilla crowdsourcing or project management system, except there is no one actually in charge.

The feature set is pretty similar to, say Loomio. The innovations seem to be that voting is managed by executable contracts rather than humans, and there is a cryptocurrency which makes payments, including micro- and nanopayments feasible.

Is that an important improvement? I honestly don’t know. For small scale and/or local collaborations-such as targeted by Loomio-it is unlikely that you need the Ethereum technology. So, what would be the use case for Colony?

At least Colony seems like it might be useful, maybe, unlike the “unstoppable companies” folks, who are just bonkers.

Overall, there wasn’t all that much innovation, and some really bad ideas that just won’t go away no matter how they fail in the real world.

It is difficult to be optimistic about the future of Ethereum.


  1. Colony, Colony Beta Overview, in Medium. 2017. https://blog.colony.io/colony-beta-product-summary-2121a357d61d – .rjtkokfou
  2. Luis Cuende, Introducing Aragon: Unstoppable companies, in Medium. 2017. https://medium.com/aragondec/introducing-aragon-unstoppable-companies-58c1fd2d00ce – .3y7vj015z
  3. Alyssa Hertig,  Rebranding The DAO: The Contentious Blockchain Concept is Back. Coindesk.Feburary 20 2017, http://www.coindesk.com/rebranding-dao-controversial-blockchain-concept-back/

 

Cryptocurrency Thursday