Cryptocurrency

ECE398SC Spring 2018
Smart Contract Security

Lecture 1: Welcome & Intro to Cryptocurrencies
Prof. Andrew Miller (ECE)
Goals of this course:
- Hands on experience in cryptocurrency, blockchains, cryptography
- Develop the skill of learning and applying a new programming

language, and especially smart contract programming
- Early exposure to concepts and techniques in computer security

Why computer security?
- Everything we already depend on is terrifyingly broken
Increasing harm of data breaches, advanced persistent attackers
Systems traditionally built with security as an afterthought
- The security mindset: You need to be able to think like an attacker
To analyze the security of a system
To build more secure systems
“How can I make this system break? What’s the worst I can do to it?”
Data Breaches
http://www.informationisbeautiful.net/visualizations/worlds-biggest-data-breaches-hacks/
Information sharing poses a dilemma...
We want:
Digitization, automation of business processes
More information sharing between businesses
We also want:
Confidentiality & security against hacks/breaches
The Times 03/Jan/2009 Chancellor on
brink of second bailout for banks.
Virtual currencies are implemented
on top of a shared database
Alice: $10
$20 -10
Bob: $30
$20 +10
Give $10 Bob, you’ve

to Bob received $10
Alice Bob
Desired security properties:

- Consistency
- Availability
- Application-defined access controls (for writes/updates)
- Privacy
~10,000 reachable nodes http://bitnodes.earn.com/
https://etherscan.io/
Bitcoin has a
$160 Billion market cap
Source: coinmarketcap 11
Cryptocurrency mining (we’ll talk about it later)
~$1M per day of newly minted bitcoins awarded to miners

Why study blockchains and computer security?
Optimistic: a chance to build security into new platforms from the start
Realistic: Security hazards in blockchains are so blatant and visible on the

surface, they make for good learning examples!
Cryptocurrencies are open systems, exciting platforms for experimenting
Cryptocurrencies encourage DIY security, “be your own bank”

Bitcoin Paper Wallet
Private Key
Public Key
Public key / private key in bitcoin
- If someone has your public key (i.e. “address”, they can

send you money.
- If you lose your private key (i.e., “wallet”), you can’t

spend your money.
- If a thief gets your private key, they can steal your

money.
Private Key
Public Key
Alice and Bob are only identified
by public keys
Transfer 10 Bitcoins from me to Bob.
1BTC
Bitcoin Network 3BTC
1BTC
Alice
5BTC
Signed with Alice’s private key
(Public Key Digital Signature)

Bitcoin is the first and largest of hundreds of cryptocurrencies
https://coinmarketcap.com
Cryptocurrency exchange markets
Beware the middleman: Empirical analysis of Bitcoin-exchange risk

Tyler Moore and Nicolas Christin, Financial Crypto 2013
There’s a Bitcoin ATM in Champaign!
https://imgur.com/a/DRhWL
ATMs
More generally: “programmable money”
Digital currency is just one application on top of
a blockchain
Decentralized Consensus
Money “Blockchain”
Users
Account Balances
Alice: ฿10
Bob: ฿15
Carol: ฿120
27
Smart Contracts: user-defined programs running on
top of a blockchain
Decentralized Consensus
Money “Blockchain”
Users
Contracts
Storage
Code
Data
28
Smart Contract Example (very high level)
If GOOG rises to $1,000 by
30 June 2015, assign 10
shares from Alice to Bob and
pay Alice $10,000
Other examples abound:

Auctions, elections, lotteries, escrow, ...
https://www.sec.gov/ICO
Please be #craeful!!!
Only interaction with

testnet is required
Source: Business insider

Ethereum’s timeline has been pocked by failures
caused by buggy and insecure smart contracts
Homework: Choose your starting character
get testnet Ether from the faucet
Send some tETH (any amount) to me:

0x1B326Ad348e19ecFd1406C43D3bF7a95547AC55c
Introduce yourself on Piazza and post your address

A blockchain is a Distributed Trusted Computer
Ordinary databases:
- distributed within one company
- distributed for performance
and availability
Blockchain databases:
- distributed across multiple
entities
- distributed for privacy and
security against attacks
Permissioned Blockchains Public Blockchains
Open for participation by

AKA “Consortium blockchain” anyone
Nodes are run by well-known,
mostly trusted entities
More Resources
https://www.coursera.org/course/bitcointech
http://soc1024.ece.illinois.edu/teaching/ece598am/fall2016/

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ECE398SC Spring 2018

Smart Contract Security

- Develop the skill of learning and applying a new programming

- Early exposure to concepts and techniques in computer security

Increasing harm of data breaches, advanced persistent attackers

Systems traditionally built with security as an afterthought

- The security mindset: You need to be able to think like an attacker

To analyze the security of a system

To build more secure systems

Give $10 Bob, you’ve

Desired security properties:

~$1M per day of newly minted bitcoins awarded to miners

Realistic: Security hazards in blockchains are so blatant and visible on the

Cryptocurrencies are open systems, exciting platforms for experimenting

Cryptocurrencies encourage DIY security, “be your own bank”

- If someone has your public key (i.e. “address”, they can

- If you lose your private key (i.e., “wallet”), you can’t

- If a thief gets your private key, they can steal your

Transfer 10 Bitcoins from me to Bob.

Bitcoin Network 3BTC

(Public Key Digital Signature)

Beware the middleman: Empirical analysis of Bitcoin-exchange risk

Other examples abound:

Only interaction with

Source: Business insider

get testnet Ether from the faucet

Send some tETH (any amount) to me:

Introduce yourself on Piazza and post your address

Open for participation by

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