Blockchain Papers

B.Asha Latha

No abstract is available for this record.

Ziyi Ye

Bitcoin is a peer-to-peer electronic currency without central bank controlling. Nowadays, increasing amount of people are engaged in the mining of Bitcoin for great profits. However, in the Bitcoin system, the more participants in the system, the greater computation power of the whole network and the less efficiency in the output of the coin, since large computational power of the whole Bitcoin system will lead to increased difficulty for a single miner to mine a new data block. At the same time, when more than 51% computing power is controlled by a single node, it could destroy the Bitcoin system. In order to reduce ineffective mining behaviors, one would wish to employ the optimal selection mechanism of different miners. This paper will mainly develop the model in which small miners (those who have relative smaller computational power in a block mining) join the major ones based on revenue, computational power cost, and other elements of the process comparing to the current model (when they work separately).

Philippe Jacquet, Bernard Mans

While cryptocurrencies and blockchain applications continue to gain popularity, their energy cost is evidently becoming unsustainable. In most instances, the main cost comes from the required amount of energy for the Proof-of-Work, and this cost is inherent to the design. In addition, useless costs from discarded work (e.g., the so-called Forks) and lack of scalability (in number of users and in rapid transactions) limit their practical effectiveness. In this paper, we present an innovative scheme which eliminates the nonce and thus the burden of the Proof-of-Work which is the main cause of the energy waste in cryptocurrencies such as Bitcoin. We prove that our scheme guarantees a tunable and bounded average number of simultaneous mining whatever the size of the population in competition, thus by making the use of nonce-based techniques unnecessary, achieves scalability without the cost of consuming a large volume of energy. The technique used in the proof of our scheme is based on the analogy of the analysis of a green leader election. The additional difference with Proof-of-Work schemes (beyond the suppression of the nonce field that is triggering most of the waste), is the introduction of (what we denote as) "empty blocks" which aim are to call regular blocks following a staircase set of values. Our scheme reduces the risk of Forks and provides tunable scalability for the number of users and the speed of block generation. We also prove using game theoretical analysis that our scheme is resilient to unfair competitive investments (e.g., "51 percent" attack) and block nursing.

N.I. Indera, Ahmad Ihsan Mohd Yassin, Azlee Zabidi, Zairi Ismael Rizman

This paper presents a Multi-Layer Exogeneous Inputs (NARX) Bitcoin price forecasting model using the opening, closing, minimum and maximum past prices together with Moving Average (MA) technical indicators.

Fait Muedini

In this article, I shall examine the compatibility of Bitcoin and other cryptocurrencies within the context of Islamic law. I shall begin by an introduction of Bitcoin and other cryptocurrencies. I will then discuss the history of money in Islamic history, with an emphasis on the importance ethical financial dealings. I will then argue that Bitcoin and other cryptocurrencies are highly compatible within Islamic finance, and in many cases, actually provide solutions to problems of government institution controlled currencies, arguing that Bitcoin and other cryptocurrencies better address several problems that early Islamic finance scholars were concerned with. Unlike traditional fiat, the supply of Bitcoin and many other digital currencies are fixed, thereby eliminating potential for gharar (deception), and also inflation. In addition, unlike fiat and precious metal coins, digital currencies cannot be altered, forged, or manipulated. Moreover, cryptocurrencies’ peer-to-peer transactions remove the need for any banking institution, thereby eliminating any risk with a third party controlling one’s money. I shall then conclude with a summary of the main points of the article, and examine future possibilities with regards to the role of digital and cryptocurrencies.

Hélder Sebastião, António Portugal Duarte, Gabriel Guerreiro

This paper analyses the price discovery in the USD/Bitcoin market since Mar‑2014 to Nov‑2016. The results show a positive relationship between the informational relevance of exchanges and their market shares. Information is mostly transmitted between exchanges within an hour, at least for the main exchanges, although lagged feedbacks occur from the major exchanges. Minor exchanges are merely satellite ones and react to price information with some delay. Bitfinex is the most important exchange: the lagged feedback from this exchange to the market is 18.3%, while the reverse feedback accounts only for 0.6% of the total feedback. Volatility in the major exchanges is the main factor explaining the feedback measures, which sustains the claim that the relative importance of the information-based component of volatility increases with the relative dimension of the exchange.

Husam Al Jawaheri, Mashael Al Sabah, Yazan Boshmaf, Aiman Erbad

With the rapid increase of threats on the Internet, people are continuously seeking privacy and anonymity. Services such as Bitcoin and Tor were introduced to provide anonymity for online transactions and Web browsing. Due to its pseudonymity model, Bitcoin lacks retroactive operational security, which means historical pieces of information could be used to identify a certain user. We investigate the feasibility of deanonymizing users of Tor hidden services who rely on Bitcoin as a payment method by exploiting public information leaked from online social networks, the Blockchain, and onion websites. This, for example, allows an adversary to link a user with @alice Twitter address to a Tor hidden service with private.onion address by finding at least one past transaction in the Blockchain that involves their publicly declared Bitcoin addresses. To demonstrate the feasibility of this deanonymization attack, we carried out a real-world experiment simulating a passive, limited adversary. We crawled 1.5K hidden services and collected 88 unique Bitcoin addresses. We then crawled 5B tweets and 1M BitcoinTalk forum pages and collected 4.2K and 41K unique Bitcoin addresses, respectively. Each user address was associated with an online identity along with its public profile information. By analyzing the transactions in the Blockchain, we were able to link 125 unique users to 20 Tor hidden services, including sensitive ones, such as The Pirate Bay and Silk Road. We also analyzed two case studies in detail to demonstrate the implications of the resulting information leakage on user anonymity. In particular, we confirm that Bitcoin addresses should always be considered exploitable, as they can be used to deanonymize users retroactively. This is especially important for Tor hidden service users who actively seek and expect privacy and anonymity.

Husam Al Jawaheri, Mashael Al Sabah, Yazan Boshmaf, Aiman Erbad

With the rapid increase of threats on the Internet, people are continuously seeking privacy and anonymity. Services such as Bitcoin and Tor were introduced to provide anonymity for online transactions and Web browsing. Due to its pseudonymity model, Bitcoin lacks retroactive operational security, which means historical pieces of information could be used to identify a certain user. We investigate the feasibility of deanonymizing users of Tor hidden services who rely on Bitcoin as a payment method by exploiting public information leaked from online social networks, the Blockchain, and onion websites. This, for example, allows an adversary to link a user with @alice Twitter address to a Tor hidden service with private.onion address by finding at least one past transaction in the Blockchain that involves their publicly declared Bitcoin addresses. To demonstrate the feasibility of this deanonymization attack, we carried out a real-world experiment simulating a passive, limited adversary. We crawled 1.5K hidden services and collected 88 unique Bitcoin addresses. We then crawled 5B tweets and 1M BitcoinTalk forum pages and collected 4.2K and 41K unique Bitcoin addresses, respectively. Each user address was associated with an online identity along with its public profile information. By analyzing the transactions in the Blockchain, we were able to link 125 unique users to 20 Tor hidden services, including sensitive ones, such as The Pirate Bay and Silk Road. We also analyzed two case studies in detail to demonstrate the implications of the resulting information leakage on user anonymity. In particular, we confirm that Bitcoin addresses should always be considered exploitable, as they can be used to deanonymize users retroactively. This is especially important for Tor hidden service users who actively seek and expect privacy and anonymity.

Rhys Bowden, Paul Keeler, A. E. Krzesinski, Peter Taylor

Bitcoin is a electronic payment system where payment transactions are verified and stored in a data structure called the blockchain. Bitcoin miners work individually to solve a computationally intensive problem, and with each solution a Bitcoin block is generated, resulting in a new arrival to the blockchain. The difficulty of the computational problem is updated every 2,016 blocks in order to control the rate at which blocks are generated. In the original Bitcoin paper, it was suggested that the blockchain arrivals occur according to a homogeneous Poisson process. Based on blockchain block arrival data and stochastic analysis of the block arrival process, we demonstrate that this is not the case. We present a refined mathematical model for block arrivals, focusing on both the block arrivals during a period of constant difficulty and how the difficulty level evolves over time.

Kenji Saito, Mitsuru Iwamura

Bitcoin and other similar digital currencies on blockchains are not ideal means for payment, because their prices tend to go up in the long term (thus people are incentivized to hoard those currencies), and to fluctuate widely in the short term (thus people would want to avoid risks of losing values). The reason why those blockchain currencies based on proof of work are unstable may be found in their designs that the supplies of currencies do not respond to their positive and negative demand shocks, as the authors have formulated in our past work. Continuing from our past work, this paper proposes minimal changes to the design of blockchain currencies so that their market prices are automatically stabilized, absorbing both positive and negative demand shocks of the currencies by autonomously controlling their supplies. Those changes are: 1) limiting re-adjustment of proof-of-work targets, 2) making mining rewards variable according to the observed over-threshold changes of block intervals, and 3) enforcing negative interests to remove old coins in circulation. We have made basic design checks and evaluations of these measures through simple simulations. In addition to stabilization of prices, the proposed measures may have effects of making those currencies preferred means for payment by disincentivizing hoarding, and improving sustainability of the currency systems by making rewards to miners perpetual.

V. Kornivska

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Asma Salman, Muthanna G. Abdul Razzaq

A peer-to-peer system of blockchain, originally started for a cryptocurrency Bitcoin, has caused major disruptions in the stock market. It has affected many businesses if not all, but its significance in the financial world is magnanimous. Historical data (daily rates) for the past 23 months are analyzed to understand the market size, market capitalization and price volatility for Bitcoin. Time series data and financial model are applied to realize the shocks. Monte Carlo simulation is applied to assess the dynamic structure of Bitcoin. With greater volume and activity, the banks and financial intermediaries may become outdated, and the middleman will have no place. It seems like a distant thought, but the facts are pointing toward its reality.

Léonie Pauline Benoist

In this dissertation we will present the Bitcoin and its technology and is supporting feature as a success factor for innovation and entrepreneurship. We will first demonstrate that Bitcoin is a currency and present its history and technology. Then from our literature researches and the interview we have conducted we will try to answer our problematic: Is Bitcoin and the Blockchain supporting entrepreneurship and innovation? Finally after crossing the theoretical and academic lectures with the testimony of the real actors we will present our conclusion and recommendation to the lectors.

Scott Gilbert, Hio Loi

Digital currencies, such as Bitcoin, have emerged as an alternative form of money, untethered to traditional money and largely unregulated. As such, digital currency represents a wild frontier for investors who might otherwise be shopping for gold or foreign currencies, with serious risks. The present work considers digital currency from a traditional asset pricing perspective. Setting aside risks of seller fraud or currency theft, we examine fluctuation and systematic risk in the price of Bitcoin. From this perspective, Bitcoin does not appear to carry much systematic risk -- despite its high volatility -- and so is a reasonable candidate for inclusion in investors’ portfolios. Some illustrative examples suggest that the optimal amount of Bitcoin to include in investor portfolios may be tiny or instead substantial - as high as 21 percent of total financial assets.

Zhijie Ren, Kelong Cong, Taico Aerts, Bart de Jonge · 6 authors

Bitcoin, as well as many of its successors, require the whole transaction record to be reliably acquired by all nodes to prevent double-spending. Recently, many blockchains have been proposed to achieve scale-out throughput by letting nodes only acquire a fraction of the whole transaction set. However, these schemes, e.g., sharding and off-chain techniques, suffer from a degradation in decentralization or the capacity of fault tolerance. In this paper, we show that the complete set of transactions is not a necessity for the prevention of double-spending if the properties of value transfers is fully explored. In other words, we show that a value-transfer ledger like Bitcoin has the potential to scale-out by its nature without sacrificing security or decentralization. Firstly, we give a formal definition for the value-transfer ledger and its distinct features from a generic database. Then, we introduce an off-chain based scheme with a shared main chain for consensus and an individual chain for each node for recording transactions. A locally executable validation scheme is proposed with uncompromising validity and consistency. A beneficial consequence of our design is that nodes will spontaneously try to reduce their transmission cost by only providing the transactions needed to show that their transactions are double-spending-proof. As a result, the network is sharded as each node only acquires part of the transaction record and a scale-out throughput could be achieved, which we call "spontaneous sharding".

Yhlas Sovbetov

This paper examines factors that influence prices of most common five cryptocurrencies such Bitcoin, Ethereum, Dash, Litecoin, and Monero over 2010-2018 using weekly data. The study employs ARDL technique and documents several findings. First, cryptomarket-related factors such as market beta, trading volume, and volatility appear to be significant determinant for all five cryptocurrencies both in short- and long-run. Second, attractiveness of cryptocurrencies also matters in terms of their price determination, but only in long-run. This indicates that formation (recognition) of the attractiveness of cryptocurrencies are subjected to time factor. In other words, it travels slowly within the market. Third, SP500 index seems to have weak positive long-run impact on Bitcoin, Ethereum, and Litcoin, while its sign turns to negative losing significance in short-run, except Bitcoin that generates an estimate of -0.20 at 10% significance level. Lastly, error-correction models for Bitcoin, Etherem, Dash, Litcoin, and Monero show that cointegrated series cannot drift too far apart, and converge to a long-run equilibrium at a speed of 23.68%, 12.76%, 10.20%, 22.91%, and 14.27% respectively.

Amit Behera, Goutam Paul

In 2013, Farid and Vasiliev [arXiv:quant-ph/1310.4922] for the first time proposed a way to construct a protocol for the realisation of "{\em Classical to Quantum}" one-way hash function, a derivative of the Quantum one-way function as defined by Gottesman and Chuang [Technical Report arXiv:quant-ph/0105032] and used it for constructing quantum digital signatures. We, on the other hand, for the first time, propose the idea of a different kind of one-way function, which is "{\em quantum-classical}" in nature, that is, it takes an $n$-qubit quantum state of a definite kind as its input and produces a classical output. We formally define such a one-way function and propose a way to construct and realise it. The proposed one-way function turns out to be very useful in authenticating a quantum state in any quantum money scheme and so we can construct many different quantum money schemes based on such a one-way function. Later in the paper, we also give explicit constructions of some interesting quantum money schemes like quantum bitcoins and quantum currency schemes, solely based on the proposed one-way function. The security of such schemes can be explained on the basis of the security of the underlying one-way functions.

Kristoffer Francisco, David Swanson

Blockchain technology, popularized by Bitcoin cryptocurrency, is characterized as an open-source, decentralized, distributed database for storing transaction information. Rather than relying on centralized intermediaries (e.g., banks) this technology allows two parties to transact directly using duplicate, linked ledgers called blockchains. This makes transactions considerably more transparent than those provided by centralized systems. As a result, transactions are executed without relying on explicit trust [of a third party], but on the distributed trust based on the consensus of the network (i.e., other blockchain users). Applying this technology to improve supply chain transparency has many possibilities. Every product has a long and storied history. However, much of this history is presently obscured. Often, when negative practices are exposed, they quickly escalate to scandalous, and financially crippling proportions. There are many recent examples, such as the exposure of child labor upstream in the manufacturing process and the unethical use of rainforest resources. Blockchain may bring supply chain transparency to a new level, but presently academic and managerial adoption of blockchain technologies is limited by our understanding. To address this issue, this research uses the Unified Theory of Acceptance and Use of Technology (UTAUT) and the concept of technology innovation adoption as a foundational framework for supply chain traceability. A conceptual model is developed and the research culminates with supply chain implications of blockchain that are inspired by theory and literature review.

Mark D. Iannettoni

No abstract is available for this record.

Guang Chen, Bing Xu, Manli Lu, Nian‐Shing Chen

Blockchain is the core technology used to create the cryptocurrencies, like bitcoin. As part of the fourth industrial revolution since the invention of steam engine, electricity, and information technology, blockchain technology has been applied in many areas such as finance, judiciary, and commerce. The current paper focused on its potential educational applications and explored how blockchain technology can be used to solve some education problems. This article first introduced the features and advantages of blockchain technology following by exploring some of the current blockchain applications for education. Some innovative applications of using blockchain technology were proposed, and the benefits and challenges of using blockchain technology for education were also discussed.

Nicolas Botton

One of the most tone-deaf suggestions in the Brexit proceedings so far came in August 2017, when the UK Brexit team released a long-awaited position paper setting out its proposal on how to manage its border with Ireland. It suggested that "technology-based solutions" - meaning blockchain, the technology behind cryptocurrencies such as Bitcoin - could be implemented to "make it easier to comply with customs procedures." The UK's vague and misguided solution was quickly ridiculed by experts at home, as well as seasoned counterparts abroad. Although blockchain technology has now been around for ten years, it has not seen any meaningful implementation in global supply-chains, let alone within customs offices. Indeed, a "seamless and frictionless" border in compliance with fundamental customs procedures - itself a unicorn - cannot simply be coded into existence on its own. In reality, questions of capacity and time constraints mean that technological solutions are actually unworkable ...

Connor Ortman

“In the future, virtually every function in the world of financial services will be displaced, disintermediated and decentralized. The Internet gave us a powerful way to share and access information. Blockchain now gives us a powerful way to share and access value.” During a February 2017 AICPA roundtable, Chairman of the Wall Street Blockchain Alliance and previous Global Head of Trading Analytics at Thomson Reuters, Ron Quarantana spoke to the revolutionary scale of blockchain. Quaranta, viewed by many as an expert in financial technology, predicts that the adoption of blockchain, both by the Big Four accounting firms and their clients, will disrupt the accounting industry by greatly reducing the time and skill needed to perform a quality audit. Some, such as Thomson Reuters’ Jon Baron, even claim that blockchain may eliminate the need for financial statement audits altogether. To many, blockchain is synonymous with Bitcoin, the cryptocurrency that, over the past three years, has returned 3,310%, compared to 35% and 36% returns of the S&P 500 and Dow Jones Industrial Average (DJIA), respectively. Blockchain, however, is much more than Bitcoin, with applications stretching further than cryptocurrency. Rather, it is a peer-to-peer hosted public ledger that does not require a central authority to support or verify transactions, and is unalterable in future periods. In this study, I propose to examine what blockchain technology means for the 887,000 people currently employed by the Big Four. More specifically, I seek to expand upon whether the potential adoption of blockchain in the coming years will reduce audit fees, impact audit quality, or perhaps do away with the audit completely.

Olena Burutina

Nowadays the cryptocurrency industry is constantly growing and developing. Each year it attracts a big number of investors and businessmen from all over the world. Since the creation of Bitcoin in 2009, more than a thousand new cryptocurrencies with different features were created. Most countries are already working on an effective regulatory mechanism for the cryptocurrency industry. However, the question is whether the regulation will not contradict the essential features of digital currency, such as decentralization, independence and anonymity. This MA thesis analyzes the issue of cryptocurrency regulation as an important stage in their development and evolution. I compare the regulatory frameworks, developed by Canada, the USA, Great Britain and China, which are considered to be the world leaders in the cryptocurrency industry and the ICO sector. In this MA thesis I also try to explain how cryptocurrencies are perceived both by the cryptocurrency community and the regulators in order to give an answer to the question "What is a cryptocurrency?". Finally, this thesis also discusses the issue of cryptocurrency lobbying as an important part of the communication between the state and the third sector.

Alexander Kibble

This study investigates the possible diversification benefits of multiple cryptocurrencies (Bitcoin, Ethereum and Litecoin) in a diversified portfolio from the perspective of a South African investor over the period 30 July 2015 to 20 December 2017. Cryptocurrencies are mostly still in their infancy, and reliable information regarding their usefulness as an asset class in a diversified portfolio is scarce to come by. This study adopts a quantitative research methodology which incorporates the following statistical methods: i) mean-semivariance optimisation; ii) Kendall Tau-b correlations; and, iii) autocorrelation function for serial correlations. The JSE All Bond Index is used as bond investment proxy, a combination of the JSE Top 40, Resources Index and Financial-Industrials Index is used as an equity investment proxy, and the LBMA Gold PM is used as a gold investment proxy. The study found that all three cryptocurrencies under investigation yielded risk-return benefits for a diversified portfolio. The alternative cryptocurrencies (Ethereum and Litecoin) exhibited higher levels of downside risk (semideviation) than Bitcoin, but proportionately greater returns. Hence, the addition of these two cryptocurrencies to a portfolio that includes Bitcoin and traditional assets resulted in an expansion of the efficient frontier. Ethereum exhibited slightly lower correlations to Bitcoin than Litecoin, which is most likely attributed to its greater technological differences, but performed worse as a diversifier. All three cryptocurrencies yielded similar low to very low correlations to all traditional assets, including gold - representative of the potential diversification benefits. The autocorrelation function resulted in high positive serial correlations for all three cryptocurrencies, indicative of strong trending behaviour and high volatility.