Cryptocurrencies have seen a massive surge in popularity and behind these new virtual currencies is an innovative technology called the block chain: a distributed digital ledger in which cryptocurrency transactions are recorded after having been verified. The transactions within a ledger are verified by multiple clients or "validators," within the cryptocurrency's peer-to-peer network using one of many varied consensus algorithms for resolving the problem of reliability in a network involving multiple unreliable nodes. The most widely used consensus algorithms are the Proof of Work (PoW) algorithm and the Proof of Stake (PoS) algorithm; however, there are also other consensus algorithms which utilize alternative implementations of PoW and PoS, as well as other hybrid implementations and some altogether new consensus strategies. In this paper, we perform a comparative analysis of typical consensus algorithms and some of their contemporaries that are currently in use in modern blockchains. Our analysis focuses on the algorithmic steps taken by each consensus algorithm, the scalability of the algorithm, the method the algorithm rewards validators for their time spent verifying blocks, and the security risks present within the algorithm. Finally, we present our conclusion and some possible future trends for consensus algorithms used in block chains.
Increasingly, connected cars are becoming a decentralized data platform. With greater autonomy, they have growing needs for computation and perceiving the world around them through sensors. While todays generation of vehicles carry all the necessary sensor data and computation on board, we envision a future where vehicles can cooperate to increase their perception of the world beyond their immediate view, resulting in greater safety, coordination and more comfortable experience for their human occupants. In order for vehicles to obtain data, compute and other services from other vehicles or road side infrastructure, it is important to be able to make micro payments for those services and for the services to run seamlessly despite the challenges posed by mobility and ephemeral interactions with a dynamic set of neighboring devices. We present MOTIVE, a trusted and decentralized framework that allows vehicles to make peer to peer micropayments for data, compute and other services obtained from other vehicles or road side infrastructure within radio range. The framework utilizes distributed ledger technologies including smart contracts to enable autonomous operation and trusted interactions between vehicles and nearby entities.
Yu‐Jin Kwon, Hyoungshick Kim, Jinwoo Shin, Yongdae Kim
Bitcoin has become the most popular cryptocurrency based on a peer-to-peer network. In Aug. 2017, Bitcoin was split into the original Bitcoin (BTC) and Bitcoin Cash (BCH). Since then, miners have had a choice between BTC and BCH mining because they have compatible proof-of-work algorithms. Therefore, they can freely choose which coin to mine for higher profit, where the profitability depends on both the coin price and mining difficulty. Some miners can immediately switch the coin to mine only when mining difficulty changes because the difficulty changes are more predictable than that for the coin price, and we call this behavior fickle mining. In this paper, we study the effects of fickle mining by modeling a game between two coins. To do this, we consider both fickle miners and some factions (e.g., BITMAIN for BCH mining) that stick to mining one coin to maintain that chain. In this model, we show that fickle mining leads to a Nash equilibrium in which only a faction sticking to its coin mining remains as a loyal miner to the less valued coin (e.g., BCH), where loyal miners refer to those who conduct mining even after coin mining difficulty increases. This situation would cause severe centralization, weakening the security of the coin system. To determine which equilibrium the competing coin systems (e.g., BTC vs. BCH) are moving toward, we traced the historical changes of mining power for BTC and BCH and found that BCH often lacked loyal miners until Nov. 13, 2017, when the difficulty adjustment algorithm of BCH mining was changed. However, the change in difficulty adjustment algorithm of BCH mining led to a state close to the stable coexistence of BTC and BCH. We also demonstrate that the lack of BCH loyal miners may still be reached when a fraction of miners automatically and repeatedly switches to the most profitable coin to mine (i.e., automatic mining). According to our analysis, as of Dec. 2018, loyal miners to BCH would leave if more than about 5% of the total mining capacity for BTC and BCH has engaged in the automatic mining. In addition, we analyze the recent “hash war” between Bitcoin ABC and SV, which confirms our theoretical analysis. Finally, we note that our results can be applied to any competing cryptocurrency systems in which the same hardware (e.g., ASICs or GPUs) can be used for mining. Therefore, our study brings new and important angles in competitive coin markets: a coin can intentionally weaken the security and decentralization level of the other rival coin when mining hardware is shared between them, allowing for automatic mining.
René Riedl, Max Neuhofer, Bernhard Stockinger, Florian Grillenberger · 7 authors
Eine Analyse von 1498 Artikeln aus sechs Tageszeitungen zeigt, dass im deutschsprachigen Raum vorwiegend negativ über den Bitcoin berichtet wird. Eine Analyse von 1498 Artikeln aus sechs Tageszeitungen zeigt, dass im deutschsprachigen Raum vorwiegend negativ über den Bitcoin berichtet wird. Zwischen den untersuchten Tageszeitungen bestehen nur geringe Unterschiede. Zwischen den untersuchten Tageszeitungen bestehen nur geringe Unterschiede. Zwischen der Berichterstattung zum Bitcoin und dem Kursverlauf gibt es einen Zusammenhang. Zwischen der Berichterstattung zum Bitcoin und dem Kursverlauf gibt es einen Zusammenhang.
Thanks to rapid technological advances in the Internet of Things (IoT), a smart public safety (SPS) system has become feasible by integrating heterogeneous computing devices to collaboratively provide public protection services. While a service oriented architecture (SOA) has been adopted by IoT and cyber-physical systems (CPS), it is difficult for a monolithic architecture to provide scalable and extensible services for a distributed IoT based SPS system. Furthermore, traditional security solutions rely on a centralized authority, which can be a performance bottleneck or single point failure. Inspired by microservices architecture and blockchain technology, this paper proposes a BLockchain-ENabled Decentralized Microservices Architecture for Smart public safety (BlendMAS). Within a permissioned blockchain network, a microservices based security mechanism is introduced to secure data access control in an SPS system. The functionality of security services are decoupled into separate containerized microservices that are built using a smart contract, and deployed on edge and fog computing nodes. An extensive experimental study verified that the proposed BlendMAS is able to offer a decentralized, scalable and secured data sharing and access control to distributed IoT based SPS system.
This paper presents a literature review of Blockchain and Bitcoin technology future applications. Recently Blockchain has received special attention and is used as a new platform for digital information and to store encrypted data and process secure digital transactions. Noticeably, the majority of Blockchain cryptocurrency is structured based on the elliptic curves digital signature algorithm (ECDSA). In particular, Bitcoin uses special ECDSA called secp256k1. Losses of personal and organizational data occurred due to security breaches of data at small and large scales using traditional transactional and financial platforms. Furthermore, data on Blockchain and Bitcoin platforms are assumed to be highly encrypted and in secured state.
Open access
Blockchain Technology Applications and Security
Advanced Steganography and Watermarking Techniques
Parinya Ekparinya, Vincent Gramoli, Guillaume Jourjon
In this paper, we explore vulnerabilities and countermeasures of the recently proposed blockchain consensus based on proof-of-authority. The proof-of-work blockchains, like Bitcoin and Ethereum, have been shown both theoretically and empirically vulnerable to double spending attacks. This is why Byzantine fault tolerant consensus algorithms have gained popularity in the blockchain context for their ability to tolerate a limited number t of attackers among n participants. We formalize the recently proposed proof-of-authority consensus algorithms that are Byzantine fault tolerant by describing the Aura and Clique protocols present in the two mainstream implementations of Ethereum. We then introduce the Cloning Attack and show how to apply it to double spend in each of these protocols with a single malicious node. Our results show that the Cloning Attack against Aura is always successful while the same attack against Clique is about twice as fast and succeeds in most cases.
The core security of proof-of-work (PoW)-based blockchain networks, relies on PoW consensus algorithm and requires miners solving a crypto-puzzles of hash computation. However, the mining process in the blockchain is resource-intensive where only the first miner who completes full PoW will be rewarded. Therefore, miners exhibit malicious behaviors which cause a waste of distributed computation resource, even posing a threat on the efficiency of blockchain networks. In this brief, we propose a new reputation-based mechanism for the PoW computation in the blockchain, in which miners are incentivized to conduct honest mining. Based on the game theory, we design a reputation-based algorithm to encourage honest mining of miners, and thereby increase the overall revenue of the pool. In addition, numerical illustrations are also presented to support the performance of our proposed mechanism.
Sergey Ivantsov, E. L. Sidorenko, Борис Спасенников, Yuri Berezkin · 5 authors
The authors have analyzed crimes connected with the use of virtual currency in the regional and international aspects. They introduce a new category of «cryptocrime» understood as the aggregate of publically dangerous acts, united by their common systemic characteristics, committed against or using the products of distributed registries (cryptocurrency, tokens and other forms of digital financial assets). They analyze each of the cryptocrime segments separately: illegal trade in psychoactive substances (narcotics, psychoactive substances, precursors), pornography and other prohibited content (including illegal services); laundering of criminal proceeds; theft of cryptocurrency and tokens. Using the scientific research methods (comparative, sociological, statistical analysis and extrapolation of data, building a trend line, etc.) the authors identify regularities in the dynamics of each type of cryptocrime as well as key factors facilitating them. The goal of the authors is to conduct a systemic examination of crimes committed against and using cryptocurrency and to determine the prospects of developing different segments of cryptocrime. To achieve this goal, they analyze qualitative and quantitative characteristics of illegal trade in narcotics and pornography, legalization of criminal proceeds and theft of digital assets. They name the anonymity of cryptocurrency as a factor facilitating illegal trade in drugs, while the growing scope of the legalization of criminal proceeds and theft is facilitated by the fact that cryptocurrency and tokens do not have a legal status as objects of civil law and objects of encroachments on property. The analysis allows the authors to conclude that without effective criminological measures the level of such crimes will continue to grow and may double by the end of 2019. According to the authors, the priority directions of international criminal policy in the sphere of cryptocrime prevention include determining cryptocurrencies’ legal status, licensing cryptocurrency trade (stock exchange services, exchange platforms, companies issuing tokens), setting international standards of counteracting the legalization of criminal proceeds and the financing of terrorism, creating a cryptocrime database.
We outline a quantum-enabled blockchain architecture based on a consortium of quantum servers. The network is hybridised, utilising digital systems for sharing and processing classical information combined with a fibre--optic infrastructure and quantum devices for transmitting and processing quantum information. We deliver an energy efficient interactive mining protocol enacted between clients and servers which uses quantum information encoded in light and removes the need for trust in network infrastructure. Instead, clients on the network need only trust the transparent network code, and that their devices adhere to the rules of quantum physics. To demonstrate the energy efficiency of the mining protocol, we elaborate upon the results of two previous experiments (one performed over 1km of optical fibre) as applied to this work. Finally, we address some key vulnerabilities, explore open questions, and observe forward--compatibility with the quantum internet and quantum computing technologies.
The blockchain technology has been changing our daily lives since Bitcoin - i.e., the first decentralized cryptocurrency - was invented and released as open-source software by an unidentified person or a group called Satoshi Nakamoto in 2009. Of many applications which can be implemented based on the blockchain, storage is an important one, a notable example of which is the InterPlanetary File System (IPFS). IPFS is a distributed web based on a peer-to-peer hypermedia protocol to make the web faster, safer, and more open and focuses on public accessible files. To provide a solution for private file storage in the blockchain way, in this paper we propose a Merkle-tree-based File System (MTFS). In MTFS, the blockchain is more than a trust machine; it is an abstract of a cluster system. Distributed random nodes form a tree network cluster without a central controller to provide a secure private storage service and faster message propagation. Advance proxy re-encryption algorithm is applied to guarantee secure file exchanges under permission. Merkle tree will make sure that the files are distributed among the service nodes in a balanced way. The proposed MTFS can be used not only for personal file storage and exchange but also for industry requiring mutual trust in file uploading and downloading in making contracts like insurances.
We study the computation contests where players compete for searching a solution to a given problem with a winner-take-all reward. The search processes are independent across the players and the search speeds of players are proportional to their computational powers. One concrete application of this abstract model is the mining process of proof-of-work type blockchain systems, such as Bitcoin. Although one's winning probability is believed to be proportional to his computational power in previous studies on Bitcoin, we show that it is not the case in the strict sense. Because of the gaps between the winning probabilities and the proportions of computational powers, the Matthew effect will emerge in the system, where the rich get richer and the poor get poorer. In addition, we show that allowing the players to pool with each other or reducing the number of solutions to the problem may aggravate the Matthew effect and vice versa.
Darcy W E Allen, Alastair Berg, Brendan Markey‐Towler
We apply institutional cryptoeconomics to the information problems in global trade, model the incentives under which blockchain-based supply chain infrastructure will be built, and make predictions about the future of supply chains. We argue blockchain may fundamentally change the patterns and dynamics of how, where and what we trade by: (1) facilitating new forms of economic organisation governing supply chain coordination (e.g. the V-form organisation) (2) shifting economic power towards the ends of supply chains (e.g. primary producers) by decreasing information asymmetries (3) de-commoditising goods and disaggregating price signals by changing the dimensions along which goods may be reliably differentiated and (4) lowering reliance on proxies (e.g. production within national borders) for the quality of goods.
We describe the design and implementation of GNU Taler, an electronic payment system based on an extension of Chaumian online e-cash with efficient change. In addition to anonymity for customers, it provides the novel notion of income transparency, which guarantees that merchants can reliably receive a payment from an untrusted payer only when their income from the payment is visible to tax authorities. Income transparency is achieved by the introduction of a refresh protocol, which gives anonymous change for a partially spent coin without introducing a tax evasion loophole. In addition to income transparency, the refresh protocol can be used to implement Camenisch-style atomic swaps, and to preserve anonymity in the presence of protocol aborts and crash faults with data loss by participants. Furthermore, we show the provable security of our income-transparent anonymous e-cash, which, in addition to the usual anonymity and unforgeability proper- ties of e-cash, also formally models conservation of funds and income transparency. Our implementation of GNU Taler is usable by non-expert users and integrates with the modern Web architecture. Our payment platform addresses a range of practical issues, such as tipping customers, providing refunds, integrating with banks and know-your-customer (KYC) checks, as well as Web platform security and reliability requirements. On a single machine, we achieve transaction rates that rival those of global, commercial credit card processors. We increase the robustness of the exchange—the component that keeps bank money in escrow in exchange for e-cash—by adding an auditor component, which verifies the correct operation of the system and allows to detect a compromise or misbehavior of the exchange early. Just like bank accounts have reason to exist besides bank notes, e-cash only serves as part of a whole payment system stack. Distributed ledgers have recently gained immense popularity as potential replacement for parts of the traditional financial industry. While cryptocurrencies based on proof-of-work such as Bitcoin have yet to scale to be useful as a replacement for established payment systems, other more efficient systems based on Blockchains with more classical consensus algorithms might still have promising applications in the financial industry. We design, implement and analyze the performance of Byzantine Set Union Consensus (BSC), a Byzantine consensus protocol that agrees on a (super-)set of elements at once, instead of sequentially agreeing on the individual elements of a set. While BSC is interesting in itself, it can also be used as a building block for permissioned Blockchains, where—just like in Nakamoto-style consensus—whole blocks of transactions are agreed upon at once, increasing the transaction rate.
Die Unsicherheit über den intrinsischen Wert von Kryptowährungen und der nachgewiesene Einfluss der Aufmerksamkeit an dem Marktwert verschiedener Vermögenswerte haben uns veranlasst, den Einfluss der Aufmerksamkeit auf den Marktwert von Kryptowährungen zu untersuchen. Als Aufmerksamkeitsindikator haben wir das Volumen von Google-Suchen zu bestimmten der Suchwörter Suchbegriffe genutzt das Suchvolumen von Google-Suchmenge, die auf Schlüsselwörtern basieren, die sich auf unseren Satz von Kryptowährungen einer sehr genauen Granularität beziehen. Unter Verwendung von ARMA und VECM haben wir getestet, ob die Google-Suchmenge die Vorhersage für Kryptowährungspreisentwicklung im Zeitrahmen von 15 Minuten bis zu einem Tag verbessert. Anschließend haben wir den Handel mit dieser Out-of-Sample Prognose simuliert und kamen zu dem Schluss, dass im Fall von häufigem Handel ohne Gebühren, einfache, univariate, autoregressive Modelle besser Ergebnisse produzieren. Unter Vernachlässigung von Gebühren jedoch, verbessert sich durch die Einbeziehung der Variablen für das Google-Suchvolumen das Handelsergebnisse, insbesondere bei stündlichen und täglichen Frequenzen. Unter Verwendung solcher Frequenzen übertraf das Modell univariate Modelle sowie das Wachstum der zugrunde liegenden Vermögenswerte.
Sam M. Werner, Paul J. Pritz, Alexei Zamyatin, William J. Knottenbelt
Mining pools in Proof-of-Work cryptocurrencies allow miners to pool their computational resources as a means of reducing payout variance. In Ethereum, uncle blocks are valid Proof-of-Work solutions which do not become the head of the blockchain, yet yield rewards if later referenced by main chain blocks. Mining pool operators are faced with the non-trivial task of fairly distributing rewards for both block types among pool participants.
Анотація. У статті розглянуто процеси подальшої інтеграції сучасних інформаційних цифрових технологій в економіку країни, впровадження та широке використання електронних фінансових інструментів і технологій, тенденції їх поширення в Україні. Серед усього різноманіття технологій цифрової економіки, що розвивається прискореними темпами, особливе місце займають інноваційні технології у фінансовій сфері. Необхідність надійного та захищеного інформаційного забезпечення проведення фінансових операцій і взаємних
A trusted routing scheme is very important to ensure the routing security and efficiency of wireless sensor networks (WSNs). There are a lot of studies on improving the trustworthiness between routing nodes, using cryptographic systems, trust management, or centralized routing decisions, etc. However, most of the routing schemes are difficult to achieve in actual situations as it is difficult to dynamically identify the untrusted behaviors of routing nodes. Meanwhile, there is still no effective way to prevent malicious node attacks. In view of these problems, this paper proposes a trusted routing scheme using blockchain and reinforcement learning to improve the routing security and efficiency for WSNs. The feasible routing scheme is given for obtaining routing information of routing nodes on the blockchain, which makes the routing information traceable and impossible to tamper with. The reinforcement learning model is used to help routing nodes dynamically select more trusted and efficient routing links. From the experimental results, we can find that even in the routing environment with 50% malicious nodes, our routing scheme still has a good delay performance compared with other routing algorithms. The performance indicators such as energy consumption and throughput also show that our scheme is feasible and effective.
This letter investigates the dynamic relationship between market efficiency, liquidity, and multifractality of Bitcoin. We find that before 2013 liquidity is low and the Hurst exponent is less than 0.5, indicating that the Bitcoin time series is anti-persistent. After 2013, as liquidity increased, the Hurst exponent rose to approximately 0.5, improving market efficiency. For several periods, however, the Hurst exponent was found to be significantly less than 0.5, making the time series anti-persistent during those periods. We also investigate the multifractal degree of the Bitcoin time series using the generalized Hurst exponent and find that the multifractal degree is related to market efficiency in a non-linear manner.
The aim of this paper is to analyze how limits in revenue and spending autonomy of sub-sovereign governments influence their decisions. Revenue and spending autonomy indicators for Polish towns were established and used in analysis on school education expenditures during 2003–2016. The influence of limits on revenue autonomy on municipal spending has been extensively addressed in both theoretical and empirical literature. However, studies related to spending autonomy are rare. The analysis presented in this paper suggests that when limits exist in spending autonomy, more decentralized tasks are crowded out by regulated obligations. That is why the spending autonomy analysis is important to evaluate the equity between local units and the adequacy of local revenues to decentralized expenditures.The basic principle of local finance is that there should be an adequate relationship between the financial resources available to a local authority and the tasks it performs. However, in practice, the assessment of whether this has been achieved is very difficult. Often, only problems with the solvency of local governments indicate that we are dealing with a poorly constructed system of local finances. The expenditure autonomy indicator proposed in this article is a tool that provides a way to indicate problems with the adequacy of revenues before such anextreme situation occurs.
With the ever growing Internet of Things (IoT) market, ledger systems are facing new challenges to efficiently store and secure enormous customer records collected by the IoT devices. The authenticity, availability, and integrity of these records are critically important for both business providers and customers. In this paper, we describe DLedger, a lightweight and resilient distributed ledger system. Instead of a single chain of blocks, DLedger builds the ledger over a directed acyclic graph (DAG), so that its operations can tolerate network partition and intermittent connectivity. Instead of compute-intensive Proof-of-Work (PoW), DLedger utilizes Proof-of-Authentication (PoA), whose light-weight operations are IoT-friendly, to achieve consensus. Furthermore, DLedger is built upon a data-centric network called Named Data Networking (NDN), which facilitates the peer-to-peer data dissemination in heterogeneous IoT networks.
Whether we recognize it or not, the Internet is rife with exciting and original institutional forms that are transforming social organization on and offline. Issues of governance in these Internet platforms and other digital institutions have posed a challenge for software engineers, many of whom have little exposure to the relevant history or theory of institutional design. Here, we offer one useful framework with an aim to stimulate dialogue between computer scientists and political scientists. The dominant guiding practices for the design of digital institutions to date in human-computer interaction, computer-supported cooperative work, and the tech industry at large have been an incentive-focused behavioral engineering paradigm, a collection of atheoretical approaches such as A/B-testing, and incremental issue-driven software engineering. One institutional analysis framework that has been useful in the design of traditional institutions is the body of resource governance literature known as the "Ostrom Workshop". A key finding of this literature that has yet to be broadly incorporated in the design of many digital institutions is the importance of including participatory change process mechanisms in what is called a "constitutional layer" of institutional design---in other words, defining rules that allow and facilitate diverse stakeholder participation in the ongoing process of institutional design change. We explore to what extent this consideration is met or could be better met in three varied cases of digital institutions: cryptocurrencies, cannabis informatics, and amateur Minecraft server governance. Examining such highly varied cases allows us to demonstrate the broad relevance of constitutional layers in many different types of digital institutions.
Blockchain is challenging the status quo of the central trust infrastructure currently prevalent in the Internet towards a design principle that is underscored by decentralization, transparency, and trusted auditability. In ideal terms, blockchain advocates a decentralized, transparent, and more democratic version of the Internet. Essentially being a trusted and decentralized database, blockchain finds its applications in fields as varied as the energy sector, forestry, fisheries, mining, material recycling, air pollution monitoring, supply chain management, and their associated operations. In this paper, we present a survey of blockchain-based network applications. Our goal is to cover the evolution of blockchain-based systems that are trying to bring in a renaissance in the existing, mostly centralized, space of network applications. While re-imagining the space with blockchain, we highlight various common challenges, pitfalls, and shortcomings that can occur. Our aim is to make this work as a guiding reference manual for someone interested in shifting towards a blockchain-based solution for one's existing use case or automating one from the ground up.