Analysis of current blockchain based crypto currency limitations and opportunities for tangle based technology such as IOTA, Byteball

1. Tangle: An Alternative to Block Chain
For Future of Crypto Currency
Presented by
Kishor Datta Gupta
Center for Information Assurance (CfIA)

2. Some Conceptual issue
Center for Information Assurance (CfIA)
• Block is not equal Bitcoin or any CryptoCoin.
• Header of every block contains a hash of header of the previous block.
• Mining is NOT about creating new coins.
• Block is not limited to a definite number like Bitcoin/Cryptocoin.
• Linked List outside between blocks & Merkle tree inside between
transections.
• Merkle roots do not verify transactions, they verify a set of transactions.
• Merkle root will change if data tempered.

3. Simplified Bitcoin Block Chain
Center for Information Assurance (CfIA)

4. Mining Logic
Center for Information Assurance (CfIA)
Joe's reward = Reward for mining block + transactions fees

5. Block Chain Issue
Center for Information Assurance (CfIA)
As a Block chain grows over
time, nodes will need more and
more storage capacity and a
higher bandwidth (volume
increases) to keep up-to-date
with the transactions added to
the ledger.
Network Size
Memory Storage
Bandwidth
Centralization

6. 8 Pool Contain 75% mining
Center for Information Assurance (CfIA)

7. Some can have 51%
Center for Information Assurance (CfIA)

8. LinkList vs DAG
Center for Information Assurance (CfIA)
LinkList
Direct Acyclic Graph

9. Tangle
Center for Information Assurance (CfIA)
Same as block chain , tangle is also a distributed ledger, in
which a network of independent accounts perform
transactions among themselves, reaching consensus about
who owns what without depending on a centralized
authority.
http://tangle.glumb.de

10. Tangle: Issue a transaction
Center for Information Assurance (CfIA)
• It chooses two other transactions to approve (in
general, these two transactions may coincide),
according to some algorithm.
• It checks if the two transactions are not conflicting and
do not approve conflicting transactions.
• For the transaction to be valid, the node must solve a
cryptographic puzzle

11. Tangle: Nodes
Center for Information Assurance (CfIA)
Full Node: store all transactions since the last snapshot. It
is required to be online (= available to its neighbors) 24/7
Permanodes: is a Full Node that doesn't do snapshots and
stores all transactions since the genesis transaction.
Light Client: does not store any transactions. To make
transactions, it has to has access to a Full Node.
It asks the full node to publish its transactions. It does not
have to be online 24/7.
Swarm Clients: Full Nodes that run distributed on more
than one device.

12. Tangle: Nodes Weight
Center for Information Assurance (CfIA)

13. Tangle: Consensus
Center for Information Assurance (CfIA)
A node runs the tip selection algorithm many times, and
see which transaction of the two is more likely to be
(indirectly) approved by the selected tip.
For example, if, after 100 runs of the tip selection
algorithm, a transaction was selected 97 times, we say that
it is confirmed with 97% confidence.

14. Consensus: tip selection algorithm
Center for Information Assurance (CfIA)
Instead of just randomly selecting two tips (or always using the newest two tips), there
is a tip selection algorithm that is run and which will select the tips, to make sure that
tips are chosen in a way to make the tangle converge (have all transactions approved)
quickly. IOTA Use Random Walk Markov Chain Monte Carlo algorithm

15. Consensus: Orphaned
Center for Information Assurance (CfIA)
if a node issues a new transaction that approves conflicting transactions, then it risks that
other nodes will not approve its new transaction, which will fall into oblivion."
In order to find transactions to approve that are unlikely to lead its own transaction to be
orphaned, a node runs a "tip selection algorithm."

16. Incentive: For Node to Run
Center for Information Assurance (CfIA)
Every node calculates some statistics, one of which is how
many new transactions are received from a neighbor. If one
particular node is “too lazy", it will be dropped by its
neighbors.
So, even if a node does not issue transactions (and hence has
no direct incentive to share new transactions that approve its
own one), it still has incentive to work hard.

17. Incentive: For Full Node to Run
Center for Information Assurance (CfIA)
• Hope that people are generally good
• Almost all server run 24*7

18. Possible attack scenarios :Double
Spending
Center for Information Assurance (CfIA)

19. Possible attack scenarios :Parasite
Chain
Center for Information Assurance (CfIA)

20. Tangle Applications: IOTA
Center for Information Assurance (CfIA)
• Uses a coordinator to issue all node a
certificate.
• Not distributed yet per definition, but
decentralized.
• Uses Quantum Resistance cryptography
• No mining so No transection fees
• Partition intolerance
IOTA is a Crypto Currency designed for
the Internet of Things.

21. Tangle Applications: Byteball
Center for Information Assurance (CfIA)
• Has Transection Fees
• Use a MC(main chain) algorithm to define transaction order
• Need time to verify transection
• Can remove orphan nodes
Byteball is a Crypto Currency similar to IOTA with additional
features

22. Tangle Applications: Git
Center for Information Assurance (CfIA)
Git actually use tangle type consensus to commit its code
In simplified form, git object storage is "just" a DAG of objects,
with a handful of different types of objects. They are all stored
compressed and identified by an SHA-1 hash (that, incidentally,
isn't the SHA-1 of the contents of the file they represent, but of
their representation in git).

23. Tangle Advantages over block chain:
Scalability
Center for Information Assurance (CfIA)

24. Conclusions
Center for Information Assurance (CfIA)
A Tangle can solve many problems blockchains are facing right now
• Bandwidth
• Storage cost
• Centralization
• Scalability
• Micropayments