In 2009, an innovative form of digital currency premiered in the marketplace — Bitcoin. Bitcoin is a peer-to-peer payment network developed by Satoki Nakamoto (Nakamoto). Nakamoto created Bitcoin to be the ultimate digital currency, meaning no governmental oversight, central database, or tracking system. Bitcoin, a so-called “cryptocurrency,” is a digital currency with encrypted messages that are not accessible to third parties. Bitcoin is leading the cryptocurrency market with pioneering technology concepts such as limited distribution and secure information system.
Bitcoin is a "crypto currency", a decentralized electronic payment scheme based on cryptography. Bitcoin economy grows at an incredibly fast rate and is now worth some 10 billions of dollars. Bitcoin mining is an activity which consists of creating (minting) the new coins which are later put into circulation. Miners spend electricity on solving cryptographic puzzles and they are also gatekeepers which validate bitcoin transactions of other people. Miners are expected to be honest and have some incentives to behave well. However. In this paper we look at the miner strategies with particular attention paid to subversive and dishonest strategies or those which could put bitcoin and its reputation in danger. We study in details several recent attacks in which dishonest miners obtain a higher reward than their relative contribution to the network. In particular we revisit the concept of block withholding attacks and propose a new concrete and practical block withholding attack which we show to maximize the advantage gained by rogue miners. RECENT EVENTS: it seems that the attack was recently executed, see Section XI-A.
Open access
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Blockchain Technology Applications and Security
Cryptography and Data Security
Advanced Steganography and Watermarking Techniques
In the digital world, so many copyrighted works are made in an illegal way because it is easy to keep and copy. Digital Rights Management has proposed to prevent this theft. Contents providers often bring in one server who has charge of managing the normal user, but there are some problems that it flocks to the server. Against this problem, P2P based DRM system has considered. All users can transfer the encrypted content to other users, so the content server does not have to load so much traffic from users. As a problem with this method, it is hard to figure out usage situation of contents because P2P based system is divided into many pieces of users. In this paper, we propose a new P2P based DRM system using Bitcoin protocol, which is one of the electric commerce. Bitcoin protocol, timestamp server saves all transactions to prevent double spending. We can bring out all usage situations to apply this system.
Open access
Digital Rights Management and Security
Advanced Steganography and Watermarking Techniques
The new, decentralized, anonymous digital currency Bitcoin has in less than three years gone from a proof-of-concept to being traded for about €78 million on a daily basis. Its ascendancy offers up a puzzle for financial regulators and other law-enforcers worldwide, while also promising to fulfill the political visions of a group of market-anarchist cryptographers. While it is still a very small economy in absolute terms, Bitcoin also poses some interesting challenges to traditional economic institutions, and is thus an interesting case for economic sociology. Using the notion of material embeddedness, this paper examines the possible implications of a further propagation of Bitcoin. If the currency proves a success, this will have ramifications for a large number of economic institutions, such as the possibility of taxation of untraceable money, the credit economy and interest rates, and international currency control.
The mathematical concept of Bitcoin network was introduced in the year 2008. by a person, or group of people under the pseudonym Satoshi Nakamoto. During the next year, the first implementation of software for supporting Bitcoin transactions was put into operation. Today, it supports more than 70,000 daily transactions, and market value in the last five years has reached roughly $ 7 billion. Therefore, it can be easily seen that that there is a specific need for the application of new forms of digital payment in electronic commerce
Razsirjenost uporabe virtualnih denarnih valut se v zadnjem casu naglo povecuje, kar napeljuje na potrebo po podrobnejsi seznanitvi z njimi. Virtualne denarne valute, ki iz tehnicnega vidika ponujajo relativno dovrsen in delujoc sistem, obenem prinasajo stevilne negotovosti na podrocju njihovega umescanja v obstojece zakonodajne okvire. Zakonodajalci in pravni strokovnjaki po svetu so sele pred kratkim zaceli odkrivati ta fenomen. V diplomskem delu je iz pravne, ekonomske in tehnicne plati predstavljen sistem virtualnih denarnih valut s poudarkom na valuti bitcoin. Sirok vpogled v delovanje sistema je podlaga za razumevanje zakonodajnih procesov, ki bodo sooblikovali prihodnost virtualnih denarnih valut. Diplomsko delo povzema del zakonodajnih in regulacijskih procesov v razlicnih pravnih redih, ki na teoreticni in prakticni ravni skusajo vkljuciti virtualne denarne valute v urejene pravne okvire.
The development and orientation of bit-coin is the forefront of currency issue for it is directly related to the currency position of bit-coin and affects the progress direction of the world economy. At present, there are serious differences in people's discussion about the orientation of bit-coin, the typical representation of which is that they do not have a thorough understanding of the basic properties of bit-coin, neither is there a legal orientation for it, and especially that is a lack of the basis of methodology of various research. All these have been hindering the application and progress of bit-coin. By discussion the current classification and future development of bit-coin, we believe that the generation of bit-coin is a reflection of the Internet economy.
Five years after the introduction of the peer-to-peer payment system and digital currency bitcoin, cryptocurrencies have flourished and become a global phenomenon. Concerns regarding the impact of cryptocurrency on financial stability and the conduct of monetary policy have drawn regulatory scrutiny and formal policy stances on this emerging phenomenon. The main purpose of the present research is to determine whether cryptocurrencies are scarce and can, by this virtue, be regarded as money. Cryptocurrencies such as bitcoin and litecoin are programmed to have supply scarcity, however the fact that myriad digital coins can be created effortless by emulation raises the question of whether the total combined supply of this potential money is indeed scarce or not. The primary focus of the paper is to determine empirically if the two main cryptocurrencies, bitcoin and litecoin are actually perceived by the market as being different. In order to determine whether bitcoin and litecoin are perceived as similar or not by the market, I conduct an empirical analysis using daily closing price and trade volumes data from major exchanges Bitstamp and BTC-e. I calculate correlations on a monthly and weekly frequency to investigate price co-movement and its dynamics. Complementarity and substitutability for the entire sample and for 4 separate subsamples is formally analyzed through the calculation of direct price elasticities and of cross-price elasticities of volume. I show that in spite of negligible fundamental differences that would lead us to believe that the two cryptocoins are interchangeable and fungible to a great extent, the empirical landscape is more complex, with fair evidence in favor of substitutability, i.e. them being effectively perceived as different monies. The implication of this finding is that the supply scarcity of any individual coin is not placed under question by the potentially infinite aggregate supply of all cryptocurrencies. Cryptocurrencies can posses scarcity, and, other properties left aside, can be regarded as money.
Många länder går mot ett samhälle där kontanter används till en mindre grad vilket har lett till en ökning av elektroniska betalningsmetoder. Utöver kortbetalningsmetoder har andra mer hög teknologiska betalningsmetoder vuxit fram. Bland dem är Bitcoin ett nytt system som vuxit sig relativt stor under de senaste åren. Bitcoin är både kritiserat och hyllat i olika medier. Utifrån de två väletablerade teorierna; Diffusion av innovation och Teknologi acceptans modellen avser studien att identifiera betydande faktorer i Svenska företags adaption av Bitcoin. Denna kvalitativa studie bygger på strukturerade telefon- och mailintervjuer i samband med samling av sekundärdata vilket tillsammans skapar empirins underlag. Studien består av åtta telefonintervjuer och tre mailsvar Studien är av deduktiv natur då den undersöker innovationen utifrån redan befintliga teorier. I användandet av teorin återfinns ingen undersökning av innovationen, istället har innovationer av närliggande karaktär studerats för stödjande av faktorernas vikt för adaptionen av innovationen. Resultaten visar att relativa fördela, kompatibilitet, svårighet att använda och uppfattad risk bör vara de främsta faktorerna. Utöver dessa faktorer finns bevis som pekar på att sociala influenser och tekniskt intresse även är viktiga för Bitcoins adaption.
I explore a popular Bitcoin futures market and make empirical observations on the divergence between standard futures model and the observed futures prices by backing out what the implied risk-free rate of return would be if the standard assumptions held for this exchange. Intended as a blog post.
In On the Origins of Money (1892), Carl Menger explains that in a barter situation, some commodities are more commonly demanded than others, are more saleable. In order to overcome the double coincidence of wants, people naturally begin trading their goods first for a more saleable good in order to then trade for their final objective. Menger (1892) describes it thus, «Men have been led, with increasing knowledge of their individual interests, each by his own economic interests, without convention, without legal compulsion, nay, even without any regard to the common interest, to exchange goods destined for exchange (their “wares”) for other goods equally destined for exchange, but more saleable.» Lud-wig von Mises restated the same insight in Human Action (1940), «[Money] is the most marketable good which people acquire be-cause they want to offer it in later acts of interpersonal exchange. Money is the thing which serves as the generally accepted and commonly used medium of exchange.»
 As ever more people discovered the advantages of using a more saleable good in indirect exchange, one commodity became increasingly adopted until it eventually became money, the most marketable of all goods, the good that can generally be traded for all other goods within the market. As Menger said (1892), «And so it has come to pass, that as man became increasingly conversant with these economic advantages… those commodities, which relatively to both space and time are most saleable, have in every market become the wares, which it is not only in the interest of every one to accept in exchange for his own less saleable goods, but which also are those he actually does readily accept.»
I dagens samhälle används en mängd metoder och verktyg för att nå kunder och eftersom konkurrensen är knivskarp är det extra viktigt att skapa personliga relationer till sina kunder. Syftet med denna uppsats är att studera bitcoin, en virtuell valuta, som ett verktyg för att skapa, underhålla och fördjupa dessa relationer. Bitcoin accepteras idag som betalningsmedel av en mängd olika företag och det är därför intressant att undersöka varför de gör detta. Genom att utföra en enkätstudie och intervjuer kan det konstateras att användningen av bitcoin bland företag har ökat stadigt det senaste halvåret. Det visar sig också att företagen använder sig av bitcoin som marknadsföringsverktyg på två olika sätt; dels som ett betalningsalternativ inom traditionell butikshandel men också som en belöning inom ett lojalitetsprogram. Det kan konstateras att företagen använt bitcoin som ett verktyg för att komma i kontakt med nya kunder och för att utmärka sig inom sin bransch. Dock använder företagen inte bitcoin som ett verktyg för att bygga långvariga relationer. Därför är slutsatsen att bitcoin inte används på ett relationsmarknadsföringsmässigt sätt och således inte heller leder till några förstärkta kundrelationer.
Los motivos históricos y económicos que han llevado a programar el protocolo Bitcoin se encuentran en la actualidad con una interesante fase evolutiva de los algoritmos de encriptación para la identificación de datos y la transmisión de derechos, tratándose de un sistema que presenta aspectos jurídicos dignos de mención.
Bakgrund: Riksbanken har haft sedelmonopol sedan 1897, vilket har inneburit att de sedan dess har haft ensamrätt att ge ut pengar. Den teknologiska utvecklingen och den ökade användningen av internet har lett till att virtuella samfund har utvecklats och i vissa fall har dessa samhällen skapat sin egen valuta. Bitcoin är världens första helt decentraliserade valuta och baserades i början av sin existens på teknisk nyfikenhet för en handfull hobbyister. Under de senaste åren har efterfrågan på bitcoins ökat vilket i sin tur har lett till att kursen stigit explosivartat.Syfte: Syftet med uppsatsen är att kartlägga och analysera de transaktionskostnader som kan uppstå när Bitcoin används som betalningsmedel, samt jämföra dessa kostnader med de transaktionskostnader som är förenade med användandet av traditionella betalningsmedel. Genomförande: Studien har genomförts genom en blandning av ett kvalitativt och ett kvantitativt tillvägagångssätt samt genom en bearbetning av transaktionskostnadsteorin inom ramen för ny institutionell teori. Empirin består av tre delar där studien inleds med en litteraturstudie för att läsaren ska få en inblick i vad Bitcoin är och hur valutan fungerar. Därefter presenteras det kvalitativa angreppssättet i form av semistrukturerade intervjuer och avslutningsvis presenteras studiens kvantitativa angreppsätt i form av en enkätstudie för att kartlägga användandet av bitcoin.Slutsats: Studien visar att transaktionskostnaderna för Bitcoin är högre än för traditionella betalningsmedel i och med att valutan i dagsläget är beroende av den traditionella infrastrukturen för betalningar samt att dess användare därutöver frånsäger sig det skyddsnät som traditionella betalningsmedel omfattas av. För att Bitcoin ska bli ett etablerat betalningsmedel krävs det att de grundläggande funktionerna för pengar uppfylls. Något som studien visar är bristfälligt i nuläge
Since emerging on the scene in 2009, the digital currency bitcoin has sparked an intense debate online and in the financial presses about its relative virtues and vices as well as its implications for the future of money. In this paper, I examine whether it is likely that bitcoin will emerge as money, i.e. a generally accepted medium of exchange. I outline its unique attributes and defects to explain both its surprising popularity and its limited prospects for attaining the status of money. I conclude that, although the odds of bitcoin itself ever becoming money are slim, the innovations that its unique programming protocol unleashes could potentially have profound and far-reaching implications for monetary institutions, particularly in nations with corrupt and poorly managed money.
The appearance of bitcoin is the beginning of a new era in which advanced technological capabili- ties have changed the perspective on the financial system's functioning rules and have expanded the understanding of the category of money. Bitcoin is used in commercial transactions, transfers and as an investment asset. The establishment of bitcoin is a part of the movement away from cash transactions and the general acceptance of non-material form of money observed around the world. The aim of the study is to analyse the bitcoin cryptocurrency in the scope of the fulfilment of the definition criteria and functions of money formulated in an economic theory, and to present the current legal situation in selected countries relating with its functioning.
This paper will explore the recent development of digital (aka virtual or crypto-) currencies—currencies which are creatures of the Internet, have no issuing or governing body, are self-authenticating, and can be used worldwide by members of the general public to engage in the same types of direct, one-to-one transactions that daily occur using government-issued currencies
This project attempts to implement an open source FPGA based Bitcoin miner on an Altera DE2-115 development board. Bitcoin is an experimental peer-to-peer digital currency based on public key cryptography. The advantages of Bitcoins are that they can be transferred between any two people anywhere in the world, and they do not have the same fees and lack of control associated with traditional methods of currency transfers. The first part of this project focuses on detailing how the Bitcoin network and open source miner work. The second part of the project attempts to improve the performance of the open source miner, but a lack of resources on the Cyclone IV EP4CE115F29C7 ultimately prevented implementing a dual pipelined design.
Bitcoin’s nature makes regulation extremely difficult for international governments. The currency’s resistance to regulation also makes it appealing to people who want freedom from government or central bank control. However, given the rapidly moving growth and emerging uses of Bitcoin, governments will need to take action sooner rather than later, to prevent fraud and protect Bitcoin users.