Bitcoin is the first and most successful Blockchain system so far. In the Bitcoin system, miners use transaction attached fees as a driving force to mine a new block and package transactions, while users compete by bidding transaction fees for faster confirmation. Considering the particularity of Bitcoin trading system, we take time series into consideration to analyze the transaction rules of Bitcoin system from the perspective of multiple cycles and establish a dynamic game model related to time under Generalised Second Price(GSP) mechanism, and also confirm the model's superiority on saving users' fees, compared with the static game model. Also, we propose the quantification of the user experience quantified by calculating the price difference between the transactions uploaded by the same user within adjacent times, making the transaction process of the Bitcoin system no longer the final say of the transaction price. The dynamic game model shows that there is a perfect Bayesian game equilibrium solution in the payment decision, so there is no incentive for users to change the attached fee, and the whole system is maintained stably. In addition, we verify the dynamic game model from computational experiment. Firstly, it is proved that with the help of revenue discount, the cost saving of the dynamic model is generally higher than that of the static model. Then the user's revenue under the dynamic model is showing an upward trend, and the transactions order under the dynamic model is more stable than that under static model, which can be illustrated mathematically and computationally that the proposed dynamic game model in this paper will help all transactions be processed more efficiently in a uniform pipeline.
Michał Kędziora, Dawid Pieprzka, Ireneusz J. Jóźwiak, Yongxin Liu · 5 authors
The purpose of this paper is to present mechanisms and algorithms implemented for improving Bitcoin cryptocurrency efficiency and security and to examine the block propagation times from a selected period before and after SegWit was introduced. In this paper, Segregated Witness Implementation issues were verified based both on the simulation and real data from the Bitcoin network. Based on the block propagation times calculated in the simulator, as well as bitcoin network real data, the efficiency and safety of Bitcoin have been analysed and validated.
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Blockchain Technology Applications and Security
Advanced Steganography and Watermarking Techniques
F. N. M. de Sousa Filho, J. N. Silva, Mário Augusto Bertella, Edgardo Brigatti
In this paper, we explore some stylized facts of the Bitcoin market using the BTC-USD exchange rate time series of historical intraday data from 2013 to 2020. Bitcoin presents some very peculiar idiosyncrasies, like the absence of macroeconomic fundamentals or connections with underlying assets or benchmarks, an asymmetry between demand and supply and the presence of inefficiency in the form of strong arbitrage opportunity. Nevertheless, all these elements seem to be marginal in the definition of the structural statistical properties of this virtual financial asset, which result to be analogous to general individual stocks or indices. In contrast, we find some clear differences, compared to fiat money exchange rates time series, in the values of the linear autocorrelation and, more surprisingly, in the presence of the leverage effect. We also explore the dynamics of correlations, monitoring the shifts in the evolution of the Bitcoin market. This analysis is able to distinguish between two different regimes: a stochastic process with weaker memory signatures and closer to Gaussianity between the Mt. Gox incident and the late 2015, and a dynamics with relevant correlations and strong deviations from Gaussianity before and after this interval.
Bitcoin is electronic money that can be used as an alternative for investment. Investors will get benefit buying bitcoin when the price of bitcoin is down and reselling it when bitcoin prices are increasing. The fluctuating bitcoin prices cause forecasting as a basis for investors to make decisions, where the time series method is used as a forecasting model, then a pattern can be found to predict future events. The classical time series methods are often violating the statistical assumptions. To face these problems, then it is used free assumptions methods, the method with the Fuzzy Time Series Markov Chain, the Chen Logical Method, and its segmented methods due to unbalancing forecasting results. This study is built the forecasting model of the price of bitcoin for the coming period based on the data from 2010 to 2020. The proposed methods have a better fit for bitcoin time series data prices. Besides, the Fuzzy Time Series Markov Chain method has the slightly smallest accuracy error based on Mean Absolute Percentage Error (MAPE) comparing to the Fuzzy Time Series Segmented Chen Logical Method and Fuzzy Time Series Chen Logical Method.
BitML is a process calculus to express smart contracts that can be run on Bitcoin. One of its current limitations is that, once a contract has been stipulated, the participants cannot renegotiate its terms: this prevents expressing common financial contracts, where funds have to be added by participants at run-time. In this paper, we extend BitML with a new primitive for contract renegotiation. At the same time, the new primitive can be used to write recursive contracts, which was not possible in the original BitML. We show that, despite the increased expressiveness, it is still possible to execute BitML on standard Bitcoin, preserving the security guarantees of BitML.
Johannes Jakubik, Abdolreza Nazemi, Andreas Geyer-Schulz, Frank J. Fabozzi
In this paper, we investigate how a deep learning machine learning model can be applied to improve Bitcoin price forecasting and trading by incorporating unstructured information from financial news. The two-stage model we propose that includes financial news significantly outperforms machine learning models without financial news. In the first stage, we leverage long short-term memory (LSTM) networks to extract structured information from financial news. In the second stage, we apply machine learning models with structured input from financial news to the prediction of Bitcoin prices. In addition to the superior performance relative to machine learning models without input from financial news, we find that the out-of-time rate of return attained with the proposed forecasting system is substantially higher than for a buy-and-hold strategy. Our study highlights how combining deep learning and financial news offers investors and traders support for the monetization of unstructured data in finance.
Tämän tutkimuksen tavoitteena oli selvittää lohkoketjuteknologian ja hajautettujen tilikirjojen soveltuvuutta arvo-osuuksien käsittelyyn. Lohkoketjuteknologia on saanut verrattain paljon huomioita lähinnä kryptovaluuttojen vuoksi, ja sen on arvioitu muuttavan finanssialaa tulevaisuudessa. Tutkimus keskittyi ensisijaisesti selvittämään, onko lohkoketjuteknologialla aidosti disruptiivisia ominaisuuksia, jotta se voisi muuttaa arvopaperikeskusten, keskusvastapuolten ja säilyttäjäpankkien roolia tulevaisuudessa. Täytyykö lohkoketjun olla suunniteltu juuri tietynlaiseksi, jotta sitä voitaisiin hyödyntää arvo-osuuksien käsittelyssä. Lisäksi tutkimus pyrki löytämään syitä siihen, miksi lohkoketjuteknologian ja hajautettujen tilikirjojen käyttö ei ole yleistynyt sen luvatuista hyödyistä ja mainituista perusominaisuudesta huolimatta. \n \nTutkimuksessa pyrittiin selvittämään, voitaisiinko hajautetulla tilikirjoilla vähentää arvopapereiden säilytykseen ja selvitykseen liittyviä riskejä, kuten selvitys-, likviditeetti- tai säilytysketjun riskejä. Lisäksi tutkimuksessa pyrittiin selvittämään, voisiko lohkoketjupohjaiset selvitys- ja säilytysjärjestelmät lisätä omaisuuden suojaa, tietosuojaa, sekä lisätä läpinäkyvyyttä liikkeeseenlaskijoille, loppusijoittajille ja valvojille. Tutkimus toteutettiin puolistrukturoituina asiantuntijahaastatteluina. \n \nTutkimustulokset viittaavat siihen, että lohkoketjuteknologia ja hajautetut tilikirjat eivät tällä hetkellä sovellu laajamittaisesti arvopapereiden säilytykseen ja selvitykseen. Tosin, toimiala näkee mahdollisuuksia lohkoketjuteknologian soveltamiseen esim. fyysisten arvopapereiden, kuten osakeyhtiöiden osakkeiden käsittelyssä. Lohkoketjuteknologian luvatut hyödyt eivät ole toteutuneet, osittain investointien vähyyden vuoksi. Myös nykyisten järjestelmien todellisten ongelmien vähäinen määrä, sekä uuden teknologian tuomat mahdolliset hyödyt ovat osaltaan vähentäneet sen kiinnostusta toimialalla.
Fog computing (FC) is the extension of Cloud Computing (CC), from the core of the internet architecture to the edge of the network, with the aim to perform processes closer to end-users. This extension is proven to enhance security, and to reduce latency and energy consumption. Blockchain (BC), on the other hand, is the base technology behind crypto-currencies, yet is implemented in wide range of different applications. The security and reliability, along with the distributed trust management criteria proposed in BC, excited the research community to integrate it with FC, in a step towards reaching a distributed and trusted, Data, Payment, Reputation, and Identity management systems. In this survey we present the up-to-date state-of-the-art of FC-BC integration with a detailed literature review and classification. We discuss and categorize the related papers according to the year of publication, domain, used algorithms, BC roles, and the placement of the BC in the FC architecture. Our research presents detailed observations, analysis, and open challenges for the BC-FC integration. We believe such conclusions may clarify the vision of the BC-FC integration, and calibrate the compass towards open issues and future research directions.
Constructing globally distributed file systems (DFS) has received great attention. Traditional Peer-to-Peer (P2P) distributed file systems have inevitable drawbacks such as instability, lacking auditing and incentive mechanisms. Thus, Inter-Planetary File System (IPFS) and Swarm, as the representative DFSs which integrate with blockchain technologies, are proposed and becoming a new generation of distributed file systems. Although the blockchain-based DFSs successfully provide adequate incentives and security guarantees by exploiting the advantages of blockchain, a series of challenges, such as scalability and privacy issues, are also constraining the development of the new generation of DFSs. Mainly focusing on IPFS and Swarm, this paper conducts an overview of the rationale, layered structure and cutting-edge studies of the blockchain-based DFSs. Furthermore, we also identify their challenges, open issues and future directions. We anticipate that this survey can shed new light on the subsequent studies related to blockchain-based distributed file systems.
In this paper we analyse the advantages that the application of blockchain technology brings to accounting information systems (AIS), but also highlight the potential issues with its use. We examine the use of blockchain against the background of the historical evolution of AIS and explain the operational fit of this technology in AIS. We then analyse the pros and cons of the highly probable use of blockchain technology in AIS. For this purpose, we review the relevant contributions on this subject in the accounting academic literature to date and classify them into four categories on the basis of their focus: governance, transparency and trust; continuous audit; smart contracts; and roles of accountants and auditors. We also analyse the early reactions of the accounting industry and regulators to this new technological environment.
Sarada Prasad Gochhayat, Sachin Shetty, Ravi Mukkamala, Peter Foytik · 6 authors
Blockchain promises to provide a distributed and decentralized means of trust among untrusted users. However, in recent years, a shift from decentrality to centrality has been observed in the most accepted Blockchain system, i.e., Bitcoin. This shift has motivated researchers to identify the cause of decentrality, quantify decentrality and analyze the impact of decentrality. In this work, we take a holistic approach to identify and quantify decentrality in Blockchain based systems. First, we identify the emergence of centrality in three layers of Blockchain based systems, namely governance layer, network layer and storage layer. Then, we quantify decentrality in these layers using various metrics. At the governance layer, we measure decentrality in terms of fairness, entropy, Gini coefficient, Kullback-Leibler divergence, etc. Similarly, in the network layer, we measure decentrality by using degree centrality, betweenness centrality and closeness centrality. At the storage layer, we apply a distribution index to define centrality. Subsequently, we evaluate the decentrality in Bitcoin and Ethereum networks and discuss our observations. We noticed that, with time, both Bitcoin and Ethereum networks tend to behave like centralized systems where a few nodes govern the whole network.
The author of the article has outlined the problem of finding the most optimal model of the state for of government, because the necessary condition for stable development of society and effective functioning of the state is to ensure the balance between national interests and the interests of the population of regions and territorial communities. The preconditions, political history and periods of the formation of decentralized power in most European medieval states, scientific positions of national and foreign legal scholars on the expediency of implementing decentralization have been analyzed. It has been found out that the vast majority of Western European countries abdicate the unitary state model by introducing decentralization. The leading idea of reforming is to move the center of solving local issues to the local and, in particular regional level that is achieved by optimizing relations between different levels of territorial organization of power. National traditions, formation and functioning of public agencies in the past, specific features of administrative and territorial structure of the state, existence of autonomous territories, multiethnic population have a significant influence on the formation of the constitutional system on the basis of decentralization in the EU countries. The positive experience of Denmark and France has been studied. The author has theoretically substantiated that the principle of decentralization has been successfully implemented in the practice of the European Union countries. It has been indicated that the prerequisite for the successful implementation of decentralization processes to create an effective model of governance within the system of decentralized government of Ukraine is: the establishment of the rule of law principle; recognition and guarantees of local self-government; equal legal protection of all forms of ownership; democratic and effective electoral legislation; independence, efficiency, accessibility and transparency of the judicial system, functioning of administrative justice institutions; perfect budget process and high financial discipline; availability of adequate social standards; developed public sector and stable tendency towards its development.
Numberlink is a logic puzzle for which the player has to connect all pairs of cells with the same numbers by non-crossing paths in a rectangular grid. In this paper, we propose a physical protocol of zero-knowledge proof for Numberlink using a deck of cards, which allows a player to physically show that he/she knows a solution without revealing it. In particular, we develop a physical protocol to count the number of elements in a list that are equal to a given secret value without revealing that value, the positions of elements in the list that are equal to it, or the value of any other element in the list. Our protocol can also be applied to verify the existence of vertex-disjoint paths connecting all given pairs of endpoints in any undirected graph.
Zero-knowledge proofs have always provided a clear solution when it comes to conveying information from a prover to a verifier or vice versa without revealing essential information about the process. Advancements in zero-knowledge have helped develop proofs which are succinct and provide non-interactive arguments of knowledge along with maintaining the zero-knowledge criteria. zk-SNARKs (Zero knowledge Succinct Non-Interactive Argument of Knowledge) are one such method that outshines itself when it comes to advancement of zero-knowledge proofs. The underlying principle of the Zcash algorithm is such that it delivers a full-fledged ledger-based digital currency with strong privacy guarantees and the root of ensuring privacy lies fully on the construction of a proper zk-SNARK. In this paper we elaborate and construct a concrete zk-SNARK proof from scratch and explain its role in the Zcash algorithm.
Blockchain technology becomes relevant in economic exchange as it lowers costs and contributes to cost-efficiency and effectiveness of economic transactions. The key quality of Blockchain lies in ensuring the authenticity of digital data: trust in the traditional legal relationship has been replaced by digital verification of data in blocks. As an important phenomenon, Blockchain calls for legal answers on the issues arising from its application. An example of this development is the legal regime of smart contracts. A smart contract is a transaction in which any rights and obligations of the contracting parties are programmed in a code. Being the result of Blockchain technology application, such a contract implies the need for trust between the contracting parties. As a legal phenomenon, Blockchain (smart contract) technology raises the issue of liability for performing contractual obligations. Smart contracts can minimize certain contract risks and additionally simplify contract execution. They are immediately put into effect, without the need for any further interaction between the parties. The essential components of smart contracts are the digitally verifiable data and the automatic performance of legally relevant actions based on digitally received and processed information. All of the enlisted issues are important for proper understanding of liability of Blockchain actors.
A key challenge of smart contract systems is the fact that many useful contracts require access to information that does not natively live on the blockchain. While miners can verify the value of a hash or the validity of a digital signature, they cannot determine who won an election, whether there is a flood in Paris, or even what is the price of ether in US dollars, even though this information might be necessary to execute prediction market, insurance, or financial contracts respectively. A number of promising projects and research developments have provided a better understanding of how one might construct a decentralized, binary oracle - namely an oracle that can respond by one of two possibilities, typically "yes" or "no", even while not requiring the interaction of a trusted third party. In this work, we extend these ideas to construct a general-purpose, decentralized oracle that can estimate the value of a real-world quantity that is in a dense totally ordered set, such as R. In particular, this proposal can be used to estimate real number valued quantities, such as required for a price oracle. We will establish a number of desirable properties about this proposal. Particularly, we will see that the precision of the output is tunable to users' needs.
Cryptocurrency is a recent and popular topic that attracts the interest of investors and fund managers. Beyond the market discipline, researchers question the interaction between cryptocurrencies and macroeconomic variables. This study focuses on how the changes in gold and oil prices affect the daily price movements of various cryptocurrencies. The daily database used in this study includes the prices of the cryptocurrencies such as Bitcoin, Tether, Ethereum, Litecon and EOS for the period of August 1, 2017 and April 3, 2019. Initially, the stationarity of the time series is tested by The existence of the cointegration relationship among the series is tested by The presence of causality relationships among the series is investigated with the Dolado and Ltkepohl (1996) causality test. The empirical results support that there exists a cointegration relationship only in between Tether and gold and oil prices.