Blockchain technology and, in particular, blockchain-based cryptocurrencies offer us information that has never been seen before in the financial world. In contrast to fiat currencies, all transactions of crypto-currencies and crypto-tokens are permanently recorded on distributed ledgers and are publicly available. As a result, this allows us to construct a transaction graph and to assess not only its organization but to glean relationships between transaction graph properties and crypto price dynamics. The ultimate goal of this paper is to facilitate our understanding on horizons and limitations of what can be learned on crypto-tokens from local topology and geometry of the Ethereum transaction network whose even global network properties remain scarcely explored. By introducing novel tools based on topological data analysis and functional data depth into Blockchain Data Analytics, we show that Ethereum network (one of the most popular blockchains for creating new crypto-tokens) can provide critical insights on price strikes of crypto-tokens that are otherwise largely inaccessible with conventional data sources and traditional analytic methods.
The problem of reliable democratic governance is important for survival of any community, and it will be more critical over time communities with levels of social connectivity in society rapidly increasing with speeds and scales of electronic communication. In order to face such challenge, different sorts of rating and reputation systems are being developed, however reputation gaming and manipulation in such systems appears to be serious problem. We are considering use of advanced reputation system supporting "liquid democracy" principle with generalized design and underlying ontology fitting different sorts of environments such as social networks, financial ecosystems and marketplaces. The suggested system is based on "temporal weighted liquid rank" algorithm employing different sorts of explicit and implicit ratings being exchanged by members of the society. For the purpose, we suggest "incremental reputation" design and graph database used for implementation of the system. Finally, we present evaluation of the system against real social network and financial blockchain data. The entire framework is expected to be the foundation of any multi-agent AI framework, so the evolution of distributed multi-agent AI architecture and dynamics will be based on the organic reputation scores earned by the agents that are part of it.
Abstract We study the interplay between social ties and financial transactions made through a recent cryptocurrency called $\breve {G}1$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"><mml:mi>Ğ</mml:mi><mml:mn>1</mml:mn></mml:math> . It has the particularity of combining the usual transaction record with a reliable network of identified users. This gives the opportunity to observe exactly who sent money to whom over a social network. This social network is a key piece of this cryptocurrency, which therefore puts much effort in ensuring that nodes correspond to unique, well identified, real living human users, linked together only if they met at least once in real world. Using this data, we study how social ties impact the structure of transactions and conversely. We show that users make transactions almost exclusively with people they are connected with in the social network. Instead, they tend to build social connections with people they will never make transactions with.
Recently, blockchain technology has become a topic in the spotlight but also a hotbed of various cybercrimes. Among them, phishing scams on blockchain have been found making a notable amount of money, thus emerging as a serious threat to the trading security of the blockchain ecosystem. In order to create a favorable environment for investment, an effective method for detecting phishing scams is urgently needed in the blockchain ecosystem. To this end, this paper proposes an approach to detect phishing scams on Ethereum by mining its transaction records. Specifically, we first crawl the labeled phishing addresses from two authorized websites and reconstruct the transaction network according to the collected transaction records. Then, by taking the transaction amount and timestamp into consideration, we propose a novel network embedding algorithm called trans2vec to extract the features of the addresses for subsequent phishing identification. Finally, we adopt the oneclass support vector machine (SVM) to classify the nodes into normal and phishing ones. Experimental results demonstrate that the phishing detection method works effectively on Ethereum, and indicate the efficacy of trans2vec over existing state-of-the-art algorithms on feature extraction for transaction networks. This work is the first investigation on phishing detection on Ethereum via network embedding and provides insights into how features of large-scale transaction networks can be embedded.
Muhammad Baqer Mollah, Jun Zhao, Dusit Niyato, Kwok‐Yan Lam · 8 authors
Due to the unique features and characteristics of blockchain technology, its applications have expanded across various sectors, including finance, banking, supply chains, and smart grids (SGs). Blockchain ensures security and trust in transactions without requiring a third party, making it particularly valuable in decentralized systems. This paper explores the integration of blockchain technology into SG systems. It begins with a comprehensive review of conventional and smart power grids, identifying the key challenges modern SGs face, particularly issues related to trust and fraud. An in-depth analysis of blockchain technology follows, highlighting its potential, advantages, and defining characteristics. The study then examines several blockchain-based SG applications and provides a comparative analysis of prior research. The findings of this review illuminate the critical role of blockchain in enhancing SG performance by addressing trust and fraud prevention challenges. Furthermore, this research has significant implications for the energy sector, as it underscores the potential of blockchain to revolutionize SGs through increased security, transparency, and efficiency. By providing a foundation for future studies, this paper aims to guide the development of unified blockchain frameworks that address scalability, privacy, and energy management, paving the way for a more secure and efficient decentralized energy system
Henry Kim, Marek Laskowski, Michael Zargham, Hjalmar Turesson · 6 authors
The study of how to set up cryptocurrency incentive mechanisms and to operationalize governance is token economics. Given the $250 billion market cap for cryptocurrencies, there is compelling need to investigate this topic. In this paper, we present facets of the token engineering process for a real-life 80-person Swiss blockchain startup, Insolar. We show how Insolar used systems modeling and simulation combined with cryptocurrency expertise to design a mechanism to incentivize enterprises and individual users to use their new MainNet public blockchain network. The study showed subsidy pools that incentivize application developers to develop on the network does indeed have the desired positive effect on MainNet adoption. For a startup like Insolar whose success hinge upon how well their model incentivizes various stakeholders to participate on their MainNet network versus that of numerous alternatives, this token economics simulation analysis provides invaluable insights.
Abstract Cryptocurrencies as a new way of transferring assets and securing financial transactions have gained popularity in recent years. Transactions in cryptocurrencies are publicly available, hence, statistical studies on different aspects of these currencies are possible. However, previous statistical analysis on cryptocurrencies transactions have been very limited and mostly devoted to Bitcoin, with no comprehensive comparison between these currencies. In this study, we intend to compare the transaction graph of Bitcoin, Ethereum, Litecoin, Dash, and Z-Cash, with respect to the dynamics of their transaction graphs over time, and discuss their properties. In particular, we observed that the growth rate of the nodes and edges of the transaction graphs, and the density of these graphs, are closely related to the price of these currencies. We also found that the transaction graph of these currencies is non-assortative, i.e. addresses do not tend for transact with a particular type of addresses of higher or lower degree, and the degree sequence of their transaction graph follows the power law distribution.
The intelligent vehicle (IV) has become a promising technology that could revolutionize our life in smart cities sooner or later. However, it yet suffers from many security vulnerabilities. Traditional security methods are incapable to secure the IV data sharing against malicious attacks. Blockchain, as expected by both research and industry communities, has emerged as a good solution to address these issues. The major issues in IV data sharing are trust, data accuracy and reliability of data sharing in the communication channel. Blockchain technology, previously working for the cryptocurrency, has recently applied to build trust and reliability in peer-to-peer networks with similar topologies of IV data sharing. In this chapter, we present a new framework, namely biometric blockchain (BBC), for secure IV data sharing. In our new scheme, biometric information is exploited as a cue to record who is responsible in the data sharing activities, while the proposed BBC technology serves as the backbone of the IV data-sharing architecture. Hence, the proposed BBC technology provides a more reliable trust environment between the vehicles while personal identities are traceable in the proposed new scheme.
Many real systems can be described by a set of interacting entities forming a complex network. To some surprise, these have been shown to share a number of structural properties regardless of their type or origin. It is thus of vital importance to design simple and intuitive models that can explain their intrinsic structure and dynamics. These can, for instance, be used to study networks analytically or to construct networks not observed in real life. Most models proposed in the literature are of two types. A model can be either static, where edges are added between a fixed set of nodes according to some predefined rule, or evolving, where the number of nodes or edges increases over time. However, some real networks do not grow but rather shrink, meaning that the number of nodes or edges decreases over time. We here propose a simple model of shrinking networks called the war pact model. We show that networks generated in such a way exhibit common structural properties of real networks. Furthermore, compared to classical models, these resemble international trade, correlates of war, Bitcoin transactions and other networks more closely. Network shrinking may therefore represent a reasonable explanation of the evolution of some networks and greater emphasis should be put on such models in the future.
Summary In this paper, we analyze the Ethereum blockchain using the complex networks modeling framework. Accounts acting on the blockchain are represented as nodes, while the interactions among these accounts, recorded on the blockchain, are treated as links in the network. Using this representation, it is possible to derive interesting mathematical characteristics that improve the understanding of the actual interactions happening in the blockchain. Not only, by looking at the history of the blockchain, it is possible to verify if radical changes in the blockchain evolution happened.
Mark Weber, Giacomo Domeniconi, Jie Chen, Daniel Karl I. Weidele · 7 authors
Anti-money laundering (AML) regulations play a critical role in safeguarding financial systems, but bear high costs for institutions and drive financial exclusion for those on the socioeconomic and international margins. The advent of cryptocurrency has introduced an intriguing paradox: pseudonymity allows criminals to hide in plain sight, but open data gives more power to investigators and enables the crowdsourcing of forensic analysis. Meanwhile advances in learning algorithms show great promise for the AML toolkit. In this workshop tutorial, we motivate the opportunity to reconcile the cause of safety with that of financial inclusion. We contribute the Elliptic Data Set, a time series graph of over 200K Bitcoin transactions (nodes), 234K directed payment flows (edges), and 166 node features, including ones based on non-public data; to our knowledge, this is the largest labelled transaction data set publicly available in any cryptocurrency. We share results from a binary classification task predicting illicit transactions using variations of Logistic Regression (LR), Random Forest (RF), Multilayer Perceptrons (MLP), and Graph Convolutional Networks (GCN), with GCN being of special interest as an emergent new method for capturing relational information. The results show the superiority of Random Forest (RF), but also invite algorithmic work to combine the respective powers of RF and graph methods. Lastly, we consider visualization for analysis and explainability, which is difficult given the size and dynamism of real-world transaction graphs, and we offer a simple prototype capable of navigating the graph and observing model performance on illicit activity over time. With this tutorial and data set, we hope to a) invite feedback in support of our ongoing inquiry, and b) inspire others to work on this societally important challenge.
Andreas Kamilaris, Agusti Fonts, Francesc X. Prenafeta‐Boldú
Blockchain is an emerging digital technology allowing ubiquitous financial transactions among distributed untrusted parties, without the need of intermediaries such as banks. This article examines the impact of blockchain technology in agriculture and food supply chain, presents existing ongoing projects and initiatives, and discusses overall implications, challenges and potential, with a critical view over the maturity of these projects. Our findings indicate that blockchain is a promising technology towards a transparent supply chain of food, with many ongoing initiatives in various food products and food-related issues, but many barriers and challenges still exist, which hinder its wider popularity among farmers and systems. These challenges involve technical aspects, education, policies and regulatory frameworks.
The blockchain art market is partitioned around the roles of artists and collectors and highly concentrated among few prominent figures. We hence propose to adapt Kleinberg's authority/hub HITS method to rate artists and collectors in the art context. This seems a reasonable choice since the original method deftly defines its scores in terms of a mutual recursive relationship between authorities/artists - the miners of information/art, and hubs/collectors - the assemblers of such information/art. We evaluated the proposed method on the collector-artist network of SuperRare gallery, the major crypto art marketplace. We found that the proposed artist and collector metrics are weakly correlated with other network science metrics like degree and strength. This hints the possibility of coupling different measures in order to profile active users of the gallery and suggests investment strategies with different risk/reward ratios for collectors as well as marketing strategies with different targets for artists.
Determining the trust of an individual Bitcoin wallet is a difficult problem. There are no ratings, that offer vendors or exchanges meaningful information about the level of the taint of Bitcoins they are receiving. Lack of such information places exchanges liable in an event when the received Bitcoins are stolen or ill-gotten. In this paper, we try to solve this problem by introducing a Bitcoin address taint score called TaintRank. It provides insight into a specific wallet by taking the addresses it interacted with throughout history into consideration. This ranking method provides such Bitcoin exchange companies insight with whom they are trading.
Social media signals have been successfully used to develop large-scale predictive and anticipatory analytics. For example, forecasting stock market prices and influenza outbreaks. Recently, social data has been explored to forecast price fluctuations of cryptocurrencies, which are a novel disruptive technology with significant political and economic implications. In this paper we leverage and contrast the predictive power of social signals, specifically user behavior and communication patterns, from multiple social platforms GitHub and Reddit to forecast prices for three cyptocurrencies with high developer and community interest - Bitcoin, Ethereum, and Monero. We evaluate the performance of neural network models that rely on long short-term memory units (LSTMs) trained on historical price data and social data against price only LSTMs and baseline autoregressive integrated moving average (ARIMA) models, commonly used to predict stock prices. Our results not only demonstrate that social signals reduce error when forecasting daily coin price, but also show that the language used in comments within the official communities on Reddit (r/Bitcoin, r/Ethereum, and r/Monero) are the best predictors overall. We observe that models are more accurate in forecasting price one day ahead for Bitcoin (4% root mean squared percent error) compared to Ethereum (7%) and Monero (8%).
Recently, graph embedding techniques have been widely used in the analysis of various networks, but most of the existing embedding methods omit the network dynamics and the multiplicity of edges, so it is difficult to accurately describe the detailed characteristics of the transaction networks. Ethereum is a blockchain-based platform supporting smart contracts. The open nature of blockchain makes the transaction data on Ethereum completely public, and also brings unprecedented opportunities for the transaction network analysis. By taking the realistic rules and features of transaction networks into consideration, we first model the Ethereum transaction network as a Temporal Weighted Multidigraph (TWMDG), where each node is a unique Ethereum account and each edge represents a transaction weighted by amount and assigned with timestamp. Then we define the problem of Temporal Weighted Multidigraph Embedding (T-EDGE) by incorporating both temporal and weighted information of the edges, the purpose being to capture more comprehensive properties of dynamic transaction networks. To evaluate the effectiveness of the proposed embedding method, we conduct experiments of node classification on real-world transaction data collected from Ethereum. Experimental results demonstrate that T-EDGE outperforms baseline embedding methods, indicating that time-dependent walks and multiplicity characteristic of edges are informative and essential for time-sensitive transaction networks.
The Lightning Network is the most widely used payment channel network (PCN) to date, making it an attractive attack surface for adversaries. In this paper, we analyze the Lightning Network's PCN topology and investigate its resilience towards random failures and targeted attacks. In particular, we introduce the notions of channel exhaustion and node isolation attacks and show that the Lightning Network is susceptible to these attacks. In a preliminary analysis, we confirm that the Lightning Network can be classified as a small-world and scale-free network. Based on these findings, we develop a series of strategies for targeted attacks and introduce metrics that allow us to quantify the adversary's advantage. Our results indicate that an attacker who is able to remove a certain number of nodes should follow a centrality-based strategy, while a resource-limited attacker who aims for high efficiency should employ a highest ranked minimum cut strategy.
While most of humanity is suddenly on the net, the value of this singularity is hampered by the lack of credible digital identities: Social networking, person-to-person transactions, democratic conduct, cooperation and philanthropy are all hampered by the profound presence of fake identities, as illustrated by Facebook's removal of 5.4Bn fake accounts since the beginning of 2019. Here, we introduce the fundamental notion of a \emph{genuine personal identifier}---a globally unique and singular identifier of a person---and present a foundation for a decentralized, grassroots, bottom-up process in which every human being may create, own, and protect the privacy of a genuine personal identifier. The solution employs mutual sureties among owners of personal identifiers, resulting in a mutual-surety graph reminiscent of a web-of-trust. Importantly, this approach is designed for a distributed realization, possibly using distributed ledger technology, and does not depend on the use or storage of biometric properties. For the solution to be complete, additional components are needed, notably a mechanism that encourages honest behavior and a sybil-resilient governance system.
This paper presents an empirical analysis of Steemit, a key representative of the emerging incentivized social media platforms over Blockchains, to understand and evaluate the actual level of decentralization and the practical effects of cryptocurrency-driven reward system in these modern social media platforms. Similar to Bitcoin, Steemit is operated by a decentralized community, where 21 members are periodically elected to cooperatively operate the platform through the Delegated Proof-of-Stake (DPoS) consensus protocol. Our study performed on 539 million operations performed by 1.12 million Steemit users during the period 2016/03 to 2018/08 reveals that the actual level of decentralization in Steemit is far lower than the ideal level, indicating that the DPoS consensus protocol may not be a desirable approach for establishing a highly decentralized social media platform. In Steemit, users create contents as posts which get curated based on votes from other users. The platform periodically issues cryptocurrency as rewards to creators and curators of popular posts. Although such a reward system is originally driven by the desire to incentivize users to contribute to high-quality contents, our analysis of the underlying cryptocurrency transfer network on the blockchain reveals that more than 16% transfers of cryptocurrency in Steemit are sent to curators suspected to be bots and also finds the existence of an underlying supply network for the bots, both suggesting a significant misuse of the current reward system in Steemit. Our study is designed to provide insights on the current state of this emerging blockchain-based social media platform including the effectiveness of its design and the operation of the consensus protocols and the reward system.
Bitcoin is considered the most valuable currency in the world. Besides being highly valuable, its value has also experienced a steep increase, from around 1 dollar in 2010 to around 18000 in 2017. Then, in recent years, it has attracted considerable attention in a diverse set of fields, including economics and computer science. The former mainly focuses on studying how it affects the market, determining reasons behinds its price fluctuations, and predicting its future prices. The latter mainly focuses on its vulnerabilities, scalability, and other techno-crypto-economic issues. Here, we aim at revealing the usefulness of traditional autoregressive integrative moving average (ARIMA) model in predicting the future value of bitcoin by analyzing the price time series in a 3-years-long time period. On the one hand, our empirical studies reveal that this simple scheme is efficient in sub-periods in which the behavior of the time-series is almost unchanged, especially when it is used for short-term prediction, e.g. 1-day. On the other hand, when we try to train the ARIMA model to a 3-years-long period, during which the bitcoin price has experienced different behaviors, or when we try to use it for a long-term prediction, we observe that it introduces large prediction errors. Especially, the ARIMA model is unable to capture the sharp fluctuations in the price, e.g. the volatility at the end of 2017. Then, it calls for more features to be extracted and used along with the price for a more accurate prediction of the price. We have further investigated the bitcoin price prediction using an ARIMA model, trained over a large dataset, and a limited test window of the bitcoin price, with length $w$, as inputs. Our study sheds lights on the interaction of the prediction accuracy, choice of ($p,q,d$), and window size $w$.
Crowdfunding has become a popular form of collective funding, in which small donations or investments, made by groups of people, support the development of new projects in exchange of free products or different types of recognition. Social network sites, on the other hand, promote user cooperation and currently are at the basis of any individuals cyber-interactions. In this paper, we present LikeStarter, a blockchain-based decentralized platform that combines social interactions with crowdfunding mechanisms, allowing any user to raise funds while becoming popular in the social network. Being built over the Ethereum blockchain, LikeStarter is structured as a Decentralized Autonomous Organization (DAO), that fosters crowdfunding without the intervention of any central authority, and recognizes the active role of donors, enabling them to support artists or projects, while making profits.
Graph edges, along with their labels, can represent information of fundamental importance, such as links between web pages, friendship between users, the rating given by users to other users or items, and much more. We introduce LEAP, a trainable, general framework for predicting the presence and properties of edges on the basis of the local structure, topology, and labels of the graph. The LEAP framework is based on the exploration and machine-learning aggregation of the paths connecting nodes in a graph. We provide several methods for performing the aggregation phase by training path aggregators, and we demonstrate the flexibility and generality of the framework by applying it to the prediction of links and user ratings in social networks. We validate the LEAP framework on two problems: link prediction, and user rating prediction. On eight large datasets, among which the arXiv collaboration network, the Yeast protein-protein interaction, and the US airlines routes network, we show that the link prediction performance of LEAP is at least as good as the current state of the art methods, such as SEAL and WLNM. Next, we consider the problem of predicting user ratings on other users: this problem is known as the edge-weight prediction problem in weighted signed networks (WSN). On Bitcoin networks, and Wikipedia RfA, we show that LEAP performs consistently better than the Fairness & Goodness based regression models, varying the amount of training edges between 10 to 90%. These examples demonstrate that LEAP, in spite of its generality, can match or best the performance of approaches that have been especially crafted to solve very specific edge prediction problems.
Whether we recognize it or not, the Internet is rife with exciting and original institutional forms that are transforming social organization on and offline. Issues of governance in these Internet platforms and other digital institutions have posed a challenge for software engineers, many of whom have little exposure to the relevant history or theory of institutional design. Here, we offer one useful framework with an aim to stimulate dialogue between computer scientists and political scientists. The dominant guiding practices for the design of digital institutions to date in human-computer interaction, computer-supported cooperative work, and the tech industry at large have been an incentive-focused behavioral engineering paradigm, a collection of atheoretical approaches such as A/B-testing, and incremental issue-driven software engineering. One institutional analysis framework that has been useful in the design of traditional institutions is the body of resource governance literature known as the "Ostrom Workshop". A key finding of this literature that has yet to be broadly incorporated in the design of many digital institutions is the importance of including participatory change process mechanisms in what is called a "constitutional layer" of institutional design---in other words, defining rules that allow and facilitate diverse stakeholder participation in the ongoing process of institutional design change. We explore to what extent this consideration is met or could be better met in three varied cases of digital institutions: cryptocurrencies, cannabis informatics, and amateur Minecraft server governance. Examining such highly varied cases allows us to demonstrate the broad relevance of constitutional layers in many different types of digital institutions.
Shayan Eskandari, Seyedehmahsa Moosavi, Jeremy Clark
We consider front-running to be a course of action where an entity benefits from prior access to privileged market information about upcoming transactions and trades. Front-running has been an issue in financial instrument markets since the 1970s. With the advent of the blockchain technology, front-running has resurfaced in new forms we explore here, instigated by blockchains decentralized and transparent nature. In this paper, we draw from a scattered body of knowledge and instances of front-running across the top 25 most active decentral applications (DApps) deployed on Ethereum blockchain. Additionally, we carry out a detailed analysis of Status.im initial coin offering (ICO) and show evidence of abnormal miners behavior indicative of front-running token purchases. Finally, we map the proposed solutions to front-running into useful categories.