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.
Bitcoin time series dataset recording individual transactions denominated in Euro at the COINBASE market between April 23, 2015 and August 15, 2016 is analyzed. Markov switching model is applied to classify the regions of varying volatility represented by three hidden state regimes using univariate autoregressive model and dependent mixture model. Causality extraction and price prediction of daily BTCEUR exchange rates is performed by means of a recurrent neural network using the standard Elman model. Strong correlations is found between the normalized mean squared error of the Elman network (out-of-sample 5-day-ahead prediction) and the realized volatility (sum of minute returns squared throughout the trading day). The present approach is calibrated using simulated regime change in standard econometric models. Our results clearly demonstrate the applicability of recurrent neural networks to causality extraction even in the case of highly volatile cryptocurrency exchange rate time series data.
Andrea Pinna, Roberto Tonelli, Matteo Orrú, Michele Marchesi
A Blockchain is a global shared infrastructure where cryptocurrency transactions among addresses are recorded, validated and made publicly available in a peer- to-peer network. To date the best known and important cryptocurrency is the bitcoin. In this paper we focus on this cryptocurrency and in particular on the modeling of the Bitcoin Blockchain by using the Petri Nets formalism. The proposed model allows us to quickly collect information about identities owning Bitcoin addresses and to recover measures and statistics on the Bitcoin network. By exploiting algebraic formalism, we reconstructed an Entities network associated to Blockchain transactions gathering together Bitcoin addresses into the single entity holding permits to manage Bitcoins held by those addresses. The model allows also to identify a set of behaviours typical of Bitcoin owners, like that of using an address only once, and to reconstruct chains for this behaviour together with the rate of firing. Our model is highly flexible and can easily be adapted to include different features of the Bitcoin crypto-currency system.
This letter revisits the informational efficiency of the Bitcoin market. In particular we analyze the time-varying behavior of long memory of returns on Bitcoin and volatility 2011 until 2017, using the Hurst exponent. Our results are twofold. First, R/S method is prone to detect long memory, whereas DFA method can discriminate more precisely variations in informational efficiency across time. Second, daily returns exhibit persistent behavior in the first half of the period under study, whereas its behavior is more informational efficient since 2014. Finally, price volatility, measured as the logarithmic difference between intraday high and low prices exhibits long memory during all the period. This reflects a different underlying dynamic process generating the prices and volatility.
Hyperledger Fabric (HLF) is a flexible permissioned blockchain platform designed for business applications beyond the basic digital coin addressed by Bitcoin and other existing networks. A key property of HLF is its extensibility, and in particular the support for multiple ordering services for building the blockchain. Nonetheless, the version 1.0 was launched in early 2017 without an implementation of a Byzantine fault-tolerant (BFT) ordering service. To overcome this limitation, we designed, implemented, and evaluated a BFT ordering service for HLF on top of the BFT-SMaRt state machine replication/consensus library, implementing also optimizations for wide-area deployment. Our results show that HLF with our ordering service can achieve up to ten thousand transactions per second and write a transaction irrevocably in the blockchain in half a second, even with peers spread in different continents.
The bitcoin peer-to-peer network has drawn significant attention from researchers, but so far has mostly focused on publicly visible portions of the network, i.e., publicly reachable peers. This mostly ignores the hidden parts of the network: unreachable Bitcoin peers behind NATs and firewalls. In this paper, we characterize Bitcoin peers that might be behind NATs or firewalls from different perspectives. Using a special-purpose measurement tool we conduct a large scale measurement study of the Bitcoin network, and discover several previously unreported usage patterns: a small number of peers are involved in the propagation of 89% of all bitcoin transactions, public cloud services are being used for Bitcoin network probing and crawling, a large amount of transactions are generated from only two mobile applications. We also empirically evaluate a method that uses timing information to re-identify the peer that created a transaction against unreachable peers. We find this method very accurate for peers that use the latest version of the Bitcoin Core client.
Stefanie Roos, Pedro Moreno-Sanchez, Aniket Kate, Ian Goldberg
Path-based transaction (PBT) networks, which settle payments from one user to another via a path of intermediaries, are a growing area of research. They overcome the scalability and privacy issues in cryptocurrencies like Bitcoin and Ethereum by replacing expensive and slow on-chain blockchain operations with inexpensive and fast off-chain transfers. In the form of credit networks such as Ripple and Stellar, they also enable low-price real-time gross settlements across different currencies. For example, SilentWhsipers is a recently proposed fully distributed credit network relying on path-based transactions for secure and in particular private payments without a public ledger. At the core of a decentralized PBT network is a routing algorithm that discovers transaction paths between payer and payee. During the last year, a number of routing algorithms have been proposed. However, the existing ad hoc efforts lack either efficiency or privacy. In this work, we first identify several efficiency concerns in SilentWhsipers. Armed with this knowledge, we design and evaluate SpeedyMurmurs, a novel routing algorithm for decentralized PBT networks using efficient and flexible embedding-based path discovery and on-demand efficient stabilization to handle the dynamics of a PBT network. Our simulation study, based on real-world data from the currently deployed Ripple credit network, indicates that SpeedyMurmurs reduces the overhead of stabilization by up to two orders of magnitude and the overhead of routing a transaction by more than a factor of two. Furthermore, using SpeedyMurmurs maintains at least the same success ratio as decentralized landmark routing, while providing lower delays. Finally, SpeedyMurmurs achieves key privacy goals for routing in PBT networks.
Stefanie Roos, Pedro Moreno-Sánchez, Aniket Kate, Ian Goldberg
Path-based transaction (PBT) networks, which settle payments from one user to\nanother via a path of intermediaries, are a growing area of research. They\novercome the scalability and privacy issues in cryptocurrencies like Bitcoin\nand Ethereum by replacing expensive and slow on-chain blockchain operations\nwith inexpensive and fast off-chain transfers. In the form of credit networks\nsuch as Ripple and Stellar, they also enable low-price real-time gross\nsettlements across different currencies. For example, SilentWhsipers is a\nrecently proposed fully distributed credit network relying on path-based\ntransactions for secure and in particular private payments without a public\nledger. At the core of a decentralized PBT network is a routing algorithm that\ndiscovers transaction paths between payer and payee. During the last year, a\nnumber of routing algorithms have been proposed. However, the existing ad hoc\nefforts lack either efficiency or privacy. In this work, we first identify\nseveral efficiency concerns in SilentWhsipers. Armed with this knowledge, we\ndesign and evaluate SpeedyMurmurs, a novel routing algorithm for decentralized\nPBT networks using efficient and flexible embedding-based path discovery and\non-demand efficient stabilization to handle the dynamics of a PBT network. Our\nsimulation study, based on real-world data from the currently deployed Ripple\ncredit network, indicates that SpeedyMurmurs reduces the overhead of\nstabilization by up to two orders of magnitude and the overhead of routing a\ntransaction by more than a factor of two. Furthermore, using SpeedyMurmurs\nmaintains at least the same success ratio as decentralized landmark routing,\nwhile providing lower delays. Finally, SpeedyMurmurs achieves key privacy goals\nfor routing in PBT networks.\n
Sep 15, 2017·Lydia Y. Chen; Hans P. Reiser. Proc. of 17th IFIP Distributed Applications and Interoperable Systems, Jun 2017, Neuch{â}tel, Switzerland. Springer, 10320, pp.34-48, 2017, LNCS - Lecture Notes in Computer Science
Most online lotteries today fail to ensure the verifiability of the random process and rely on a trusted third party. This issue has received little attention since the emergence of distributed protocols like Bitcoin that demonstrated the potential of protocols with no trusted third party. We argue that the security requirements of online lotteries are similar to those of online voting, and propose a novel distributed online lottery protocol that applies techniques developed for voting applications to an existing lottery protocol. As a result, the protocol is scalable, provides efficient verification of the random process and does not rely on a trusted third party nor on assumptions of bounded computational resources. An early prototype confirms the feasibility of our approach.
De bitcoin is sinds zijn inceptie paradoxaal genoeg zowel besmet als aansprekend geweest. De aanhangers ervan menen dat de bitcoin in een eerlijker, meer gedecentraliseerde vorm van financiering zal gaan voorzien. Tegenstanders wijzen er daarentegen op dat dubieuze klanten veel gebruik maken van bitcoin-betalingen. De traditionele regels voor klantidentificatie werken echter niet goed voor deze bedrijfstak. Het gebruik van financiële prikkels kan wel leiden om tot een identificatiesysteem te komen dat het nationale niveau overstijgt.
Streszczenie: Celem zreferowanych w artykule bada jest ocena speniania przez kryptowalut funkcji ekonomicznych i spoecznych pienidza. W trakcie bada za pomoc programu komputerowego uzyskano 7561 Satoshi, ktre nastpnie poddano prbom uytkowym metod L
Technical, economic and social changes are happening so rapidly that it sometimes feels like a parallel universe operates alongside our own lives. The implications for investing are massive but unfathomable. Traditional financial analysis is spun on its head when the market values a company like Tesla higher than General Motors. In 2016, Tesla made a loss and produced only 76,000 cars, while GM had net income of US$9.4 billion and sold over 10 million vehicles. Uber churns through cash by the billion and will probably never make a profit, but is valued at US$70 billion. Have you ever heard of a game called Dungeon Fighter? Unbelievably, it has grossed more revenue since 2005 than Star Wars, Hollywood's leading franchise across eight movies, has earned since 1977.
Abstract Visibility of digital art and its ownership can be achieved using blockchain technology as part of a broader solution for the identification, attribution, and payment for digital work. A case study is provided of a firm using the Bitcoin blockchain as part of an integrated solution to identify and authenticate ownership of digital property. An integrated ownership ledger allows for secure attribution, transfer, and provenance of digital property. Blockchain technology enables limited‐edition digital property, while Internet‐scale web crawl and machine learning shows where and how works are being used on the Internet.
After more than eight years since the launch of Bitcoin, the decentralized transaction ledger functionality implemented through the blockchain technology is being used not only for cryptocurrencies, but to register, confirm and transfer any kind of contract and property. In this work, we analyze the most relevant functionalities and known issues of this technology, with the intent of pointing out the possible behaviours that are not as efficient and reliable as they should be when thinking with a broader outlook.
Open access
Blockchain Technology Applications and Security
Cryptography and Data Security
Advanced Steganography and Watermarking Techniques
This paper presents a simple game theoretic framework, assuming complete information, to model Bitcoin mining activity. It does so by formalizing the activity as an all-pay contest: a competition where participants contend with each other to win a prize by investing in computational power, and victory is probabilistic. With at least two active miners, the unique pure strategy Nash equilibrium of the game suggests the following interesting insights on the motivation for being a miner: while the optimal amount of energy consumption depends also on the reward for solving the puzzle, as long as the reward is positive the decision to be an active miner depends only on the mining costs. Moreover, the intrinsic structure of the mining activity seems to prevent the formation of a monopoly, because in an equilibrium with two miners, both of them will have positive expected profits for any level of the opponent’s costs. A monopoly could only form if the rate of return on investment were higher outside bitcoin.
Bitcoin has advanced as the most fruitful cryptographic currency in history. Since its launch in 2009.Bitcoingrewtocomprisebillionsofdollarsofecono mic value. Since then a lot of literature has been identified with concealed-but-vital properties of the system, exposed attacks, proposed promising alternatives, and singled out dif challenges. This paper threw light to many related cryptocurrencies or 'altcoins' and enables a more insightful analysis of Bitcoin's properties. The researcher maps the space for providing analyses for bitcoin mining, bitcoin protocol, and bitcoin value determinations.This paper surveys the anonymity in Bitcoins and provides an insight into the framework for analysing the mining hardware, the calculation of Bitcoin value by reviewing various literatures and websites related to Bitcoins.
Bitcoin is the world's first completely decentralized peer-to-peer digital currency. The main reason behind using bitcoin is that of its low transaction fee compared to any other transfers like western union, credit card transaction etc. and bitcoin transactions are transparent. So we don't have to consider about tax problems.It avoids Taxation.
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.
Dimitris Chatzopoulos, Sujit Gujar, Boi Faltings, Pan Hui
The popularity of digital currencies, especially cryptocurrencies, has been continuously growing since the appearance of Bitcoin. Bitcoin's security lies in a proof-of-work scheme, which requires high computational resources at the miners. Despite advances in mobile technology, existing cryptocurrencies cannot be maintained by mobile devices due to their low processing capabilities. Mobile devices can only accommodate mobile applications (wallets) that allow users to exchange credits of cryptocurrencies. In this work, we propose LocalCoin, an alternative cryptocurrency that requires minimal computational resources, produces low data traffic and works with off-the-shelf mobile devices. LocalCoin replaces the computational hardness that is at the root of Bitcoin's security with the social hardness of ensuring that all witnesses to a transaction are colluders. Localcoin features (i) a lightweight proof-of-work scheme and (ii) a distributed blockchain. We analyze LocalCoin for double spending for passive and active attacks and prove that under the assumption of sufficient number of users and properly selected tuning parameters the probability of double spending is close to zero. Extensive simulations on real mobility traces, realistic urban settings, and random geometric graphs show that the probability of success of one transaction converges to 1 and the probability of the success of a double spending attempt converges to 0.
<p><strong>Abstract </strong></p><p>In Indonesia, <em>bitcoin</em> is a form of digital currency (<em>e-money</em>) and means of payment transactions that have been used by some communities. It is necessary to get attention, especially from Bank Indonesia. Other than that, the supervision that was once fully done by the central bank of Bank Indonesia, is now taken over by OJK (Otoritas Jasa Keuangan). Thus, Bank Indonesia only has the authority to regulate and control the circulation of currency only. Since some of the tasks and authorities of Bank Indonesia were taken over by OJK (Otoritas Jasa Keuangan), many things have not been covered, such as the new phenomenon in the field of finance in terms of capital, investment, currency circulation, and others. In addition there is no legal umbrella against <em>bitcoin</em>, which is increasingly widespread transaction using <em>bitcoin</em> done in <em>e-commerce</em> transactions. So in terms of security also need to be questioned, therefore there needs to be regulation and supervision specifically against <em>bitcoin</em>, and society will not feel harmed. When viewed in the perspective of Islamic law, that relating to the issuance of money as a means of transactions in a country, is a matter protected by general rules in Islamic law. Therefore, the issuance of money and the determination of the amount is matters relating to the benefit of the people. Another aspect to consider in the use of <em>bitcoin</em> is whether from the side of <em>madharat</em> is greater or benefits taken if used as currency and tool transactions, even as a commodity though. So the focus in this research is the use of <em>bitcoin</em> as currency and transaction tool by using approach and study of Islamic law.</p>
Bitcoin is the world's first decentralized digital currency. The rate at which bitcoins enter circulation is cut in half every 4 years, approximately. These events are considered landmarks in Bitcoin's history, and as such are widely celebrated. However, this requires placing confidence intervals on the precise timing of the halving well in advance, and the particular mechanism by which the halving time is determined makes this challenging. In this paper, we intend to help party planners by describing the problem, and highlighting several techniques to estimate the mean and variance of the halving.
A decentralized online quantum cash system, called qBitcoin, is given. We design the system which has great benefits of quantization in the following sense. Firstly, quantum teleportation technology is used for coin transaction, which prevents from the owner of the coin keeping the original coin data even after sending the coin to another. This was a main problem in a classical circuit and a blockchain was introduced to solve this issue. In qBitcoin, the double-spending problem never happens and its security is guaranteed theoretically by virtue of quantum information theory. Making a block is time consuming and the system of qBitcoin is based on a quantum chain, instead of blocks. Therefore a payment can be completed much faster than Bitcoin. Moreover we employ quantum digital signature so that it naturally inherits properties of peer-to-peer (P2P) cash system as originally proposed in Bitcoin.