A major limitation of open P2P networks is the lack of strong identities. This allows any agent to attack the system by creating multiple false personas, thereby disrupting the overlay network's connectivity and sabotaging its operation. In this paper, we explore practical ways to defend P2P networks from such attacks. To do so, we employ a game theoretic approach to the management of each peer's list of known nodes and to the overlay construction mechanisms that utilize this list. We consider the interaction between defender and attacker agents as a zero-sum game. We show that the cost of attacks can be driven up substantially if the defender utilizes available information about peers it chooses to connect to, such as their IP address. In addition to theoretical analysis of the underlying game, we apply our approach to the Bitcoin P2P network and derive effective strategies that guarantee a high safety level against attacks.
Investoren und Vermögensverwalter suchen nach Finanzinstrumenten, die die erwartete Rendite ihrer Investition bei gleichzeitiger Minimierung des potenziellen Risikos erhöhen. In der Praxis diversifizieren Vermögensverwalter ihre Vermögensallokation auf verschiedene Anlageklassen allen voran Aktien, Anleihen und Rohstoffe. In den letzten Jahren gewinnt die neue Anlageklasse der Kryptowährungen immer mehr an Einfluss - Anlagekapital. Die erste unter ihnen, Bitcoin, wurde wegen ihrer Technologie sehr berühmt: dezentrale Datenhaltung, sicheres und schnelles elektronisches Tausch- und Zahlungsmittel. Diese Arbeit konzentriert sich auf die Leistung der Core-Satellite Strategie mit diesen neuen digitalen Währungen als Satellit. Die Herausforderung besteht darin, die Kryptowährungen zu finden, die Abwärtstrends kompensieren kann und dem Anleger bessere Renditen erwirtschaftet. Die Korrelationsstruktur der Kryptowährungen muss untersucht werden, sodass gegenläufige Kryptowährungen ausgewählt werden können. Dazu verwenden wir TEDAS – Tail Event Driven Asset allocation, eine aktive Investitionsstrategie zur Auswahl der Kryptowährungen. Diese Methode untersucht die Abhängigkeit von Kryptowährungen in verschiedenen Quantilen am linken Rand der Verteilung. Die Arbeit vergleicht verschiedene auf TEDAS basierenden Investitionsstrategie.
La technologie Blockchain, support de Bitcoin, se diffuse récemment à des activités extra financières variées et suscite un intérêt dans de nombreux secteurs d’activité. Cet article vise à discuter des conséquences à attendre de cette technologie pour les métiers du champ CCA. Plus précisément, nous chercherons, dans une approche prospective, à présenter cette technologie et à en illustrer les aspects novateurs, qui influenceront ces activités dans les années à venir.
The cryptocurrency market is unique on many levels: Very volatile, frequently changing market structure, emerging and vanishing of cryptocurrencies on a daily level. Following its development became a difficult task with the success of cryptocurrencies (CCs) other than Bitcoin. For fiat currency markets , the IMF offers the index SDR and, prior to the EUR, the ECU existed, which was an index representing the development of European currencies. Index providers decide on a fixed number of index constituents which will represent the market segment. It is a challenge to fix a number and develop rules for the constituents in view of the market changes. In the frequently changing CC market, this challenge is even more severe. A method relying on the AIC is proposed to quickly react to market changes and therefore enable us to create an index, referred to as CRIX, for the cryptocurrency market. CRIX is chosen by model selection such that it represents the market well to enable each interested party studying economic questions in this market and to invest into the market. The diversified nature of the CC market makes the inclusion of altcoins in the index product critical to improve tracking performance. We have shown that assigning optimal weights to altcoins helps to reduce the tracking errors of a CC portfolio, despite the fact that their market cap is much smaller relative to Bitcoin. The codes used here are available via www.quantlet.de .
As Bitcoin's popularity has grown over the decade since its creation, it has become an increasingly attractive target for adversaries of all kinds. One of the most powerful potential adversaries is the country of China, which has expressed adversarial positions regarding the cryptocurrency and demonstrated powerful capabilities to influence it. In this paper, we explore how China threatens the security, stability, and viability of Bitcoin through its dominant position in the Bitcoin ecosystem, political and economic control over domestic activity, and control over its domestic Internet infrastructure. We explore the relationship between China and Bitcoin, document China's motivation to undermine Bitcoin, and present a case study to demonstrate the strong influence that China has over Bitcoin. Finally, we systematize the class of attacks that China can deploy against Bitcoin to better understand the threat China poses. We conclude that China has mature capabilities and strong motives for performing a variety of attacks against Bitcoin.
Dr. Julian Hosp, Toby Hoenisch, Paul Kittiwongsunthorn
Since the creation of Bitcoin in 2009 we have seen a great push towards public and private blockchains. In order to avoid fragmentation, a global network connecting all these blockchains is envisioned. Just like the Internet facilitates communication and the transfer of information, we propose a system, similar in size and reach for payments and transactions: A cryptographically-secure off-chain multi-asset instant transaction network (COMIT) can connect and exchange any asset on any blockchain to any other blockchain using a cross-chain routing protocol (CRP). COMIT is a super blockchain network that allows for instant transactions which are enforced using off-chain smart contracts. It leverages Payment Channels and Hashed Timelock Contracts (HTLC) across chains to solve the problem of double spending attacks without requiring a settlement onto the underlying blockchains. COMIT's connectivity is provided by Liquidity Providers (LP), who operate on one or more blockchains, acting as payment hubs and nodes on a single chain and market makers in a decentralized network for cross-chain asset conversions. This paper lays out how COMIT works, the benefits for Users, Liquidity Providers and Businesses; and how this does not only accelerate the adoption of blockchain technology, but furthermore allows for an integration with the traditional banking system.
In 2008-09, after the subprime mortgage crisis, the governments of several developed countries had to print billions of dollars to bail out banks and insurance companies. Bitcoins, unlike paper currencies, cannot be minted, but can only be mined by bots. Although bitcoin is yet to gain prominence as mainstream currency in India, the technology behind it — the Blockchain technology — has captured the attention of numerous Indian banks. In 2016, ICICI Bank revealed that it successfully executed transactions in global trade finance and remittances using Blockchain technology. Even as developed nations such as Japan and Russia contemplate legalizing the use of bitcoins, India, despite being at the threshold of a digital revolution, is yet to officially recognize the cryptocurrency. However, the biggest impediment that bitcoin supporters perceive to making this currency mainstream is the fact that several nations are treading very cautiously around bitcoin and do not have any concrete regulations governing them. This paper highlights the legal validity of bitcoin in India.
Марат Рашитович Сафиуллин, A.A. Abdukaeva, Leonid Alekseevich Elshin
The accelerated pace of development of the cryptocurrency market and its integration into the system of economic, operational, financial and other processes determines the need for a comprehensive study of this phenomenon. This is particularly relevant because in recent months, at the state level have intensified discussions on the prospects of the legalization of the cryptocurrency market and the possibility of using its tools in the economic activities of economic agents. Despite the sometimes polar views and approaches at the moment among Russian experts regarding the solution to this issue, the development of the crypto-currencies market is extremely high, regardless of its regulation. This determines and actualizes the scientific research in the field of evaluation of the prospects of development of this market, forming the subject of this study in order to predict the possible effects and risks for the national economic system. The purpose of the article is the development of tools of modelling and forecasting the volatility of the cryptocurrency market on the basis of “foreseeing” fluctuations in the value of “digital money” using special models of autoregression (ARMA, ARIMA). The study was based on the application of a class of parametric models. It allowed describing both stationary and non-stationary time series and on this basis to develop a system of prognostic estimates for the prospects of further development of the series under study. With the help of our ARIMA model, which evaluates the parameters of the analyzed time series of the cryptocurrency exchange rate, we developed a system of prognostic assessments for the short term. The authors proved that the application of such models with a high level of reliability predicts future adjustments in the market under study. It leads to a high level of prospects for their use in modelling future parameters of the cryptocurrency market development. This creates a basis for a business to develop adaptive mechanisms for to emerging price index adjustments of “digital money”.
The authors assess the impact of the emotional tonality of bitcoin news on its exchange rate. In particular, we studied the hypothesis of the impact of the readability index of the news text on the volatility of bitcoin. Despite the fact that excessive volatility threatens bitcoin not to become a successful currency, many scientists are interested in the determinants of such volatility. Factors such as speculative investments or the attention of the society are the drivers of the volatility of the exchange rate of bitcoin. In this regard, the question of studying the impact of news on the bitcoin exchange rate is relevant. The purpose of this paper is to assess the impact of the emotional tonality of bitcoin news on its exchange rate. The empirical base of the study was quite extensive since it includes more than 1330 news from the Thomson Reuters information base for the period from 19.08.2011 to 16.08.2016 on the bitcoin market. The research methodology includes the sentiment analysis conducted by using the dictionary MacDonald and Loughran and also the analysis of the interdependence of time series-based causal analysis using the test of Granger causation. We present three hypotheses about the impact of news on the bitcoin exchange rate. During the study, two of them were confirmed. We proved the first hypothesis that the negative news had a more significant impact than positive ones, taking into account the five time-lags. The second hypothesis about the impact of positive tonality in the news on the bitcoin exchange rate, using the Granger test for causation, was not confirmed, since the positive values of this test were obtained in two time-lags out of five. We can confirm that the third hypothesis was proved — the high readability index has an impact on the bitcoin volatility for the entire studied period, taking into account all five time-lags. Thus, the assumption about the impact of the emotional tonality of news on the bitcoin exchange rate can be confirmed.
Open access
Market Dynamics and Volatility
Blockchain Technology Applications and Security
Economic, Social, and Public Health Issues in Russia and Globally
Fadhlan Hafizhelmi Kamaruzaman, Ahmad Ihsan Mohd Yassin, Azlee Zabidi, Fadhlan Hafizhelmi Kamaru Zaman · 7 authors
In recent years, an individual under the pseudonym of Satoshi Nakamoto devised a revolutionary technology called blockchain as the engine behind the first decentralized virtual currency called Bitcoin. A radical concept departing from government-centric controlled currencies, Bitcoin has emerged as a disruptive technology with the power to revolutionize business and its processes. Advantages of the blockchain include decentralized control, immutability, elimination of central authority and solution of concurrency problems in traditional databases. Leveraging on the advantages of blockchain technology defined above, this paper discusses the potential application of blockchain technology for storage of Islamic marriage certificates. Marriage certificates are documents issued to couples to legally recognize their marriage. Due to its paper-based nature, there is significant risk for them to be forged or frauded. These issues can be addressed effective using blockchain. The proposed application was implemented using smart contracts on a simulated Ethereum platform. A smart contract is designed to execute automatically under certain predefined conditions. The use of smart contracts eliminate manipulation by a single party. In addition, the immutable concept of blockchain ensures that data integrity is always preserved, greatly reducing the risk of fraud. Â
Main objective of this study is to develop investment portfolio with diversifications using two different assets. Modern portfolio theory develop investment portfolio to maximize expected return based on a given level of market risk. This study selected cryptocurreny (Bitcoin) and stock price (Petronas Gas Berhad) as the combination in developing investment portfolio. In this analysis, mean return for Bitcoin is 9.890 %. Meanwhile, the mean return for stock price of Petronas Gas Berhad is -0.496 %.The value of correlation is between two assets is -0.372. Result shows the portfolio risk can be reduced with the diversification approach for different assets. Therefore, findings of this study are important for assisting investors to maximize their return for given level of investment risk.
Bu çalışmada, isminden son yıllarda sıkça bahsettiren ve kripto paralardan biri olan Bitcoin fiyatı ile Türkiye ve G7 ülkelerine ait borsa endeksleri arasındaki nedensellik ilişkisi incelenmektedir. Bitcoin fiyatlarındaki dalgalanmanın 2013 yılından itibaren başlaması nedeni ile çalışmada 01.01.2013-26.01.2018 arasındaki günlük veriler kullanılmıştır. Çalışmada öncelikle birim kök testleri ve eşbütünleşme analizi gerçekleştirilmiştir. Değişkenler arasındaki ilişkinin uzun dönemde dengede olup olmadığını analiz edebilmek için vektör hata düzeltme modeli (VECM) kullanılmış, kısa dönemli ilişkiler ise Granger Nedensellik/WALD testi yardımıyla incelenmiştir. Yapılan analizler sonucunda, Bitcoin ile diğer ülke borsaları arasında herhangi bir uzun dönemli denge ilişkisinden söz edilemeyeceği bulunurken, kısa dönemde İngiltere borsasının (FTSE) Bitcoin’in nedeni olduğu sonucuna ulaşılmıştır. Ayrıca, Bitcoin’in de S&P 500 ve Kanada Borsasının (STSX) nedeni olduğu görülmüştür. Sonuç olarak, Bitcoin fiyatının dalgalanması hakkında kısa vadede bu üç borsa endeksinin de fikir verebileceği ortaya çıkmaktadır. Yatırımcılar hem araştırmaya konu olan bu borsalar arasında hem de Bitcoin’e yatırım yaparak risklerini çeşitlendirme yoluna gidebilir.
Bitcoin has enjoyed wider adoption than any previous cryptocurrency; yet its success has also attracted the attention of fraudsters who have taken advantage of operational insecurity and transaction irreversibility. We study the risk that investors face from the closure of Bitcoin exchanges, which convert between Bitcoins and hard currency. We examine the track record of 80 Bitcoin exchanges established between 2010 and 2015. We find that nearly half (38) have since closed, with customer account balances sometimes wiped out. Fraudsters are sometimes to blame, but not always. Twenty-five exchanges suffered security breaches, 15 of which subsequently closed. We present logistic regressions using longitudinal data on Bitcoin exchanges aggregated quarterly. We find that experiencing a breach is correlated with a 13 times greater odds that an exchange will close in that same quarter. We find that higher-volume exchanges are less likely to close (each doubling in trade volume corresponds to a 12% decrease in the odds of closure). We also find that exchanges that derive most of their business from trading less popular (fiat) currencies, which are offered by at most one competitor, are less likely to close.
Abstract Providing reliable and surreptitious communications is difficult in the presence of adaptive and resourceful state level censors. In this paper we introduce Tithonus, a framework that builds on the Bitcoin blockchain and network to provide censorship-resistant communication mechanisms. In contrast to previous approaches, we do not rely solely on the slow and expensive blockchain consensus mechanism but instead fully exploit Bitcoin’s peer-to-peer gossip protocol. We develop adaptive, fast and cost effective data communication solutions that camouflage client requests into inconspicuous Bitcoin transactions. We propose solutions to securely request and transfer content, with unobservability and censorship resistance, and free, pay-per-access and subscription based payment options. When compared to state-of-the-art Bitcoin writing solutions, Tithonus reduces the cost of transferring data to censored clients by 2 orders of magnitude and increases the goodput by 3 to 5 orders of magnitude. We show that Tithonus client initiated transactions are hard to detect, while server initiated transactions cannot be censored without creating split world problems to the Bit-coin blockchain.
Blockchain has emerged as a trusted and secure distributed ledger for transactions while also being decentralised, distributed and its legitimacy not guaranteed by a trusted authority. Since the appearance of Bitcoin, Blockchain has known many implementations based on P2P architectures. This paper presents how the blockchain and smart contracts technologies can be integrated into the SwarmESB ecosystem. SwarmESB is a framework that helps building distributed applications, which benefit from privacy and scalability features. Our proposal will present the flexibility in building not only microservices based applications, but also decen-tralised applications employing blockchain and smart-contracts by modeling a sample Dapp.
El objetivo de esta investigación fue saber si realmente las inversiones en el Bitcoin son riesgosas o no, y conocer más acerca de este nuevo mercado de Monedas Virtuales. Esta investigación se llevó acabo de manera documental, analizando la información disponible en el campo para así buscar la principal causa de incertidumbre de este mercado internacional, y conocer así sus principales ventajas y desventajas, con esto identificar si son riesgosas o no, y así poder ayudar a los lectores a tener una mejor y más sencilla idea, sobre este mercado para saber si la inversión resultara o no. Los resultados mostraron que invertir en este momento en Bitcoins no es lo más indicada, pero en un futuro, no muy lejano, este mercado será más estable y seguro para hacer cualquier tipo de inversión y transacción.
Марат Рашитович Сафиуллин, Leonid Alekseevich Elshin, A.A. Abdukaeva
Importance The article discusses the process of economic and mathematical modeling of time series describing the volatility of the bitcoin exchange rate through the Autoregressive Moving Average (ARMA) models. Objectives We search for, and substantiate tools and mechanisms used to predict the cryptocurrency market developments. Methods The research applies tools of stochastic analysis of stationary and non-stationary time series.
In recent years,the cryptocurrencies have received broader attention and adoption from the investing public. The price appreciation in value of digital currencies has increased to many folds that captivated from individual investors to wall street banks and high frequency traders.An important feature of bitcoin is that they are not backed by any central bank unlike the traditional currencies. The supply of these currencies are limited to a design of protocol (Bouri et al., 2017). The Bitcoin is one of the most popular cryptocurrencies and accounts about 41% of the cryptocurrencies capitalization (Katsiampa,2017).Bitcoin was invented in 2009 by a group of people in the name of Sathoshi Nakamoto (Briere et al., 2015).Since its introduction, bitcoin has grown steeper and sweeping the investors worldwide. The value of Bitcoin grew from US $ 6 billion (Bouri et al.,2017) in 2015 to US $ 167 billion in November 2017(Source: CoinMarketCap) indicating the tremendous growth.
Privacy of blockchains has been a matter of discussion since the inception of Bitcoin. Various techniques with a varying degree of privacy protection and complexity have been proposed over the past decade. In this survey, we present a systematic analysis of these proposals in four categories: (i) identity, (ii) transaction, (iii) consensus, and (iv) smart contract privacy. Each of these categories have privacy requirements of its own, and various solutions have been proposed to meet these requirements. Almost every technique in the literature of privacy enhancing technologies have been applied to blockchains: mix networks, zero-knowledge proofs, blind signatures, ring signatures, secure MPC, homomorphic encryption, to name just a few. We analyze each category separately in the paper. We first define the related privacy issues, and then review the proposed solutions. The limitations of each solution and the attacks discovered are also discussed along with the proposals. For each category, we first define the relevant privacy issues, and then review the proposed solutions along with their features and limitations
U ovom završnom radu obrađen je pojam hardvera za rudarenje kriptovaluta. Nakon uvoda u prvom poglavlju opisana je prva kriptovaluta "Bitcoin". U drugom poglavlju objašnjen je protokol "Blockchain" na koji Bitcoin funkcionira. U trećem poglavlju opisane su transakcije, te posao rudara u bitcoin mreži. U četvrtom poglavlju je opisana povijest hardvera, te detaljan opis hardvera ovisno o generaciji. U zadnjem poglavlju je opisan suvremeni hardver te najbolje rješenje za Bitcoin i Ethereum, drugu najvrjedniju kriptovalutu.