Sehyun Park, Seongwon Im, Youhwan Seol, Jeongyeup Paek
Bitcoin is a decentralized digital currency that has gained significant attention and growth in recent years. Unlike traditional currencies, Bitcoin does not rely on a centralized authority to control the supply, distribution, and verification of the validity of transactions. Instead, Bitcoin relies on a peer-to-peer (P2P) network of volunteers to distribute pending transactions and confirmed blocks, to verify transactions, and to collectively implement a replicated ledger that everyone agrees on. This P2P network is at the heart of Bitcoin and many other blockchain technologies. In this paper, we present a comparative measurement study of nodes in the Bitcoin network. We measure and analyze how many the so-called “volunteers” are in the Bitcoin P2P network by scanning the live Bitcoin network for 37 days in 2018 and compare them with the data reported by prior work in 2013~2016. This paper is motivated by the fact that Bitcoin has experienced explosive growth in terms of a number of users, transactions, value, and interest over a recent couple of years. Our investigation includes the IP addresses of Bitcoin nodes, size of the network, power law in the geographic distribution, protocol, and client versions, and network latencies and shows how today's network is different from early days. In addition, based on the observations made from the measurement study, we propose a simple distance-based peer selection rule for improved connectivity and faster data propagation. The evaluation results show that our proposed lightweight and backward-compatible peer selection rule has the potential to reduce data dissemination latency.
Open access
Blockchain Technology Applications and Security
Advanced Steganography and Watermarking Techniques
Bitcoin as a major cryptocurrency has come up as a shooting star of the 2017 and 2018 headlines. After exploding its price twenty times just in the twelve months of 2017, the tone has changed dramatically in 2018 after major price corrections and increasing concerns about its mining power consumption and overall sustainability. The dynamics and interaction between Bitcoin price and its mining costs have become of major interest. Here we show that these two quantities are tightly interconnected and they tend to a common long-term equilibrium. Mining costs adjust to the cryptocurrency price with the adjustment time of several months up to a year. Current developments suggest that we have arrived at a new era of Bitcoin mining where marginal (electricity) costs and mining efficiency play the prime role. Presented results open new avenues towards interpreting past and predicting future developments of the Bitcoin mining framework.
Anders Stensås, Magnus Frostholm Nygaard, Khine Kyaw, Sirimon Treepongkaruna
This paper investigates whether Bitcoin acts as a diversifier, hedge or safe haven tool for investors in major developed and developing markets, as well as for commodities. This paper employs the GARCH Dynamic Conditional Correlation (DCC) model. The sample covers seven developed and six developing countries, five regional indices and 10 commodity series. The results show that Bitcoin acts as a hedge for investors in most of the developing countries such as Brazil, Russia, India and South Korea, but only as a diversifier for investors in developed countries and for commodities. Moreover, Bitcoin acts as a diversifier for all the 10 commodities studied here. During the US election in 2016, Brexit referendum in 2016, and the burst of Chinese market bubble in 2015, Bitcoin acted as a safe haven asset for both the US and non-US investors. Understanding the role of Bitcoin is important for financial market participants who seek protection against market turmoil and downward movements. Furthermore, our findings would be of interests to regulators and governments to engage in more discussion of the role of Bitcoin in financial markets. This paper contributes to the ongoing debate on the usefulness of Bitcoin for investments. Furthermore, it distinguishes the benefits of Bitcoin as a diversifier, hedge and safe haven to investors in the developed versus developing markets.
In today’s era of big data, deep learning and artificial intelligence have formed the backbone for cryptocurrency portfolio optimization. Researchers have investigated various state of the art machine learning models to predict Bitcoin price and volatility. Machine learning models like recurrent neural network (RNN) and long short-term memory (LSTM) have been shown to perform better than traditional time series models in cryptocurrency price prediction. However, very few studies have applied sequence models with robust feature engineering to predict future pricing. In this study, we investigate a framework with a set of advanced machine learning forecasting methods with a fixed set of exogenous and endogenous factors to predict daily Bitcoin prices. We study and compare different approaches using the root mean squared error (RMSE). Experimental results show that the gated recurring unit (GRU) model with recurrent dropout performs better than popular existing models. We also show that simple trading strategies, when implemented with our proposed GRU model and with proper learning, can lead to financial gain.
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.
Communication across distributed systems, each running its own consensus, is a problem previously studied under the assumption of trust across systems. With the appearance of distributed ledgers or blockchains, numerous protocols have emerged, which attempt to achieve trustless communication between distrusting ledgers and participants. Cross-chain communication thereby plays a fundamental role in cryptocurrency exchanges, sharding, bootstrapping and extension of distributed ledgers. Unfortunately, existing proposals are designed ad-hoc for specific use-cases, making it hard to gain confidence on their correctness and to use them as building blocks for new systems.
Distributed Ledger Technology (DLT) has emerged as one of the most disruptive technologies in the last decade. It promises to change the way people do their business, track their products, and manage their personal data. Though the concept of DLT was first implemented in 2009 as Bitcoin, it has gained significant attention only in the past few years. During this time, different DLT enthusiasts and commercial companies have proposed and developed several DLT platforms. These platforms are usually categorized as public vs private, general purpose vs application specific and so on. As a growing number of people are interested to build DLT applications, it is important to understand their underlying architecture and capabilities in order to determine which DLT platform should be leveraged for a specific DLT application. In addition, the platforms need to be evaluated and critically analyzed to assess their applicability, resiliency and sustainability in the long run. In this paper, we have surveyed several leading DLT platforms and evaluated their capabilities based on a number of quantitative and qualitative criteria. The comparative analysis presented in this paper will help the DLT developers and architects to choose the best platform as per their requirement(s).
Weilin Zheng, Zibin Zheng, Xiangping Chen, Kemian Dai · 6 authors
Blockchain, originated from Bitcoin system, has drawn intense attention from the academic community because of its decentralization, persistency, anonymity and auditability. In the past decade, the blockchain technology has evolved and became viable for various applications beyond the domain of finance. However, due to the complexity of blockchain technology, it is usually difficult and costly for most developers or teams to build, maintain and monitor a blockchain network that supports their applications. Most common developers or teams are unable to ensure the reliability and security of the blockchain system, which to a certain extent affects the quality of their applications. In this paper, we develop a BaaS platform called NutBaaS, which provides blockchain service over cloud computing environments, such as network deployment and system monitoring, smart contracts analysis and testing. Based on these services, developers can focus on the business code to explore how to apply blockchain technology more appropriately to their business scenarios, without bothering to maintain and monitor the system.
Modern power systems face different challenges such as the ever-increasing electrical energy demand, the massive growth of renewable energy with distributed generations, the large-scale Internet of Things (IoT) devices adaptation, the emerging cyber-physical security threats, and the main goal of maintaining the system's stability and reliability. These challenges pose extreme pressure on finding advanced technologies and sustainable solutions for secure and reliable operations of the power system. The blockchain is one of the recent technologies that have gained lots of attention in different applications including smart grid for its uniqueness and decentralized nature. In the last few years, this technology grew a momentum specifically with the cryptocurrencies' industry such as the Bitcoin and Etherium. The Blockchain's applications in the smart grids could offer many innovative and affordable solutions to some of the challenges that the future and the current smart grids will be facing. This paper reviews different prospects, advantages, approaches, and technical challenges of utilizing the blockchain technology in the smart grid, and presents frameworks for key smart grid blockchain-based applications; more specifically, it is shown that how the blockchain can be used as the smart grid's cyber-physical layer.
Healthcare data management has been gaining a lot of attention in recent years because of its high potential to provide more accurate and cost-efficient patient care. The traditional client-server and cloud-based healthcare data management systems suffer from the issues of single point of failure, data privacy, centralized data stewardship, and system vulnerability. The replication mechanism, and privacy and security features of blockchain have a promising future in the healthcare domain as they can solve some of the inherent issues of the health management system. However, most of the recent research works on blockchain in the healthcare domain have primarily focused on the permission-less Bitcoin network that suffers from drawbacks such as high energy consumption, limited scalability, and low transaction throughput. Consequently, there is a need for a scalable, fault-tolerant, secure, traceable and private blockchain to suit the requirements of the healthcare domain. We propose a lightweight blockchain architecture for the healthcare data management that reduces the computational and communication overhead compared to the Bitcoin network by dividing the network participants into clusters and maintaining one copy of the ledger per cluster. Our architecture introduces the use of canal, that allows secure and confidential transactions within a group of network participants. Furthermore, we propose a solution to avoid forking which is prevalent in the Bitcoin network. We demonstrate the effectiveness of our proposed architecture in providing security and privacy compared to the Bitcoin network by analyzing different threats and attacks. We also discuss how our proposed architecture addresses the identified threats. Our experimental results demonstrate that our proposed architecture generates 11 times lower network traffic compared to the Bitcoin network as the number of blocks increases. Our ledger update is 1.13 times faster. Our architecture shows a speedup of 67% in ledger update and 10 times lower network traffic when the number of nodes increases.
Jorge Bernal Bernabé, José Luis Cánovas, José L. Hernández-Ramos, Rafael Torres Moreno · 5 authors
Blockchains offer a decentralized, immutable and verifiable ledger that can record transactions of digital assets, provoking a radical change in several innovative scenarios, such as smart cities, eHealth or eGovernment. However, blockchains are subject to different scalability, security and potential privacy issues, such as transaction linkability, crypto-keys management (e.g. recovery), on-chain data privacy, or compliance with privacy regulations (e.g. GDPR). To deal with these challenges, novel privacy-preserving solutions for blockchain based on crypto-privacy techniques are emerging to empower users with mechanisms to become anonymous and take control of their personal data during their digital transactions of any kind in the ledger, following a Self-Sovereign Identity (SSI) model. In this sense, this paper performs a systematic review of the current state of the art on privacy-preserving research solutions and mechanisms in blockchain, as well as the main associated privacy challenges in this promising and disrupting technology. The survey covers privacy techniques in public and permissionless blockchains, e.g. Bitcoin and Ethereum, as well as privacy-preserving research proposals and solutions in permissioned and private blockchains. Diverse blockchain scenarios are analyzed, encompassing, eGovernment, eHealth, cryptocurrencies, Smart cities, and Cooperative ITS.
Originally conceived as a mechanism to enable a trustless cryptocurrency-Bitcoin, blockchain has since unbound itself from its original purpose as an increasing number of industries and stakeholders' eye the technology as an attractive alternative to solve existing business solutions as well as disrupt mature industries. This paper presents a systematic literature review of the blockchain technology, tracking its increase in popularity in relation to similar technologies, such as cryptocurrencies and Bitcoin. The objective of this paper is to identify the current standing of the blockchain technology within the literature while also identifying the major fields of study and areas of application for which blockchain offers a valuable solution. This paper finds that unique features to the blockchain, such as privacy, security, anonymity, decentralization, and immutability, provide valuable benefits to various fields and subjects. This paper also finds that exploring the application of blockchain has only begun with some limited studies in areas, such as the Internet of Things, energy, finance, healthcare, and government, that also stand to benefit disproportionately from its implementation.
Marianna Belotti, Nikola Bozic, Guy Pujolle, Stefano Secci
Blockchain is a technology making the shared registry concept from distributed systems a reality for a number of application domains, from the cryptocurrency one to potentially any industrial system requiring decentralized, robust, trusted, and automated decision making in a multi-stakeholder situation. Nevertheless, the actual advantages in using blockchain instead of any other traditional solution (such as centralized databases) are not completely understood to date, or at least there is a strong need for a vademecum guiding designers toward the right decision about when to adopt blockchain or not, which kind of blockchain better meets use-case requirements, and how to use it. In this paper, we aim at providing the community with such a vademecum, while giving a general presentation of blockchain that goes beyond its usage in Bitcoin and surveying a selection of the vast literature that emerged in the last few years. We draw the key requirements and their evolution when passing from permissionless to permissioned blockchains, presenting the differences between proposed and experimented consensus mechanisms, and describing existing blockchain platforms.
Bitcoin,2009 yılında ortaya çıkan ve günümüzde kullanım alanı devamlı olarak genişleyenen yaygın (%54) kripto para birimidir. Bu para ile kişiler ya da kurumlargerçek parayla yaptıkları gibi harcama yapabilmekte ya da para transferedebilmektedir. Bitcoin sistemi merkezi bir otorite tarafındandenetlenmemektedir. Hiçbir kimse Bitcoin hesaplarına el koyamaz ve yapılanişlemleri iptal edemez. Toplam Bitcoin sayısı maksimum 21 milyon olaraktasarlanmış olup yaklaşık 17 milyon Bitcoin piyasada bulunmaktadır. Bitcoin’inbirçok avantajlı yönü olmasına karşın bazı risklere de sahip olduğundan çoktartışılan bir konudur. Bitcoin bir gelir olarak kabul edilir ve tüm dünyadavergilendirilmesi tartışılmaktadır. Bu çalışmada, Bitcoin’in tarihsel süreci,özellikleri, diğer paralardan farklılıkları, avantaj ve dezavantajlarıincelenmiştir.
The idea of anonymous digital money existing outside of traditional banking system lasts at least 40 years. It appeared as soon as technological solutions, which such a system requires, became available. The article analyses the genesis of the crypto-currencies and technological solutions implemented into the Bitcoin digital currency. The article shows current state of the Bitcoin market and changes in its price, market capitalisation and number of transactions during last decade of operations of the crypto-currency market. Although there are difficulties in using Bitcoins, which include technical background and resulting from the high volatility of prices of this currency, the continuing upward trend of the Bitcoin price and the average daily number of transactions shows that interest in this currency is growing. Bitcoin features that attract new users are a large dose of anonymity, security of funds guaranteed by the extremely high computing power of the Bitcoin network, the speed of transactions and their low cost associated with the exclusion of a financial intermediary. The features of this money and data from the market allow to expect that Bitcoin will gain more individual and institutional users.
The development of new digital technologies in the areas of cryptography, distributed ledgers and mobile phones is affecting the way money is used for economic transactions. Electronic payments systems are rapidly replacing the use of cash. New powerful distributed ledger technologies, operated on a peer-to-peer decentralized basis is leading to the rapid expansion of digital money, with bitcoin being the most prominent digital currency (although there are more than one-thousand different crypto-currencies).
Blockchain Technology is an emerging technology nowadays. The Blockchain was first used as a Peer-to-Peer ledger for registering Bitcoin transactions. The blockchain is a singly linked list which consists of a number of transactions. The blockchain is a decentralized distributed ledger which consists of a number of blocks organized in the form of a chain. A block in blockchain consists of two parts data and hash pointer. The first block in the blockchain is known as genesis block. The transactions and data in the block are secured by cryptography. The data inside a block in blockchain can be anything like bank transactions, backup data etc., which are recorded chronologically and publicly. The Hash pointer of a block is a unique code generated by a hash function like SHA256, SHA-3 etc., the hash function used in bitcoin blockchain. A block consists of a public key and a private key, using hash function digital signature is generated to the block. This is how the data inside the blockchain is so secured. The blocks are added into the blockchain by verifying the transaction in the block, the transactions are verified by miners. The miners use consensus algorithm to solve the blocks.
Bitcoin, merkezi bir otoriteye veya finansal bir kuruluşa bağlı olmayan ve kriptografik özellikler içeren dijital (kripto) paralardan biridir. Bitcoin’ in Merkezi otoriteye bağlı olmaması ve fiyatını etkileyen faktörlerin arz ve talep ile açıklanması yüksek volatite ile sonuçlanmıştır. Son dönemlerde yatırımcıların en büyük endişesi fiyatlardaki aşırı volatilite durumudur. Çalışmada Blockchain Teknolojisi, Madencilik ve Blockchain Teknolojisinin bir çıktısı olan Bitcoin kısaca anlatılmıştır. Çalışmanın uygulama bölümünde literatürde sıklıkla kullanılan yöntemlerden olan ve asimetrik volatilitenin belirlenmesi amacıyla ARCH, GARCH, ARCHM, EGARCH ve TARCH modelleri kullanılmıştır. Bu amaçla Bitcoin/USD kuru kapanış fiyatlarından Bitcoine ilişkin tarihsel getiriler hesaplanmıştır. Hesaplama dönemi 01.01.2015-11.02.2018 olarak belirlenmiştir. Yapılan analizler sonucunda volatilite tahmini için en iyi sonuç veren TARCH yöntemi bulunmuştur.
Abstract. This study focuses on the dollar, euro, gold, bitcoin and the impact of bubbles in financial investment instruments on bitcoin returns in the context of Turkey. The causal relationships (using the Toda-Yamamato causality test) between the returns of these financial instruments were also determined. In performing this assessment, the sup augmented Dickey-Fuller (SADF) and generalised SADF (GSADF) tests were employed to determine the existence of bubbles based on the period from 1 August 2018 to 23 March 2018. The volatility of bitcoin was tested by autoregressive conditional variant models. As aresult, it was shown that the observed bubbles in gold’s, the euro’s and the dollar’s returns reduced the volatility of bitcoin’s returns. Then, it was shown that the dollar’s, the euro’s and gold’s returns affected bitcoin’s returns. Keywords. Speculative bubbles, Bitcoin, Investment instruments, Autoregressive conditional heteroskedasticity models, Toda-Yamamato causality. JEL. G10, C58, E44.