Ferdinando Ametrano

Bitcoin and Blockchain Technology, Fall 2019

Department of Statistics and Quantitative Methods, University of Milano-Bicocca

Course page: https://elearning.unimib.it/course/view.php?id=25308

Please subscribe the course mailing list sending an e-mail to bbt2019-bicocca+subscribe@https://dgi.io; you are also invited to join the 201910-bicocca channel in the Slack BBT workspace.

Learning objectives

The course is an introduction to bitcoin and the associated blockchain technology.

Starting from a computationally focused approach to elliptic curves over finite fields and presenting the discrete logarithm problem as the cornerstone of public-key cryptography, bitcoin is introduced as ingenious breakthrough innovation.

Its game theory, computer science (distributed systems, distributed consensus), and monetary theory elements are examined in the attempt to properly convey the interdisciplinarity of the topic and appreciate its relevance.

Technical and programming elements about digital signatures, blockchain, Merkle tree, addresses, transactions, and timestamping are also provided to assess features and limits of the Bitcoin protocol.

Prerequisites

There are no strict prerequisites, even if a computer science mindset and some familiarity with algebra and finance might help to appreciate the course. While a rigorous formal approach is almost impossible in a course touching on so many and so different knowledge areas, intellectual curiosity is stimulated about the interplay between maths, cryptography, economic incentives, technology, monetary theory, and politics.

Contents

• Hash functions, hash pointers, blockchain, Merkle tree
• Modular arithmetic and algebra of sets
• Elliptic curves over real numbers and a finite field 𝐹
• Asymmetric cryptography on elliptic curves
• Elliptic curve digital signature algorithm
• Elliptic curve Schnorr signature algorithm: Mu(lti)Sig(nature), threshold signature, batch verification
• Diffie-Hellman
• Pedersen commitment
• Confidential transactions
• Design of a simplified digital currency
• Distributed consensus
• Mining
• P2P network
• Protocol governance
• Addresses and WIFs
• Hierarchical deterministic wallets: BIP32, BIP43, BIP44
• Mnemonic phrase: BIP39 and Electrum
• TxIns, TxOs, UTxO, nLockTime
• Bitcoin script language
• Transactions
• Blocks
• Wallets and Bitcoin Core
• Testnet, regtest, and wallet workshop
• Money and innovation: monetary and token engineering
• Hayek money and dual asset ledger money
• Blockchain beyond bitcoin
• Finance and blockchain
• Timestamping, notarization, and anchoring
• Smart contracts
• Distributed ledger technology

Teaching method

• Slide based lessons with associated bibliography
• Python 3 programming assignments and technology assignments
• Workshop labs on Bitcoin Core, Electrum, and OpenTimestamps

Teaching language

Italian or English, the latter if foreign students are present.

Schedule

Workshops are with Paolo Mazzocchi, assistant lecturer.

1. Wednesday 2019-10-09 16:30-18:30 edificio U6 aula 33
   Bitcoin as Digital Gold (part 1)
   slides
2. Wednesday 2019-10-16 16:30-18:30 edificio U6 aula 33
   Bitcoin as Digital Gold (part 2)
   slides
3. Wednesday 2019-10-23 16:30-18:30 edificio U6 aula 33
   Blockchain, Mining, and Distributed Consensus (part 1)
   slides
4. Wednesday 2019-10-30 16:30-18:30 edificio U6 aula 33
   Blockchain, Mining, and Distributed Consensus (part 2)
   slides
5. Wednesday 2019-11-06 16:30-18:30 edificio U6 aula 33
   Elliptic Curve Digital Signature Algorithm (part 1)
   slides
6. Wednesday 2019-11-13 16:30-18:30 edificio U6 aula 33
   Elliptic Curve Digital Signature Algorithm (part 2)
   slides
7. Wednesday 2019-11-27 16:30-18:30 edificio U6 aula 33
   Wallets: Key Encodings and Deterministic Key Sequences
   slides
8. Wednesday 2019-12-04 16:30-18:30 edificio U6 aula 33
   Wallets: Key Encodings and Deterministic Key Sequences (Part 2)
   slides
9. Wednesday 2019-12-11 16:30-18:30 edificio U6 aula 33
   Transactions and Blocks
   slides
10. Wednesday 2019-12-18 16:30-18:30 edificio U6 aula 33
    Beyond Bitcoin: Between Hype and Reality
    slides
11. Friday 2020-12-20 12:30-14:30 edificio U6 aula 22
    Wednesday 2020-01-15 16:30-18:30 edificio U6 aula 33
    The Cryptocurrency Frontier in Monetary Engineering
    slides, text

In the last lesson anonymous course evaluation forms will be collected

Python library

btclib.org

Python scripts, Excel spreadsheets, and regtest lab material

https://github.com/dginst/bbt

Introductory reading

• Ferdinando Ametrano,
  “Bitcoin: oro digitale per nuovi standard monetari” (2018),
  https://drive.google.com/file/d/1-1k3wlL6ElZzJMjSakTjTNetJI5ws6wL

Technology references

• Satoshi Nakamoto,
  “Bitcoin: A Peer-to-Peer Electronic Cash System” (2008),
  https://bitcoin.org/bitcoin.pdf
• Andreas M. Antonopoulos,
  “Mastering Bitcoin: Programming the Open Blockchain” (2nd edition, 2017),
  Oreilly & Associates Inc, 978-1491954386,
  https://github.com/bitcoinbook/bitcoinbook
• Jimmy Song,
  “Programming Bitcoin: Learn How to Program Bitcoin from Scratch” (2019)
  Oreilly & Associates Inc, 978-1492031499,
  https://github.com/jimmysong/programmingbitcoin
• A. Narayanan, et al.,
  “Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction” (2016),
  Princeton University Press, 978-0691171692,
  https://www.coursera.org/learn/cryptocurrency, https://bitcoinbook.cs.princeton.edu, https://bitcoinbook.cs.princeton.edu, https://www.lopp.net/pdf/princeton_bitcoin_book.pdf
• Pedro Franco,
  “Understanding Bitcoin: Cryptography, Engineering and Economics” (2014),
  Wiley, 978-1119019169
• Ferdinando Ametrano,
  “Bitcoin, Blockchain, and Distributed Ledgers: Between Hype and Reality” (2017),
  https://ssrn.com/abstract=2832249
• Roger Wattenhofer,
  “Blockchain Science: Distributed Ledger Technology” (3rd edition, 2019),
  Independently published, 978-1793471734

Cryptography references

• Christof Paar, Jan Pelzl,
  “Understanding Cryptography”,
  Springer, 978-3642041006
  https://wiki.crypto.rub.de/Buch/en/slides.php, https://youtube.com/channel/UC1usFRN4LCMcfIV7UjHNuQg/videos
• Dan Boneh, “A Graduate Course in Applied Cryptography”,
  Stanford University
  https://www.coursera.org/learn/crypto, https://toc.cryptobook.us/
• Lawrence C. Washington,
  “Elliptic Curves Number Theory And Cryptography” (2008),
  Chapman and Hall, 978-1420071467
• Standards for Efficient Cryptography Group
  SEC 1: Elliptic Curve Cryptography, March 2009. Version 2.0.
  https://www.secg.org/sec1-v2.pdf
• Standards for Efficient Cryptography Group
  SEC 2: Recommended Elliptic Curve Domain Parameters, March 2009. Version 2.0.
  https://www.secg.org/sec2-v2.pdf
• Guidelines for Efficient Cryptography
  GEC 2: Test Vectors for SEC 1, September 1999. Version 0.3.
  http://read.pudn.com/downloads168/doc/772358/TestVectorsforSEC%201-gec2.pdf

Monetary theory references

• Friedrich A. Hayek,
  “Denationalisation of Money: The Argument Refined”,
  https://mises.org/library/denationalisation-money-argument-refined
• Saifedean Ammous,
  “The Bitcoin Standard: The Decentralized Alternative to Central Banking” (2018),
  Wiley, 978-1119473862
• Ferdinando Ametrano,
  “Hayek Money: The Cryptocurrency Price Stability Solution” (2014),
  https://ssrn.com/abstract=2425270
• Robert Sams,
  “A Note on Cryptocurrency Stabilisation: Seigniorage Shares” (2015),
  https://github.com/rmsams/stablecoins/blob/master/paper.pdf