E-Money vs Cryptocurrency. Dimaz Ankaa Wijaya

Transcription

1 E-Money vs Cryptocurrency Dimaz Ankaa Wijaya

2 2 Education UGM B. Computer Science (2007) MONASH Uni. M. Networks & Security (2016) MONASH Uni. Ph.D Student (2017-current) Dimaz Ankaa Wijaya Field of Expertise Dig. forensic, cybersecurity Cryptocurrency, Blockchain Work Experience Indonesian Government official ( )

3 3 Today s Menu Money E-Money Cryptocurrency E-Money vs Cryptocurrency Cryptocurrency in Depth

4 4 MONEY

5 5 Functions of Money (Mankiw, 2014) Medium of exchange (to buy stuff) Unit of account (to measure prices and values) Store of value (to transfer purchasing power to the future)

6 6 Evolution of Money Simple form (salt, shells, etc) Precious metals (gold, silver) Paper money and coins (fiat money) Digital currency Electronic money (electronic fiat money) Cryptocurrency?

7 7 Challenges With Physical Money International Trade Internet E-Commerce Smartphone Apps

8 8 E-Money

9 9 Electronic Money / e-money Fiat money in digital form Issued by bank/financial institution Hardware-based: credit card Software-based: e-cash, Go-Pay

10 10 Why e-money Has Value E-Money reflects your fiat currency Convenience: no physical money needed Highly regulated Financial technology Fits the function of money

11 11 International Trade System: e-money Needed

12 12 Attacks on e-money

13 13 Cryptocurrency

14 14 Various Types of Cryptocurrency Source: bitslog

15 15 Overview of Bitcoin Created by Satoshi Nakamoto A Peer-to-Peer Electronic Cash System (Nakamoto, 2008) Limited supply Low transaction fee ID theft protection Fast settlement

16 16 What s Special About Bitcoin Blockchain (public ledger) No central authority Double spending Peer-to-Peer network No middleman Customized transaction

17 17 Blockchain: Identical Ledgers Across Nodes

18 18 How Blockchain Works

19 19 Double Spending Problem

20 20 Peer-to-Peer Network Identical information in each server/node.

21 21 No Central Authority: Byzantine Generals Problem/BGP

22 22 Proof of Work / PoW Solving BGP Required to construct a new block Find a hash value based on a criteria Mining

23 23 Remove The Middleman

24 24 Customized Transaction Escrow transaction Hash-locked transaction Time-locked transaction

25 25 Comparisons E-money vs Cryptocurrency

26 26 E-Money vs Cryptocurrency No Characteristics E-Money Cryptocurrency 1 Medium Digital Digital 2 Transaction network Banks or Financial Institution Peer-to-peer 3 New money creation Government Miners 4 Validator Banks or Financial Institution Node and Miners 5 Authentication Method ID card, password, PIN Digital signature

27 27 E-Money vs Cryptocurrency (2) No Characteristics E-Money Cryptocurrency 6 Money Supply Government Consensus 7 Backer Government N/A 8 Exchange rate Currency market & Government Currency market 9 Collateral asset Fiat money N/A

28 28 Summary: Centralized vs Decentralized

29 29 Cryptocurrency Security Issues Attacks and Mitigation Strategies

30 30 Cryptocurrency Exchange Hacks

31 31 Private Keys Theft/Lost

32 32 51% Attack Controlling the majority of the consensus. Mitigation: Discourage such event Evaluate consensus method

33 33 Denial of Service Flooding nodes with invalid requests. Flooding network with dust transactions. Mitigation: Drop requests, filtering Prioritize transactions.

34 34 Sybil Attack Several malicious nodes providing wrong information. Mitigation: Whitelist of trusted nodes.

35 35 Selfish Mining Not broadcasting a new block. Keep mining based on the block. After a certain length, the blocks are published. Double spending potential. Mitigation?

36 36 Private Key Theft Stealing private keys. Mitigation: Shamir secret sharing Multisignature Security hardening

37 37 Conclusion

38 38 Comparing Benefits: E-Money vs Cryptocurrency No Criteria E-Money Cryptocurrency 1 Consumer Protection V X 2 Well Regulated V X 3 Stable Value V X 4 Fast Settlement X V 5 Infeasible to tamper the data X V 6 Transaction Fee X V

39 39 Comparing Problems: E-Money vs Cryptocurrency No Criteria E-Money Cryptocurrency 1 Single Point of Failure V X 2 Consensus Problems X V 3 Privacy and Anonymity V V

40 40 Attack Vectors: E-Money vs Cryptocurrency No Criteria E-Money Cryptocurrency 1 Software Security V V 2 Network Security V V 3 Dishonest Authority V X 4 ID Theft, Secret Key Theft V V

41 41 NEXT: Government-issued Cryptocurrency?

42 42 Blockchain on Other Areas?

43 43

44 44 THANKS! Any questions? You can find me &