This paper introduces some of the interdependent components within the multifaceted solution our team is developing towards accelerating the functionality, complexity and versatility of blockchain-enabled services. The focus here is particularly on introducing and bringing together selected individual components of the solution to achieve a synergistic effect in expanding the functionality of blockchain-enforced smart contracts. The contributions of this paper include: (i) proposing a method for automated management of contracts with hierarchical conditionality structures through an hierarchy of intelligent agents and the use of hierarchical cryptographic key-pairs; (ii) proposing a method for efficient and secure matching and transfer of smart-contract underlyings (entities) among disparate smart contracts/subcontracts; (iii) proposing a method for producing an hierarchy of common secrets to facilitate hierarchical communication channels of increased security, and applying this method both in the context of method (i) and method (ii); and (iv) proposing the use of distributed hash tables DHT in building secure and optimized repositories in the context of method (i) and in the context method (ii), where the former involves a DHT repository of smart contracts and the latter involves a DHT repository of entities underlying smart contracts that are being exchanged among different smart contracts and subcontracts. The smart-contract focused methods introduced in this paper contribute to the overall goal towards a sustainable adaptive mechanism for processing evolving volumes, versatility, and complexity of blockchain transactions, traffic, and services. Blockchain-enabled services are efficient, secure, automated, and allowing worldwide distribution of resources. They present a more efficient and sustainable alternative to current service infrastructures within a range of domains, particularly the legal and financial domains. They also set a sustainable infrastructure for emerging Internet-of-things services.
Andrea Pinna, Roberto Tonelli, Matteo Orrù, Michele Marchesi
A Blockchain is a global shared infrastructure where cryptocurrency transactions among addresses are recorded, validated and made publicly available in a peer-to-peer network. To date, the best known and important cryptocurrency is the bitcoin. In this paper, we focus on this cryptocurrency and in particular on the modeling of the Bitcoin Blockchain by using the Petri Nets formalism. The proposed model allows us to quickly collect information about identities owning Bitcoin addresses and to recover measures and statistics on the Bitcoin network. By exploiting algebraic formalism, we reconstructed an Entities network associated to Blockchain transactions gathering together Bitcoin addresses into the single entity holding permits to manage Bitcoins held by those addresses. The model allows also to identify a set of behaviors typical of Bitcoin owners, like that of using an address only once, and to reconstruct chains for this behavior together with the rate of firing. Our model is highly flexible and can easily be adapted to include different features of the Bitcoin cryptocurrency system. By exploiting algebraic formalism, we reconstructed an Entities network associated to Blockchain transactions gathering together Bitcoin addresses into the single entity holding permits to manage Bitcoins held by those addresses. The model allows also to identify a set of behaviors typical of Bitcoin owners, like that of using an address only once, and to reconstruct chains for this behavior together with the rate of firing. Our model is highly flexible and can easily be adapted to include different features of the Bitcoin cryptocurrency system.
Stefanie Roos, Pedro Moreno-Sánchez, Aniket Kate, Ian Goldberg
Path-based transaction (PBT) networks, which settle payments from one user to\nanother via a path of intermediaries, are a growing area of research. They\novercome the scalability and privacy issues in cryptocurrencies like Bitcoin\nand Ethereum by replacing expensive and slow on-chain blockchain operations\nwith inexpensive and fast off-chain transfers. In the form of credit networks\nsuch as Ripple and Stellar, they also enable low-price real-time gross\nsettlements across different currencies. For example, SilentWhsipers is a\nrecently proposed fully distributed credit network relying on path-based\ntransactions for secure and in particular private payments without a public\nledger. At the core of a decentralized PBT network is a routing algorithm that\ndiscovers transaction paths between payer and payee. During the last year, a\nnumber of routing algorithms have been proposed. However, the existing ad hoc\nefforts lack either efficiency or privacy. In this work, we first identify\nseveral efficiency concerns in SilentWhsipers. Armed with this knowledge, we\ndesign and evaluate SpeedyMurmurs, a novel routing algorithm for decentralized\nPBT networks using efficient and flexible embedding-based path discovery and\non-demand efficient stabilization to handle the dynamics of a PBT network. Our\nsimulation study, based on real-world data from the currently deployed Ripple\ncredit network, indicates that SpeedyMurmurs reduces the overhead of\nstabilization by up to two orders of magnitude and the overhead of routing a\ntransaction by more than a factor of two. Furthermore, using SpeedyMurmurs\nmaintains at least the same success ratio as decentralized landmark routing,\nwhile providing lower delays. Finally, SpeedyMurmurs achieves key privacy goals\nfor routing in PBT networks.\n
Harry Kalodner, Steven Goldfeder, Alishah Chator, Malte Möser · 5 authors
Analysis of blockchain data is useful for both scientific research and commercial applications. We present BlockSci, an open-source software platform for blockchain analysis. BlockSci is versatile in its support for different blockchains and analysis tasks. It incorporates an in-memory, analytical (rather than transactional) database, making it several hundred times faster than existing tools. We describe BlockSci's design and present four analyses that illustrate its capabilities. This is a working paper that accompanies the first public release of BlockSci, available at https://github.com/citp/BlockSci. We seek input from the community to further develop the software and explore other potential applications.
Purwono Purwono, Alfian Ma’arif, Wahyu Rahmaniar, Qazi Mazhar ul Haq · 6 authors
Blockchain technology has a promising future in a number of industries and enterprises. Formerly connected to virtual currency like Bitcoin, blockchain has evolved into a versatile technology with many applications. In the upcoming years, it is predicted that blockchain will revolutionize a variety of industries, including banking, supply chain management, healthcare, voting systems, and more. The future of blockchain technology depends critically on its ability to increase security and transparency. By providing a decentralized and unchangeable record, eliminating the need for middlemen, and boosting participant confidence, blockchain promotes secure and traceable transactions. This transparency has the potential to transform whole industries by reducing fraud, streamlining processes, and increasing output. Blockchain also has the power to change financial systems. Blockchain-based smart contracts facilitate faster, more efficient transactions by automating and enforcing contractual agreements without the need for middlemen. By enabling speedier cross-border transactions, reducing costs, and boosting financial inclusion, tokenization and blockchain-based digital currencies have the potential to overturn conventional banking institutions. Blockchain’s key attributes, including decentralization, transparency, immutability, and security, make it a desirable choice for a range of organizations. Cross-border payments, trade finance, and smart contracts are just a few of the financial sector processes that blockchain technology has the potential to enhance and automate, lowering costs and increasing productivity. Additionally, the tamper-resistance of blockchain technology can boost transaction security and reliability, allowing for a wider use in traditional financial institutions. Outside of the financial industry, blockchain technology has a lot of promise, particularly in industries like supply chain management, healthcare, energy, intellectual property, and governance. By enabling transparent and traceable transactions, blockchain may improve supply chain efficiency, ensure product authenticity, and boost customer trust. By facilitating the secure exchange of patient data and research data, the decentralized nature of blockchain technology can enhance data security, interoperability, and privacy in the healthcare sector. A more decentralized and sustainable energy ecosystem may be supported by blockchain technology through peer-to-peer energy exchange, grid management, and monitoring of renewable energy certificates in the energy sector. Additionally, blockchain technology has the potential to transform decentralized governance structures, voting procedures, intellectual property rights, and digital identity management. By allowing people to own and manage their digital identities, blockchain can enhance privacy and reduce identity theft. Blockchain-based voting systems can offer transparency, security, and verifiability, thereby increasing voter turnout and public trust in democratic institutions. Blockchain can also enable the secure and transparent management of intellectual property rights, fostering author credit and just compensation.
Cüneyt Gürcan Akçora, Yulia R. Gel, Murat Kantarcıoğlu
Bitcoin and its underlying technology, blockchain, have gained significant popularity in recent years. Satoshi Nakamoto designed Bitcoin to enable a secure, distributed platform without the need for central authorities, and blockchain has been hailed as a paradigm that will be as impactful as Big Data, Cloud Computing, and Machine Learning. Blockchain incorporates innovative ideas from various fields, such as public-key encryption and distributed systems. As a result, readers often encounter resources that explain Blockchain technology from a single perspective, leaving them with more questions than answers. In this primer, we aim to provide a comprehensive view of blockchain. We will begin with a brief history and introduce the building blocks of the blockchain. As graph mining is a major area of blockchain analysis, we will delve into the graph-theoretical aspects of Blockchain technology. We will also discuss the future of blockchain and explain how extensions such as smart contracts and decentralized autonomous organizations will function. Our goal is to provide a concise but complete description of blockchain technology that is accessible to readers with no prior expertise in the field.
We’ve seen repeatedly that ideas in the research literature can be gradually forgotten or lie unappreciated, especially if they are ahead of their time, even in popular areas of research. Both practitioners and academics would do well to revisit old ideas to glean insights for present systems. Bitcoin was unusual and successful not because it was on the cutting edge of research on any of its components, but because it combined old ideas from many previously unrelated fields. This is not easy to do, as it requires bridging disparate terminology, assumptions, etc., but it is a valuable blueprint for innovation.
Rituparna Bhattacharya, Martin White, Natalia Beloff
Almost every traveller possesses some amount of leftover foreign currency, either as actual cash or on a travel currency card, at the end of any international trip. However, the means to exchange this leftover currency, coins in particular, is largely inconvenient often leading to considerable amounts discarded or left unused. In this paper, we explore how distributed ledger technology, i.e. blockchain, could be applied to the problem of utilizing this leftover foreign currency. We portray here the drawbacks of the existing systems of foreign currency exchange and delineate the requirements of a potential mobile web application for exchanging this currency by integrating smart kiosk based systems, particularly for handling cash, with a peer-to-peer currency exchange technique based on blockchain that could help to bring such currency back into circulation efficiently.
Zhijie Ren, Kelong Cong, Johan Pouwelse, Zekeriya Erkin
Recently, the blockchain technique was put in the spotlight as it introduced a systematic approach for multiple parties to reach consensus without needing trust. However, the application of this technique in practice is severely restricted due to its limitations in throughput. In this paper, we propose a novel consensus model, namely the implicit consensus, with a distinctive blockchain-based distributed ledger in which each node holds its individual blockchain. In our system, the consensus is not on the transactions, but on a special type of blocks called Check Points that are used to validate individual transactions. Our system exploits the ideas of self-interest and spontaneous sharding and achieves unbounded throughput with the transaction reliability that equivalent to traditional Byzantine fault tolerance schemes.
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.
Bitcoin is a popular alternative to fiat money, widely used for its perceived anonymity properties. However, recent attacks on Bitcoin's peer-to-peer (P2P) network demonstrated that its gossip-based flooding protocols, which are used to ensure global network consistency, may enable user deanonymization---the linkage of a user's IP address with her pseudonym in the Bitcoin network. In 2015, the Bitcoin community responded to these attacks by changing the network's flooding mechanism to a different protocol, known as diffusion. However, no systematic justification was provided for the change, and it is unclear if diffusion actually improves the system's anonymity. In this paper, we model the Bitcoin networking stack and analyze its anonymity properties, both pre- and post-2015. In doing so, we consider new adversarial models and spreading mechanisms that have not been previously studied in the source-finding literature. We theoretically prove that Bitcoin's networking protocols (both pre- and post-2015) offer poor anonymity properties on networks with a regular-tree topology. We validate this claim in simulation on a 2015 snapshot of the real Bitcoin P2P network topology.
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 “killer application” 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 law’s 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.
Over past decade cloud services have enabled individuals and organizations to perform different types of tasks such as online storage, email services, on-demand movies and TV shows. The cloud services has also enabled on-demand deployment of applications, at cheap cost with elastic and scalable, fault tolerant system. These cloud services are offered by cloud providers who use authentication, authorization and accounting framework based on client-server model. Though this model has been used over decades, study shows it is vulnerable to different hacks and it is also inconvenient to use for the end users. In addition, the cloud provider has total control over user data which they are able to monitor, trace, leak and even modify at their will. Thus, the user data ownership, digital identity and use of cloud services has raised privacy and security concern for the users. In this thesis, Blockchain and its applications are studied and alternative model for authentication, authorization and accounting is proposed based on Ethereum Blockchain. Furthermore, a prototype is developed which enables users to consume cloud services by authenticating, authorizing and accounting with a single identity without sharing any private user data. Experiments are run with the prototype to verify that it works as expected. Measurements are done to assess the feasibility and scalability of the solution. In the final part of the thesis, pros and cons of the proposed solution are discussed and perspectives for further research are sketched.
The Bitcoin protocol allows to save arbitrary data on the blockchain through a special instruction of the scripting language, called OP_RETURN. A growing number of protocols exploit this feature to extend the range of applications of the Bitcoin blockchain beyond transfer of currency. A point of debate in the Bitcoin community is whether loading data through OP_RETURN can negatively affect the performance of the Bitcoin network with respect to its primary goal. This paper is an empirical study of the usage of OP_RETURN over the years. We identify several protocols based on OP_RETURN, which we classify by their application domain. We measure the evolution in time of the usage of each protocol, the distribution of OP_RETURN transactions by application domain, and their space consumption.
Distributed ledger technology (DLT) is a database architecture which enables the keeping and sharing of records in a distributed and decentralized way, while ensuring its integrity through the use of consensus-based validation protocols and cryptographic signatures. In principle, DLT has the potential to reduce costs and increase the efficiency of securities settlement, the ultimate step of every security transaction. In this paper, we first examine to what extent DLT could add value and change securities settlement. We then characterize the innovation process in the post-trade industry and finally, we describe the economics of a hypothetical DLT-based security settlement industry. Our main conclusions are that: i) DLT has the potential to improve efficiency and reduce costs in securities settlement, but the technology is still evolving and it is uncertain at this point what form, if any, a DLT-based solution for securities settlement will ultimately take, ii) technological innovation in the post-trade industry is more likely to achieve its potential with some degree of co-ordination which could be facilitated by the relevant authorities, and iii) if DLT-based securities settlement becomes a reality, then it is likely to be concentrated among few providers which, in the absence of regulation, could result in inefficient monopoly pricing or efficient price discrimination with service providers capturing much of the market surplus.
Luis Ibáñez, Elena Simperl, Fabien Gandon, Henry Story
The web was originally conceived as decentralized and universal, but during its popularization, its big value was built on centralized servers and nonuniversal access. A key element to redecentralize the web is to be able to generate trustable, secure, and accountable updates among autonomous participants without a central server. The authors believe that the marriage between distributed ledgers and linked data can provide this functionality and unlock the web's true potential. As a first step toward it, the authors propose a minimal vocabulary to describe and link distributed ledgers.
The know-your-customer (KYC) due diligence process is outdated and generates costs of up to USD 500 million per year per bank. We propose a new system, based on distributed ledger technology (DLT) that reduces the costs of the core KYC verification process for financial institutions and improves the customer experience. In the proposed system, the core KYC verification process is only conducted once for each customer, regardless of the number of financial institutions with which the customer intends to work. Thanks to DLT, the result of the core KYC verification can be securely shared by customers with all the financial institutions that they intend to work with. This system allows for efficiency gains, cost reduction, improved customer experience, and increased transparency throughout the process of onboarding a customer.
Jan 1, 2017·Proceedings of the ... Annual Hawaii International Conference on System Sciences/Proceedings of the Annual Hawaii International Conference on System Sciences
Technological innovation and consequential decentralisation are driving forces in the ongoing evolution and increasing openness of digital infrastructures and services. One of the most discussed and allegedly disruptive innovations is the distributed database technology referred to as blockchain. Although it is still in its technological infancy, experimental adoption and customization seem to be in full progress in various potential fields of application ranging from decentralized grids for computation and storage to global financial services. However, the technology and its path of development still entail a lot of common unknowns for practitioners and researchers alike. Especially regarding the question how the technology could amend or be incorporated into the existing landscape of digital services, processes and infrastructures. Hence, in this article we develop an ontology that (1) clearly delineates common terminology, core concepts and components, their relationships as well as innovative features of blockchain technology. It further (2) connects these insights with implications for relevant types of digital market models. Our framework is of high theoretical and practical value as it provides researchers and practitioners a common basis for communication and means for guided analysis of blockchain applicability.
Ujan Mukhopadhyay, Anthony Skjellum, Oluwakemi Hambolu, Jon Oakley · 6 authors
Cryptocurrencies have emerged as important financial software systems. They rely on a secure distributed ledger data structure; mining is an integral part of such systems. Mining adds records of past transactions to the distributed ledger known as Blockchain, allowing users to reach secure, robust consensus for each transaction. Mining also introduces wealth in the form of new units of currency. Cryptocurrencies lack a central authority to mediate transactions because they were designed as peer-to-peer systems. They rely on miners to validate transactions. Cryptocurrencies require strong, secure mining algorithms. In this paper we survey and compare and contrast current mining techniques as used by major Cryptocurrencies. We evaluate the strengths, weaknesses, and possible threats to each mining strategy. Overall, a perspective on how Cryptocurrencies mine, where they have comparable performance and assurance, and where they have unique threats and strengths are outlined.
Adem Efe Gencer, Robbert van Renesse, Emin Gün Sirer
The rise of blockchain-based cryptocurrencies has led to an explosion of services using distributed ledgers as their underlying infrastructure. However, due to inherently single-service oriented blockchain protocols, such services can bloat the existing ledgers, fail to provide sufficient security, or completely forego the property of trustless auditability. Security concerns, trust restrictions, and scalability limits regarding the resource requirements of users hamper the sustainable development of loosely-coupled services on blockchains. This paper introduces Aspen, a sharded blockchain protocol designed to securely scale with increasing number of services. Aspen shares the same trust model as Bitcoin in a peer-to-peer network that is prone to extreme churn containing Byzantine participants. It enables introduction of new services without compromising the security, leveraging the trust assumptions, or flooding users with irrelevant messages.
Roman Matzutt, Oliver Hohlfeld, Martin Henze, Robin Rawiel · 6 authors
As transaction fees skyrocket today, blockchains become increasingly expensive, hurting their adoption in broader applications. This work tackles the saving of transaction fees for economic blockchain applications. The key insight is that other than the existing "default'' mode to execute application logic fully on-chain, i.e., in smart contracts, and in fine granularity, i.e., user request per transaction, there are alternative execution modes with advantages in cost-effectiveness. On Ethereum, we propose a holistic middleware platform supporting flexible and secure transaction executions, including off-chain states and batching of user requests. Furthermore, we propose control-plane schemes to adapt the execution mode to the current workload for optimal runtime cost. We present a case study on the institutional accounts (e.g., coinbase.com) intensively sending Ether on Ethereum blockchains. By collecting real-life transactions, we construct workload benchmarks and show that our work saves 18%\sim 47%18%-47% per invocation than the default baseline while introducing 1.81%\sim 16.59%1.81%-16.59% blocks delay.
Dimitris Chatzopoulos, Sujit Gujar, Boi Faltings, Pan Hui
The popularity of digital currencies, especially cryptocurrencies, has been continuously growing since the appearance of Bitcoin. Bitcoin is a peer-to-peer (P2P) cryptocurrency protocol enabling transactions between individuals without the need of a trusted authority. Its network is formed from resources contributed by individuals known as miners. Users of Bitcoin currency create transactions that are stored in a specialised data structure called a block chain. Bitcoin's security lies in a proof-of-work scheme, which requires high computational resources at the miners. These miners have to be synchronised with any update in the network, which produces high data traffic rates. Despite advances in mobile technology, no cryptocurrencies have been proposed for mobile devices. This is largely due to the lower processing capabilities of mobile devices when compared with conventional computers and the poorer Internet connectivity to that of the wired networking. In this work, we propose LocalCoin, an alternative cryptocurrency that requires minimal computational resources, produces low data traffic and works with off-the-shelf mobile devices. LocalCoin replaces the computational hardness that is at the root of Bitcoin's security with the social hardness of ensuring that all witnesses to a transaction are colluders. It is based on opportunistic networking rather than relying on infrastructure and incorporates characteristics of mobile networks such as users' locations and their coverage radius in order to employ an alternative proof-of-work scheme. Localcoin features (i) a lightweight proof-of-work scheme and (ii) a distributed block chain.
Jul 1, 2016·2016 Intl IEEE Conferences on Ubiquitous Intelligence & Computing, Advanced and Trusted Computing, Scalable Computing and Communications, Cloud and Big Data Computing, Internet of People, and Smart World Congress (UIC/ATC/ScalCom/CBDCom/IoP/SmartWorld)
Till Neudecker, Philipp Andelfinger, Hannes Hartenstein
Flooding Peer-to-Peer (P2P) networks form the basis of services such as the electronic currency system Bitcoin. The decentralized architecture enables robustness against failure. However, knowledge of the network's topology can allow adversaries to attack specific peers in order to, e.g., isolate certain peers or even partition the network. Knowledge of the topology might be gained by observing the flooding process, which is inherently possible in such networks,, performing a timing analysis on the observations. In this paper we present a timing analysis method that targets flooding P2P networks, show its theoretical, practical feasibility. A validation in the real-world Bitcoin network proves the possibility of inferring network links of actively participating peers with substantial precision, recall (both ~ 40%), potentially enabling attacks on the network. Additionally, we analyze the countermeasure of trickling, quantify the tradeoff between the effectiveness of the countermeasure, the expected performance penalty. The analysis shows that inappropriate parametrization can actually facilitate inference attacks.
Address clustering tries to construct the one-to-many mapping from entities to addresses in the Bitcoin system. Simple heuristics based on the micro-structure of transactions have proved very effective in practice. In this paper we describe the primary reasons behind this effectiveness: address reuse, avoidable merging, super-clusters with high centrality, and the incremental growth of address clusters. We quantify their impact during Bitcoin's first seven years of existence.