The Bitcoin Masterclass (Slovenia) Day 1: Bitcoin and IPv6 use cases

In the second session, Dr Wright discussed the various use cases for IPv6 and Bitcoin and how the two technologies can work together to create a new Internet

Written by

Ryan Brothwell

Published On

09 Jun 2023

Dr Craig S. Wright, Chief Scientist at nChain, held the second edition of his Bitcoin Masterclass series at an exclusive venue in Slovenia in March. The Masterclass course forms part of a monthly series aimed at helping attendees understand the fundamentals of Bitcoin and the technology behind it.

The Bitcoin Masterclass series will give you a comprehensive overview of Bitcoin’s history, theory and design. Wright discussed the future of Bitcoin and the unbounded scalability of nChain’s blockchain solutions with potential use cases across several industries.

In the second session, Dr Wright discussed Multicast and IPsec and how these two concepts apply to Bitcoin and create a truly distributed, permissionless peer-to-peer network with no scaling limit.

Wright began the session by splitting the audience into six different groups and getting them to discuss different topics surrounding Bitcoin, IPSec, IPv6 and how these technologies interact with one another and the different use cases which can be developed.

IPv6 and Bitcoin use cases

Group 1 – P2P messaging

The first group discussed the idea of developing a peer-to-peer messaging service to enhance privacy in communication by eliminating third-party involvement. This is significantly safer than current communication apps and would prevent data collection and bad actors from listening in.

Dr Wright largely agreed with this idea but noted that Bitcoin is designed to be open and transparent and that it has an evidence trail by design. He added that any system which has billions of transactions is inherently private because it is almost impossible to track every transaction all at once.

However, he noted that it is feasible for law enforcement to track transactions which appear fraudulent or suspicious – noting that this is the difference between privacy and secrecy.

Group 2 – Trusted communications

Group two focused on using IPv6 to establish trust between devices. To illustrate this point, Dr Wright gave the example of a person who can issue keys to protect access to their devices, such as controlling their car using a smartphone.

These keys can also be given to people with deliberate limitations – such as lending a car to a friend or when taking it to a mechanic.

Group 3 – Identification and verification

Group three discussed using blockchain for mobile IP registration to record IP addresses as mobile devices switch between networks. This registration can aid in user verification and identification.

Dr Wright noted that mobile IPs can be linked to keys without necessarily relying on government-issued key IDs. Hierarchies can be established to allow individuals to prove their device’s location and access such information selectively. He added that there are other use cases for this, such as showing that a person is not present in a place without revealing their actual whereabouts.

Group 4 – Authentication Headers and Encapsulating Security Payload

The fourth group discussed the concept of Authentication Headers and Encapsulating Security Payload. The Authentication Header (AH) protocol provides data origin authentication, data integrity, and replay protection. However, AH does not provide data confidentiality, which means that all of your data is sent in the clear.

Encapsulating Security Payload (ESP) is a member of the Internet Protocol Security (IPsec) set of protocols that encrypt and authenticate the packets of data between computers using a Virtual Private Network (VPN). The focus and layer on which ESP operates make it possible for VPNs to function securely.

Dr Wright noted that Authentication Headers serve as a built-in field in every IPv6 packet, providing authentication by verifying the source device. He discussed using these features to prevent malicious actors from transmitting false data. He added that encryption can be employed, and alert keys can authenticate network attack information. These measures need not be overly complex, contrary to popular belief.

Group 5 – Network nodes and efficiency

The fifth group looked at network nodes and network efficiency, and the discussion focused on the number of nodes in an IPv6 multicast group and the geographical placement and organisation of nodes.

Group 6 – Neighbor Discovery Protocol and IP Security

The final group discussed NDP (Neighbor Discovery Protocol) and IPsec (IP security). The Neighbour Discovery Protocol is used alongside IPv6 and its main function is the resolution of IPv6 addresses into valid MAC addresses, the respective devices’ underlying hardware address.


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