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Breaking Bitcoin

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BLOCKCHAINLAB SRL

on 9 September 2017

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Transcript of Breaking Bitcoin

September 9th 2017


Knowledge
Resources
Resources
Knowledge
Giacomo Zucco
@giacomozucco
Thanks!
QUESTIONS?
Paris
giacomo@bhb.network
SECURITY CHALLENGES
USABILITY VS SECURITY


COUNTERPARTY VS MARKET RISK


WHO IS THE EXPERT? CIRCULAR

Incumbents
Experts
SECURITY IMPLICATIONS
HAPPENING NOW!
SUBLIMINAL MESSAGE:
NO
2X
A SIMPLE MODEL
ADVANCED MODELS
Type 1: Direct Bitcoin Users
Un-seizable Store of Value
Payments for Black and Gray markets
Payments for Global Borderless markets
Payments for Innovative Permissionless markets
Secure interoperable e-commerce
they need:
this drives:
Demand for btc up
Scarce supply
this causes:
Btc price up (or just uncorrelated)
Type 2: Bitcoin Investors
they need:
They need:
Safe storage of private keys
Peer reviewed Open Source software
Some understanding of the tech
Good privacy tools and practices
...really?
They need:
Their usual, good, old, boring
... trusted third party
Bitcoin Startups
Traditional Banks
+: tech knowledge
+: market knowledge
+: risk loving
- : small numbers
- : lack of trust and marketing
- : domain naivety
- : regulatory risk
- : lack of tools
+: domain knowledge
+: regulatory compliance
+: abundance of tools
+: big numbers
+: trust and marketing
- : market ignorance
- : tech ignorance
- : risk adversion
4 banks in Lugano
2 banks in Geneva
2 banks in Zurich
1 bank in Norway
1 bank in Italy
some banks in Australia
Exchange-based model

Vault-based model

Provider-based model

Knowledge-based model

Market risk:
volatility (LR/SR)
splits
attacks on fungibility
Counterparty risk:
hacks
accidental losses
insider jobs
Exotic Financial Derivatives
Physical Precious Metal
Bitcoin
2 TYPES OF USERS
2 KINDS OF PROVIDERS
"TYPE 2" USERS
A manual procedure
Bitcoin Core nodes
7 consumer-grade hardware wallets
(3 different producers)
1 "eternal backup"
Multisig scheme
([5 of 7] OR [CLTV 1 yr])
Manual accounting
Enterprise-grade ad hoc software
Enterprise-grade secure hardware
Complex security rules
Integration with legacy systems
Semi-custodian scenarios
Traditional Banks
as Bitcoin Custodians:
Security Challenges and Implications

credits: cryptograffiti.com
Blockchain-based tools for traditional assets:





Traditional tools for blockchain-based assets:
Full transcript