Network security (SKR4200)

Group members:
Nazim Bin Zulkifle 183091
Muhammad Azrul Bin Marzuki 182526
Badrunsyahmin Bin Othman` 182731
Omar Ali Muhammad Abdullah 181240
Abdirahman Mohamed Aboubaker 181204
Bitcoin Script

Buit for bitcoin

Simple and compact
Support for cryptography
Stack Based
Limit on time/memory
No Looping
Bitcoin Block
Transactions being bundle
together
Single unit of work for
miners
Hash-chain of block
shorter one block for
large number of
transaction

Efficient and secure verification of contents

SHA-2 used for hashing
Intergrity od branch can be checked immediately
 The Bitcoin Network

Peer to peer payment network

Transaction is recorded and
replicated as blockchain
Proof of work system
called mining

Limitation
Longer transaction time
Higher transaction cost

Improvement
Offering transaction fees
Reformed to allow for growing bid
Applications of Bitcoin Script

Escrow transactions
Involving third-person involved if theres some disputed.
Green addresses
Involving bank real world guarantee
Coin-swapping
Required no personal data to use
User choose when and where to trade
How to store and use Bitcoin
Simple local storage:
In practice, when we say we want to store bitcoin , we will talk about how to how store
and manage the keys .the approach of simple local storage of bitcoin is something like
that. The bitcoin is stored on some local device. That local device can either be your
home computer, phone, or a USB stick with some wallet software to help you manage
that data.
How to store and use Bitcoin

When we have to figure out how to store and use Bitcoin there are three
coals to consider which are;
Availability: How quickly can you spend your coins?
Security: How safe are my coins to ensure no one else spends my coins?
Convenience: How easy is it to manage the coins?
How to store and use Bitcoin(Cont.)

The simplest approach is to store key in a file on a computer or phone

It is very convenient and accessible all the time
But if the device is lost /wiped Key lost as well as the coins.
Moreover, device compromised the key could leaked which cost coins stolen.
Hot storage and Cold storage
Hot storage and Cold storage (conts.)

The concept of Hot storage and cold storage is that hot storage is a bitcoin
address users can spend money form at any given time. This storage is
virtually connected to the internet.
Cold storage does exact opposite it ins not intended to be used for regular
expenses, yet can still receive money at any given time. Cold storage is
Offline it is locked away somewhere and its not connected to the internet.
Splitting and sharing keys

We always put a key in a certain places whether that locked in save or

software or paper its always in one place. So storing all key in one place is
kind of failure. So if something gone wrong with that key we will be in
trouble. Therefore, the solution is to split the key to pieces around so we can
minimize the failure problems .
Splitting and sharing keys(Conts.)
Splitting and sharing keys(Conts.)
Advantage and disadvantage of Secret
sharing
Advantage: Store shares separately
Adversary must compromise several shares to get the key.
Disadvantage: To sign, need to bring shares together
Online Wallets and Exchanges

Online wallets is like local wallet that we can manage by ourselves. Except
that its in the cloud. It runs in our browsers. The site will store the keys.
the site, will encrypt the keys to a password only the user knows. Example of
the
Online wallet tradeoffs

Online wallet have some tradeoffs comparing doing the things yourself one
advantage is that its convenient we do not have to install it,
Works on multiple devices
However, there are some security issues. Ex: if the site our or the people who
operate the site turn out to be malicious or compromised then the
information that the user store might be in danger.
Bitcoin Exchange

It works like bank deposit.

Can accept deposits of Bitcoins and we can transfer bitcoins to exchange
Can transfer fiat currency like ($,euro.) into an exchange by doing transfer
from bank account.
Pros and Cons of Exchanges

Connects BTC economy to fait currency economy

Easy to transfer value back and forth.
But, its risky just like banks
Payment services

HTML
Payment
button
Payment process
 End Result
Customer: pays Bitcoins
Merchant: gets dollars, minus a small percentage

Payment service:
gets Bitcoins
pays dollars (keeps small percentage)
absorbs risk: security, exchange rate
needs to exchange Bitcoins for dollars, in volume
Transaction fees
Transaction fees are included with your bitcoin transaction in order to have
your transaction processed by a miner and confirmed by the Bitcoin network.
The space available for transactions in a block is currently artificially limited
to 1 MB. This means that to get your transaction processed quickly you will
have to outbid other users.

Transaction fee =value of inputs value of outputs

Fee goes to miner who records the transaction.
Consensus Fees

Current Consensus Fee

No fee if
1. tx less than 1000 Bytes in size
2. all outputs are 0.01 BTC or larger, and priority is large enough
Otherwise fee is 0.0001 BTC per 1000B

Priority = (sum of inputAge * inputValue) / (tx size)

Approx transaction size : 148 Ninputs + 34 Noutputs + 10
Currency exchange markets
Cont