=Paper=
{{Paper
|id=Vol-2267/228-232-paper-42
|storemode=property
|title=About some of the blockchain problems
|pdfUrl=https://ceur-ws.org/Vol-2267/228-232-paper-42.pdf
|volume=Vol-2267
|authors=Alexander V. Bodganov,Alexander B. Degtyarev,Vladimir V. Korkhov,Magdalyne Kamande,Oleg O. Iakushkin
}}
==About some of the blockchain problems==
https://ceur-ws.org/Vol-2267/228-232-paper-42.pdf
Proceedings of the VIII International Conference "Distributed Computing and Grid-technologies in Science and
Education" (GRID 2018), Dubna, Moscow region, Russia, September 10 - 14, 2018
ABOUT SOME OF THE BLOCKCHAIN PROBLEMS
A.V. Bogdanov 1, A.B. Degtyarev 1, V.V. Korkhov 1, M. Kamande 1,
O.O. Iakushkin 1, V. Khvatov 2
1
Saint Petersburg State University, 7/9 Universitetskaya nab., St. Petersburg, 199034, Russia
2
BGX, Toronto, Canada
E-mail: a.v.bogdanov@spbu.ru
This year the Blockchain technology celebrates ten years since its inception in 2008. The technology is
in its third generation now, however many issues still exist and the fourth generation is already
anticipated. In this paper we consider some of the problems of Blockchain 3.0 and discuss possible
approaches to their resolution on the way to the next generation of the technology Blockchain 4.0.
Keywords: blockchain, consensus, distributed ledger
© 2018 Alexander V. Bodganov, Alexander B. Degtyarev, Vladimir V. Korkhov,
Magdalyne Kamande, Oleg O. Iakushkin
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Proceedings of the VIII International Conference "Distributed Computing and Grid-technologies in Science and
Education" (GRID 2018), Dubna, Moscow region, Russia, September 10 - 14, 2018
1. Introduction
Blockchain is a special data structure usually implemented as a linked list (block chain), in
form of a distributed system, where a copy of the list is stored on many computers (nodes) and
synchronized using a special protocol (consensus).
The Blockchain solution was proposed by the legendary founder of the first successful Bitcoin
cryptocurrency network, Satoshi Nakamoto, in the form of a practical implementation of bitcoin as its
public translation ledger. Although many of the technological solutions were laid in the first protocol
implementation (block encryption, the double-spending problem solution, currency mining), for some
time the approach remained an application to Bitcoin and an integral part of this solution only. This
time, which can be called the Blockchain 1.0 generation, for several years, the crypto community
tested the system for various types of attacks and searched for vulnerabilities in the protocol, and
around the original system developed its own infrastructure of access to Bitcoin nodes: wallets, mining
programs, etc.
In 2013, the young founder of Bitcoin Magazine, Vitalik Buterin, proposed a new concept for
the blockchain network called Ethereum. The main difference of this system was the ability to execute
small unchangeable programs, smart contracts. Ethereum was launched on July 30, 2015 and revealed
a new generation of blockchain systems - Blockchain 2.0. It was Ethereum that brought blockchain
technology to a new level, allowing for distributed computing as part of a new economy. This gave a
start to many projects by implementing their own virtual currency, including secondary tokens.
The growth of the crypto economy over the following years brought into use a whole pool of
technological solutions, some of which were aimed at solving applied solutions, others were looking
for new and more efficient algorithms.
2. Consensus
In addition to the blockchain structure, the idea of Bitcoin was supplemented with a number of
other possibilities aimed at supporting the structure itself and its operability with a number of
cryptographic functions. In essence, this system stores the flow of transactions within itself, in the
process of implementing which, the issue of additional currency (Bitcoin) takes place in favor of
network-supporting enthusiasts – miners. Information is stored as a chain of blocks, a block contains
transactions, each block header contains hashes of each transaction, as well as a hash of the previous
block header. The result is an immutable chain of blocks, which allows you to see all the transactions
while maintaining the anonymity of those behind these transfers. Such a system leads to a high
stability of the transaction formation process, the emergence of a method for decentralized processing
of transactions, data exchange between nodes (node consensus), and resistance to attempts to
substitute information.
The way to achieve consensus through computational work is called Proof-of-Work (PoW).
Thanks to PoW, Bitcoin is able to function on millions of computers, but it has several disadvantages:
it leads to a significant slowdown in synchronization operations (more than 10 minutes to form a
block), and is also accompanied by a waste of energy.
In 1982, a group of scientists (Leslie Lamport, Marshall Pease, Robert Shostak) published a
document that outlined the problem of reliability in a decentralized system [1]. In the “The Byzantine
Generals Problem” the authors suggested a mental experiment: “Imagine that a group of generals, each
command part of the Byzantine army, surrounds the enemy city. Generals can only communicate as
messengers, but in order to conquer the city, they must agree on a battle plan. The problem is that one
or more generals can be a traitor who will try to distort messages and sabotage the plan. The question
is, how many treacherous generals can there be in the army, so that it can still act as a single force?”
The solution appeared in 1999, when Miguel Castro and Barbara Liskov introduced a practical
byzantine fault tolerance algorithm (PBFT) [2]. PBFT can handle a huge amount of direct peer-to-peer
(or distributed) messages with minimal delay. This means that programmers can create secure and
fault-tolerant private distributed networks. Since 1999, PBFT has been implemented in different ways,
and it has been refined in several technological approximations. The previously mentioned Proof-of-
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Proceedings of the VIII International Conference "Distributed Computing and Grid-technologies in Science and
Education" (GRID 2018), Dubna, Moscow region, Russia, September 10 - 14, 2018
Work method is a revision of PBFT – users must repeatedly run the corresponding algorithms to verify
the transactions of other system participants.
In a broad sense, any distributed system operating in a non-trusted environment should
provide Byzantine Fault Tolerance, resistance to various types of attacks – actions of “bad” network
nodes. A distributed system, in contrast to a centralized system, must select “correct” transactions,
avoiding such vulnerabilities as double-spending.
3. Decentralization and distribution
A system can be built as decentralized and distributed in varying degrees. At the same time, its
architecture and topology will be different in terms of decisions made on the number of nodes, the
order of decisions made, tasks to be solved, load profiles. According to the well-known DCS theorem,
decentralization, consensus and scalability form a triangle that limits the chosen solution: the harder
the consensus and the greater the decentralization, the harder it is to achieve the desired performance
of a distributed system (see Figure 1).
Figure 1. DSC theorem
The implementations of various synchronization mechanisms between nodes in a distributed
system (consensus mechanism) are described in detail in [3].
The implementation of the synchronization mechanism between nodes in a distributed system
(consensus mechanism) in a more general approach is determined by the following parameters:
• Decentralized governance: a single central authority cannot ensure the completion of a
transaction.
• Quorum structure: Nodes exchange messages in predestination (paths that may include steps
or levels).
• Authentication: this process provides the means to verify the identity of participants.
• Integrity: it provides verification of the integrity of a transaction (for example,
mathematically by means of cryptography).
• Non-repudiation: provides a means to verify that the intended sender actually sent the
message.
• Privacy: this helps ensure that only the intended recipient can read the message.
• Fault tolerance: The network works efficiently and quickly, even if some nodes or servers do
not work or are slow.
• Performance: takes into account bandwidth, survivability, scalability and latency.
4. Scalability
The problem of transaction processing performance directly follows from the architecture of
the classic blockchain. Indeed, the solution in which each node must be ready to process any
transaction becomes weaker with the growth of nodes and the number of processed transactions due to
the delay in the exchange between nodes. At the same time, the mechanism for achieving consensus is
the most vulnerable link, a critical component responsible for the performance of a distributed system.
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Proceedings of the VIII International Conference "Distributed Computing and Grid-technologies in Science and
Education" (GRID 2018), Dubna, Moscow region, Russia, September 10 - 14, 2018
The solution to this problem may lie in additions to the existing architecture, as well as a more
radical change in the very principle of the algorithm at the expense of all the compromise in terms of
decentralization or the complexity of the mechanism.
Here are the most common ways to solve the problem:
Optimization of the data structure leads to reduction in the volume of processed and
transmitted data. In particular, SegWit, which optimizes the structure of data storage in
blocks of Bitcoin and some other currencies (Litecoin, Vertcoin), follows this path;
Optimization of block sizes, e.g. increasing the size of a block in Bitcoin to 2 MB:
increasing the block size will increase the speed of processing transactions, since more
transactions will be included at a time;
Off-chain state channels: the formation of secure computing outside the blockchain
network and then saving the results to the network. In fact, it works in three stages: a) State
fixing through some mechanism (for example, smart contract and multi-signature), b) Data
exchange between two participants without the involvement of the network, c) Providing
status back to the blockchain network, closing the channel and unlocking the state.
Implementations of this method are Lightning Network and Raiden;
Sharding: processing segmentation, like in distributed databases. Transactions are
clustered according to different shards and, depending on the cluster, are sent to a different
server. This approach has found application, in particular, with federative consensus.
However, in general, this approach is not applicable to all practical problems;
Plasma: an approach in which payment channels (sidechains) are formed according to
embedded smart contracts. Although it looks similar to the off-chain state channels, its
fundamental difference is in the use of mechanisms built into the blockchain. The Proof of
Fraud mechanism is integrated into the Plasma project implemented over Ethereum: the
smart contract logic that allows users to quickly withdraw funds from the side chain to the
main blockchain protected by full-fledged mining in case of an attack;
Off-chain computation is another approach that takes transaction calculations out of the
main network. An example of such a solution is the TrueBit network. At the expense of
additional nodes, Solvers, smart contracts are processed outside the main network, a
deposit is made to the Solver’s account. In case of successful resolution, Solver is
rewarded. Otherwise, the deposit is withdrawn, and the conflict is resolved in the main
network by mining, the so-called Verification Games;
Changing Consensus Algorithm: as part of this approach, the very architecture of data
synchronization between nodes is changing. Recently, new models have spread,
significantly raising the speed of data processing.
5. Proposed approach
The technologies listed above solve processing and consensus problems in different ways.
Currently, there is a rapid development of this area, and there is no single settled solution. In our
opinion, the most serious problem is a significant increase in the speed of transactions and clearing.
Acceptance of cryptocurrency can seriously slow down the turnover of funds and, in practice, can take
up to a week at a price up to 30% of the entire transaction. The p2p payment channels used to
accelerate seriously increase the speed of transactions, however, the basic principle of the technology
is violated: it is impossible to simultaneously change the state of the system in all its nodes. There are
some discrete time intervals in which the system is not synchronized. At the same time, there are such
opportunities for significant security breaches as:
Carrying out third-party transactions through already established chains of reliable users
The possibility of including third parties as an additional node of the Blockchain system with
the participation of an unscrupulous partner of a streamlined chain.
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Proceedings of the VIII International Conference "Distributed Computing and Grid-technologies in Science and
Education" (GRID 2018), Dubna, Moscow region, Russia, September 10 - 14, 2018
It is clear that without solving security problems, it is impossible to talk about the practical use
of distributed registry technologies. It seems to us that solving these problems requires an integrated
approach to technology based on the creation of hybrid systems with several mechanisms for ensuring
an acceptable transaction rate and a given level of security based on a rigorous mathematical model.
To solve these issues we propose to use of the following concept [4]:
At the node level, the use of virtual servers that make up the node complex (a.k.a. virtual
supercomputers) [5,6];
Construction of the topological structure of nodes, when the transaction processing logic itself
is carried out in a specific cluster and only then spreads to the entire network (by analogy with
FBA Stellar);
As a base layer for storing information, taking advantage of DAG structures;
Division of processing into intranet and extranet (interacting with channels of other
currencies)
6. Conclusion
In this paper, we focused on the analysis of integration of distributed ledger systems with the
practical tasks of the business environment and related problems of the technology. While today there
is no silver bullet, such an algorithm for building distributed ledgers that would satisfy all the needs of
abstract business problems does not yet exist, we identified the actual architecture problems in solving
which such an algorithm could become a reality, and suggested an approach based on which we plan
to form such an algorithm in future works. We plan to concentrate on the development of a new
generation of consensus algorithms that will address the current blockchain problems based on the
emerging BGX platform [4].
Acknowledgement
This work was partially supported by the grant of Saint Petersburg State University no.
26520170.
References
[1] Leslie Lamport, Robert Shostak, and Marshall Pease. 1982. The Byzantine Generals Problem.
ACM Trans. Program. Lang. Syst. 4, 3 (July 1982), 382-401. DOI: 10.1145/357172.357176
[2] Miguel Castro and Barbara Liskov. 1999. Practical Byzantine fault tolerance. In Proceedings of the
third symposium on Operating systems design and implementation (OSDI '99). USENIX Association,
Berkeley, CA, USA, 173-186.
[3] Consensus: Immutable agreement for the Internet of Value, KPMG, 2016, URL:
https://assets.kpmg.com/content/dam/kpmg/pdf/2016/06/kpmg-blockchain-consensus-mechanism.pdf
[4] BGX Blue paper, 2018, URL: https://bgx.ai/documents/en/BGX_BLUEPAPER_1.0.pdf
[5] A. Bogdanov, A. Degtyarev, V. Korkhov. Desktop supercomputer: what can it do? Physics of
Particles and Nuclei Letters, 2017, Volume 14, Issue 7, pp 985–992 DOI:
10.1134/S1547477117070032
[6] Alexander Bogdanov, Alexander Degtyarev, Vladimir Korkhov, Vladimir Gaiduchok, Ivan
Gankevich. Virtual Supercomputer as basis of Scientific Computing, in series: Horizons in Computer
Science Research, vol. 11, eds.: Thomas S. Clary, pp. 159-198, Nova Science Publishers, 2015,
ISBN: 978-1-63482-499-6
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