This article demonstrates the possibility of constructing indicators of critical and crisis phenomena in the volatile market of cryptocurrency. For this purpose, the methods of the theory of complex systems such as recurrent analysis of dynamic systems and the calculation of permutation entropy are used. It is shown that it is possible to construct dynamic measures of complexity, both recurrent and entropy, which behave in a proper way during actual pre-crisis periods. This fact is used to build predictors of crisis phenomena on the example of the main five crises recorded in the time series of the key cryptocurrency bitcoin, the effectiveness of the proposed indicators-precursors of crises has been identified.
Atalay Mert İleri, Halil Ibrahim Ozercan, Alper Gundogdu, Ahmet K. Senol · 6 authors
Rate of growth of the amount of data generated using the high throughput sequencing (HTS) platforms now exceeds the growth stipulated by Moore's Law. The HTS data is expected to surpass those of other "big data" domains such as astronomy, before the year 2025. In addition to sequencing genomes for research purposes, genome and exome sequencing in clinical settings will be a routine part of health care. The analysis of such large amounts of data, however, is not without computational challenges. This burden is even more increased due to the periodic updates to reference genomes, which typically require re-analysis of existing data. Here we propose Coin-Application Mediator Interface (Coinami) to distribute the workload for mapping reads to reference genomes using a volunteer grid computer approach similar to Berkeley Open Infrastructure for Network Computing (BOINC). However, since HTS read mapping requires substantial computational resources and fast analysis turnout is desired, Coinami uses the HTS read mapping as proof-of-work to generate valid blocks to main its own cryptocurrency system, which may help motivate volunteers to dedicate more resources. The Coinami protocol includes mechanisms to ensure that jobs performed by volunteers are correct, and provides genomic data privacy. The prototype implementation of Coinami is available at http://coinami.github.io/.
To the knowledge of the author, this is the first time it has been shown that interest rates that are extremely high by modern standards (100% and higher) are necessary within a zero-sum monetary system, and not just driven by greed. Extreme interest rates that appeared in various places and times reinforce the idea that hard money may have contributed to high rates of interest. Here a model is presented that examines the interest rate required to succeed as an investor in a zero-sum fixed quantity hard-money system. Even when the playing field is significantly tilted toward the investor, interest rates need to be much higher than expected. In a completely fair zero-sum system, an investor cannot break even without charging 100% interest. Even with a 5% advantage, an investor won't break even at 15% interest. From this it is concluded that what we consider usurious rates today are, within a hard-money system, driven by necessity. Cryptocurrency is a novel form of hard-currency. The inability to virtualize the money creates a system close to zero-sum because of the limited supply design. Therefore, within the bounds of a cryptocurrency system that limits money creation, interest rates must rise to levels that the modern world considers usury. It is impossible, therefore, that a cryptocurrency that is not expandable could take over a modern economy and replace modern fiat currency.
In this paper we revisit some major orthodoxies which lie at the heart of the bitcoin crypto currency and its numerous clones. In particular we look at The Longest Chain Rule, the monetary supply policies and the exact mechanisms which implement them. We claim that these built-in properties are not as brilliant as they are sometimes claimed. A closer examination reveals that they are closer to being... engineering mistakes which other crypto currencies have copied rather blindly. More precisely we show that the capacity of current crypto currencies to resist double spending attacks is poor and most current crypto currencies are highly vulnerable. Satoshi did not implement a timestamp for bitcoin transactions and the bitcoin software does not attempt to monitor double spending events. As a result major attacks involving hundreds of millions of dollars can occur and would not even be recorded. Hundreds of millions have been invested to pay for ASIC hashing infrastructure yet insufficient attention was paid to network neutrality and to insure that the protection layer it promises is effective and cannot be abused. In this paper we develop a theory of Programmed Self-Destruction of crypto currencies. We observe that most crypto currencies have mandated abrupt and sudden transitions. These affect their hash rate and therefore their protection against double spending attacks which we do not limit the to the notion of 51% attacks which is highly misleading. In addition we show that smaller bitcoin competitors are substantially more vulnerable. In addition to small hash rate, many bitcoin competitors mandate incredibly important adjustments in miner reward. We exhibit examples of 'alt-coins' which validate our theory and for which the process of programmed decline and rapid self-destruction has clearly already started.
We give an explicit definition of decentralization and show you that\ndecentralization is almost impossible for the current stage and Bitcoin is the\nfirst truly noncentralized currency in the currency history. We propose a new\nframework of noncentralized cryptocurrency system with an assumption of the\nexistence of a weak adversary for a bank alliance. It abandons the mining\nprocess and blockchain, and removes history transactions from data\nsynchronization. We propose a consensus algorithm named Converged Consensus for\na noncentralized cryptocurrency system.\n
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.
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Blockchain Technology Applications and Security
Cryptography and Data Security
Advanced Steganography and Watermarking Techniques
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.
Designed to compete with fiat currencies, bitcoin proposes it is a crypto-currency alternative. Bitcoin makes a number of false claims, including: solving the double-spending problem is a good thing; bitcoin can be a reserve currency for banking; hoarding equals saving, and that we should believe bitcoin can expand by deflation to become a global transactional currency supply. Bitcoin's developers combine technical implementation proficiency with ignorance of currency and banking fundamentals. This has resulted in a failed attempt to change finance. A set of recommendations to change finance are provided in the Afterword: Investment/venture banking for the masses; Venture banking to bring back what investment banks once were; Open-outcry exchange for all CDS contracts; Attempting to develop CDS type contracts on investments in startup and existing enterprises; and Improving the connection between startup tech/ideas, business organization and investment.
Bitcoin is a "crypto currency", a decentralized electronic payment scheme based on cryptography which has recently gained excessive popularity. Scientific research on bitcoin is less abundant. A paper at Financial Cryptography 2012 conference explains that it is a system which "uses no fancy cryptography", and is "by no means perfect". It depends on a well-known cryptographic standard SHA-256. In this paper we revisit the cryptographic process which allows one to make money by producing bitcoins. We reformulate this problem as a Constrained Input Small Output (CISO) hashing problem and reduce the problem to a pure block cipher problem. We estimate the speed of this process and we show that the cost of this process is less than it seems and it depends on a certain cryptographic constant which we estimated to be at most 1.86. These optimizations enable bitcoin miners to save tens of millions of dollars per year in electricity bills. Miners who set up mining operations face many economic incertitudes such as high volatility. In this paper we point out that there are fundamental incertitudes which depend very strongly on the bitcoin specification. The energy efficiency of bitcoin miners have already been improved by a factor of about 10,000, and we claim that further improvements are inevitable. Better technology is bound to be invented, would it be quantum miners. More importantly, the specification is likely to change. A major change have been proposed in May 2013 at Bitcoin conference in San Diego by Dan Kaminsky. However, any sort of change could be flatly rejected by the community which have heavily invested in mining with the current technology. Another question is the reward halving scheme in bitcoin. The current bitcoin specification mandates a strong 4-year cyclic property. We find this property totally unreasonable and harmful and explain why and how it needs to be changed.