The emergence of a cryptocurrency in the digital domain went unnoticed for years until the general press started to cover Bitcoin's more than tenfold raise in price in the space of a few months in 2017. Earlier on, technical and legal discussion revolved around one of its fundamental building blocks, but Bitcoin is more than the blockchain or an investment object. It is a revolutionary open source artefact that is bound to change the way we consider currency, as well as a proof-of-concept for how parts of international trade could disfranchise banks and other institutions as payment service providers.
Since its creation in 2009, the electronic currency Bitcoin has generated volumes of online debate in the business press. While there have been plenty of economic arguments situating it as a financial bubble about to collapse including from Nobel Prize winning economists, its price value has proven to be more durable than many have predicted. To explain this durability, Karpikâs conception of market singularities is used to understand the Bitcoin phenomenon by outlining the beliefs that maintain Bitcoinâs status as a volatile financial asset. Market singularities are markets for particular kinds of goods and services that are of uncertain and incommensurable value. Singularities markets have communities of followers and a distinctive belief system that ascribes value to a particular product, service, or asset. Developing Karpikâs conception, the paper explores the libertarian political belief system that surrounds Bitcoinâs status as a financial asset. I also outline some political tensions within the electronic currency community concerning governance and centralisation.
Despite its increasing popularity, no official guidance on the financial reporting of Bitcoin transactions has been provided by standard setters, although tax accounting guidance began to appear in 2014. Designed as a decentralised currency, Bitcoin is not intended to become a reporting currency and will instead complement fiat money. We argue that in the case of Bitcoin the accounting principle of faithful representation requires interpretation of the economic substance for financial reporting that varies with reporting entity: trading firms recognise Bitcoin like a foreign currency and measure the revenue, or expense, at the equivalent amount of the reporting currency and digital currency exchanges recognise Bitcoin as goods in line with tax accounting treatment. An Economica paper by Radford (1945), which describes the use of cigarettes as commodity money in a prisoner of war camp alludes to this economic basis. This paper applies accounting principles to a practical issue and contributes to the process by which standard setters may issue an interpretation.
Disseminating medical data beyond the protected cloud of institutions poses severe risks to patientsâ privacy, as breaches push them to the point where they abstain from full disclosure of their condition. This situation negatively impacts the patient, scientific research, and all stakeholders. To address this challenge, we propose a blockchain-based data sharing framework that sufficiently addresses the access control challenges associated with sensitive data stored in the cloud using immutability and built-in autonomy properties of the blockchain. Our system is based on a permissioned blockchain which allows access to only invited, and hence verified users. As a result of this design, further accountability is guaranteed as all users are already known and a log of their actions is kept by the blockchain. The system permits users to request data from the shared pool after their identities and cryptographic keys are verified. The evidence from the system evaluation shows that our scheme is lightweight, scalable, and efficient.
There has been increasing interest in adopting BlockChain (BC), that underpins the crypto-currency Bitcoin, in Internet of Things (IoT) for security and privacy. However, BCs are computationally expensive and involve high bandwidth overhead and delays, which are not suitable for most IoT devices. This paper proposes a lightweight BC-based architecture for IoT that virtually eliminates the overheads of classic BC, while maintaining most of its security and privacy benefits. IoT devices benefit from a private immutable ledger, that acts similar to BC but is managed centrally, to optimize energy consumption. High resource devices create an overlay network to implement a publicly accessible distributed BC that ensures end-to-end security and privacy. The proposed architecture uses distributed trust to reduce the block validation processing time. We explore our approach in a smart home setting as a representative case study for broader IoT applications. Qualitative evaluation of the architecture under common threat models highlights its effectiveness in providing security and privacy for IoT applications. Simulations demonstrate that our method decreases packet and processing overhead significantly compared to the BC implementation used in Bitcoin.
Malte MÜser, Kyle Soska, Ethan Heilman, Kevin Lee ¡ 11 authors
Abstract Monero is a privacy-centric cryptocurrency that allows users to obscure their transactions by including chaff coins, called âmixins,â along with the actual coins they spend. In this paper, we empirically evaluate two weaknesses in Moneroâs mixin sampling strategy. First, about 62% of transaction inputs with one or more mixins are vulnerable to âchain-reactionâ analysis - that is, the real input can be deduced by elimination. Second, Monero mixins are sampled in such a way that they can be easily distinguished from the real coins by their age distribution; in short, the real input is usually the ânewestâ input. We estimate that this heuristic can be used to guess the real input with 80% accuracy over all transactions with 1 or more mixins. Next, we turn to the Monero ecosystem and study the importance of mining pools and the former anonymous marketplace AlphaBay on the transaction volume. We find that after removing mining pool activity, there remains a large amount of potentially privacy-sensitive transactions that are affected by these weaknesses. We propose and evaluate two countermeasures that can improve the privacy of future transactions.
Jan Mendling, Ingo Weber, Wil M. P. van der Aalst, Jan vom Brocke ¡ 32 authors
Blockchain technology offers a sizable promise to rethink the way interorganizational business processes are managed because of its potential to realize execution without a central party serving as a single point of trust (and failure). To stimulate research on this promise and the limits thereof, in this article, we outline the challenges and opportunities of blockchain for business process management (BPM). We first reflect how blockchains could be used in the context of the established BPM lifecycle and second how they might become relevant beyond. We conclude our discourse with a summary of seven research directions for investigating the application of blockchain technology in the context of BPM.
Giuseppe Pappalardo, Tiziana Di Matteo, Guido Caldarelli, Tomaso Aste
We investigate Bitcoin network observing transactions broadcasted into the network during a week from 04/05/2016 and then monitoring their inclusion into the blockchain during the following seven months.We unveil that 42% of the transactions are still not included in the Blockchain after 1 h from their appearance and 20% of the transactions are still not included in the Blockchain after 30 days, therefore revealing a great inefficiency in the Bitcoin system. However, we observe that most of these âforgottenâ transactions have low values and in terms of transferred value the system is less inefficient with 93% of the transactions value being included into the Blockchain within 3 h and 98.8% within a day. The fact that a sizeable fraction of transactions is not processed timely casts serious doubts on the usability of the Bitcoin Blockchain for reliable time-stamping purposes. It also calls for a debate about the right systems of incentives which a peer-to-peer unintermediated system should introduce to promote efficient transaction recording
Open access
3 source records
Blockchain Technology Applications and Security
Advanced Steganography and Watermarking Techniques
Double spending and blockchain forks are two main issues that the Bitcoin crypto-system is confronted with. The former refers to an adversary's ability to use the very same coin more than once while the latter reflects the occurrence of transient inconsistencies in the history of the blockchain distributed data structure. We present a new approach to tackle these issues: it consists in adding some local synchronization constraints on Bitcoin's validation operations, and in making these constraints independent from the native blockchain protocol. Synchronization constraints are handled by nodes which are randomly and dynamically chosen in the Bitcoin system. We show that with such an approach, content of the blockchain is consistent with all validated transactions and blocks which guarantees the absence of both double-spending attacks and blockchain forks.
Philippe Genestier, Sajida Zouarhi, Pascal Limeux, David Excoffier ¡ 7 authors
In our digital world, access to personal data has become an item of concern, with challenging security and privacy aspects. Occurrences of hacking intentions and privacy violations make digital trust a major challenge. This is true in the eHealth area where management of patient health data must comply with many regulations, while remaining accessible to duly authorised health practitioners. Most will have heard about Blockchain because of its most known application - Bitcoin - in the payment area. However, Blockchainâs characteristics make it possible to fulfill the requirements of consent management, as illustrated in an implementation within a health domain use case.
In this document, we introduce some thinkings relative to the concept of blockchain, how it works and what are the issues for the banking system. Thus, first we recall what cryptography is, then we introduce the concept of blockchain as a protocol for transmitting information in a secure way, distinguishing two possible approaches: the decentralized public approach and the centralized private approach. The notion of cryptocurrency is introduced and two examples of applications of the public blockchains that are the bitcoin and the etherium are provided.
Igor Zikratov, Alexander Kuzmin, Vladislav Akimenko, Viktor Niculichev ¡ 5 authors
Blockchain is a relatively new technology that has shown a lot of possibilities. It emerged in 2009 as a public ledger of all Bitcoin transactions. Blockchain technology is finding applications in wide range of areas: digital assets and stocks, smart contracts, record keeping, ID systems, cloud storage, ride sharing, etc. We investigate the blockchains' activity in terms of how to store, retrieve and share files in decentralized network.
Building the Internet of Things requires deploying a huge number of objects with full or limited connectivity to the Internet. Given that these objects are exposed to attackers and generally not secured-by-design, it is essential to be able to update them, to patch their vulnerabilities and to prevent hackers from enrolling them into botnets. Ideally, the update infrastructure should implement the CIA triad properties, i.e., confidentiality, integrity and availability. In this work, we investigate how the use of a blockchain infrastructure can meet these requirements, with a focus on availability. In addition, we propose a peer-to-peer mechanism, to spread updates between objects that have limited access to the Internet. Finally, we give an overview of our ongoing prototype implementation.
M. J. G. Borge, Eleftherios Kokoris-Kogias, Philipp Jovanovic, Linus Gasser ¡ 6 authors
Permissionless blockchain-based cryptocurrencies commonly use proof-of-work (PoW) or proof-of-stake (PoS) to ensure their security, e.g. to prevent double spending attacks. However, both approaches have disadvantages: PoW leads to massive amounts of wasted electricity and re-centralization, whereas major stakeholders in PoS might be able to create a monopoly. In this work, we propose proof-of-personhood (PoP), a mechanism that binds physical entities to virtual identities in a way that enables accountability while preserving anonymity. Afterwards we introduce PoPCoin, a new cryptocurrency, whose consensus mechanism leverages PoP to eliminate the dis-advantages of PoW and PoS while ensuring security. PoPCoin leads to a continuously fair and democratic wealth creation process which paves the way for an experimental basic income infrastructure.
The blockchain has fueled one of the most enthusiastic bursts of activity in applied cryptography in years, but outstanding problems in security and privacy research must be solved for blockchain technologies to go beyond the hype and reach their full potential. At the first IEEE Privacy and Security on the Blockchain Workshop (IEEE S&B), we presented peer-reviewed papers bringing together academia and industry to analyze problems ranging from deploying newer cryptographic primitives on Bitcoin to enabling usecases like privacy-preserving file storage. We overview not only the larger problems the workshop has set out to tackle, but also outstanding unsolved issues that will require further cooperation between academia and the blockchain community.
Ali Dorri, Marco Steger, Salil S. Kanhere, Raja Jurdak
Interconnected smart vehicles offer a range of sophisticated services that benefit the vehicle owners, transport authorities, car manufacturers and other service providers. This potentially exposes smart vehicles to a range of security and privacy threats such as location tracking or remote hijacking of the vehicle. In this article, we argue that BlockChain (BC), a disruptive technology that has found many applications from cryptocurrencies to smart contracts, is a potential solution to these challenges. We propose a BC-based architecture to protect the privacy of the users and to increase the security of the vehicular ecosystem. Wireless remote software updates and other emerging services such as dynamic vehicle insurance fees, are used to illustrate the efficacy of the proposed security architecture. We also qualitatively argue the resilience of the architecture against common security attacks.
The Internet of Things (IoT) technology has a potential to bring the benefits of intelligently interconnecting not just computers and humans, but most of everyday things. IoT has a promise of opening significant business process improvement opportunities leading to economic growth and cost reductions. However, there are many challenges facing IoT, including significant scalability and security challenges due to the integration of potentially huge number of things into the network. Many of scalability and security issues stem from a centralized, primarily client/server, architecture of IoT systems and frameworks. Blockchain technology, as a relativelly new approach to decentralized computation and assets management and transfer, has a potential to help solve a number of scalability and security issues that IoT is facing, primarilly through the removal of centralized points of failure for such systems. As such, blockchain technology and IoT integration provides a promising direction and it has recently generated significant research interest, e.g., [4].
Blockchain or distributed ledger technology is the key innovation inside Bitcoin, the virtual currency, or distributed database commodity. Regulators in different states and nations have viewed and now regulate Bitcoin variously. For example, Bitcoin is property (IRS), a virtual currency (New York State Department of Financial Services and its BitLicense), and an unregulated technology (California, Texas). This regulatory divergence has not prevented the emergence of an $18 billion Bitcoin global market. It has however led some of its early enthusiasts to prison for crossing the line from trusted blockchain anonymity to money laundering. Distributed ledger applications are presently in experimental and early commercial use in applications and for industry sectors now extending far beyond Bitcoin, and far beyond fintech (financial technology.)
This paper evaluates blockchain technology and the role of regulators and policymakers in shaping the evolution and commercialization of this disruptive innovation particularly for the Internet of Things. As blockchain is increasingly used to establish a secure trust relationship and permanent record in a wide array of networked markets, will the diverse regulatory treatments of âessentially the same â innovation create new policy barriers to its wide application? Are there information policy measures, which can help industry and users, avoid the inevitable pitfalls of a novel technology? If so, is there a new alignment of distribution of authority among regulators, which these innovations will spark? Presently for example, the Securities and Exchange Commission, IRS, and This original research will be among the first to deconstruct blockchain for a wide array of industrial sectors and Internet of Things markets. Most prior work has focused on blockchain applications for financial markets, and specifically the cybercurrency Bitcoin, and in particular its cryptographically driven consensus process to establish and maintain trust. While it is important to understand how blockchain technology utilization can increase technical efficiency and reduce transaction costs with an immutable, auditable record of all transactions, that only explains why this technology innovation has sparked such interest. Most important is the ability of blockchain to combine trust and privacy with transparency in new way.
The research methods for evaluation of blockchaining the Internet of Things include socio-technical field tests and multi-method pilot studies currently being planned. Preliminary results and insights from industry and policymaker interviews and will be shared in this paper. Suggestions for further blockchain Internet of Things policy research will conclude the paper.
Bitcoin telah menarik investor di seluruh dunia karena menyajikan pilihan yang menarik untuk sistem moneter saat ini. Ini adalah mata uang virtual yang dapat berpotensi menggantikan mata uang moneter yang ada karena menawarkan konsep baru pembayaran dikenal sebagai reksa persetujuan tanpa bergantung pada kepercayaan untuk setiap bank atau desentralisasi. Bitcoin sebagai mata uang telah diberlakukan di beberapa negara, meskipun tanggapan telah kecurigaan dan memperingatkan.Makalah ini akan memeriksa bitcoin isu-isu terkait menggunakan pendekatan normatif-yuridis dan kritis dalam konteks hukum yang berlaku di Indonesia, Undang-Undang Nomor 11 Tahun 2008 tentang Informasi dan Transaksi Elektronik. Sejauh ini, undang-undang serupa telah diberlakukan oleh California, Uni Eropa dan Singapura untuk menangani masalah-masalah mata uang virtual. Tujuan dari makalah ini adalah untuk menggambarkan bitcoin, mengapa mata uang dan bagaimana kerangka perlindungan hukum untuk Bitcoin investor di Indonesia.Berdasarkan luas-tersebar adopsi bitcoin dan sisi gelap dari kasus bitcoin membentuk sikap pemerintah tentang bitcoin di Amerika Serikat, makalah ini mengeksplorasi bagaimana memberikan peraturan yang tepat untuk melindungi bitcoin investor di Indonesia.
Bitcoin, the most innovate digital currency as of now, created since 2008, even through experienced its ups and downs, still keeps drawing attentions to all parts of society. It relies on peer-to-peer network, achieved decentralization, anonymous and transparent. As the most representative digital currency, people curious to study how Bitcoinâ price changes in the past. In this paper, we use monthly data from 2011 to 2016 to build a VEC model to exam how economic factors such as Custom price index, US dollar index, Dow jones industry average, Federal Funds Rate and gold price influence Bitcoin price. From empirical analysis we find that all these variables do have a long-term influence. US dollar index is the biggest influence on Bitcoin price while gold price influence the least. From our result, we conclude that for now Bitcoin can be treated as a speculative asset, however, it is far from being a proper credit currency.
Spyros Makridakis, Antonis Polemitis, George M. Giaglis, Soula Louca
Blockchain technologies, once used exclusively for buying and selling bitcoins, have entered the mainstream of computer applications, fundamentally changing the way Internet transactions can be implemented by ascertaining trust between unknown parties. In addition, they ensure immutability (once information is entered it cannot be modified) and enable disintermediation (as trust is assured, no third party is required to verify transactions). These advantages can produce disruptive changes when properly exploited, inspiring a large number of applications. These applications are forming the backbone of what can be called the Internet of Value, bound to bring as significant changes as those brought over the last 20 years by the traditional Internet. This chapter investigates blockchain and the technologies behind it and explains their technological might and outstanding potential, not only for transactions but also as distributed databases. It also discusses its future prospects and the disruptive changes it promises to bring, while also considering the challenges that would need to be overcome for its widespread adoption. Finally, the chapter considers combining blockchain with Artificial Intelligence (AI) and discusses the revolutionary changes that would result by rapidly advancing the AI field.
Abstract Stratum, the de-facto mining communication protocol used by blockchain based cryptocurrency systems, enables miners to reliably and efficiently fetch jobs from mining pool servers. In this paper we exploit Stratumâs lack of encryption to develop passive and active attacks on Bitcoinâs mining protocol, with important implications on the privacy, security and even safety of mining equipment owners. We introduce StraTap and ISP Log attacks, that infer miner earnings if given access to miner communications, or even their logs. We develop BiteCoin, an active attack that hijacks shares submitted by miners, and their associated payouts. We build BiteCoin on WireGhost, a tool we developed to hijack and surreptitiously maintain Stratum connections. Our attacks reveal that securing Stratum through pervasive encryption is not only undesirable (due to large overheads), but also ineffective: an adversary can predict miner earnings even when given access to only packet timestamps. Instead, we devise Bedrock, a minimalistic Stratum extension that protects the privacy and security of mining participants. We introduce and leverage the mining cookie concept, a secret that each miner shares with the pool and includes in its puzzle computations, and that prevents attackers from reconstructing or hijacking the puzzles. We have implemented our attacks and collected 138MB of Stratum protocol traffic from mining equipment in the US and Venezuela. We show that Bedrock is resilient to active attacks even when an adversary breaks the crypto constructs it uses. Bedrock imposes a daily overhead of 12.03s on a single pool server that handles mining traffic from 16,000 miners.
Distributed ledger technology, a method of storing and maintaining the integrity of multiple copies of critical data using a massively redundant network of participating machines, has found a âkiller applicationâ in blockchain, a type of distributed ledger. A blockchain consists of sequential blocks that may never be modified or reordered, leaving a public, auditable record that is consistent and highly resistant to tampering and deletion. These qualities make blockchain eminently suitable for its most common use, cryptocurrency, and its occasional variants in the form of cryptocurrency tokens, used to represent ownership or some other right to virtual or physical goods and capabilities. Blockchain also enables smart contracts, discrete bodies of software written to serve both as the memorial and the means of execution of an agreement between parties. Smart contracts can have all the elements of a traditional contract, and as jurisdictions legislate or jurists rule on the fine points of enforceability and the acceptability of smart contracts as traditional contracts, applications in nearly every area of commerce have emerged. Digital lawyers may not need to become software developers, but deepening their understanding of the capabilities and limitations of the technology, developing a keen awareness of the issues at the intersection between code and the law, as well as the lawâs readiness in this area, will be of great advantage to them and their clients in this rapidly evolving area at the intersection of technology, commerce and law.