The English version of this paper can be found at: http://ssrn.com/abstract=2709713 Italian Abstract: La tecnologia fondamentale del protocollo Bitcoin, conosciuta come blockchain, è emersa recentemente in tutta la sua straordinaria portata innovativa, teoricamente in grado di riconfigurare le nostre attuali interazioni economiche, politiche e sociali. Sebbene l'interesse accademico per questa tecnologia sia ormai crescente, finora non è stata ancora divulgata un'analisi esaustiva delle sue applicazioni dal punto di vista politologico. Questa ricerca si propone di discutere i punti essenziali di una governance decentralizzata fondata sulla blockchain, che sfida in varia misura i meccanismi tradizionali della autorità statale, della cittadinanza e della democrazia. In particolare, la ricerca si pone l'obiettivo di verificare la performance della blockchain e delle piattaforme decentralizzate come strumenti iperpolitici, in grado cioè di gestire interazioni sociali su ampia scala e di destituire eventualmente le autorità centrali tradizionali. L'analisi evidenzia i rischi relativi a posizioni dominanti di natura privatistica negli ecosistemi distribuiti, che potrebbero spogliare i cittadini dei loro diritti e permettere l'insorgere di una società globale senza stato. Se gli utopisti tecnologici sollecitano la destituzione di qualsiasi autorità centrale, questa ricerca difende invece il ruolo dello Stato come necessario punto di coordinazione nella società civile e dimostra come la decentralizzazione attuata attraverso algoritmi e sistemi di consenso distribuito costituisca una teoria organizzativa, non una teoria politica autonoma. English Abstract: The core technology of Bitcoin, the blockchain, has recently emerged as a disruptive innovation with a wide range of applications, potentially able to redesign our interactions in business, politics and society at large. Although scholarly interest in this subject is growing, a comprehensive analysis of blockchain applications from a political perspective is severely lacking to date. This paper aims to fill this gap and it discusses the key points of blockchain-based decentralized governance, which challenges to varying degrees the traditional mechanisms of State authority, citizenship and democracy. In particular, the paper verifies to which extent blockchain and decentralized platforms can be considered as hyper-political tools, capable to manage social interactions on large scale and dismiss traditional central authorities. The analysis highlights risks related to a dominant position of private powers in distributed ecosystems, which may lead to a general disempowerment of citizens and to the emergence of a stateless global society. While technological utopians urge the demise of any centralized institution, this paper advocates the role of the State as a necessary central point of coordination in society, showing that decentralization through algorithm-based consensus is an organizational theory, not a stand-alone political theory.
Artykuł porusza problem identyfikacji (w oparciu o rozkład Benforda) nietypowych transakcji w sieci Bitcoin. Dla przykładowo wybranych adresów portfeli Bitcoin porównano rozkład Benforda z rozkładem częstotliwości występowania poszczególnych cyfr na pierwszej najbardziej znaczącej pozycji w kwotach transakcji związanych z tymi adresami. Rozkłady te nie były zgodne z rozkładem Benforda. Zwrócono uwagę na konieczność zachowania dużej ostrożności przy analizowaniu transakcji za pomocą narzędzi statystycznych takich jak rozkład Benforda. Brak zgodności z rozkładem Benforda w żadnym wypadku nie jest równoznaczny z prowadzeniem działalności niezgodnej z prawem. Z drugiej strony, zgodność z rozkładem Benforda nie stanowi gwarancji tego, że nie występują nieprawidłowości.
Nicolas T. Courtois, Pinar Emirdag, Zhouyixing Wang
In this paper we study the question of centralisation in bitcoin digital currency. In theory bitcoin has been designed to be a totally decentralized distributed system. Satoshi Nakamoto has very clearly postulated that each node should be collecting recent transactions and trying to create new blocks (Satoshi08). In bitcoin transactions are aggregated in block in order to authenticate them and form an official ledger and history of bitcoin transactions. In practice as soon as expensive ASIC bitcoin miners have replaced general-purpose hardware, production of bitcoins and the validation of transactions has concentrated in the hands of a smaller group of people. Then at some moment in early 2012 an important decision was taken: the Stratum protocol was designed (Palatinus12) which took a deliberate decision to move the power of selecting which transactions are included in blocks from miners to pool managers. The growing difficulty of mining and large standard deviation in this process (Rosenfeld13; CourtoisBahack14) made that majority of miners naturally shifted to pooled mining. At this moment bitcoin ceased being a decentralized democratic system. In this paper we survey the question of a 51% attacks and show that there is a large variety of plausible attack scenarios. In particular we study one particularly subversive attack scenario which depends on non-trivial internal details of the bitcoin hashing process. How does it compare with the current mining practices? We have study the Stratum protocol in four popular real-life mining configurations. Our analysis shows that pools could very easily cheat the majority of people. However the most subversive versions of the attack are NOT facilitated and could potentially be detected.
Cash in the real world allows for parties to exchange currency without the need to go through some sort of central authority. One person, Alice, can simply hand cash over to another person, Bob. In this transaction the only two people that have knowledge of this exchange are Alice and Bob. Until recently there was no electronic equivalent to this exchange. In 1982 David Chaum proposed a system of anonymous electronic cash based on blind signatures, and in 1990 founded DigiCash as an electronic cash company. There were a few banks that implemented electronic cash systems, but these banks and DigiCash ultimately went bankrupt in 1997 and 1998 despite the enthusiasm surrounding anonymous electronic cash. Between 1998 and 2008 there were no successful implementations of electronic cash that offer a decentralized, anonymous, and untraceable system.\nIn 2008 a paper was published by Satoshi Nakamoto on the cryptocurrency known as Bitcoin. A cryptocurrency is a form of electronic cash backed by mathematical and cryptographic constructs, unlike traditional currency which was historically backed by gold or silver. Cryptocurrencies have seen rising popularity in recent years due to their decentralized, distributed, peer-to-peer protocols. Part of this rising popularity is also attributable to the supposed anonymity of these protocols; however, due to the public transaction history required for these protocols and the fact that transactions are pseudonymous and not purely anonymous, this supposed anonymity does not exist. While the systems may achieve the goal of decentralized currency it does not achieve the goal of untraceability. In this thesis we analyze the technical implementations of Bitcoin and other cryptocurrencies to determine the level of anonymity provided by these protocols. We also analyze proposed improvements for their feasibility.
Foteini Baldimtsi, Aggelos Kiayias, Thomas Zacharias, Bingsheng Zhang
We introduce a new class of protocols called Proofs of Work or Knowledge (PoWorKs). In a PoWorK, a prover can convince a verifier that she has either performed work or that she possesses knowledge of a witness to a public statement without the verifier being able to distinguish which of the two has taken place. We formalize PoWorK in terms of three basic properties, completeness, f-soundness and indistinguishabil-ity (where f is a function that determines the tightness of the proof of work aspect) and present a construction that transforms 3-move HVZK protocols into 3-move public-coin PoWorKs. To formalize the work aspect in a PoWorK protocol we define cryptographic puzzles that adhere to certain uniformity conditions, which may also be of independent interest. We instantiate our puzzles in the random oracle (RO) model as well as via constructing “dense ” versions of suitably hard one-way functions. We then showcase PoWorK protocols by presenting two applications. We first show how non-interactive PoWorKs can be used to reduce spam email by forcing users sending an e-mail to either prove to the mail server they are approved contacts of the recipient or to perform computational work. As opposed to previous approaches [DN92, DGN03] that applied proofs of work to this problem, our proposal of using PoWorKs is privacy-preserving as it hides the list of the receiver’s approved contacts from the mail server. Our second application for PoWorK relates to zero-knowledge protocols. We show that PoWorK protocols imply straight-line quasi-polynomial simulatable arguments of knowledge; by applying this result to our construction we obtain an efficient straight-line concurrent 3-move statistically quasi-polynomial simulatable argument of knowledge, improving the round complexity of the previously known four-move protocols, [Pas03].
PGP is built upon a Distributed Web of Trust in which the trustworthiness of a user is established by others who can vouch through a digital signature for that particular identity. Preventing its wholesale adoption are a number of inherent weaknesses to include (but not limited to) the following: 1) Trust Relationships are built on a subjective honor system, 2) Only first degree relationships can be fully trusted, 3) Levels of trust are difficult to quantify with actual values, and 4) Issues with the Web of Trust itself (Certification and Endorsement). Although the security that PGP provides is proven to be reliable, it has largely failed to garner large scale adoption. In this paper, we propose several novel contributions to address the aforementioned issues with PGP and associated Web of Trust. To address the subjectivity of the Web of Trust, we provide a new certificate format based on Bitcoin which allows a user to verify a PGP certificate using Bitcoin identity-verification transactions - forming first degree trust relationships that are tied to actual values (i.e., number of Bitcoins transferred during transaction). Secondly, we present the design of a novel Distributed PGP key server that leverages the Bitcoin transaction blockchain to store and retrieve Bitcoin-Based PGP certificates. Lastly, we provide a web prototype application that demonstrates several of these capabilities in an actual environment.
Bitcoin is a decentralized P2P digital currency in which coins are generated by a distributed set of miners and transaction are broadcasted via a peer-to-peer network. While Bitcoin provides some level of anonymity (or rather pseudonymity) by encouraging the users to have any number of random-looking Bitcoin addresses, recent research shows that this level of anonymity is rather low. This encourages users to connect to the Bitcoin network through anonymizers like Tor and motivates development of default Tor functionality for popular mobile SPV clients. In this paper we show that combining Tor and Bitcoin creates an attack vector for the deterministic and stealthy man-in-the-middle attacks. A low-resource attacker can gain full control of information flows between all users who chose to use Bitcoin over Tor. In particular the attacker can link together user's transactions regardless of pseudonyms used, control which Bitcoin blocks and transactions are relayed to the user and can \ delay or discard user's transactions and blocks. In collusion with a powerful miner double-spending attacks become possible and a totally virtual Bitcoin reality can be created for such set of users. Moreover, we show how an attacker can fingerprint users and then recognize them and learn their IP address when they decide to connect to the Bitcoin network directly.
Bitcoin is the first decentralised, peer-to-peer network that allows for the proof and transfer of ownership of virtual currencies without the need for a trusted third party. The purpose of this article is to address how we can capture Bitcoin’s potential benefits for the economy while addressing new regulatory challenges.
Off-Chain transactions allow for the immediate transfer of Cryptocurrency between two parties, without delays or unavoidable transaction fees. Such capabilities are critical for mainstream Cryptocurrency adaption. They allow for the "Coffee-Coin Criteria"; under which a customer orders a coffee and pays for that coffee in bitcoins. This is not possible with On-Chain transactions today. Unfortunately, all existing Off-Chain transaction protocols are notoriously unreliable The current generation of third-party facilitators are vulnerable to hacker-based attacks. As Mt. Gox tragically demonstrated, centralized-transaction institutions are easy targets for Cryptocurrency thieves. The slightest security flaw in a third-party system will pounced on by hackers, who will proceed to devour it like ants devouring a crab. Under such circumstances, it no wonder that the Public treats most Cryptocurrency services with a constant shadow of suspicion. For Bitcoin to flourish, its anti-hierarchy principles must be applied to safe Off-Chain transactions. First and foremost, we need a new hacker-proof protocol that can easily be executed by any experienced developer. Preferably, the protocol will be open-sourced for full reliability and transparency. This paper presents one such procedure, which allows for he safe transmission of Bitcoin private key control by way of Cryptocubic transactions.
We study decentralized cryptocurrency protocols in which the participants do not deplete physical scarce resources. Such protocols commonly rely on Proof of Stake, i.e., on mechanisms that extend voting power to the stakeholders of the system. We offer analysis of existing protocols that have a substantial amount of popularity. We then present our novel pure Proof of Stake protocols, and argue that they help in mitigating problems that the existing protocols exhibit.
On February 2014, $650.000.000 worth of Bitcoins disappeared. Currently it is unclear whether hackers or MtGox, the largest Bitcoin exchange, are to be blamed. In either case, the anonymous and unregulated nature of the Bitcoin system makes it practically impossible for innocent victims to get their money back. We have investigated the technical possibilities, solutions and implications of introducing a regulatory framework based on redlisting Bitcoin accounts. Despite numerous proposals, the Bitcoin community has voiced a strong opinion against any form of regulation. However, most of the discussions were based on speculations rather than facts. We strive to contribute a scientific foundation to these discussions and illuminate the path to crypto-justice.
Alex Biryukov, Dmitry Khovratovich, Ivan Pustogarov
Bitcoin is a digital currency which relies on a distributed set of miners to mint coins and on a peer-to-peer network to broadcast transactions. The identities of Bitcoin users are hidden behind pseudonyms (public keys) which are recommended to be changed frequently in order to increase transaction unlinkability. We present an efficient method to deanonymize Bitcoin users, which allows to link user pseudonyms to the IP addresses where the transactions are generated. Our techniques work for the most common and the most challenging scenario when users are behind NATs or firewalls of their ISPs. They allow to link transactions of a user behind a NAT and to distinguish connections and transactions of different users behind the same NAT. We also show that a natural countermeasure of using Tor or other anonymity services can be cut-off by abusing anti-DoS countermeasures of the bitcoin network. Our attacks require only a few machines and have been experimentally verified. We propose several countermeasures to mitigate these new attacks.
Open access
4 source records
Blockchain Technology Applications and Security
Internet Traffic Analysis and Secure E-voting
Advanced Steganography and Watermarking Techniques
Dans les crypto-monnaies telles Bitcoin, l’anonymité des utilisateurs peut être compromise de plusieurs façons. Dans ce mémoire, nous effectuons une revue de littérature et une classification des différents protocoles existants pour anonymiser les usagers et analysons leur efficacité. S’appuyant sur certains critères désirables dans de tels protocoles, nous proposons un modèle de mixeur synchrone décentralisé. Nous avons ciblé deux approches qui s’inscrivent dans ce modèle, le plan de transaction et le réseau de transactions, le second étant une contribution originale de ce mémoire. Nous expliquons son fonctionnement puis analysons son efficacité dans le contexte actuel d’utilisation de Bitcoin
We calculate the probability of success of block-hiding mining strategies in Bitcoin-like networks. These strategies involve building a secret branch of the block-tree and publishing it opportunistically, aiming to replace the top of the main branch and rip the reward associated with the secretly mined blocks. We identify two types of block-hiding strategies and chart the parameter space where those are more beneficial than the standard mining strategy described in Nakamoto's paper. Our analysis suggests a generalization of the notion of the relative hashing power as a measure for a miner's influence on the network. Block-hiding strategies are beneficial only when this measure of influence exceeds a certain threshold.
Open access
2 source records
cs.CR
Advanced Steganography and Watermarking Techniques
In this short note we show that the Bitcoin network can allow remote parties to gamble with their bitcoins by tossing a fair or biased coin, with no need for a trusted party, and without the possibility of extortion by dishonest parties who try to abort. The superfluousness of having a trusted party implies that there is no house edge, as is the case with centralized services that are supposed to generate a profit.
Bitcoin is a digital currency which is based on P2P network and open source software. It is avirtual currency without any control by any centralized organization. New Bitcoins are issuedby lots of specified algorithms. The whole Bitcoin network utilizes the distributed database toverify and record all the transactions through the nodes in the P2P network in which thedouble spending is prevented. No person or organization is able to control Bitcoin based on adecentralized P2P network and algorithm. The cryptographic functions of Bitcoin are designedto allow only the real Bitcoin owner to pay and transfer, and ensure the anonymity andmarketability.The purpose of this thesis is to analyze the security architecture and services for the Bitcoin system and describe of all the features and infrastructures of the whole Bitcoin network. A whole establishment demo including wallet client, mining server with GUI and mining client is implemented. Further improvement will be suggested and recommended for the system
In the last few years the efficiency of secure multi-party computation (MPC) increased in several orders of magnitudes. However, this alone might not be enough if we want MPC protocols to be used in practice. A crucial property that is needed in many applications is that everyone can check that a given (secure) computation was performed correctly – even in the extreme case where all the parties involved in the computation are corrupted, and even if the party who wants to verify the result was not participating. This is especially relevant in the clients-servers setting, where many clients provide input to a secure computation performed by a few servers. An obvious example of this is electronic voting, but also in many types of auctions one may want independent verification of the result. Traditionally, this is achieved by using non-interactive zero-knowledge proofs during the computation. A recent trend in MPC protocols is to have a more expensive preprocessing phase followed by a very efficient online phase, e.g., the recent so-called SPDZ protocol by Damgard et al. Applications such as voting and some auctions are perfect use-case for these protocols, as the parties usually know well in advance when the computation will take place, and using those protocols allows us to use only cheap information-theoretic primitives in the actual computation. Unfortunately no protocol of the SPDZ type supports an audit phase. In this paper, we show how to achieve efficient MPC with a public audit. We formalize the concept of publicly auditable secure computation and provide an enhanced version of the SPDZ protocol where, even if all the servers are corrupted, anyone with access to the transcript of the protocol can check that the output is indeed correct. Most importantly, we do so without significantly compromising the performance of SPDZ i.e. our online phase has complexity approximately twice that of SPDZ.
In Bitcoin, transaction malleability describes the fact that the signatures that prove the ownership of bitcoins being transferred in a transaction do not provide any integrity guarantee for the signatures themselves. This allows an attacker to mount a malleability attack in which it intercepts, modifies, and rebroadcasts a transaction, causing the transaction issuer to believe that the original transaction was not confirmed. In February 2014 MtGox, once the largest Bitcoin exchange, closed and filed for bankruptcy claiming that attackers used malleability attacks to drain its accounts. In this work we use traces of the Bitcoin network for over a year preceding the filing to show that, while the problem is real, there was no widespread use of malleability attacks before the closure of MtGox.