Address clustering tries to construct the one-to-many mapping from entities to addresses in the Bitcoin system. Simple heuristics based on the micro-structure of transactions have proved very effective in practice. In this paper we describe the primary reasons behind this effectiveness: address reuse, avoidable merging, super-clusters with high centrality, and the incremental growth of address clusters. We quantify their impact during Bitcoin's first seven years of existence.
Blockchain technology is disrupting society by enabling new kinds of disintermediated digital platforms. Furthermore, it is also providing efficiency gains on top of old existing structures by removing the need for actively intermediated data-synchronization and concurrency control. Due to this dual effect, blockchain technology has the potential to impact all sectors and layers of society, in a multitude of combined ways. While there is a lot of hype around the concept of blockchains, the phenomenon itself has remained ambiguous and misconceptions have emerged about the capabilities and the potential of blockchain technology. Drawing from ETLA’s participation in blockchain research in 2014–2016, this paper aims to provide a more comprehensive understanding on blockchain technology, its true possibilities, and its potential larger societal implications. It offers a holistic view of the key concepts and the basic principles, and the tools and the framework to understand the ongoing discussion, to critically evaluate different viewpoints, and to delve deeper in a constructed manner
Irni Eliana Khairuddin, Corina Sas, Sarah Clinch, Nigel Davies
This paper presents an exploratory study focusing on user experience with Bitcoin technology. We describe interviews with 9 Bitcoin users and report findings related to users' motivations for buying and using bitcoins. Our initial findings capture three main motivations such as Bitcoin's predicted role in a monetary revolution, users' increased empowerment, and their perception of a real value of Bitcoin currency. We conclude with reflections on the value of these findings for HCI researchers.
Digital currencies represent a new method for exchange -- a payment method with no physical form, made real by the Internet. This new type of currency was created to ease online transactions and to provide greater convenience in making payments. However, a critical component of a monetary system is the people who use it. Acknowledging this, we present results of our interview study (N=20) with two groups of participants (users and non-users) about how they perceive the most popular digital currency, Bitcoin. Our results reveal: non-users mistakenly believe they are incapable of using Bitcoin, users are not well-versed in how the protocol functions, they have misconceptions about the privacy of transactions, and that Bitcoin satisfies properties of ideal payment systems as defined by our participants. Our results illustrate Bitcoin's tradeoffs, its uses, and barriers to entry.
In January 3, 2009, Satoshi Nakamoto gave rise to the "Bitcoin Block Chain" creating the first block of the chain hashing on his computers central processing unit (CPU). Since then, the hash calculations to mine Bitcoin have been getting more and more complex, and consequently the mining hardware evolved to adapt to this increasing difficulty. Three generations of mining hardware have followed the CPU's generation. They are GPU's, FPGA's and ASIC's generations. This work presents an agent based artificial market model of the Bitcoin mining process and of the Bitcoin transactions. The goal of this work is to model the economy of the mining process, starting from GPU's generation, the first with economic significance. The model reproduces some "stylized facts" found in real time price series and some core aspects of the mining business. In particular, the computational experiments performed are able to reproduce the unit root property, the fat tail phenomenon and the volatility clustering of Bitcoin price series. In addition, under proper assumptions, they are able to reproduce the price peak at the end of November 2013, its next fall in April 2014, the generation of Bitcoins, the hashing capability, the power consumption, and the mining hardware and electrical energy expenses of the Bitcoin network.
Brendan Benshoof, Andrew Rosen, Anu G. Bourgeois, Robert W. Harrison
We present D3NS, a system to replace the current top level DNS system and certificate authorities, offering increased scalability, security and robustness. D3NS is based on a distributed hash table and utilizes a domain name ownership system based on the Bitcoin blockchain. It addresses previous criticism that a DHT would not suffice as a DNS replacement. D3NS provides solutions to current DNS vulnerabilities such as DDOS attacks, DNS spoofing and censorship by local governments. D3NS eliminates the need for certificate authorities by providing a decentralized authenticated record of domain name ownership. Unlike previous DNS replacement proposals, D3NS is reverse compatible with DNS and allows for incremental implementation within the current system.
User, content, and device names as a security primitive have been an attractive approach especially in the context of Information-Centric Networking (ICN) architectures. We leverage Hierarchical Identity Based Encryption (HIBE) to build (content) name-based security mechanisms used for securely distributing content. In contrast to similar approaches, in our system each user maintains his own Private Key Generator used for generating the master secret key and the public system parameters required by the HIBE algorithm. This way our system does not suffer from the key escrow problem, which is inherent in many similar solutions. In order to disseminate the system parameters of a content owner in a fully distributed way, we use blockchains, a distributed, community managed, global list of transactions.
In Bitcoin system, transactions are prioritized according to attributes such as the remittance amount and transaction fees, and transactions with low priority are likely to wait for confirmation. Because the demand of micro payment in Bitcoin is expected to increase due to low remittance cost, it is important to quantitatively investigate how the priority mechanism of Bitcoin affects the transaction-confirmation time. In this paper, we analyze the transaction-confirmation time by queueing theory. We model the transaction priority mechanism of Bitcoin as a priority queueing system with batch service, deriving the mean transaction-confirmation time. Numerical examples show how the demand of transactions of low remittance amount affects the transaction-confirmation time. We also consider the effect of the maximum block size on the transaction-confirmation time.
Bitcoin mining presents a significant economic incentive for efficient hashing and broadcast of data, both parameters stemming from the Proofs of Work used to advance the network. This incentive has led to the development of Bitcoin specific application specific integrated circuits and centralized mining pools, undermining the decentralized motivations behind Bitcoin's design. In addition, the imminent block reward halving threatens the profitability of mining at any scale. Some work has been done in formal models for miner profitability, but existing models do not account for conditions such as the pricing of off-peak power and diverse investment strategies regarding sunken costs. There is also a lack of formal study of how the profit model changes as mining scales from the individual to the industrial level. Given the lack of analysis of these conditions, there are alternative models for profitable or net zero mining that operate at smaller, and therefore more desirable, scale.
O Bitcoin e um sistema de pagamento totalmente digital independente de uma entidade centralizadora como bancos ou governos. O projeto foi criado e publicado em 2008 atraves da Internet. Entretanto apenas em 2009 a rede tornou-se operacional. O Bitcoin e um protocolo de codigo aberto e uma rede ponto a ponto de participantes que e responsavel pelo funcionamento do sistema. Seguranca criptografica, ausencia de taxas e de custos de instalacao sao fatores que convenceram varias empresas do mundo a adota-lo como alternativa de pagamento. Apesar dos trabalhos acerca da moeda digital, pouco ainda se sabe sobre sua topologia e caracteristicas, principalmente pela otica de ciencia de redes. Nesse sentido, o presente trabalho apresenta o estudo da dinamicidade de suas principais variaveis no seu funcionamento diario. No decorrer do trabalho sao apresentadas duas formas de extracao de dados da rede Bitcoin para futuras analises.
Giuseppe Ateniese, Bernardo Magri, Daniele Venturi, Ewerton R. Andrade
We put forward a new framework that makes it possible to re-write or compress the content of any number of blocks in decentralized services exploiting the blockchain technology. As we argue, there are several reasons to prefer an editable blockchain, spanning from the necessity to remove inappropriate content and the possibility to support applications requiring re-writable storage, to "the right to be forgotten." Our approach generically leverages so-called chameleon hash functions (Krawczyk and Rabin, NDSS '00), which allow determining hash collisions efficiently, given a secret trapdoor information. We detail how to integrate a chameleon hash function in virtually any blockchain-based technology, for both cases where the power of redacting the blockchain content is in the hands of a single trusted entity and where such a capability is distributed among several distrustful parties (as is the case with Bitcoin). We also report on a proof-of-concept implementation of a redactable blockchain, building on top of Nakamoto's Bitcoin core. The prototype only requires minimal changes to the way current client software interprets the information stored in the blockchain and to the current blockchain, block, or transaction structures. Moreover, our experiments show that the overhead imposed by a redactable blockchain is small compared to the case of an immutable one.
Steve Huckle, Rituparna Bhattacharya, Martin White, Natalia Beloff
This paper explores how the Internet of Things and blockchain technology can benefit shared economy applications. The focus of this research is understanding how blockchain can be exploited to create decentralised, shared economy applications that allow people to monetise, securely, their things to create more wealth. Shared economy applications such as Airbnb and Uber are well-known applications, but there are many other opportunities to share in the digital economy. With the recent interest in the Internet of Things and blockchain, the opportunity exists to create a myriad of sharing applications, e.g. peer-to-peer automatic payment mechanisms, foreign exchange platforms, digital rights management and cultural heritage to name but a few. While many types of shared economy scenarios are proliferating, few of them, so far, leverage the Internet of Things and blockchain as technologies to build distributed applications. This paper discusses how we might make use of the Internet of Things and blockchains to create secure shared economy distributed applications. Presented are examples of such distributed applications in the context of an Internet of Things architecture using blockchain technology.
Ittay Eyal, Adem Efe Gencer, Emin Gün Sirer, Robbert van Renesse
Cryptocurrencies, based on and led by Bitcoin, have shown promise as infrastructure for pseudonymous online payments, cheap remittance, trustless digital asset exchange, and smart contracts. However, Bitcoin-derived blockchain protocols have inherent scalability limits that trade-off between throughput and latency and withhold the realization of this potential. This paper presents Bitcoin-NG, a new blockchain protocol designed to scale. Based on Bitcoin's blockchain protocol, Bitcoin-NG is Byzantine fault tolerant, is robust to extreme churn, and shares the same trust model obviating qualitative changes to the ecosystem. In addition to Bitcoin-NG, we introduce several novel metrics of interest in quantifying the security and efficiency of Bitcoin-like blockchain protocols. We implement Bitcoin-NG and perform large-scale experiments at 15% the size of the operational Bitcoin system, using unchanged clients of both protocols. These experiments demonstrate that Bitcoin-NG scales optimally, with bandwidth limited only by the capacity of the individual nodes and latency limited only by the propagation time of the network.
Krzysztof Rzaḑca, Anwitaman Datta, Gunnar Kreitz, Sonja Buchegger
In a decentralized storage system, agents replicate each other’s data to increase availability. Compared to organizationally centralized solutions, such as cloud storage, a decentralized storage system requires less trust in the provider and may result in smaller monetary costs. Our system is based on reciprocal storage contracts that allow the agents to adopt to changes in their replication partners’ availability (by dropping inefficient contracts and forming new contracts with other partners). The data availability provided by the system is a function of the participating agents’ availability. However, a straightforward system in which agents’ matching is decentralized uses the given agent availability inefficiently. As agents are autonomous, the highly available agents form cliques replicating data between each other, which makes the system too hostile for the weakly available newcomers. In contrast, a centralized, equitable matching is not incentive compatible: it does not reward users for keeping their software running. We solve this dilemma by a mixed solution: an “adoption” mechanism in which highly available agents donate some replication space, which in turn is used to help the worst-off agents. We show that the adoption motivates agents to increase their availability (is incentive-compatible), but also that it is sufficient for acceptable data availability for weakly-available agents.
Till Neudecker, Philipp Andelfinger, Hannes Hartenstein
We present a simulation model of the Bitcoin peer-to-peer network, a widely deployed distributed electronic currency system. The model enables evaluations of the feasibility and cost of attacks on the Bitcoin network at full scale of 6,000 nodes. The simulation model is based on unmodified code from core segments of the Bitcoin reference implementation used by 99% of nodes. Parametrization of the model is performed based on large-scale measurements of the real-world network. We present preliminary validation results showing a reasonable correspondence of the propagation of messages in the Bitcoin network compared with simulation results. We apply the model to study the feasibility of a partitioning attack on the network and show that the attack is sensitive to the churn of the attacking nodes.
Bitcoin is a virtual currency based on the P2P network. Because of decentralization, anonymity, stability and other advantages, Bitcoin develops rapidly. In order to cope with increasingly wide application fields of bitcoin, this research designs bitcoin's payment based on the IC card, which improves its safety and convenience. According to Bitcoin's unique utilization, we've designed and achieved the documental structure of Bitcoin IC card and mutual authentication between PSAM card and IC card. With the combination of IC card private key and user's private key leading to account's private key, it will be safer to private key. Besides using merge-avoidance algorithm when trading improves the security of the account.
Bitcoin is a decentralized peer-to-peer payment system that has the potential to disrupt the financial industry. In order for the Bitcoin network to function properly, people within the network need to follow the protocol and contribute computing power. However, selfish strategies can be used to disproportionately increase one’s payoff relative to their computational power. Three approaches are used to analyze selfish mining strategies in the Bitcoin network in order to determine when this strategy will dominate.