Zcash is a fork of Bitcoin with optional anonymity features. While transparent transactions are fully linkable, shielded transactions use zero-knowledge proofs to obscure the parties and amounts of the transactions. First, we observe various metrics regarding the usage of shielded addresses. Moreover, we show that most coins sent to shielded addresses are later sent back to transparent addresses. We then search for round-trip transactions, where the same, or nearly the same number of coins are sent from a transparent address, to a shielded address, and back again to a transparent address. We argue that such behavior exhibits high linkability, especially when they occur nearby temporally. Using this heuristic our analysis matched 31.5% of all coins sent to shielded addresses.
Bitcoin, a peer-to-peer payment system and digital currency, is often involved in illicit activities such as scamming, ransomware attacks, illegal goods trading, and thievery. At the time of writing, the Bitcoin ecosystem has not yet been mapped and as such there is no estimate of the share of illicit activities. This paper provides the first estimation of the portion of cyber-criminal entities in the Bitcoin ecosystem. Our dataset consists of 854 observations categorised into 12 classes (out of which 5 are cybercrime-related) and a total of 100,000 uncategorised observations. The dataset was obtained from the data provider who applied three types of clustering of Bitcoin transactions to categorise entities: co-spend, intelligence-based, and behaviour-based. Thirteen supervised learning classifiers were then tested, of which four prevailed with a cross-validation accuracy of 77.38%, 76.47%, 78.46%, 80.76% respectively. From the top four classifiers, Bagging and Gradient Boosting classifiers were selected based on their weighted average and per class precision on the cybercrime-related categories. Both models were used to classify 100,000 uncategorised entities, showing that the share of cybercrime-related is 29.81% according to Bagging, and 10.95% according to Gradient Boosting with number of entities as the metric. With regard to the number of addresses and current coins held by this type of entities, the results are: 5.79% and 10.02% according to Bagging; and 3.16% and 1.45% according to Gradient Boosting.
Haoyan Wu, Zhijie Li, Brian King, Zina Ben Miled · 6 authors
Supply chains (SC) span many geographies, modes and industries and involve several phases where data flows in both directions from suppliers, manufacturers, distributors, retailers, to customers. This data flow is necessary to support critical business decisions that may impact product cost and market share. Current SC information systems are unable to provide validated, pseudo real-time shipment tracking during the distribution phase. This information is available from a single source, often the carrier, and is shared with other stakeholders on an as-needed basis. This paper introduces an independent, crowd-validated, online shipment tracking framework that complements current enterprise-based SC management solutions. The proposed framework consists of a set of private distributed ledgers and a single blockchain public ledger. Each private ledger allows the private sharing of custody events among the trading partners in a given shipment. Privacy is necessary, for example, when trading high-end products or chemical and pharmaceutical products. The second type of ledger is a blockchain public ledger. It consists of the hash code of each private event in addition to monitoring events. The latter provide an independently validated immutable record of the pseudo real-time geolocation status of the shipment from a large number of sources using commuters-sourcing.
In recent years, with the development of the Internet, network currency has gradually emerged. Bitcoin which is produced on the basis of complex algorithms has developed rapidly and attracted wide attention in academia. This paper explores the influence factors of bitcoin market transaction by analyzing the interaction between agents in bitcoin market transaction. Applying complex adaptive system modeling method based on multi-agent, this paper establishes an agent-based bitcoin market transaction model, and designs behavioral rules as well as transaction mechanism in detail for each agent in the process of market transaction. Then, we carry out a simulation on the Starlogo simulation platform and analyze the impact of the change in trader’s number on market transaction.
The wisdom of the crowd is a valuable asset in today’s society. It is not only important in predicting elections but also plays an essential role in marketing and the financial industry. Having a trustworthy source of opinion can make forecasts more accurate and markets predictable. Until now, a fundamental problem of surveys is the lack of incentives for participants to provide accurate information. Classical solutions like small monetary rewards or the chance of winning a prize are often not very attractive for participants. More attractive solutions, such as prediction markets, face the issue of illegality and are often unavailable. In this work, we present a solution that unites the advantages from classical polling and prediction markets via a customizable incentivization framework. Apart from predicting events, this framework can also be used to govern decentralized autonomous organizations.
Blockchain systems are designed to produce blocks at a constant average rate. The most popular systems currently employ a Proof of Work (PoW) algorithm as a means of creating these blocks. Bitcoin produces, on average, one block every 10 minutes. An unfortunate limitation of all deployed PoW blockchain systems is that the time between blocks has high variance. For example, 5% of the time, Bitcoin's inter-block time is at least 40 minutes. This variance impedes the consistent flow of validated transactions through the system. We propose an alternative process for PoW-based block discovery that results in an inter-block time with significantly lower variance. Our algorithm, called Bobtail, generalizes the current algorithm by comparing the mean of the k lowest order statistics to a target. We show that the variance of inter-block times decreases as k increases. If our approach were applied to Bitcoin, about 80% of blocks would be found within 7 to 12 minutes, and nearly every block would be found within 5 to 18 minutes; the average inter-block time would remain at 10 minutes. Further, we show that low-variance mining significantly thwarts doublespend and selfish mining attacks. For Bitcoin and Ethereum currently (k=1), an attacker with 40% of the mining power will succeed with 30% probability when the merchant sets up an embargo of 8 blocks; however, when k>=20, the probability of success falls to less than 1%. Similarly, for Bitcoin and Ethereum currently, a selfish miner with 40% of the mining power will claim about 66% of blocks; however, when k>=5, the same miner will find that selfish mining is less successful than honest mining. The cost of our approach is a larger block header.
Yu‐Jin Kwon, Do-Hyun Kim, Yunmok Son, Eugene Y. Vasserman · 5 authors
In the Bitcoin system, participants are rewarded for solving cryptographic puzzles. In order to receive more consistent rewards over time, some participants organize mining pools and split the rewards from the pool in proportion to each participant's contribution. However, several attacks threaten the ability to participate in pools. The block withholding (BWH) attack makes the pool reward system unfair by letting malicious participants receive unearned wages while only pretending to contribute work. When two pools launch BWH attacks against each other, they encounter the miner's dilemma: in a Nash equilibrium, the revenue of both pools is diminished. In another attack called selfish mining, an attacker can unfairly earn extra rewards by deliberately generating forks. In this paper, we propose a novel attack called a fork after withholding (FAW) attack. FAW is not just another attack. The reward for an FAW attacker is always equal to or greater than that for a BWH attacker, and it is usable up to four times more often per pool than in BWH attack. When considering multiple pools - the current state of the Bitcoin network - the extra reward for an FAW attack is about 56% more than that for a BWH attack. Furthermore, when two pools execute FAW attacks on each other, the miner's dilemma may not hold: under certain circumstances, the larger pool can consistently win. More importantly, an FAW attack, while using intentional forks, does not suffer from practicality issues, unlike selfish mining. We also discuss partial countermeasures against the FAW attack, but finding a cheap and efficient countermeasure remains an open problem. As a result, we expect to see FAW attacks among mining pools.
A. Pinar Ozisik, George Bissias, Brian Neil Levine
We make several contributions that quantify the real-time hash rate and therefore the consensus of a blockchain. We show that by using only the hash value of blocks, we can estimate and measure the hash rate of all miners or individual miners, with quanti able accuracy. We apply our techniques to the Ethereum and Bitcoin blockchains; our solution applies to any proof-of-work-based blockchain that relies on a numeric target for the validation of blocks. We also show that if miners regularly broadcast status reports of their partial proof-of- work, the hash rate estimates are signi cantly more accurate at a cost of slightly higher bandwidth. Whether using only the blockchain, or the additional information in status reports, merchants can use our techniques to quantify in real-time the threat of double-spend attacks.
Bitcoin and other cryptocurrencies have surged in popularity over the last decade. Although Bitcoin does not claim to provide anonymity for its users, it enjoys a public perception of being a privacy preserving financial system. In reality, cryptocurrencies publish users' entire transaction histories in plaintext, albeit under a pseudonym; this is required for transaction validation. Therefore, if a user's pseudonym can be linked to their human identity, the privacy fallout can be significant. Recently, researchers have demonstrated deanonymization attacks that exploit weaknesses in the Bitcoin network's peer-to-peer (P2P) networking protocols. In particular, the P2P network currently forwards content in a structured way that allows observers to deanonymize users. In this work, we redesign the P2P network from first principles with the goal of providing strong, provable anonymity guarantees. We propose a simple networking policy called Dandelion which provides quasi-optimal, network-wide anonymity, with minimal cost to the network's utility. We also discuss practical implementation challenges and propose heuristic solutions.
May 28, 2017·CEUR Workshop Proceedings, Vol-2104: Proceedings of the 14th International Conference on ICT in Education, Research and Industrial Applications. Integration, Harmonization and Knowledge Transfer. Volume II: Workshops
The paper investigates the Bitcoin exchange rate response to the dai- ly Twitter data. Sentiment score is computed for the number of obtained tweets. The prediction accuracy for the Bitcoin exchange rate employing the sentiment score reveals the influence of the Twitter social network on the news diffusion and target exchange rate volatility. We used the historical data on the Bitcoin exchange rate and the daily sentiment score of the pertinent tweets to forecast the direction of change for the Bitcoin. The results show better performance of the developed forecasting method with both historical data on the exchange rate and the sentiment score than using only the exchange rate data as an input.
Youngbin Kim, Jurim Lee, Nuri Park, Jaegul Choo · 6 authors
Bitcoin is an online currency that is used worldwide to make online payments. It has consequently become an investment vehicle in itself and is traded in a way similar to other open currencies. The ability to predict the price fluctuation of Bitcoin would therefore facilitate future investment and payment decisions. In order to predict the price fluctuation of Bitcoin, we analyse the comments posted in the Bitcoin online forum. Unlike most research on Bitcoin-related online forums, which is limited to simple sentiment analysis and does not pay sufficient attention to note-worthy user comments, our approach involved extracting keywords from Bitcoin-related user comments posted on the online forum with the aim of analytically predicting the price and extent of transaction fluctuation of the currency. The effectiveness of the proposed method is validated based on Bitcoin online forum data ranging over a period of 2.8 years from December 2013 to September 2016.
Malte Möser, Kyle Soska, Ethan Heilman, Kevin Lee · 11 authors
Abstract Monero is a privacy-centric cryptocurrency that allows users to obscure their transactions by including chaff coins, called “mixins,” along with the actual coins they spend. In this paper, we empirically evaluate two weaknesses in Monero’s mixin sampling strategy. First, about 62% of transaction inputs with one or more mixins are vulnerable to “chain-reaction” analysis - that is, the real input can be deduced by elimination. Second, Monero mixins are sampled in such a way that they can be easily distinguished from the real coins by their age distribution; in short, the real input is usually the “newest” input. We estimate that this heuristic can be used to guess the real input with 80% accuracy over all transactions with 1 or more mixins. Next, we turn to the Monero ecosystem and study the importance of mining pools and the former anonymous marketplace AlphaBay on the transaction volume. We find that after removing mining pool activity, there remains a large amount of potentially privacy-sensitive transactions that are affected by these weaknesses. We propose and evaluate two countermeasures that can improve the privacy of future transactions.
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.
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.
Daniel Augot, Hervé Chabanne, Thomas Chenevier, William R. George · 5 authors
We present an identity management scheme built into the Bitcoin blockchain, allowing for identities that are as indelible as the blockchain itself. Moreover, we take advantage of Bitcoin's decentralized nature to facilitate a shared control between users and identity providers, allowing users to directly manage their own identities, fluidly coordinating identities from different providers, even as identity providers can revoke identities and impose controls.
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Blockchain Technology Applications and Security
Advanced Steganography and Watermarking Techniques
Massimo Bartoletti, Stefano Lande, Livio Pompianu, Andrea Bracciali
Modern cryptocurrencies exploit decentralised blockchains to record a public and unalterable history of transactions. Besides transactions, further information is stored for different, and often undisclosed, purposes, making the blockchains a rich and increasingly growing source of valuable information, in part of difficult interpretation. Many data analytics have been developed, mostly based on specifically designed and ad-hoc engineered approaches. We propose a general-purpose framework, seamlessly supporting data analytics on both Bitcoin and Ethereum --- currently the two most prominent cryptocurrencies. Such a framework allows us to integrate relevant blockchain data with data from other sources, and to organise them in a database, either SQL or NoSQL. Our framework is released as an open-source Scala library. We illustrate the distinguishing features of our approach on a set of significant use cases, which allow us to empirically compare ours to other competing proposals, and evaluate the impact of the database choice on scalability.
Ponzi schemes are financial frauds which lure users under the promise of high\nprofits. Actually, users are repaid only with the investments of new users\njoining the scheme: consequently, a Ponzi scheme implodes soon after users stop\njoining it. Originated in the offline world 150 years ago, Ponzi schemes have\nsince then migrated to the digital world, approaching first the Web, and more\nrecently hanging over cryptocurrencies like Bitcoin. Smart contract platforms\nlike Ethereum have provided a new opportunity for scammers, who have now the\npossibility of creating "trustworthy" frauds that still make users lose money,\nbut at least are guaranteed to execute "correctly". We present a comprehensive\nsurvey of Ponzi schemes on Ethereum, analysing their behaviour and their impact\nfrom various viewpoints.\n
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.
With the increase in the use of virtual currencies across the globe, the security of Bitcoin wallets has become a serious concern for the Bitcoin community. The developers are trying to implement concrete security solutions in Bitcoin wallets to ensure that no vulnerability gets exploited. However, a large number of known, as well as zero-day attacks, are launched on the Bitcoin wallets on a daily basis, resulting in a loss of bitcoins. In this regard, this paper presents a security analysis of existing Android wallets. We demonstrate how the implemented security practices can be bypassed by malicious entities, causing financial loss to Bitcoin users. As a countermeasure, we present a smart card based authentication scheme which will protect the users from all of the identified attacks.