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From the limits of Blockchain-based systems to the Emergent Centralisation of Bitcoin Claudio J Tessone URPP Social Networks Blockchain from a Central Bank Perspective |

FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

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Page 1: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

From the limits of Blockchain-based

systems to the Emergent

Centralisation of Bitcoin

Claudio J� Tessone

URPP Social Networks

Blockchain from a Central Bank Perspective | ��������

Page 2: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Prelude

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 3: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Thesis �

�� Blockchain-based systems are complex techno-economic ones� Interconnectedness� Incentive schemes �hidden!�� Feedback loops

�� As such� they cannot be designed immutably�� Proper interdisciplinary insight is necessary for their design

and sustainability

z Thesis� Wrongly placed incentives at different levels foster itscentralisation

⌅ Monetary supply� Means of production� Governance

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 4: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Thesis �

�� Blockchain-based systems are complex techno-economic ones� Interconnectedness� Incentive schemes �hidden!�� Feedback loops

�� As such� they cannot be designed immutably

�� Proper interdisciplinary insight is necessary for their design

and sustainability

z Thesis� Wrongly placed incentives at different levels foster itscentralisation

⌅ Monetary supply� Means of production� Governance

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 5: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Thesis �

�� Blockchain-based systems are complex techno-economic ones� Interconnectedness� Incentive schemes �hidden!�� Feedback loops

�� As such� they cannot be designed immutably�� Proper interdisciplinary insight is necessary for their design

and sustainability

z Thesis� Wrongly placed incentives at different levels foster itscentralisation

⌅ Monetary supply� Means of production� Governance

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 6: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Thesis �

�� Blockchain-based systems are complex techno-economic ones� Interconnectedness� Incentive schemes �hidden!�� Feedback loops

�� As such� they cannot be designed immutably�� Proper interdisciplinary insight is necessary for their design

and sustainability

z Thesis� Wrongly placed incentives at different levels foster itscentralisation

⌅ Monetary supply� Means of production� Governance

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 7: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Digitalisation of economic transactions �

Verification

Transactions

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 8: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Digitalisation of economic transactions �

Verification

Transactions

⌅ Economic transactions have regressed since electroniccommerce

⌅ Credit cards� debit transfers� remi�ances

⌅ All require a central authority that asserts identity and

validates the transactions before they occur

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 9: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Digitalisation of economic transactions �

Verification

Transactions

⌅ Economic transactions have regressed since electroniccommerce

⌅ Credit cards� debit transfers� remi�ances

⌅ All require a central authority that asserts identity and

validates the transactions before they occur

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 10: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Digitalisation of economic transactions �

Verification

Transactions

Centralised payment systems propagate trustworthy informa-tion because of trusted communication channels

The obvious

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 11: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin� A decentralised approach �

In a decentralised payment network� possible misbehaviour bythe users abound⌅ A user claims to own assets she actually does not own⌅ A user a�empts to use multiple times the same assets

⌅ Risk of forging transactions / assets

How to propagate trustworthy information and create confi-dence among peers in a decentralised system with non-trustedcommunication channels?

The difficult part

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 12: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin� A decentralised approach �

In a decentralised payment network� possible misbehaviour bythe users abound⌅ A user claims to own assets she actually does not own⌅ A user a�empts to use multiple times the same assets⌅ Risk of forging transactions / assets

How to propagate trustworthy information and create confi-dence among peers in a decentralised system with non-trustedcommunication channels?

The difficult part

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 13: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blocks �

How to keep consistent the information stored in the system?

Transaction_ID Sender Receiver Amount Received

------------------------

2001193F04EA23 Alice Bob 5 BTC 1070BA782056FA

20020AC93670A6 Charles Dan, Alice 3 BTC, 1 BTC 1090945761BE90

2003620FB49204 Eva Faythe 2 BTC 10509587DAB3BA

20041957701BC3 Bob Sam 5 BTC 2001193F04EA23

2005AB30C94045 Wendy Oscar 5 BTC 135294594CB10EE

------------------------

⌅ Make data accessible to everyparticipant

⌅ Bundle multiple new� verified

transactions into a block

⌅ Each block building on theprevious one

���� is the only way new bitcoins are createdSupply

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 14: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blocks �

How to keep consistent the information stored in the system?

Transaction_ID Sender Receiver Amount Received

------------------------

2001193F04EA23 Alice Bob 5 BTC 1070BA782056FA

20020AC93670A6 Charles Dan, Alice 3 BTC, 1 BTC 1090945761BE90

2003620FB49204 Eva Faythe 2 BTC 10509587DAB3BA

20041957701BC3 Bob Sam 5 BTC 2001193F04EA23

2005AB30C94045 Wendy Oscar 5 BTC 135294594CB10EE

------------------------

⌅ Make data accessible to everyparticipant

⌅ Bundle multiple new� verified

transactions into a block

⌅ Each block building on theprevious one

���� is the only way new bitcoins are createdSupply

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 15: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blocks �

How to keep consistent the information stored in the system?

Transaction_ID Sender Receiver Amount Received

------------------------

2001193F04EA23 Alice Bob 5 BTC 1070BA782056FA

20020AC93670A6 Charles Dan, Alice 3 BTC, 1 BTC 1090945761BE90

2003620FB49204 Eva Faythe 2 BTC 10509587DAB3BA

20041957701BC3 Bob Sam 5 BTC 2001193F04EA23

2005AB30C94045 Wendy Oscar 5 BTC 135294594CB10EE

------------------------

Why should users verify?Allow the block creator �miner� toissue a reward transaction toherself consisting of�� A predefined arbitrary quantity

without a sender�� All fees included in the

transactions

���� is the only way new bitcoins are createdSupply

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 16: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blocks �

How to keep consistent the information stored in the system?

Transaction_ID Sender Receiver Amount Received

------------------------

20010BA4569035 MINE Gandalf 12.5 BTC

2001193F04EA23 Alice Bob 5 BTC 1070BA782056FA

20020AC93670A6 Charles Dan, Alice 3 BTC, 1 BTC 1090945761BE90

20030DAD029445 MINE Merlin 12.5 BTC

2003620FB49204 Eva Faythe 2 BTC 10509587DAB3BA

20041957701BC3 Bob Sam 5 BTC 2001193F04EA23

2005AB30C94045 Wendy Oscar 5 BTC 135294594CB10EE

------------------------

Why should users verify?Allow the block creator �miner� toissue a reward transaction toherself consisting of�� A predefined arbitrary quantity

without a sender�� All fees included in the

transactions

���� is the only way new bitcoins are createdSupply

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 17: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01

addr_01 5 BTCaddr_02 3 BTC

Issuing transactions

⌅ Users issue transactions� which build a transaction network

⌅ Verifiers are connected to a peer-to-peer verification network

⌅ Each new transaction is broadcast through to the verificationnetwork

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 18: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01

addr_01 5 BTCaddr_02 3 BTC

Issuing transactions

⌅ Users issue transactions� which build a transaction network

⌅ Verifiers are connected to a peer-to-peer verification network

⌅ Each new transaction is broadcast through to the verificationnetwork

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 19: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01

addr_01 5 BTCaddr_02 3 BTC

Issuing transactions

⌅ Users issue transactions� which build a transaction network

⌅ Verifiers are connected to a peer-to-peer verification network

⌅ Each new transaction is broadcast through to the verificationnetwork

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 20: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01

addr_01 5 BTCaddr_02 3 BTC

Issuing transactions

⌅ Users issue transactions� which build a transaction network

⌅ Verifiers are connected to a peer-to-peer verification network

⌅ Each new transaction is broadcast through to the verificationnetwork

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 21: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01

addr_01 5 BTCaddr_02 3 BTC

Mining new blocks

…It must be �computationally� costly to add new information�

simple to verify it …� �e�g� proof of work�⌅ Nodes in the verification network a�empt to create a new

block �with all new transactions�

⌅ Once found� the block is broadcast through to the verificationnetwork

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 22: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01

addr_01 5 BTCaddr_02 3 BTC

Mining new blocks

…It must be �computationally� costly to add new information�

simple to verify it …� �e�g� proof of work�⌅ Nodes in the verification network a�empt to create a new

block �with all new transactions�⌅ Once found� the block is broadcast through to the verification

network

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 23: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01 8 BTC

addr_01 0 BTCaddr_02 0 BTC

⌅ Only a�er this block has been added to all nodes in theverification network� the transactions it contains� occurred

�network consensus�

⌅ Miners want to ensure the reward transaction is theirs

⌅ Reward the effort invested in keeping the system consistent

⌅ Anyone can participate of the supply� it is decentralised

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 24: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01 8 BTC

addr_01 0 BTCaddr_02 0 BTC

⌅ Only a�er this block has been added to all nodes in theverification network� the transactions it contains� occurred

�network consensus�⌅ Miners want to ensure the reward transaction is theirs

⌅ Reward the effort invested in keeping the system consistent

⌅ Anyone can participate of the supply� it is decentralised

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 25: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The dynamics of verification and mining �

addr_01 8 BTC

addr_01 0 BTCaddr_02 0 BTC

⌅ Only a�er this block has been added to all nodes in theverification network� the transactions it contains� occurred

�network consensus�⌅ Miners want to ensure the reward transaction is theirs

⌅ Reward the effort invested in keeping the system consistent

⌅ Anyone can participate of the supply� it is decentralised

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 26: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin supply �

2010 2011 2012 2013 2014 2015 2016Year

0

2

4

6

8

10

12

14

16

Tota

lSup

ply

�10

6B

itcoi

n

Complete Supply

⌅ Supply policy� arbitrary decision� unrelated to the technology

⌅ Predictable�

⌅ Supply grows �piece-wise� linearly over time⌅ Every two years� supply rate halves

⌅ However� supply in circulation is sizeable smaller

⌅ Reasons?

⌅ Incentivise early adoption even in absence of transactions⌅ Self-reward for creators -?-

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 27: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin supply �

2010 2011 2012 2013 2014 2015 2016Year

0

2

4

6

8

10

12

14

16

Tota

lSup

ply

�10

6B

itcoi

n

Complete Supply

⌅ Supply policy� arbitrary decision� unrelated to the technology⌅ Predictable�

⌅ Supply grows �piece-wise� linearly over time⌅ Every two years� supply rate halves

⌅ However� supply in circulation is sizeable smaller⌅ Reasons?

⌅ Incentivise early adoption even in absence of transactions⌅ Self-reward for creators -?-

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 28: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin supply �

2010 2011 2012 2013 2014 2015 2016Year

0

2

4

6

8

10

12

14

16

Tota

lSup

ply

�10

6B

itcoi

n

Complete Supply

⌅ Supply policy� arbitrary decision� unrelated to the technology⌅ Predictable�

⌅ Supply grows �piece-wise� linearly over time⌅ Every two years� supply rate halves

⌅ However� supply in circulation is sizeable smaller

⌅ Reasons?

⌅ Incentivise early adoption even in absence of transactions⌅ Self-reward for creators -?-

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 29: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin supply �

2010 2011 2012 2013 2014 2015 2016Year

0

2

4

6

8

10

12

14

16

Tota

lSup

ply

�10

6B

itcoi

n

Complete SupplyCirculating Supply

⌅ Supply policy� arbitrary decision� unrelated to the technology⌅ Predictable�

⌅ Supply grows �piece-wise� linearly over time⌅ Every two years� supply rate halves⌅ However� supply in circulation is sizeable smaller

⌅ Reasons?

⌅ Incentivise early adoption even in absence of transactions⌅ Self-reward for creators -?-

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 30: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The effect of supply policy on mining �

2009 2010 2011 2012 2013 2014 2015 2016Year

104

106

108

1010

1012

1014

1016

1018

Has

hR

ate

[Has

h/se

c]

BTCTop 500

⌅ This created an arms race to devote more resources to mining

⌅ Everybody has an incentive to mine as soon as possible⌅ With increasing Bitcoin prices� only larger-scale investors can

afford it

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 31: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The effect of supply policy on mining �

2009 2010 2011 2012 2013 2014 2015 2016Year

104

106

108

1010

1012

1014

1016

1018

Has

hR

ate

[Has

h/se

c]

BTCTop 500

⌅ This created an arms race to devote more resources to mining⌅ Everybody has an incentive to mine as soon as possible

⌅ With increasing Bitcoin prices� only larger-scale investors canafford it

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 32: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The effect of supply policy on mining �

2009 2010 2011 2012 2013 2014 2015 2016Year

104

106

108

1010

1012

1014

1016

1018

Has

hR

ate

[Has

h/se

c]

BTCTop 500

⌅ This created an arms race to devote more resources to mining⌅ Everybody has an incentive to mine as soon as possible⌅ With increasing Bitcoin prices� only larger-scale investors can

afford it

Limits of blockchain and Bitcoin centralisation | �� Prelude

Page 33: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The limits to blockchain consensus

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 34: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blockchain ��

Block height

⌅ Sequential data structure� New blocks can only be appendedat the end of the chain

⌅ To change a block in the middle� all subsequent ones must bealtered

⌅ But the blockchain is replicated in all network nodes! Historyredundancy makes it resilient to a�acks

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 35: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blockchain ��

Block height

⌅ Sequential data structure� New blocks can only be appendedat the end of the chain

⌅ To change a block in the middle� all subsequent ones must bealtered

⌅ But the blockchain is replicated in all network nodes! Historyredundancy makes it resilient to a�acks

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 36: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blockchain ��

Block height

⌅ Sequential data structure� New blocks can only be appendedat the end of the chain

⌅ To change a block in the middle� all subsequent ones must bealtered

⌅ But the blockchain is replicated in all network nodes! Historyredundancy makes it resilient to a�acks

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 37: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blockchain consensus ��

⌅ The efficiency of blockchain-based systems depends onwhether consensus in the information stored in the differentnodes is reached

⌅ Consensus must not be confused with the policy followed toselect the issuer of the new block

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 38: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Blockchain consensus ��

⌅ The efficiency of blockchain-based systems depends onwhether consensus in the information stored in the differentnodes is reached

⌅ Consensus must not be confused with the policy followed toselect the issuer of the new block

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 39: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

An example of blockchain dynamics ��

⌅ Consensus is unknownto nodes

⌅ Blocks can appear indifferent nodes beforeconsensus is reached

⌅ Conflicts are resolvedby chain depth

⌅ The information in the

offchain blocks is lostwasted resources

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 40: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

An example of blockchain dynamics ��

⌅ Consensus is unknownto nodes

⌅ Blocks can appear indifferent nodes beforeconsensus is reached

⌅ Conflicts are resolvedby chain depth

⌅ The information in the

offchain blocks is lostwasted resources

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 41: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

An example of blockchain dynamics ��

⌅ Consensus is unknownto nodes

⌅ Blocks can appear indifferent nodes beforeconsensus is reached

⌅ Conflicts are resolvedby chain depth

⌅ The information in the

offchain blocks is lostwasted resources

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 42: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The importance of verification diversity ��

Diverse

Concentrated

⌅ When mining becomes concentrated� large portion ofverification is performed by the same actor

⌅ It decides which information enters or not into the blockchain

⌅ Others lose incentive to participate of verification �no reward�⌅ Feedback loop

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 43: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The importance of verification diversity ��

Diverse

Concentrated

⌅ When mining becomes concentrated� large portion ofverification is performed by the same actor

⌅ It decides which information enters or not into the blockchain⌅ Others lose incentive to participate of verification �no reward�

⌅ Feedback loop

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 44: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The importance of verification diversity ��

Diverse

Concentrated

⌅ When mining becomes concentrated� large portion ofverification is performed by the same actor

⌅ It decides which information enters or not into the blockchain⌅ Others lose incentive to participate of verification �no reward�⌅ Feedback loop

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 45: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Elements that affect verification diversity ��

The consensus mechanism is known to work �and be efficient� in a

complete graph where all nodes have homogeneous block

creation power

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 46: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Elements that affect verification diversity ��

⌅ The architecture of the network of interconnections

⌅ The probability that different nodes create a new block⌅ The node properties in each dimension� and interaction

between these two factors is far from trivial overlooked

⌅ ��� And this is without taking into account the strategic

behaviour of nodes in this network

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 47: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Elements that affect verification diversity ��

⌅ The architecture of the network of interconnections⌅ The probability that different nodes create a new block

⌅ The node properties in each dimension� and interaction

between these two factors is far from trivial overlooked

⌅ ��� And this is without taking into account the strategic

behaviour of nodes in this network

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 48: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Elements that affect verification diversity ��

⌅ The architecture of the network of interconnections⌅ The probability that different nodes create a new block⌅ The node properties in each dimension� and interaction

between these two factors is far from trivial overlooked

⌅ ��� And this is without taking into account the strategic

behaviour of nodes in this network

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 49: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Elements that affect verification diversity ��

⌅ The architecture of the network of interconnections⌅ The probability that different nodes create a new block⌅ The node properties in each dimension� and interaction

between these two factors is far from trivial overlooked

⌅ ��� And this is without taking into account the strategic

behaviour of nodes in this network

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 50: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Tackling this problem� �i�Modelling ��

⌅ Understanding diffusion� core question in complex systems

⌅ Input� Arbitrary network architectures� arbitrary node’sproperties� arbitrary mechanisms for block creation anddiffusion

⌅ Output� Understanding emergent properties� blocktree�distribution of consensus time� fork probability� miningconcentration� etc�

⌅ All of this without requiring high computational resources

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 51: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Tackling this problem� �i�Modelling ��

⌅ Understanding diffusion� core question in complex systems

⌅ Input� Arbitrary network architectures� arbitrary node’sproperties� arbitrary mechanisms for block creation anddiffusion

⌅ Output� Understanding emergent properties� blocktree�distribution of consensus time� fork probability� miningconcentration� etc�

⌅ All of this without requiring high computational resources

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 52: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Tackling this problem� �i�Modelling ��

⌅ Understanding diffusion� core question in complex systems

⌅ Input� Arbitrary network architectures� arbitrary node’sproperties� arbitrary mechanisms for block creation anddiffusion

⌅ Output� Understanding emergent properties� blocktree�distribution of consensus time� fork probability� miningconcentration� etc�

⌅ All of this without requiring high computational resources

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 53: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Tackling this problem� �i�Modelling ��

⌅ Understanding diffusion� core question in complex systems

⌅ Input� Arbitrary network architectures� arbitrary node’sproperties� arbitrary mechanisms for block creation anddiffusion

⌅ Output� Understanding emergent properties� blocktree�distribution of consensus time� fork probability� miningconcentration� etc�

⌅ All of this without requiring high computational resources

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 54: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Tackling this problem� �ii� Simulating ��

⌅ So�ware-defined-networks allow to instantiateso�ware-controlled virtual networks

⌅ Used to emulate the full production environments in muchsmaller systems

⌅ Taking into account �synthetically� server-server /

country-country latencies

⌅ Logical� Peers in the verification network⌅ Emulated� Established in the So�ware defined networking⌅ Physical� Actual physical underlying infrastructure

Real system Emulated system

underlying

underlying

Physicalinfrastructure

Emulated SDN

Application logic

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 55: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Tackling this problem� �ii� Simulating ��

⌅ So�ware-defined-networks allow to instantiateso�ware-controlled virtual networks

⌅ Used to emulate the full production environments in muchsmaller systems

⌅ Taking into account �synthetically� server-server /

country-country latencies

⌅ Logical� Peers in the verification network⌅ Emulated� Established in the So�ware defined networking⌅ Physical� Actual physical underlying infrastructure

Real system Emulated system

underlying

underlying

Physicalinfrastructure

Emulated SDN

Application logic

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 56: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Tackling this problem� �ii� Simulating ��

⌅ The mining process is simulated without wasting CPU

Miner 1 Poisson(λ1)

Miner 2 Poisson(λ2)

Miner 3 Poisson(λ3)

GlobalNetworkMining

Poisson(λ1+λ2+λ3)

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 57: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Tackling this problem� �ii� Simulating ��

⌅ Detailed properties of the system can be computed⌅ Time required for a block to reach a given percentage of the

system⌅ Propagation through the network

10%

50% 95%

100%90%

t1 t2t3

bloquenuevo

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 58: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Results and conclusions ��

10-1 100 101 102 103 104 105 106

Gossip Delay(seconds)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Orp

hane

d Bl

ock

Rate

�k�= 4�k�= 8�k�= 16

⌅ Three regions� Ideal condition� intermediate performance�congested system

⌅ In the congested region� orphaned branches are longer

�system collapse�

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 59: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Results and conclusions ��

10-1 100 101 102 103 104 105 106

Gossip Delay(seconds)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Orp

hane

d Bl

ock

Rate

�k�= 4�k�= 8�k�= 16

⌅ Three regions� Ideal condition� intermediate performance�congested system

⌅ In the congested region� orphaned branches are longer

�system collapse�

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 60: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Results and conclusions ��

10-1 100 101 102 103 104 105 106

Gossip Delay(seconds)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Orp

hane

d Bl

ock

Rate

�k�= 4�k�= 8�k�= 16

⌅ In fully decentralised implementations� there exists a balancebetween competing forces� The smaller the interblock time �orlarger time to propagate blocks�

⌅ The closer the systems get to collapse �rising orphaned blocks�⌅ The network structure compensates for node heterogeneity

⌅ The higher the mining heterogeneity� the less orphaned blocksbut at the cost of a non diverse set of verifiers

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 61: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Results and conclusions ��

10-1 100 101 102 103 104 105 106

Gossip Delay(seconds)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Orp

hane

d Bl

ock

Rate

�k�= 4�k�= 8�k�= 16

⌅ In fully decentralised implementations� there exists a balancebetween competing forces� The smaller the interblock time �orlarger time to propagate blocks�

⌅ The closer the systems get to collapse �rising orphaned blocks�⌅ The network structure compensates for node heterogeneity

⌅ The higher the mining heterogeneity� the less orphaned blocksbut at the cost of a non diverse set of verifiers

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 62: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Results and conclusions ��

10-1 100 101 102 103 104 105 106

Gossip Delay(seconds)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Orp

hane

d Bl

ock

Rate

�k�= 4�k�= 8�k�= 16

⌅ These analyses call for a careful thinking of the mechanismsthat generate the network topology and the miningdistribution

⌅ A scalable� transversal set of tools to prototype

blockchain-based systems in arbitrary conditions

Limits of blockchain and Bitcoin centralisation | �� The limits to blockchain consensus

Page 63: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin centralisation

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 64: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Analysing the circulation in the Bitcoin economy ��

addr_01addr_02addr_03

addr_11addr_12

addr_13addr_14

⌅ Participants of the transactions can be� Miners� End-Users

⌅ Incorrect aggregation avoided

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 65: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin adoption ��

2010 2011 2012 2013 2014 2015 2016Year

1

10

102

103

104

105

106

107

N(t

),N

i(t)

End-usersMinersTotal

⌅ User adoption shows two regimes of adoption� early adopters–miners–� end-users

⌅ Miners constitute a tiny fraction of all users

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 66: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Bitcoin adoption ��

2010 2011 2012 2013 2014 2015 2016Year

1

10

102

103

104

105

106

107

N(t

),N

i(t)

End-usersMinersTotal

2010 2011 2012 2013 2014 2015 2016Year

0.0

0.2

0.4

0.6

0.8

1.0

Use

rsha

re

End-UsersMiners

⌅ User adoption shows two regimes of adoption� early adopters–miners–� end-users

⌅ Miners constitute a tiny fraction of all users

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 67: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The network of transactions ��

2010 2011 2012 2013 2014 2015 2016Year

0.0

0.2

0.4

0.6

0.8

1.0

N(1

)n

/Nn

Bitcoin

⌅ A�er end-users surface in the system� transactions create alargely connected network

⌅ With respect to their properties in the network oftransactions� miners have different properties than end-users

⌅ Miners have many outgoing connections� only end-users

transact among themselves

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 68: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The network of transactions ��

2010 2011 2012 2013 2014 2015 2016Year

0.0

0.2

0.4

0.6

0.8

1.0

N(1

)n

/Nn

Bitcoin

2010 2011 2012 2013 2014 2015 2016Year

0

10

20

30

40

50

�k(o

)M

���k

(o)

U�

⌅ A�er end-users surface in the system� transactions create alargely connected network

⌅ With respect to their properties in the network oftransactions� miners have different properties than end-users

⌅ Miners have many outgoing connections� only end-users

transact among themselves

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 69: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Circulation of bitcoins ��

2010 2011 2012 2013 2014 2015 2016Year

0.0

0.2

0.4

0.6

0.8

1.0

p iR

elat

ive

Wea

lth

i = Useri = Miner

⌅ Miners still hold a sizeable portion of the total amount ofbitcoins in circulation

⌅ Very unequal wealth distribution� Much more than unequalcountries� Gini index = 0.9 ������

⌅ Transition in the transaction behaviour� Nowadays�most

transactions are

⌅ miner ! end-user

⌅ end-user ! end-user

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 70: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Circulation of bitcoins ��

2010 2011 2012 2013 2014 2015 2016Year

0.0

0.2

0.4

0.6

0.8

1.0

p iR

elat

ive

Wea

lth

i = Useri = Miner

10�4 10�3 10�2 10�1 100 101 102 103 104

Bitcoin Balance

10�4

10�3

10�2

10�1

100

CC

DF

Bitc

oin

Bal

ance

UnfilteredMinersPure users

⌅ Miners still hold a sizeable portion of the total amount ofbitcoins in circulation

⌅ Very unequal wealth distribution� Much more than unequalcountries� Gini index = 0.9 ������

⌅ Transition in the transaction behaviour� Nowadays�most

transactions are

⌅ miner ! end-user

⌅ end-user ! end-user

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 71: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Circulation of bitcoins ��

2010 2011 2012 2013 2014 2015 2016Year

0.0

0.2

0.4

0.6

0.8

1.0

p iR

elat

ive

Wea

lth

i = Useri = Miner

10�4 10�3 10�2 10�1 100 101 102 103 104

Bitcoin Balance

10�4

10�3

10�2

10�1

100

CC

DF

Bitc

oin

Bal

ance

UnfilteredMinersPure users

2010 2011 2012 2013 2014 2015 2016Year

0.0

0.2

0.4

0.6

0.8

1.0

1.2

T i!

j/�

j�T i

!j�

Miner to MinerMiner to end-userEnd-user to minerEnd-user to End-user

⌅ Miners still hold a sizeable portion of the total amount ofbitcoins in circulation

⌅ Very unequal wealth distribution� Much more than unequalcountries� Gini index = 0.9 ������

⌅ Transition in the transaction behaviour� Nowadays�most

transactions are

⌅ miner ! end-user

⌅ end-user ! end-user

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 72: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Implications ��

Transactions

Transactions

Transactions

With respect to economic

transactions���

⌅ Three well-defined periods

� System working as designed� Egalitarian transformation� Centralisation of supply �

wealth inequality

Bitcoin has evolved into a statethat works in a stark contrastwith its design principles��� butworks

Because of misplaced incentives

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 73: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Implications ��

Transactions

Transactions

Transactions

With respect to economic

transactions���

⌅ Three well-defined periods� System working as designed� Egalitarian transformation� Centralisation of supply �

wealth inequality

Bitcoin has evolved into a statethat works in a stark contrastwith its design principles��� butworks

Because of misplaced incentives

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 74: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Implications ��

Transactions

Transactions

Transactions

With respect to economic

transactions���

⌅ Three well-defined periods� System working as designed� Egalitarian transformation� Centralisation of supply �

wealth inequality

Bitcoin has evolved into a statethat works in a stark contrastwith its design principles��� butworks

Because of misplaced incentives

Limits of blockchain and Bitcoin centralisation | �� Bitcoin centralisation

Page 75: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Governance

Limits of blockchain and Bitcoin centralisation | �� Governance

Page 76: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The effect of governance ��

2009 2010 2011 2012 2013 2014 2015 2016 2017Year

0

500

1000

1500

2000

2500

3000

Mar

ketP

rice

[USD

]

2011 2012 2013 2014 2015 2016Year

106

107

108

109

1010

Mar

ketC

ap[U

SD]

⌅ The main developers and other stakeholders have their ownincentive to maintain the status quo

⌅ Changes of supply policy would damage tremendously theprice

⌅ But this weakens enormously the system -!-

Limits of blockchain and Bitcoin centralisation | �� Governance

Page 77: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The effect of governance ��

2009 2010 2011 2012 2013 2014 2015 2016 2017Year

0

500

1000

1500

2000

2500

3000

Mar

ketP

rice

[USD

]

2011 2012 2013 2014 2015 2016Year

106

107

108

109

1010

Mar

ketC

ap[U

SD]

⌅ The main developers and other stakeholders have their ownincentive to maintain the status quo

⌅ Changes of supply policy would damage tremendously theprice

⌅ But this weakens enormously the system -!-

Limits of blockchain and Bitcoin centralisation | �� Governance

Page 78: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

The effect of governance ��

2009 2010 2011 2012 2013 2014 2015 2016 2017Year

0

500

1000

1500

2000

2500

3000

Mar

ketP

rice

[USD

]

2011 2012 2013 2014 2015 2016Year

106

107

108

109

1010

Mar

ketC

ap[U

SD]

⌅ The main developers and other stakeholders have their ownincentive to maintain the status quo

⌅ Changes of supply policy would damage tremendously theprice

⌅ But this weakens enormously the system -!-

Limits of blockchain and Bitcoin centralisation | �� Governance

Page 79: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Take-home messages

Limits of blockchain and Bitcoin centralisation | �� Take-home messages

Page 80: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Take-home messages ��

⌅ Blockchain is indeed a technological breakthrough⌅ Incentive placement is indeed crucial⌅ Outcome far different from expected

⌅ This is a complex socio-technical system� Design cannot be

technocratic� but co-evolutionary

Limits of blockchain and Bitcoin centralisation | �� Take-home messages

Page 81: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Take-home messages ��

⌅ Blockchain is indeed a technological breakthrough⌅ Incentive placement is indeed crucial⌅ Outcome far different from expected⌅ This is a complex socio-technical system� Design cannot be

technocratic� but co-evolutionary

Limits of blockchain and Bitcoin centralisation | �� Take-home messages

Page 82: FromthelimitsofBlockchain-based systemstotheEmergent ......BitcoinAdecentralisedapproach In a decentralised payment networkpossible misbehaviour by the users abound ⌅ A user claims

Claudio J� Tessone

URPP Social Networks

B claudio�tessone@uzh�ch

m h�p�//www�socialnetworks�uzh�ch