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.
Distributed ledger technology (DLT) that stores data (usually immutable and sequenced transaction records) in a decentralized way through cryptography and consensus algorithms. The first widely recognized implementation of the blockchain took place in 2009 on the Bitcoin public blockchain. Since then, other types of blockchain have been developed for a wide range of applications and features built on common principles such as decentralization, encryption, consensus, and immutability. In particular, blockchain technology is most widely used in transaction settlement and digital currency banks and the financial sector, as well as in supply chain applications that help participants solve problems quickly and efficiently. Other use cases continue to be developed. As a form of information management, blockchain and related DLTs offer advantages over traditional databases and may help develop certain new technologies such as the Internet of Things. Blockchain regulation is currently restricted at the international and federal levels, but state-level legislation provides support and awareness of aspects of blockchain technology. Most of the current regulations are in the form of self-regulation by blockchain developers and related communities, but many challenges and risks such as data privacy and security need to be addressed in the near future.
Blockchains are distributed ledgers. Distributed ledgers replace centralized ledgers. Distributed ledgers use nodes—computers—to record, share, and synchronize transactions in their electronic ledgers. The paper examines how blockchain data is arranged into blocks and how an append-only mode chain links them. Distributed ledger technology (DLT) encrypts and consensuses immutable and sequential transaction records. Bitcoin pioneered blockchain. Since then, many blockchains with decentralization, encryption, consensus, and immutability have been developed for diverse uses. Blockchain technology is most typically used in transaction settlement, digital currency banks, and supply chain applications to solve problems quickly. The study examines how blockchain and DLTs might improve information management and build new technologies like the Internet of Things. The study shows how legal issues encourage blockchain technology despite limited international and federal restrictions. However, data privacy and security must be addressed immediately.
Bitcoin was introduced in a self-published paper by Satoshi Nakamoto in October, 2008[1, 2]. Bitcoin is a decentralized system which requires no central authority. In recent years, bitcoin has become increasingly accepted and used in many fields in place of physical cash. Bitcoin is a peer-to-peer network of nodes that distribute and record transactions [3]. Bitcoin transaction is a statement that Player 1 (address 1) would like to transfer some bitcoin values to Player 2 (address 2), signed by Player 1 by his private key. Transactions are verified by network nodes and confirmed in a public distributed ledger called the block chain. The block chain consists of a series of blocks in which each block contains the hashed value of subsequent block. Every bitcoin block contains a set of verified transactions that are collected from the bitcoin broadcast network. It is assumed that the majority of nodes in the bitcoin network are honest. This makes the verification done by the nodes is correct with high probability. More technically, bitcoin is an electronic-cash system based on cryptographic algorithms.
Open access
Advanced Steganography and Watermarking Techniques
In this paper, we identify a new form of attack, called the Balance attack, against proof-of-work blockchain systems. The novelty of this attack consists of delaying network communications between multiple subgroups of nodes with balanced mining power. Our theoretical analysis captures the precise tradeoff between the network delay and the mining power of the attacker needed to double spend in Ethereum with high probability. We quantify our probabilistic analysis with statistics taken from the R3 consortium, and show that a single machine needs 20 minutes to attack the consortium. Finally, we run an Ethereum private chain in a distributed system with similar settings as R3 to demonstrate the feasibility of the approach, and discuss the application of the Balance attack to Bitcoin. Our results clearly confirm that main proof-of-work blockchain protocols can be badly suited for consortium blockchains.
In this research we have tried to identify the relationship between the exchange rate for bitcoin to the leading currencies such as Dollar, Euro, British Pound and Chinese Yuan and Polish zloty as well. We have applied ARMA and GARCH models to model and to analyze the conditional mean and variance. The appliance of GARCH models have identified some dependency in explanation conditional variance between bitcoin and US Dollar, Euro and Yuan, while ARMA analysis have shown no relations between bitcoin and other dependent variables.
This article introduces a method of hiding transaction amounts in the strongly decentralized anonymous cryptocurrency Monero. Similar to Bitcoin, Monero is a cryptocurrency which is distributed through a proof-of-work “mining” process having no central party or trusted setup. The original Monero protocol was based on CryptoNote, which uses ring signatures and one-time keys to hide the destination and origin of transactions. Recently the technique of using a commitment scheme to hide the amount of a transaction has been discussed and implemented by Bitcoin Core developer Gregory Maxwell. In this article, a new type of ring signature, A Multilayered Linkable Spontaneous Anonymous Group signature is described which allows one to include a Pedersen Commitment in a ring signature. This construction results in a digital currency with hidden amounts, origins and destinations of transactions with reasonable efficiency and verifiable, trustless coin generation. The author would like to note that early drafts of this were publicized in the Monero Community and on the #bitcoin-wizards IRC channel. Blockchain hashed drafts are available showing that this work was started in Summer 2015, and completed in early October 2015. An eprint is also available at http://eprint.iacr.org/2015/1098.
Orphan risk for large blocks limits Bitcoin’s transactional capacity while the lack of secure instant transactions restricts its usability. Progress on either front would help spur adoption. This paper considers a technique for using fractional-difficulty blocks (weak blocks) to build subchains bridging adjacent pairs of real blocks. Subchains reduce orphan risk by propagating blocks layer-by-layer over the entire block interval, rather than all at once when the proof-of-work is solved. Each new layer of transactions helps to secure the transactions included in lower layers, even though none of the transactions have been con-firmed in a real block. Miners are incentivized to cooperate building subchains in order to process more transactions per second (thereby claiming more fee revenue) without incur-ring additional orphan risk. The use of subchains also diverts fee revenue towards network hash power rather than dripping it out of the system to pay for orphaned blocks. By nesting subchains, weak block verification times approaching the theoretical limits imposed by speed-of-light constraints would become possible with future technology improvements. As subchains are built on top of the existing Bitcoin protocol, their implementation does not require any changes to Bitcoin’s consensus rules.
Péter Juhász, József Stéger, Dániel Kondor, Gábor Vattay
Bitcoin is a digital currency and electronic payment system operating over a peer-to-peer network on the Internet. One of its most important properties is the high level of anonymity it provides for its users. The users are identified by their Bitcoin addresses, which are random strings in the public records of transactions, the blockchain. When a user initiates a Bitcoin transaction, his Bitcoin client program relays messages to other clients through the Bitcoin network. Monitoring the propagation of these messages and analyzing them carefully reveal hidden relations. In this paper, we develop a mathematical model using a probabilistic approach to link Bitcoin addresses and transactions to the originator IP address. To utilize our model, we carried out experiments by installing more than a hundred modified Bitcoin clients distributed in the network to observe as many messages as possible. During a two month observation period we were able to identify several thousand Bitcoin clients and bind their transactions to geographical locations.
Johnny Dilley, Andrew Poelstra, Jonathan Wilkins, Marta Piekarska · 6 authors
Bitcoin, the first peer-to-peer electronic cash system, opened the door to permissionless, private, and trustless transactions. Attempts to repurpose Bitcoin's underlying blockchain technology have run up against fundamental limitations to privacy, faithful execution, and transaction finality. We introduce \emph{Strong Federations}: publicly verifiable, Byzantine-robust transaction networks that facilitate movement of any asset between disparate markets, without requiring third-party trust. \emph{Strong Federations} enable commercial privacy, with support for transactions where asset types and amounts are opaque, while remaining publicly verifiable. As in Bitcoin, execution fidelity is cryptographically enforced; however, \emph{Strong Federations} significantly lower capital requirements for market participants by reducing transaction latency and improving interoperability. To show how this innovative solution can be applied today, we describe \emph{\liquid}: the first implementation of \emph{Strong Federations} deployed in a Financial Market.
We present cryptocurrency-based lottery protocols that do not require any collateral from the players. Previous protocols for this task required a security deposit that is $O(N^2)$ times larger than the bet amount, where $N$ is the number of players. Our protocols are based on a tournament bracket construction, and require only $O(\log N)$ rounds. Our lottery protocols thus represent a significant improvement, both because they allow players with little money to participate, and because of the time value of money. The Ethereum-based implementation of our lottery is highly efficient. The Bitcoin implementation requires an $O(2^N)$ off-chain setup phase, which demonstrates that the expressive power of the scripting language can have important implications. We also describe a minimal modification to the Bitcoin protocol that would eliminate the exponential blowup.
Open access
3 source records
Blockchain Technology Applications and Security
Cryptography and Data Security
Advanced Steganography and Watermarking Techniques
Pablo Lamela Seijas, Simon Thompson, Darryl McAdams
We give an overview of the scripting languages used in existing cryptocurrencies, and in particular we review in some detail the scripting languages of Bitcoin, Nxt and Ethereum, in the context of a high-level overview of Distributed Ledger Technology and cryptocurrencies. We survey different approaches, and give an overview of critiques of existing languages. We also cover technologies that might be used to underpin extensions and innovations in scripting and contracts, including technologies for verification, such as zero knowledge proofs, proof-carrying code and static analysis, as well as approaches to making systems more efficient, e.g. Merkelized Abstract Syntax Trees.
Bitcoin is a digital currency currently being legalized throughout the European Union [2], whose operating rinciples were published publicly [5], but not in scientific or mathematical sources. The goal of this report is to encourage discussions about decentralization and security of the Bitcoin system, as well as about reasonableness of the Bitcoin network fees. Bitcoin is a fully decentralized peer-to-peer electronic currency system, which lets its users to send transactions directly from one user to another, without any thirdparties. Electronic signature ensures that transaction is sent by the person who owns the money, but the main problem of such a system is to ensure, without any third-parties, that the same money could not be spent twice. This problem in the Bitcoin system is solved using a peer-to-peer network. The Bitcoin network timestamps all transactions, by grouping them to an ongoing chain of transaction blocks, where each block must have a hash (SHA256) result which would meet certain conditions, thus ensuring that in order to cancel or modify a past transaction, one would need to find more hashes which meet the required conditions than the whole Bitcoin network combined since the time of transaction. This allows users to leave and rejoin the network at will, and always be sure which transaction history is the correct one.
Cryptocurrencies which evolved with bitcoin has a decentralized structure based on the ledger which is handled via proof of work mechanism, indeed generating a monetary supply. We all agree that decentralization save us from the cruel national political system but has a limitation of computational cost involved and problem related to scalability. The idea is to introduce a new cryptocurrency named UV Coin which is a cryptocurrency framework having control of the central banks but involves distributed set of authorities to prevent double spending. This coin will maintain enough transparency. The proof of the benefits is partial centralization such as elimination of wasteful hashing and involves a scalable system to avoid double spending attack.
Open access
Blockchain Technology Applications and Security
Advanced Steganography and Watermarking Techniques
Davide Frey, Marc X. Makkes, Pierre-Louis Roman, François Taı̈ani · 5 authors
To preserve the Bitcoin ledger's integrity, a node that joins the system must download a full copy of the entire Bitcoin blockchain if it wants to verify newly created blocks.
The decentralized cryptocurrency Bitcoin has experienced great success but also encountered many challenges. One of the challenges has been the long confirmation time. Another challenge is the lack of incentives at certain steps of the protocol, raising concerns for transaction withholding, selfish mining, etc. To address these challenges, we propose Solida, a decentralized blockchain protocol based on reconfigurable Byzantine consensus augmented by proof-of-work. Solida improves on Bitcoin in confirmation time, and provides safety and liveness assuming the adversary control less than (roughly) one-third of the total mining power.
Portfolio management is the decision-making process of allocating an amount of fund into different financial investment products. Cryptocurrencies are electronic and decentralized alternatives to government-issued money, with Bitcoin as the best-known example of a cryptocurrency. This paper presents a model-less convolutional neural network with historic prices of a set of financial assets as its input, outputting portfolio weights of the set. The network is trained with 0.7 years' price data from a cryptocurrency exchange. The training is done in a reinforcement manner, maximizing the accumulative return, which is regarded as the reward function of the network. Back test trading experiments with trading period of 30 minutes is conducted in the same market, achieving 10-fold returns in 1.8 month's periods. Some recently published portfolio selection strategies are also used to perform the same back tests, whose results are compared with the neural network. The network is not limited to cryptocurrency, but can be applied to any other financial markets.
Matthias Stuermer, Gabriel Abu-Tayeh, Thomas Myrach
The modern age has heralded a shift from the industrial society, in which natural resources are crucial input factors for the economy, towards a knowledge society. To date, sustainability literature has treated knowledge-and in particular digital artifacts-mainly as a means to the end of achieving sustainable development. In this conceptual paper, we argue that digital artifacts themselves ought also to be considered as resources, which also need to be sustainable. While over-consumption is a problem facing natural resources, with sustainable digital artifacts, underproduction, and underuse are the biggest challenges. In our view, the sustainability of digital artifacts improves their potential impact on sustainable development. A theoretical foundation for digital artifacts and their ecosystem allows us to present the relevant research on digital information, knowledge management, digital goods, and innovation literature. Based on these insights, we propose ten basic conditions for sustainable digital artifacts and their ecosystem to ensure that they provide the greatest possible benefit for sustainable development. We then apply those characteristics to four exemplary cases: Linux kernel development, Bitcoin cryptocurrency, the Wikipedia project, and the Linking Open Drug Data repositories. The paper concludes with a research agenda identifying topics for sustainability scholars and information systems academics, as well as practitioners. A number of suggestions for future studies on digital sustainability are also put forward.
Million of dollars are moved worldwide by electronic contracting daily, obviously its legal regulation has been the subject of considerable debates within the contemporary commercial and procedural law. It is not only about analyzing the substantial perspective of electronic contract, but also the possibility of its demand and effectiveness in procedural stages. This article analyzes the principles that impact electronic contracting, with its own jurisprudential and normative development in the Colombian context; this requires a brief overview about the importance of the principles in law and their functions, secondly, an introduction to the phenomenon of electronic contracting, and finally with the detailed study of the principles. Later it will be analyzed its application in bitcoins.
First, Arvind Narayanan and Andrew Miller, co-authors of the increasingly popular open-access Princeton Bitcoin textbook, provide an overview of ongoing research in cryptocurrencies. Second, Song Han provides an overview of hardware trends related to another long-studied academic problem that has recently seen an explosion in popularity: deep learning.
Joshua Lind, Ittay Eyal, Peter Pietzuch, Emin Gün Sirer
Blockchain protocols are inherently limited in transaction throughput and latency. Recent efforts to address performance and scale blockchains have focused on off-chain payment channels. While such channels can achieve low latency and high throughput, deploying them securely on top of the Bitcoin blockchain has been difficult, partly because building a secure implementation requires changes to the underlying protocol and the ecosystem. We present Teechan, a full-duplex payment channel framework that exploits trusted execution environments. Teechan can be deployed securely on the existing Bitcoin blockchain without having to modify the protocol. It: (i) achieves a higher transaction throughput and lower transaction latency than prior solutions; (ii) enables unlimited full-duplex payments as long as the balance does not exceed the channel's credit; (iii) requires only a single message to be sent per payment in any direction; and (iv) places at most two transactions on the blockchain under any execution scenario. We have built and deployed the Teechan framework using Intel SGX on the Bitcoin network. Our experiments show that, not counting network latencies, Teechan can achieve 2,480 transactions per second on a single channel, with sub-millisecond latencies.
Bitcoin system, when more than 51% computing power is controlled by a single node, the block chain can be distorted maliciously. This is called 51% attack which is a well-known potential risk that could destroy the Bitcoin system. The paper proves that under the current proof-of-work mechanism, computing power eventually will be centralized at a single node if miners are rational enough. The paper propose a new proof-of-work mechanism that improves decentralization and reduces the risk of 51% attack without increasing the risk of Sybil attack. This new mechanism introduces a series of principles such as Career open to all talents, without distinction of birth, Distribution according to labor and All Men are created equal.
Open access
Blockchain Technology Applications and Security
Spam and Phishing Detection
Advanced Steganography and Watermarking Techniques
Bitcoin is a digital currency in which the need for a trusted third party is avoided. Instead, this digital currency is based on the concept of ‘proof of work’ allowing users to execute payments by digitally signing their transactions. Since electronic files can be duplicated, fraudulent transactions in the form of double-spend attacks – where users spend the same money at least twice – can happen. This paper is about attack models that can assign possible time advantage to attacker agents in the Bitcoin network. In particular, this paper presents: (i) two attack models in which partial advancement towards block production can be influenced by time and not only by the hashpower used to produce blocks of hashes, and (ii) algorithmic experimentation comparing these models against existing well-known hashrate-based attack models that do not consider time advantage. As a conclusion, this paper presents evidence on the fact that advantages are not negligible for cases in which an attacker has had enough time for secretly mining fraudulent blocks or significant control over the network. Also, the models presented in this paper help in supporting previous claims in the literature about how to correctly model and detect double-spend attacks in the Bitcoin network.