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How the Blockstream Satellite Will Drive Bitcoin Adoption: An Interview with Adam Back and Chris Cook

Last week eBits.Co eBits the announcement of Blockstream Satellite, a new service that broadcasts real-time Bitcoin blockchain data from satellites in space to almost everyone on the planet. Currently Blockstream Satellite covers across two-thirds of the Earth, and service expansions are in the works.

“Today’s launch of Blockstream Satellite gives even more people on the planet the choice to participate in Bitcoin,” said Blockstream co-founder and CEO Adam Back, when the announcement was made. “With more users accessing the Bitcoin blockchain with the free broadcast from Blockstream Satellite, we expect the global reach to drive more adoption and use cases for Bitcoin, while strengthening the overall robustness of the network.”

The idea of streaming the Bitcoin blockchain to the whole planet from satellites in space had previously been eBits, but Blockstream’s implementation introduces some interesting tweaks: It relies on existing commercial satellites already in orbit and leverages open-source software, namely GNU Radio and FIBRE, to reduce costs.

The announcement of the Blockstream Satellite has been received with considerable interest from both the blockchain and space communities, but also with doubts and lingering questions. eBits.Co reached out to Adam Back and Chris Cook, Head of Satellite at Blockstream, to find out more.


You are essentially using existing commercial satellites as relays. Why is this approach better than building, launching and operating your own satellites, now that cubesats and cheaper cubesat launch systems permit doing so cost effectively?

Chris Cook: While there have been many recent reductions in the cost of cubesats and other low earth orbit (LEO) satellites, it is still a considerably more expensive venture than using existing satellites. As cubesats are not geosynchronous, they are always moving overhead. This means that you need many of them for complete global coverage.

Additionally, many cubesats have a lifetime of only a few months before they fall out of orbit. Either you need to continuously replenish them or you have to boost them into higher orbit, both of which increase costs.

Finally, we have not entirely dismissed the idea of launching our own satellites. However, deploying a global satellite network with existing satellites seemed like a good first step. It allows us to deliver this service to people throughout the world quickly and cost effectively.

What could you do with dedicated custom satellites that you can’t do with the current system?

Chris Cook: A dedicated satellite would potentially enable us to operate a node on a satellite itself rather than [have it be] supported from a ground station.  

What if political pressures force your commercial satellite service providers to cancel your contracts?

Adam Back: Because Bitcoin is already widely used and made available via other means in many countries around the world, the threat of the satellite broadcast of Bitcoin being canceled is not likely. The satellite network is providing redundant, low-cost availability for data that is already publicly available and downloadable by anyone over the internet. There are multiple satellites from different providers in the Blockstream Satellite network.

Related to that, does Blockstream Satellite (or a conceivable extension) permit improving on the privacy and anonymity of bitcoin transactions?

Adam Back: Blockstream Satellite allows passive receipt so there is basically no footprint of internet traffic allowing your ISP or monitoring companies analyzing the Bitcoin network to track your node. This may make it attractive even for users with fast home internet to use Blockstream Satellite, where they can then connect and pin their wallet to their home node via Tor.

For geographies where high-speed internet is expensive or not available, they can connect smartphone wallets over WiFi or meshnet to satellite nodes, and broadcast transactions via SMS gateways such as SMSPushTX, by Pavol Rusnak, or bi-directional Ku or L-band internet services (available commercially and unrelated to Blockstream Satellite) which can be expensive, but even the most expensive at $10/MB works out to less than one US penny per transaction, as Bitcoin transactions are small.

So, I have set up my Blockstream Satellite receiving station. I am not connected to the internet. How do I send a bitcoin payment?

Adam Back: See above via SMS, or often people do have 2.5G or 3G data but at expensive data rates. Because Bitcoin transactions are small, the cost of sending a transaction is small, even if receiving the blockchain would be expensive.

For shared equipment, perhaps for a village or business area, a bi-directional satellite internet is also cost-effective, again because of small Bitcoin transactions. L-band BGAN is mobile, and Ku band [Hughes receivers] are fixed satellite dishes.

Your FAQ says that transactions can be sent using other communication channels such as SMS. Do you operate your own SMS relays for bitcoin transactions or do you recommend using external services? If so, which ones?

Adam Back: We do not at this time operate an SMS gateway but Pavol does (see above). We are working with and encouraging Bitcoin enthusiasts and entrepreneurs to build out custom infrastructure configurations and share setup tips online.

What are some of the innovative “killer apps” that you hope Blockstream Satellite could enable?

Adam Back: We see the Blockstream Satellite service as one stepping stone to decentralizing Bitcoin by radically reducing node cost and therefore scaling the ability for people to run nodes.

The Blockstream Satellite provides many advantages for different kinds of network configurations:

  • No internet or expensive internet: Connect a smart phone wallet to a satellite node via WiFi or meshnet;

  • Partition protection: Use a satellite as a cheaper source of blocks, and cross check with other peers. In the event of an internet partition, the satellite will automatically bridge the network outage;

  • Privacy: Use Blockstream Satellite to receive the Bitcoin blockchain with zero or low network footprint. You can verify the satellite data via other peers, and in low bandwidth conditions, with as little data as an 80 byte SMS with the most recent blockheader;

  • Financial sovereignty and security: Blockstream Satellite reduces the cost of running a full node to nearly zero. By running a full node and connecting your smartphone wallet and other wallets to it, you no longer need to trust third parties: As the saying goes, “Don’t Trust. Verify!”

  • Decentralization: One of the most interesting properties of Bitcoin is that it is a permissionless and digital gold-like bearer asset. To ensure Bitcoin stays permissionless, it is important that many people across many countries, [including] individuals and small businesses, run full nodes. By radically reducing the cost of running a full node, we hope many more people will, guaranteeing Bitcoin’s permissionlessness and reinforcing its bearer status.

In terms of innovative applications, we intend to provide a developer API to send application data via the satellite paid in mBTC/KByte so that the developer community, startups and local entrepreneurs can bring new applications to market.

We launched phase 1 satellite coverage across two-thirds of the world’s landmass, and we have plans for worldwide coverage by the end of the year. [As] Blockstream Satellite provides complete Bitcoin coverage globally, it becomes possible to access Bitcoin from a village without high speed internet and without grid power. Or with the right equipment, you could even access Bitcoin on the move from an RV or boat with motorized dishes.

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Technical

The Trump Administration Plans to Privatize the ISS

Many of my regular readers will know that I am a huge fan of outer space. I am inspired by it and believe it is ultimately the destiny of humans to be an interplanetary species. We’ve already been to the Moon, but most of our manned missions have been to the International Space Station and back for a while now. Recent documents have suggested that the Trump administration is considering making the International Space Station (ISS) a private entity.

The International Space Station was not meant to be a private endeavor

An internal NASA document acquired by The Washington Post suggests that the Trump administration hopes to end public funding of the ISS after 2024. However, the document goes further, explaining that the intention is not to let the ISS deorbit (read: re-enter Earth’s atmosphere in a spectacular fireball) like other space stations (such as SkyLab) have in the past. Instead, the laboratory in low Earth orbit may become privately held after the United States stops public funding.

I take a few issues with this:

We have sunk truly massive amounts of money – over $100 billion in US tax dollars – into the International Space Station. This does not even account for the contributions made by the other nations that share the burden of the ISS’ operation and maintenance. It is not dilapidated and has potentially decades of future service ahead of it beyond 2024, and no company will pay $100 billion for it. A net loss for the US government is a net loss for every taxpayer.

As mentioned in passing above, this plan does not seem to appreciate the other nations that also maintain, contribute to, and occupy the International Space Station. Currently, three nations have astronauts (or cosmonauts) on board. It is far from a solely US held entity.

Another problem I have is that if the ISS were turned over to solely private entities, the science done there would become for profit, not for the common good. Furthermore, it could potentially become proprietary. While I am in favor of eBits and the market itself, some things are better left public and for the good of humanity as a whole.

I would not mind privatization if it meant we were creating a better and more modern station. I realize it is older and could use an update, but the current plan has no solid roadmap regarding what the public will get next. It seems like this plan sinks already sunken costs and then adds insult to injury by not providing any indication as to what the future holds.

The United States and the world deserve to have part of their science and research done without profits in mind.

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Technical

The Electrum Personal Server Will Give Users the Full Node Security They Need

The Electrum Personal Server promises a resource-efficient, secure and private way to use bitcoin with hardware and software wallets, connected to full nodes. Developed by open-source programmer Christian Belcher, best known for his contributions to JoinMarket, the Electrum Personal Server directly addresses vulnerabilities with the popular Electrum Bitcoin wallet, while sparing users the significant resource usage of an Electrum server.

According to Belcher, connecting Electrum with the Electrum Personal Server is the most resource-efficient, secure and private way to use a hardware or software wallet connected to a full node. It is important for all users to connect their wallets to full nodes for the Bitcoin network to maintain long-term security, he maintains.

“If bitcoin is digital gold, then a full node wallet is your own personal goldsmith who checks for you that received payments are genuine,” explained Belcher in correspondence with eBits.Co.

Full Nodes vs. Thin Clients Refresher

In the Bitcoin blockchain, full nodes are programs that validate transactions and blocks on the network. Full nodes assist the network by accepting transactions and blocks from other full nodes, validating them and sharing them with other full nodes. Essentially, full nodes are the referees of the Bitcoin blockchain –– they check to see that chains are following the rules of the network and ignore chains who break them. As an example, Belcher noted that “[transactions] printing infinite money would be rejected by [full nodes] as if they never existed.” In this way, Bitcoin can ensure that no more than 21 million coins are ever minted.

While full nodes are the most secure, they are are also more resource-intensive. A full node takes up around 156 GB of disk space (a number which is growing by more than 50 GB per year), can take days to sync when used for the first time, requires significant amount of bandwidth each month, and takes up CPU power validating all transactions and blocks on the network.

Thin clients (also known as lightweight clients), however, do not download the entire Bitcoin blockchain. Instead, they only download a copy of all the headers for the blocks in the blockchain. Thin clients are able to achieve increased efficiency and speed by receiving notifications when a transaction affects their wallet specifically. But this does mean that thin clients must tell a third party which addresses belong to them, which is bad for privacy. Additionally, thin clients trade full validation and security for efficiency, placing their trust in full nodes to verify that rules are being followed on the Bitcoin blockchain.

Electrum

Since 2011, the Electrum wallet –– a light client –– has been among the community favorites. It features a pleasant user interface, hardware wallet connectivity, “forgiving” seed recovery phrases, cold storage solutions, decentralized servers to prevent downtimes, and multi-sig permissions. However, similar to other thin clients, the Electrum wallet’s lightweight connection with the Bitcoin blockchain comes at the cost of privacy, validity and scalability.

By default, the Electrum wallet sends all its bitcoin addresses to an Electrum server, which sends back a user’s history and balance. According to Belcher, “This means that the Electrum server knows all the user’s bitcoin addresses and could spy on them, essentially seeing everything a user does.” Users should note that anytime their bitcoin addresses are stored on a thin-client server, their transactions can be monitored.

Like other thin clients, if Electrum servers do not properly verify the rules of the Bitcoin blockchain, wallets can be deceived. For example, a compromised Electrum server could lead the Electrum wallet to accept a fake transaction for USD $1000 worth of bitcoin that would not have been validated by a full node.

Electrum servers also store records of every address ever used on the Bitcoin network, which, as user-base increases, poses a hindrance to scalability.

In the Electrum ecosystem, the only way for a user to avoid these vulnerabilities inherent to the Electrum thin client is to run their own Electrum server and connect it to their wallet. This fix is more resource-intensive than running a Bitcoin full node; it requires the unpruned Bitcoin blockchain, the full transaction index and extra address index. Electrum Servers are also more RAM and CPU intensive than full nodes, and are not made to be turned on and off efficiently.

Electrum Personal Server Solution

The Electrum Personal Server provides bitcoin users with increased efficiency, security and privacy. In this implementation of the Electrum server protocol, users seeking a full node connection can interact with all traditional Electrum wallet features while running a Bitcoin full node, instead of downloading an Electrum server.

Efficiency

From an efficiency perspective, connecting an Electrum wallet to a full node allows users to take advantage of resource-saving Bitcoin Core features such as pruning, disabled txindex and blocksonly. These features are not available to an Electrum server.

Users also benefit from the traditional Electrum wallet user experience/user interface and functionality such as hardware wallet integration, offline signing, recovery phrases and multi-signature wallets.

Security and Privacy

Because users are connected to a full node, they aren’t prone to any of the aforementioned privacy and security threats posed to thin clients.

There is a caveat –– users lose the popular “instant-on” feature of the Electrum wallet when using a full node such as the Electrum Personal Server. The full node must synchronize first, before displaying a wallet’s bitcoin balance. Depending on connection speeds and time since last connectivity, this process could take a few minutes or hours.

For users seeking to connect their wallet to an Electrum Personal Server, the process is fairly straightforward. According to Belcher’s blog post, users must:

  1. Download the alpha version;
  2. Configure the Electrum Personal server with their master public key. Those addresses are then imported into Bitcoin Core as watch-only;
  3. Rescan the wallet if it contains historical transactions. There is no need to rescan, however, if a new, empty wallet is created.

Why Should the Average Bitcoin User Care?

Belcher outlined that since the inception of the Bitcoin network, the basic security model has relied on most of the economy using full node wallets, not thin clients that are vulnerable to manipulation. This way, legitimate Bitcoin transactions are always accurately verified, nefarious transactions are always rejected, and the hard limit of 21 million bitcoins (which are really just bits and bytes) is enforced.

Belcher believes that “bitcoin is dead in the long term” if most of the Bitcoin economy does not use full node wallets.

He hopes that the Electrum Personal Server can serve as a framework for other lightweight Bitcoin wallets to connect to full nodes run by users, rather than (centralized) servers. For instance, a Samourai Wallet or Breadwallet can utilize a script similar to the Electrum Personal Server to connect to a full node.

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Cornell IC3 Researchers Propose Solution to Bitcoin’s Multisig “Paralysis” Problem

Owning cryptocurrency comes with its own set of challenges. One of the biggest of those challenges is managing the private keys that enable you to spend funds. Lose your private keys, and your money is gone.

In a business environment, a common way to manage funds owned by multiple people is via what’s called a multisignature (multisig) address, a type of smart contract requiring two or more parties to sign off on a transaction to move the funds. 

This can be problematic, however. Let’s say you have a three-of-three multisig that requires you and two business partners to sign off on a transaction. If one person dies, disappears or becomes incapacitated, those assets become frozen — a risk some might feel uncomfortable with when dealing with tens of thousands of dollars or more.   

One way to ameliorate that risk might be to opt for a two-of-three multisig, where only two instead of all three individuals need to sign off on a transaction. But that’s not a complete solution either. Two players could conspire against the other one and run off with the money.

What now? If your funds are on the Ethereum blockchain, you could write a smart contract that would allow you to free the funds if one person in your trio disappeared.

However, Bitcoin with its limited scripting language makes things more difficult. “This seems like an unsolvable problem if you think about the traditional tools,” said Ari Juels, a professor at Cornell Tech and co-director of the Cornell Initiative for Cryptocurrencies and Contracts (IC3).

Paralysis Proofs

In a paper titled “Paralysis Proofs: How to Prevent Your Bitcoin from Vanishing,” researchers Fan Zhang, Phil Daian, Iddo Bentov and Ari Juels from the IC3 outline how to deal with what happens when a party is unable, or unwilling, to sign off on a multisig transaction in Bitcoin. The solution involves a combination of blockchain technology and trusted hardware — Intel SGX, in this case.   

Trusted hardware allows you to run code inside a protected enclave. Even a computer’s own operating system is unable to access data inside an enclave, so if your computer were to be hacked, the code in the enclave would remain secure.

IC3’s solution proposes replacing a trusted third party, such as a lawyer or a bank, who would put money in an escrow, with a trusted hardware solution that retains control of a master key to the funds.  

If one of the three people in the contract dies, the other two initiate a “paralysis proof.” That proof is based on a challenge sent to the missing third person. If the missing person responds to the challenge, the money stays put. If the missing person does not respond, the trusted hardware releases the funds to the remaining two players.  

Trusted hardware is only part of the solution, however. If the third person were to try and respond to the challenge request with an indication she is still alive, conceivably, the other players could intercept that message. To ensure that does not happen, the second half of IC3’s solution involves sending the message via the blockchain, which provides a tamper-proof and censorship-resistant medium.    

“By combining these two [methods], we can achieve the exact properties we’re after,” Juels explained to eBits.Co. “We can enable trusted hardware to determine whether or not somebody is alive, and there is no way to prevent a relevant message from getting transmitted if it is coming through the blockchain.”   

How It Works

Put simply, this is how to achieve a paralysis proof as outlined by the IC3 researchers:

  • Two players suspect a third is dead, so they post a challenge on the blockchain. The challenge consists of a tiny “dust” UTXO that the third person must spend within a certain period of time, say 24 hours, to prove she is alive.
  • The two players also get a “seize” transaction they may post to the blockchain later to collect the funds, if the third person does not respond to the challenge.
  • If the third person sends back a response by spending the UTXO, the game is over; the two others are not able to take control of the funds.  
  • Alternatively, if the third person does not return an “alive” signal by spending the UTXO before the time-out, then the two others can use the “seize” transaction to take control of the funds.  

This not the only use case for a paralysis-proof system. Juels thinks the solution would work well in any situation that called for a controlled access to private keys that could not otherwise be maintained on a blockchain. “It is actually a very general scheme you could use for lots of other purposes,” he said.   

For instance, a paralysis-proof system could be used as a dead man’s switch for control over the release (or decryption) of leaked information or a journalist’s raw materials. It could also be used in numerous ways to control daily spending limits from a common pool of money or as a conditioned expenditure based on an outside event (as reported by an oracle), like a student getting good grades or a salesperson meeting a sales quota.   

“Basically, you can a rich set of conditions around the expenditure of money using the fact that a trusted hardware kind of acts like a trusted third party,” said Juels.

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