Blockchain Papers

Guillaume Haeringer, Hanna Hałaburda

Bitcoin, a cryptocurrency invented in 2008 is both puzzling and inspiring. High volatility of its price is challenges financial analysts as well as scholars. We look at the incentive mechanisms that make Bitcoin work, and we discuss current and potential uses of Bitcoin and technologies inspired by it.

Masafumi Nakano, Akihiko Takahashi, Soichiro Takahashi

No abstract is available for this record.

Riccardo Sibani

The recent emergence of a distributed technology named blockchain, clearly created a new point of view in the data storing and data distribution fields. If on one hand blockchain is mainly known for Bitcoin (an auto-regulated decentralized digital currency), on the other hand it has the potential to set up an auto regulated economy.In this thesis, the blockchain technology will be analyzed and described starting from P2P architecture and its origin in 2009 Satoshi Nakamoto’s whitepaper, and leading to the most up to date blockchains. The advantages and disadvantages of such architecture will be pointed out keeping in mind the security, speed and cost of such infrastructure.While Real Estate companies have often anticipated the technological innovations, land registries, instead, derive and keep a working manner which is extremely old and out of date: made of unclear procedures and wet signatures. The market needs and legislation will be researched mainly referring to other works and integrated with a technical point of view with particular focus on the decentralization of such systems.After analyzing the flow, problems and flaws of the current system, a new proposal will be researched, in particular trying to minimize the dead time in between the different steps of the mortgage, increase transparency, as well as reducing dependence on the central authorities, leading to more convenient interactions among the properties’ stakeholders. An attractive low capitalization decentralized financial product will also be proposed and implemented able to lower the interest rate and create a profitable investment with low risk, low interest and durable in time.Secure and ad-hoc algorithms will be presented and, in a later section, analyzed in combination with different blockchain technologies. Scalability and performance will also be evaluated, taking into account all the current technology limitations and the near future opportunities.

Joseph Wall, D. Larry Crumbley, Lewis B. Kilbourne, Caleb Blair

In this report, the authors discuss cryptocurrencies — especially bitcoin — and argue that because the IRS lists them as property, they are taxable, and because they are not as anonymous as once thought, they are not free from fraud. Cryptocurrencies are digital assets used as a medium of exchange, but they are not really coins. They can be sent electronically from one entity to another almost anywhere in the world with an internet connection. There are many cryptocurrencies in the market, including bitcoin, ethereum, ethereum classic, litecoin, nem, dash, iota, bitshares, monero, neo, and ripple. Many of the cryptocurrency networks are not controlled by a single entity or company; instead, a decentralized network of computers keeps track of the currency using a token ID. A ledger maintains a continuously growing list of date stamped transactions in real time called “blocks.” This technology is known as blockchain, which records, verifies, and stores transactions without a trusted central authority. The network instead relies on decentralized autonomous organizations (DAOs) with uncertain legal standing.

Kee-Youn Kang, Seungduck Lee

No abstract is available for this record.

Hanna Hałaburda, Guillaume Haeringer

No abstract is available for this record.

Kamwoo Lee, Sinan Ulkuatam, Peter A. Beling, William T. Scherer

In this paper, we present a novel method to predict Bitcoin price movement utilizing inverse reinforcement learning (IRL) and agent-based modeling (ABM). Our approach consists of predicting the price through reproducing synthetic yet realistic behaviors of rational agents in a simulated market, instead of estimating relationships between the price and price-related factors. IRL provides a systematic way to find the behavioral rules of each agent from Blockchain data by framing the trading behavior estimation as a problem of recovering motivations from observed behavior and generating rules consistent with these motivations. Once the rules are recovered, an agent-based model creates hypothetical interactions between the recovered behavioral rules, discovering equilibrium prices as emergent features through matching the supply and demand of Bitcoin. One distinct aspect of our approach with ABM is that while conventional approaches manually design individual rules, our agents' rules are channeled from IRL. Our experimental results show that the proposed method can predict short-term market price while outlining overall market trend.

Michael S. Pagano, John Sedunov

No abstract is available for this record.

Peder Østbye

Bitcoin and many other cryptocurrencies have currency-caps implemented in their protocols. Bitcoin is capped at approximately 21 million bitcoins. These protocols are complied by consenting operators. This paper discusses whether such currency-caps are illegal quantity-fixing conspiracies in violation of antitrust law. It is found that there is a present antitrust risk for cryptocurrency operators. This may render such operators subject to criminal and civil liabilities.

Alexander Brauneis, Roland Mestel, Ryan Riordan, Erik Theissen

We study trading of Bitcoin against US dollar (BTCUSD) on exchanges in three continents, Bitfinex, Bitstamp and Coinbase Pro. We use a high frequency dataset that contains transactions and order book information. The BTCUSD market is highly liquid in terms of bid-ask spreads and order book depth. While spreads are even lower than in equity markets, prices are not integrated across exchanges. Persistent differences exist between the three exchanges in terms of trade prices and posted prices often violating no-arbitrage assumptions. The liquidity of the Bitcoin exchanges is predominantly determined by local factors and is essentially independent of liquidity in equity and FX markets. This suggests that despite the virtual nature of Bitcoin, local jurisdictional factors affect the flow of capital between low and high price jurisdictions.

Authors unavailable

Bitcoin, the term coined by a person or group pseudonymously called Satoshi Nakamoto, is considered the world's first decentralized digital currency. Since its release in 2009, there has been tremendous growth in market value of Bitcoin, with anonymity and distributed nature removing the need for any central authority being the driving force for its popularity. The technology is relatively new and complex for a layman to understand. However, there has been enough hype about it which has drawn the attention of researchers and nemesis alike to expose vulnerabilities in the system as well as explore the future perspectives of this new concept. This paper analyses major components of Bitcoin and related concepts of Blockchain, highlighting a few security concerns/ motivation to explore the future perspectives of this technology which is being considered analogous to the Internet revolution.

Anthony Tapiwa Mazikana

No abstract is available for this record.

Pisso Nseke

Low transaction cost, low level of entry, worldwide quickness, and anonymity of the transactions is the main advantage of cryptocurrency use, making it an attractive transaction media for African countries. At the same time, there are certain drawbacks of it in terms of strong volatility, lack of user-friendliness and its usage in crime. The conceptual paper explores the use of cryptocurrencies, and its potential in the African context. The research paper utilizes UTAUT 2 Model and adds key constructs for analyzing the adoption of new technology by Africans. These additional constructs include hedonistic motivation, habit and price cost. Key factors were considered in the case of African countries in order to analyze whether cryptocurrency is essential for economic growth in some economic countries. The application of UTAUT model in the case of Arica shows that performance, effort expectations, social influence are favorable for African countries while the influence of hedonic motivations and price is unfavorable for acceptance of cryptocurrencies in African countries.

Wang Yu-xiao, Juntao Gao

In Bitcoin financial system, a user’s privacy is supposed to be protected by means of anonymity. However, the anonymity makes illegal trades possible because nobody is able to reveal the real identities of the illegal users. In this paper, we propose a regulation scheme based on the ciphertext-policy hierarchical attribute-based encryption (CP-HABE). In the scheme, users’ identities are encrypted by using access policy and are contained in their transaction. A type of user is defined as the dependable regulation node, which is responsible for the regulation of transactions and encrypted identities. A new signature algorithm instead of the elliptic curve signature is adopted to generate wallet key pairs, this establishes a connection between wallet addresses and encrypted identities. When a transaction is doubted to involve illegal activities, the authorized regulation nodes are capable of revealing the users’ real identities and add the illegal identities to a public blacklist. Our system is based on a new CP-HABE scheme which is proved to be secure against chosen-plaintext attack in the standard model under the Bilinear Diffie–Hellman Exponent assumption. Finally, we give a performance analysis of our system. The proposed regulation system can reveal criminals’ identities undertaking illegal activities.

Urban J. Jermann

No abstract is available for this record.

Marcel Thum

No abstract is available for this record.

Önder Gürcan, Alejandro Ranchal Pedrosa, Sara Tucci-Piergiovanni

Bitcoin-like blockchains do not envisage any specific mechanism to avoid unfairness for the users. Hence, unfair situations, like impossibility of cancellation of transactions explicitly or having unconfirmed transactions, reduce the satisfaction of users dramatically, and, as a result, they may leave the system entirely. Such a consequence would impact significantly the security and the sustainability of the blockchain. Based on this observation, in this paper, we focus on explicit cancellation of transactions to improve the fairness for users. We propose a novel scheme with which it is possible to cancel a transaction, whether it is confirmed in a block or not, under certain conditions. We show that the proposed scheme is superior to the existing workarounds and is implementable for Bitcoin-like blockchains. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Éric Ghysels, Giang Nguyen

We examine price discovery and liquidity provision in the secondary market for bitcoin—an asset with a high level of speculative trading. Based on BTC-e’s full limit order book over the 2013–2014 period, we find that order informativeness increases with order aggressiveness within the first 10 tiers, but that this pattern reverses in outer tiers. In a high volatility environment, aggressive orders seem to be more attractive to informed agents, but market liquidity migrates outward in response to the information asymmetry. We also find support to the Markovian learning assumption often made in theoretical models of limit order markets.

Riccardo Longo

Cryptography is used to protect data and communications.
\nThe basic tools are cryptographic primitives, whose security and efficiency are widely studied.
\nBut in real-life applications these primitives are not used individually, but combined inside complex protocols.
\nThe aim of this thesis is to analyse various cryptographic protocols and assess their security in a formal way.
\nIn chapter 1 the concept of formal proofs of security is introduced and the main categorisation of attack scenarios and types of adversary are presented, and the protocols analysed in the thesis are briefly introduced with some motivation. 
\nIn chapter 2 are presented the security assumptions used in the proofs of the following chapters, distinguishing between the hardness of algebraic problems and the strength of cryptographic primitives.
\nOnce that the bases are given, the first protocols are analysed in chapter 3, where two Attribute Based Encryption schemes are proven secure.
\nFirst context and motivation are introduced, presenting settings of cloud encryption, alongside the tools used to build ABE schemes.
\nThen the first scheme, that introduces multiple authorities in order to improve privacy, is explained in detail and proven secure.
\nFinally the second scheme is presented as a variation of the first one, with the aim of improving the efficiency performing a round of collaboration between the authorities.
\n
\nThe next protocol analysed is a tokenization algorithm for the protection of credit cards.
\nIn chapter 4 the advantages of tokenization and the regulations required by the banking industry are presented, and a practical algorithm is proposed, and proven secure and compliant with the standard. 
\nIn chapter 5 the focus is on the BIX Protocol, that builds a chain of certificates in order to decentralize the role of certificate authorities.
\nFirst the protocol and the structure of the certificates are introduced, then two attack scenarios are presented and the protocol is proven secure in these settings.
\nFinally a viable attack vector is analysed, and a mitigation approach is discussed.
\nIn chapter 6 is presented an original approach on building a public ledger with end-to-end encryption and a one-time-access property, that make it suitable to store sensitive data. 
\nIts security is studied in a variety of attack scenarios, giving proofs based on standard algebraic assumptions. 
\nThe last protocol presented in chapter 7 uses a proof-of-stake system to maintain the consistency of subchains built on top of the Bitcoin blockchain, using only standard Bitcoin transactions.
\nParticular emphasis is given to the analysis of the refund policies employed, proving that the naive approach is always ineffective whereas the chosen policy discourages attackers whose stake falls below a threshold, that may be adjusted varying the protocol parameters.

Yinan Pei, Kazumasa Oida

No abstract is available for this record.

Tatja Kärkkäinen

Following the popularity of Bitcoin trading in recent years, Bitcoin futures were introduced in December 2017 as an effort to provide institutional and retail investors with additional trading tools for Bitcoin. This study analyses the Bitcoin futures mid-quote data from CBOE, and Bitcoin market index applying VAR and VECM process methodologies, Hasbrouck’s information share and the Gonzalo-Granger component share measurement to examine price discovery in Bitcoin markets. Furthermore, the chapter seeks to assess the Bitcoin market microstructure. The results drawn on the intra-day prices show that the futures are leading the price discovery at different frequencies even with comparably low futures trading volumes. This supports the extant literature of futures-spot market price discovery and the role of informed traders in the futures market.

Jia Kan, Lingyi Zou, Bella Liu, Xin Huang

In recent years, with the rapid development and popularization of BitCoin, the research of blockchain technology has also shown growth. It has gradually become a new generation of distributed, non-centralized and trust-based technology solution. However, the blockchain operation is expensive and transaction is delayed. Take BitCoin as an example. On the one hand, a block is produced every ten minute. On the other hand, once the new block is generated, it takes a certain time to propagate world wide. The slow speed of propagation determines that BitCoin can not use too small block interval time. Ethereum also faces similar problems, so the concept of uncle block was introduced to reduce blockchain forks. This paper introduces a new tree structure based broadcast propagation routing model, providing a novel method to organize network nodes and message propagation mechanism. In oder to avoid the single node failure problem, the tree cluster routing is proposed. The research shows that the tree based routing can accelerate broadcast convergence time and reduce redundant traffic.

Mohammad Hossein Manshaei, Murtuza Jadliwala, Anindya Maiti, Mahdi Fooladgar

Low transaction throughput and poor scalability are significant issues in public blockchain consensus protocols such as Bitcoins. Recent research efforts in this direction have proposed shard-based consensus protocols where the key idea is to split the transactions among multiple committees (or shards), which then process these shards or set of transactions in parallel. Such a parallel processing of disjoint sets of transactions or shards by multiple committees significantly improves the overall scalability and transaction throughout of the system. However, one significant research gap is a lack of understanding of the strategic behavior of rational processors within committees in such shard-based consensus protocols. Such an understanding is critical for designing appropriate incentives that will foster cooperation within committees and prevent free-riding. In this paper, we address this research gap by analyzing the behavior of processors using a game-theoretic model, where each processor aims at maximizing its reward at a minimum cost of participating in the protocol. We first analyze the Nash equilibria in an N-player static game model of the sharding protocol. We show that depending on the reward sharing approach employed, processors can potentially increase their payoff by unilaterally behaving in a defective fashion, thus resulting in a social dilemma. In order to overcome this social dilemma, we propose a novel incentive-compatible reward sharing mechanism to promote cooperation among processors. Our numerical results show that achieving a majority of cooperating processors (required to ensure a healthy state of the blockchain network) is easier to achieve with the proposed incentive-compatible reward sharing mechanism than with other reward sharing mechanisms.

Thach Ngoc Nguyen, Christian Servín, Владик Крейнович

Nowadays, most financial transactions are based on a centralized system, when all the transaction records are stored in a central location. This centralization makes the financial system vulnerable to cyber-attacks. A natural way to make the financial system more robust and less vulnerable is to switch to decentralized currencies. Such a transition will also make financial system more transparent. Historically first currency of this type -- bitcoin -- use a large amount of electric energy to mine new coins and is, thus, not scalable to the level of financial system as a whole. A more realistic and less energy-consuming scheme is provided by proof-of-stake currencies, where the right to mint a new coin is assigned to a randomly selected user, with probability depending of the user's stake (e.g., his/her number of coins). What probabilities should we choose? In this paper, we find the probability selection that provides the optimal result -- optimal in the sense that it is the least inductive to cheating.