Ponzi schemes are financial frauds which lure users under the promise of high profits. Actually, users are repaid only with the investments of new users joining the scheme: consequently, a Ponzi scheme implodes soon after users stop joining it. Originated in the offline world 150 years ago, Ponzi schemes have since then migrated to the digital world, approaching first the Web, and more recently hanging over cryptocurrencies like Bitcoin. Smart contract platforms like Ethereum have provided a new opportunity for scammers, who have now the possibility of creating "trustworthy" frauds that still make users lose money, but at least are guaranteed to execute "correctly". We present a comprehensive survey of Ponzi schemes on Ethereum, analysing their behaviour and their impact from various viewpoints.
Multi-agents systems communication is a technology, which provides a way for multiple interacting intelligent agents to communicate with each other and with environment. Multiple-agent systems are used to solve problems that are difficult for solving by individual agent. Multiple-agent communication technologies can be used for management and organization of computing fog and act as a global, distributed operating system. In present publication we suggest technology, which combines decentralized P2P BOINC general-purpose computing tasks distribution, multiple-agents communication protocol and smart-contract based rewards, powered by Ethereum blockchain. Such system can be used as distributed P2P computing power market, protected from any central authority. Such decentralized market can further be updated to system, which learns the most efficient way for software-hardware combinations usage and optimization. Once system learns to optimize software-hardware efficiency it can be updated to general-purpose distributed intelligence, which acts as combination of single-purpose AI.
Andrew Miller, Iddo Bentov, Surya Bakshi, Ranjit Kumaresan · 5 authors
Bitcoin, Ethereum and other blockchain-based cryptocurrencies, as deployed today, cannot scale for wide-spread use. A leading approach for cryptocurrency scaling is a smart contract mechanism called a payment channel which enables two mutually distrustful parties to transact efficiently (and only requires a single transaction in the blockchain to set-up). Payment channels can be linked together to form a payment network, such that payments between any two parties can (usually) be routed through the network along a path that connects them. Crucially, both parties can transact without trusting hops along the route. In this paper, we propose a novel variant of payment channels, called Sprites, that reduces the worst-case "collateral cost" that each hop along the route may incur. The benefits of Sprites are two-fold. 1) In Lightning Network, a payment across a path of $\ell$ channels requires locking up collateral for $Θ(\ellΔ)$ time, where $Δ$ is the time to commit an on-chain transaction. Sprites reduces this cost to $O(\ell + Δ)$. 2) Unlike prior work, Sprites supports partial withdrawals and deposits, during which the channel can continue to operate without interruption. In evaluating Sprites we make several additional contributions. First, our simulation-based security model is the first formalism to model timing guarantees in payment channels. Our construction is also modular, making use of a generic abstraction from folklore, called the "state channel," which we are the first to formalize. We also provide a simulation framework for payment network protocols, which we use to confirm that the Sprites construction mitigates against throughput-reducing attacks.
Andrew Miller, Iddo Bentov, Ranjit Kumaresan, Christopher Cordi · 5 authors
Bitcoin, Ethereum and other blockchain-based cryptocurrencies, as deployed\ntoday, cannot scale for wide-spread use. A leading approach for cryptocurrency\nscaling is a smart contract mechanism called a payment channel which enables\ntwo mutually distrustful parties to transact efficiently (and only requires a\nsingle transaction in the blockchain to set-up). Payment channels can be linked\ntogether to form a payment network, such that payments between any two parties\ncan (usually) be routed through the network along a path that connects them.\nCrucially, both parties can transact without trusting hops along the route.\n In this paper, we propose a novel variant of payment channels, called\nSprites, that reduces the worst-case "collateral cost" that each hop along the\nroute may incur. The benefits of Sprites are two-fold. 1) In Lightning Network,\na payment across a path of $\\ell$ channels requires locking up collateral for\n$\\Theta(\\ell\\Delta)$ time, where $\\Delta$ is the time to commit an on-chain\ntransaction. Sprites reduces this cost to $O(\\ell + \\Delta)$. 2) Unlike prior\nwork, Sprites supports partial withdrawals and deposits, during which the\nchannel can continue to operate without interruption.\n In evaluating Sprites we make several additional contributions. First, our\nsimulation-based security model is the first formalism to model timing\nguarantees in payment channels. Our construction is also modular, making use of\na generic abstraction from folklore, called the "state channel," which we are\nthe first to formalize. We also provide a simulation framework for payment\nnetwork protocols, which we use to confirm that the Sprites construction\nmitigates against throughput-reducing attacks.\n
Thomas Dickerson, Paul Gazzillo, Maurice Herlihy, Eric Koskinen
Modern cryptocurrency systems, such as Ethereum, permit complex financial transactions through scripts called smart contracts. These smart contracts are executed many, many times, always without real concurrency. First, all smart contracts are serially executed by miners before appending them to the blockchain. Later, those contracts are serially re-executed by validators to verify that the smart contracts were executed correctly by miners. Serial execution limits system throughput and fails to exploit today's concurrent multicore and cluster architectures. Nevertheless, serial execution appears to be required: contracts share state, and contract programming languages have a serial semantics. This paper presents a novel way to permit miners and validators to execute smart contracts in parallel, based on techniques adapted from software transactional memory. Miners execute smart contracts speculatively in parallel, allowing non-conflicting contracts to proceed concurrently, and "discovering" a serializable concurrent schedule for a block's transactions, This schedule is captured and encoded as a deterministic fork-join program used by validators to re-execute the miner's parallel schedule deterministically but concurrently. Smart contract benchmarks run on a JVM with ScalaSTM show that a speedup of of 1.33x can be obtained for miners and 1.69x for validators with just three concurrent threads.
Smart contracts are full-fledged programs that run on blockchains (e.g., Ethereum, one of the most popular blockchains). In Ethereum, gas (in Ether, a cryptographic currency like Bitcoin) is the execution fee compensating the computing resources of miners for running smart contracts. However, we find that under-optimized smart contracts cost more gas than necessary, and therefore the creators or users will be overcharged. In this work, we conduct the first investigation on Solidity, the recommended compiler, and reveal that it fails to optimize gas-costly programming patterns. In particular, we identify 7 gas-costly patterns and group them to 2 categories. Then, we propose and develop GASPER, a new tool for automatically locating gas-costly patterns by analyzing smart contracts' bytecodes. The preliminary results on discovering 3 representative patterns from 4,240 real smart contracts show that 93.5%, 90.1% and 80% contracts suffer from these 3 patterns, respectively.
Ethereum contracts can be designed to function as fully decentralized applications called DAPPs. Many DAPPs have already been fielded, including an online marketplace, a role playing game, a prediction market, and an Internet service provider. Unfortunately, DAPPs can be hacked, and the assets they control can be stolen. A recent attack on an Ethereum decentralized application called The DAO demonstrated that smart contract bugs are more than an academic concern. Ether worth tens of millions of US dollars was extracted by an attacker from The DAO, sending the value of its tokens and the overall exchange price of ether tumbling. We present a market-based technique for insuring the ether holdings of a DAPP using futures contracts indexed by the trade price of ether for DAPP tokens. Under fairly general circumstances, our technique is capable of recovering the majority of ether lost from theft with high probability even when all of the ether holdings are stolen; and the only cost to DAPP token holders is an adjustable ether withdrawal fee. If the probability of a margin call in $d$ days is $p$ for a futures contract with 20 times leverage, then our approach will allow for the recovery of half the stolen ether with probability $p$ and a withdrawal fee of 5%. A higher withdrawal fee of 25% allows for more than 80% of the ether to be recovered with probability $p$.
Bryan Abdón Mendoza Muñoz, Kelly Muñoz, Dasha Villasis
Extensive research is carried out on the two most important cryptocurrencies at world level, the Ether (Ethereum) and the Bitcoin with the passage of time has been positioned in this medium, this due to the great consensus that had the Ethereum in the course of the last three years
The main focus of this article is the analysis of the global cryptocurrency market as an integrated system of cryptocurrencies and infrastructures that ensure their functioning. In particular, the general state of the cryptocurrency market and its current trends have been considered. The main part of the analysis was conducted on the structure of the global cryptocurrency market and its main components. Based on the indicator of cryptocurrency market capitalization, leading cryptocurrencies have been defined. They currently represent 80% of the world cryptocurrency market. These include Bitcoin, Ethereum, Ripple, Bitcoin Cash, Cardano, Litecoin and NEM. Key players in the cryptocurrency market infrastructure have been also determined, they support and contribute to the development of the market of almost every cryptocurrency. These include miners, full nodes, exchanges, wallets and payment companies. The main market indicators for each leading cryptocurrencies such as: the market share and its change over the year, the degree of influence of the cryptocurrency on the state of the global market, the dynamics of prices and their volatility have been analyzed. The infrastructure of the market of each cryptocurrency has been estimated on the basis of indicators of the reliability of the infrastructure and its trade opportunities. The study showed a high growth rate of Bitcoin and along with it a number of significant altcoins over the past year, which had a favorable effect on the state of the common cryptocurrency market. Almost every cryptocurrency showed positive trends. Ripple is the absolute record holder of price growth over the past year, followed by NEM. Bitcoin and Ethereum are the least financially risky ones in terms of volatility. In addition, Ethereum has the most reliable infrastructure, and Bitcoin has the most secured by exchanges and wallets. Cardano showed the highest growth rates in a short period of time. In general, these phenomena are positive forerunners for the cryptocurrency industry.
All human interaction can be depicted as exchanges. We exchange trivial information, feelings, assets and more. Valuable exchanges have one thing in common; they all require some degree of trust. In today’s society we rely on institutionalized trust when commencing an exchange of value. Typically, this role is filled by a vast ecosystem consisting of commercial banks, clearinghouses and other third parties. The recent rise of Bitcoin, Ethereum and consequent attention on the underlying technology, blockchain, questions the future of current ecosystem. This report aims at uncovering what blockchain is, what different implementations are currently available and how it would affect today’s ecosystem. It does so through semistructured interviews with actors within the current ecosystem as well as weighing in the views of blockchain evangelists. It highlights five key aspects that are crucial when implementing blockchain technology within the existing banking paradigm. Today’s organized societies require law and order which, to a large extent, is limited within the realm of public blockchain technology. With the insight of society’s infrastructural limitations, this paper argue that the current transaction system of our society favors a permissioned implementation with trusted nodes. Such a system would result in more efficient financial markets and lower costs of transacting. However, this paper acknowledge the virtues and reasons behind the rise of public blockchains. Given recent developments within the field and interesting concepts, the report does not dare to exclude a future of banking relying on public blockchain technology as the underlying database.
Jean-Marc Seigneur, Hélie D'hautefort, G. Ballocchi
The number of crypto-currencies is increasing fast. On one hand, following the launch of Bitcoin in 2009, more than 1000 different crypto-currencies are listed in the crypto-currency markets. On the other hand, solutions like eCurrency exist to effectively create digital fiat currencies. There are solid economic reasons to introduce an optimized basket of fiat currencies as well, along the lines of the International Monetary Fund Special Drawing Rights, particularly for entities with global assets and liabilities or for individuals wishing to protect their purchasing power in a more and more global and multipolar world. Up to now this kind of solution was only accessible to a few large institutions due to the structure of the foreign exchange market. The main original contribution of this paper is to present the first use case of linking a managed basket of fiat currencies to a new crypto-token. The tokenisation and the use of blockchain will enable us to make it accessible to any individual gaining diversification while benefiting from good liquidity and low cost. After reviewing recent digital fiat currencies initiatives, we explain the economic rationale of our optimized currency basket and its effective implementation by means of an existing blockchain-based distributed computing platform, i.e., Ethereum. Our technological approach enables a wide range of uses of our currency basket, which would not be possible without crypto-tokens.
The digital art landscape has rapidly expanded since the passing of Visual Rights Act of 1990 (Baron, 1996; CAA, 2013). With the recent advent of blockchain technologies, derived from Nakamoto’s Bitcoin currency, new possibilities have emerged for the way artistic materials can be exchanged and how communications can be conducted. This research examines emerging applications for decentralized blockchain technologies in community-based art projects and digital art startups¬. The work of three organizations, ConsenSys, Ethereum, and Monegraph, is explored. Through the use of blockchain technologies, digital artists can create a traceable and tradable record of their work, while generating a critical discourse around the reproducibility of media. In this research, I investigate the potential uses of digital art in the blockchain and its educational value in visual arts education.
In less than a calendar year, initial coin offerings or “ICOs” have become the fastest growing capital market in the world. In 2016, an entity called The DAO raised $160 million by selling crypto-tokens to over 15,000 individual purchasers around the globe. This massive fund raise would give rise to an entirely new capital ecosystem. In 2017, initial coin offerings would explode, raising a collective $3.5 billion in just the first three quarters of the year. All of this was done without a single registration being filed with the SEC, and many of these initial coin offerings — including several $100 million raises — were based on little more than a white paper and few lines of sample code. Welcome to the new Digital Wild West. With the seemingly overnight success of this new funding mechanism, there is little if any legal scholarship addressing initial coin offerings and how, or if, such offerings should be regulated. This article provides a non-technical legal audience with a foundational understanding of how the blockchain works, and the role initial coin offerings play in this new economic ecosystem. The overarching thesis of the article is that our current securities law framework, a framework that dates to the days of the great depression, is ill-equipped to handle this new world of decentralized, global, pseudonymous fund raises on public blockchains. Instead, governmental regulators should be working with core development teams to build a regulatory framework that integrates investor protections directly into the computer code governing these systems. By embracing “code as law,” both regulators and core development teams can protect the innovation being funded by initial coin offerings, while at the same time injecting some much needed investor protections into this new ecosystem. This article begins with an introduction to the coming decentralized world, including an overview of both public blockchain technology as well the Ethereum platform, the primary public blockchain upon which initial coin offerings are being deployed. Central to this introduction is an explanation of how the decentralization and disintermediation brought by the blockchain has the potential to dramatically reshape our economic and social systems. Next, the article explores the recent explosion of initial coin offerings, discussing how these offerings are structured, and how this new funding mechanism, if developed properly, has the promise of democratizing opportunities for economic innovation. The article then examines the SEC’s early statements on initial coin offerings to illustrate the potential problems with applying a dated legal framework to this new technology. Finally, the article concludes that the traditional securities law framework is ill suited for the coming decentralized world because the SEC’s enforcement power over global blockchain platforms is limited. Recognizing that external legal frameworks cannot be forced upon public blockchain platforms, the article argues for a collaborative process where governmental regulators work with core development teams to build a regulatory framework into the very fabric of these platforms, thereby providing investors protection, while at the same time embracing the concept of code as law.
Roman Beck, Christian Becker, Juho Lindman, Matti Rossi
This report documents the program and the outcomes of Dagstuhl Seminar 17132 "Opportunities and Risks of Blockchain Technologies". Blockchain-based applications such as Bitcoin or Ethereum are emerging technologies, but a dramatic increase in industrial and academic interest in the technology is evident. Start-ups and large financial players are working intensely on blockchain-based applications, making this one of the most promising drivers of financial innovation. However, the design and implementation of blockchain-based systems requires deep technical know-how in various areas, as well as consideration of economic and societal issues. These opportunities and challenges provided the starting point for the Dagstuhl Seminar where we analyzed and synthesized the current body of knowledge on the emerging landscape of blockchain technologies. We linked cryptographic economic systems to already established research streams around trust-related issues in payment systems and digital currencies, and digital asset management.
The purpose of this study was to describe social movement meeting organization and to increase the understanding of organized spaces for collective action. This paper contributes to several research streams. Firstly, this study advances a novel research stream conceptualizing social movements as spaces, and particularly as open rather than isolated spaces. Secondly, it raises meetings into the focal point of organizing and offers a multisided examination of meeting organization instead of limiting structure under one label such as network or formal organization. Thirdly, by focusing on organizing based on multiple logics and partial organization this study brings forward the understanding of organizing in the contemporary society as well as organization located in the outskirts of formal organizations. Fourthly, by making a distinction between organizing and mobilizing, this study develops the understanding of how movements can serve as a resource for individual actors and their goals. Finally, the case provides a rare example of a movement born around a nascent digital innovation with possibly considerable impact on society. The research was carried out as a descriptive case study focusing on the meetings of Helsinki Ethereum Meetup, which is a meeting-based organization set up around a nascent blockchain platform, Ethereum. The primary data consisted of eight interviews with the meetup participants. In addition, the case was complemented by an analysis of the group’s social media accounts and membership data retrieved from meetup.com, through which the group was facilitated. The data was analyzed utilizing a dual approach deploying both open coding and theory-based coding techniques. Meetings and their organization were analyzed from three perspectives: a network, an institution and an organization. Furthermore, the case analysis included identifying the ideological, business and political context of the case and the meetup group’s relations to other groups in the field of blockchain technologies. The results of the analysis indicate that the meetings can be described as a hybrid of a norm-based institution, a network hub and a partial organization with less than all elements of a formal organization. In practice, all three perspectives are linked to each other and together complement each other to form one entity. However, this study implies that the specific logics can be regarded as analytically separate to arrive at a more pronounced multilevel analysis of meeting organizing. In addition, the case organization was found to be an example of a pioneer group in its own field being the first and only meetup devoted to Ethereum in Finland at the time of the study. Furthermore, the settings and the organization of the meetup were possibly linked to the group’s position in its field and the nascent developmental state of Ethereum.
Taneli Hukkinen, Juri Mattila, Juuso Ilomäki, Timo Seppälä
Abstract This report documents a blockchain application developed for the energy sector that enables distributed market coordination for decentralized energy systems. As its core element, it utilizes Ethereum-based smart contracts to facilitate market matching between individual producers and consumers of electricity. The motive for this application was to understand the process of developing blockchain applications with industrial partners. Moreover, the purpose of this exercise was to examine whether Ethereum-based smart contracts could be effectively utilized for similar applications in industry and society at large. The application and the discussions during its development indicate that similar horizontal market structures may spring up in value chains in which the dynamicity of the market is growing and in which the roles of the market actors are shifting from fixed roles towards switch-role markets.
Blockchain technology has the potential to disrupt how cryptography is done. In this work, we propose to view blockchains as an “enabler”, much like indistinguishability obfuscation [5, 23, 46] or one-way functions, for building a variety of cryptographic systems. Our contributions in this work are as follows:
1.
A Framework for Proof-of-Stake based Blockchains: We provide an abstract framework for formally analyzing and defining useful security properties for Proof-of-Stake (POS) based blockchain protocols. Interestingly, for some of our applications, POS based protocols are more suitable. We believe our framework and assumptions would be useful in building applications on top of POS based blockchain protocols even in the future.
2.
Blockchains as an Alternative to Trusted Setup Assumptions in Cryptography: A trusted setup, such as a common reference string (CRS) has been used to realize numerous systems in cryptography. The paragon example of a primitive requiring trusted setup is a non-interactive zero-knowledge (NIZK) system. We show that already existing blockchains systems including Bitcoin, Ethereum etc. can be used as a foundation (instead of a CRS) to realize NIZK systems. The novel aspect of our work is that it allows for utilizing an already existing (and widely trusted) setup rather than proposing a new one. Our construction does not require any additional functionality from the miners over the already existing ones, nor do we need to modify the underlying blockchain protocol. If an adversary can violate the security of our NIZK, it could potentially also take over billions of dollars worth of coins in the Bitcoin, Ethereum or any such cryptocurrency!
We believe that such a “trusted setup” represents significant progress over using CRS published by a central trusted party. Indeed, NIZKs could further serve as a foundation for a variety of other cryptographic applications such as round efficient secure computation [33, 36].
3.
One-time programs and pay-per use programs: Goldwasser et al. [29] introduced the notion of one time program and presented a construction using tamper-proof hardware. As noted by Goldwasser et al. [29], clearly a one-time program cannot be solely software based, as software can always be copied and run again. While there have been a number of follow up works [4, 6, 30], there are indeed no known constructions of one-time programs which do not rely on self destructing tamper-proof hardware (even if one uses trusted setup or random oracles). Somewhat surprisingly, we show that it is possible to base one-time programs on POS based blockchain systems without relying on trusted hardware. Our ideas do not seem to translate over to Proof-of-Work (POW) based blockchains.
We also introduce the notion of pay-per-use programs which is simply a contract between two parties — service provider and customer. A service provider supplies a program such that if the customer transfers a specific amount of coins to the provider, it can evaluate the program on any input of its choice once, even if the provider is offline. This is naturally useful in a subscription based model where your payment is based on your usage.
The Internet of Things is a proliferating industry, which is transforming many homes and businesses, making them smart. However, the rapid growth of these devices and the interactions between these devices, introduces many challenges including that of a secure management system for the identities and interactions of the devices. While the centralized model has worked well for many years, there is a risk of the servers becoming bottlenecks and a single point of failure, thereby making them vulnerable to Denial-of-Service attacks. As a backbone of these interactions, Blockchain is capable of creating a highly secure, independent and distributed platform. Blockchain is a peer to peer, distributed ledger system that stores all the transactions taking place within the network. The main purpose of the servers that form a part of the distributed system is to provide a consensus, using various consensus algorithms, on the state of the blockchain at any given time and to store a copy of all the transactions taking place. This thesis explores the Blockchain technology in general and investigates its potential with regard to access management of constrained devices. A proof of concept system has been designed and implemented that demonstrates a simplified access management system using Ethereum Blockchain. This was done to check whether the concept can be applied at a global level. Although the latency of the network depends on the computing power of the resources participating in the Blockchain, an evaluation of the proof of concept system has been made, keeping in mind the smallest device that can be involved in the consensus process. Docker containers have been used to simulate a cluster of the nodes participating in the Blockchain, in order to examine the implemented system. An outline of the various advantages and the limitations of Blockchains in general, as well as the developed proof of concept system, has also been provided.
In every nation, democratic elections are a momentous and weighty occurrence, and the voting system that is now in place requires the use of ballots or electronic voting machines (EVM). Transparency, poor turnout, vote manipulation, distrust of electoral organizations, fabrication of unique IDs (voting party IDs), and delays in posting results are some of the issues that arise as a result of these procedures. The matter of safety is of the utmost importance. When considering the installation of a computerized voting system, voter confidentiality has always been one of the most important concerns. There is no question regarding the system's capability to secure itself in contrast to prospective assaults and safeguard data in the face of such big choices. Utilization of blockchain technology is one approach that might be taken to resolve security concerns. The blockchain technology has an endless number of different uses that might be implemented. The technology known as blockchain is a distributed ledger that makes it possible for peer-to-peer networks all over the world to handle digital assets. In this context, distributed ledger technology represents an intriguing development. A grouping of all transactions is referred to as a block. Immutability, decentralisation, security, transparency, and anonymity are some of the outstanding properties offered by blockchain technology. The combination of blockchain technology with smart contracts has shown promise as a viable option for the development of trustworthy and open-source electronic voting systems. In this article, we demonstrate how to use blockchain technology with the help of a wallet and the Solidity programming language to build an electronic voting application. The programme was designed as a smart contract for the Ethereum network. In order to avoid having the same person vote twice, the user's wallet will only hold a certain number of tokens (gas), which will be depleted each time the user casts a vote. This article talks about the pros and cons of using blockchain technology. It also shows a practical solution in the form of a web app for voting and analyses its limits.