Jun 1, 2015·2015 IEEE/ACIS 16th International Conference on Software Engineering, Artificial Intelligence, Networking and Parallel/Distributed Computing (SNPD)
Bitcoin, a distributed, peer to peer crypto currency, has gained a significant popularity among different users around the world by promising users a fully decentralized network with an inherently independence from governments and without the influence of any central authorities and organizations. Mining is the fundamental concept in Bitcoin which must be done in checking all monetary transactions and verifying them which in return generates Bitcoin as a reward to encourage this work. While the qualitative nature of this unique system is clearly accepted and understood, there are some issues regarding to its decentralized network environment. Based on our analysis due to the high variance of solo mining, the number of users joining top most famous Bitcoin mining pools are increasing due to the fact that users together under a Bitcoin pool will have a higher chance of generating next block in the Bitcoin's blockchain by reducing the variance and earning the mining reward. Furthermore, emerging huge mining farms with strong mining resources and fast processing power is another trend toward centralization. Although some might argue that, the protocol itself is purely decentralized and these are marketbased centralization, this trend clearly illustrates that the pure, decentralized protocol of Bitcoin is going toward centralization in its distributed network, where any kind of centralization should be considered carefully due to the 51% attack. By analysing all the created blocks from 2009 to 2014 we proposed a centralization factor which shows how centralized is the state of Bitcoin's network in different years. Centralization, due its simplicity, is a phenomenon that happens to any disciplined and organized system automatically, which in case of Bitcoin is against the pure initial decentralized nature of it and might arise some concerns and threats to the Bitcoin's unforeseeable future.
Contrary to traditional currencies, cryptocurrencies neither have physical form nor are they guaranteed or backed by any central authority. They simply attain value by usage and the confidence of those participating in the respective system. A crypto-paymentsystem is a technology which allows for payments between individuals digitally without relying on central institutions, intermediaries or further infrastructure as required for conventional payment systems. While its legitimacy as currency has been questioned due to its high exchange rate volatility, the significant potential of the Bitcoin technology as a payment system is undeniable. As postal operators typically have a role as financial intermediaries and act in an inter-national and increasingly digital environment, crypto-paymentsystems may be of particular interest to them. In fact, as the post has a wide network of access points and is highly trusted by the general public, it may be well-suited to offer services which counter some disadvantages of crypto-paymentsystems and cryptocurrencies, while retain-ing the benefits of their technology. By turning to crypto-paymentsystems postal operators may extend their role as a financial intermediary with new domestic and interna-tional services. Furthermore, postal operators may even issue their own cryptocurrency to protect customers from the high exchange-rate volatility of cryptocurrencies.
The aim of this article is to show the position of Bitcoin among virtual currencies. On the basis of the reports published by the European Central Bank and The Financial Action Task Force, as well as the available Internet and primary sources, there have been presented the types and the history of virtual currencies, the way in which Bitcoin functions and the methods of acquiring it. The article is based on the assumption that an in-depth knowledge of virtual currencies, their classification and their functioning will make it possible to regulate their legal status. It is necessary not only for tax purposes, but also in order to avoid the risk of using this payment method for terrorist or criminal purposes. The knowledge of the history of virtual currencies also makes it possible to foresee the problems that may hinder the functioning of Bitcoin and other virtual currencies. The growing popularity of virtual currencies and cryptocurrencies is linked with the increase of importance of non-cash payments on global scale. Thus, Bitcoin may be considered a next step in the evolution of digital money.
The present study addresses one of the most problematic phenomena: Bitcoin price. We explore the Granger causality for two relationships (Bitcoin price and trade transactions; Bitcoin price and investors' attractiveness) from a frequency domain perspective-based on unconditional and conditional data analysis. Accurately, this research empirically assesses the causal links between these variables unconditionally on the one hand and conditioning upon relevant control variables (recorded in literature) on the other hand. The observed outcomes reveal some differences with respect to the frequencies involved, highlighting the difficulty to reach clearer insights and better paths into this nascent crypto-currency. Beyond the nuances of short-, medium- and long-run frequencies, this paper confirms the extremely speculative nature of Bitcoin without overlooking its usefulness in economic reasons. The consideration of the Chinese market index, the hash rate, the monetary velocity and the estimated output volume has led to solid and meaningful findings connecting further Bitcoin to speculation.
Victor Ranieri Bomfim Sampaio de Araújo, Márcia Reis Machado Machado
Bitcoins are in use today to do transitions. There are companies that accept Bitcoins as payment whem supply goods and services. However there isn’t currency status. It’s made of mathematics equations that its transactions are validated through encryption, hash function, p2p network and proof-of-work. Like a currency that just exists in the virtual form it needs the user’s confidence for have a valour. Although the large growth since your creation, in 2008, and be considered for many a big evolution, in the informatic and business fields, some entities and researchers say the Bitcoins are a ponzi scheme. This research aims to describe the transitions that envolve cripto-currency and the suitable accounting treatment in Brazil, based on the current standards. For this was done a general analysis that shows the best classifications as Contingent Asset, because their uncertainty value and their uncertainty existence too. The second section of the analysis was done hypothetical situations. The first was the mining situation, then the receive bitcoins as payment and finished with the company had bought that. Because it’s a Contingent Asset was generated a conflict on the two last situations. But for that was suggested an account on the current asset that represent the expectative to generate future cash flows when liquidate the Bitcoins without excluding the disclosure in the notes as Contingent Asset. Lastly was concluded that the risks associated with property losses and the association with illicit activity, beyond that there are so many indications that is a ponzi scheme and even it isn’t, there are not perspective for their operation.
The emergence of Bitcoin as an online currency/payment system has been surrounded with controversy with equally passionate proponents and detractors arguing for its long-term viability. These debates lead to stimulating exercises for the finance or economics student eager to understand principles of money, currencies, and monetary economics. The author presents a summary of the key arguments in a pedagogical structure useful to instructors who wish to use Bitcoin as a practical tool to stimulate critical thinking on these topics in the college classroom.
In this chapter, we discuss economic aspects of cryptocurrencies. 4.1. The double spending problem 4.2. How does Bitcoin work? Brief overview 4.3. Not the first one – predecessors of Bitcoin 4.4. Problems with Bitcoin (new challenges) 4.5. Competition against other crypto-currencies 4.6. Non-currency use of blockchain technology 4.7. Trading cryptocurrencies 4.8. How do crypto-currencies’s attributes compare to earlier money? For Chapter 1 (Introduction), see https://ssrn.com/abstract=3135021. For Chapter 2 (Means of Exchange: Ever-present Competition), see https://ssrn.com/abstract=3135028. For Chapter 3 (Platform-based Currencies), see https://ssrn.com/abstract=3135030. For Chapter 5 (Conclusions), see https://ssrn.com/abstract=3135057.
Ghassan Karame, Elli Androulaki, Marc Roeschlin, Arthur Gervais · 5 authors
Bitcoin is a decentralized payment system that relies on Proof-of-Work (PoW) to resist double-spending through a distributed timestamping service. To ensure the operation and security of Bitcoin, it is essential that all transactions and their order of execution are available to all Bitcoin users. Unavoidably, in such a setting, the security of transactions comes at odds with transaction privacy. Motivated by the fact that transaction confirmation in Bitcoin requires tens of minutes, we analyze the conditions for performing successful double-spending attacks against fast payments in Bitcoin, where the time between the exchange of currency and goods is short (in the order of a minute). We show that unless new detection techniques are integrated in the Bitcoin implementation, double-spending attacks on fast payments succeed with considerable probability and can be mounted at low cost. We propose a new and lightweight countermeasure that enables the detection of double-spending attacks in fast transactions. In light of such misbehavior, accountability becomes crucial. We show that in the specific case of Bitcoin, accountability complements privacy. To illustrate this tension, we provide accountability and privacy definition for Bitcoin, and we investigate analytically and empirically the privacy and accountability provisions in Bitcoin.
Échapper aux banques : une utopie qui a retrouvé de sa vigueur au lendemain de la crise des subprime et a donné naissance au « bitcoin », une monnaie numérique sur laquelle ont très vite commencé les spéculations, financières et autres. Mais quelle est la portée réelle de cette invention ?
Current cryptocurrencies, starting with Bitcoin, build a decentralized blockchain-based transaction ledger, maintained through proofs-of-work that also serve to generate a monetary supply. Such decentralization has benefits, such as independence from national political control, but also significant limitations in terms of computational costs and scalability. We introduce RSCoin, a cryptocurrency framework in which central banks maintain complete control over the monetary supply, but rely on a distributed set of authorities, or mintettes, to prevent double-spending. While monetary policy is centralized, RSCoin still provides strong transparency and auditability guarantees. We demonstrate, both theoretically and experimentally, the benefits of a modest degree of centralization, such as the elimination of wasteful hashing and a scalable system for avoiding doublespending attacks.
Johannes Göbel, Paul Keeler, A. E. Krzesinski, Peter Taylor
In the context of the `selfish-mine' strategy proposed by Eyal and Sirer, we study the effect of propagation delay on the evolution of the Bitcoin blockchain. First, we use a simplified Markov model that tracks the contrasting states of belief about the blockchain of a small pool of miners and the `rest of the community' to establish that the use of block-hiding strategies, such as selfish-mine, causes the rate of production of orphan blocks to increase. Then we use a spatial Poisson process model to study values of Eyal and Sirer's parameter $γ$, which denotes the proportion of the honest community that mine on a previously-secret block released by the pool in response to the mining of a block by the honest community. Finally, we use discrete-event simulation to study the behaviour of a network of Bitcoin miners, a proportion of which is colluding in using the selfish-mine strategy, under the assumption that there is a propagation delay in the communication of information between miners.
Digital currencies, such as Bitcoin, offer convenience and security to criminals operating in the black marketplace. Some Bitcoin marketplaces, such as Silk Road, even claim anonymity. This claim contradicts the findings in this work, where long term transactional behavior is used to identify and verify account holders. Transaction timestamps and network properties observed over time contribute to this finding. The timestamp of each transaction is the result of many factors: the desire purchase an item, daily schedule and activities, as well as hardware and network latency. Dynamic network properties of the transaction, such as coin flow and the number of edge outputs and inputs, contribute further to reveal account identity. In this paper, we propose a novel methodology for identifying and verifying Bitcoin users based on the observation of Bitcoin transactions over time. The behavior we attempt to quantify roughly occurs in the social band of Newell's time scale. A subset of the Blockchain 230686 is taken, selecting users that initiated between 100 and 1000 unique transactions per month for at least 6 different months. This dataset shows evidence of being nonrandom and nonlinear, thus a dynamical systems approach is taken. Classification and authentication accuracies are obtained under various representations of the monthly Bitcoin samples: outgoing transactions, as well as both outgoing and incoming transactions are considered, along with the timing and dynamic network properties of transaction sequences. The most appropriate representations of monthly Bitcoin samples are proposed. Results show an inherent lack of anonymity by exploiting patterns in long-term transactional behavior.
Evan L. Greebel, Kathleen H. Moriarty, Claudia Callaway, Gregory E. Xethalis
Purpose – To explain and draw conclusions from six recent bitcoin and virtual currency regulatory and law enforcement developments. Design/methodology/approach – Discusses and draws conclusions from six recent, important developments: two administrative rulings from the Financial Crimes Enforcement Network (FinCEN), recent remarks by New York State Department of Financial Services Superintendent Benjamin Lawsky, remarks by Mark Wetjen of the Commodity Futures Trading Commission (CFTC), a recent Securities and Exchange Commission (SEC) informational sweep of crowdsales of crypto-equity, and the US Department of Justice proceedings against Trendon Shavers. Findings – Rather than trying to stifle or control virtual currencies, US governmental entities recognize the long-term value of virtual currencies and are trying to create a regulatory regime to foster growth and development, and an atmosphere where institutional and retail investors are protected. Originality/value – Provides an overview of the key United States regulatory issues facing companies engaged in Bitcoin-related businesses.
This article is a review of the <i>Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data</i>, edited by David L.K. Chuen and published by Academic Press. <b>TOPICS:</b>Currency, big data/machine learning
Bitcoin is an innovative decentralized cryptocurrency whose core security relies on a “proof of work ” procedure, which requires network participants to repeatedly compute hashes on inputs from a large search space. Finding one of the rare inputs that generates an extremely low hash value is consid-ered a successful attempt, allowing miners to approve new transactions and, in return, to collect rewards in bitcoins. This reward allocation, which provides the incentive for miners to participate, is a random process with a large vari-ance. Miners who desire a steady income thus often par-ticipate in mining pools that divide among their members the earned rewards, and reduce this variance. Mining pools are slightly better at coordinating participants due to lower-latency communication, a fact which implies that they man-age to collect slightly higher rewards. We examine dynamics of pooled mining and the rewards that pools manage to collect, and use cooperative game the-oretic tools to analyze how pool members may share these rewards. We show that for some network parameters, es-pecially under high transaction loads, it is difficult or even impossible to distribute rewards in a stable way: some par-ticipants are always incentivized to switch between pools.
Bitcoin is an innovative virtual currency, which has gained much commercial traction, yet is widely overlooked by the accounting profession. Due to its parallels with actual currencies and its growing use, accountants should be aware of what bitcoin is, including its risks and benefits, in order to properly leverage its business uses. Of the existing financial instruments, derivatives stand out in their potential to stabilize the bitcoin market. Bitcoin regulation is sparse, but evolving, especially in the face of the emerging bitcoin securities and derivatives markets. The accounting profession is poised to play a major role in facilitating the future of proper regulation and oversight of Bitcoin.
It is no secret that e-commerce is the fastest growing retail sector in Europe. Tales of woe for the traditional high street have been on front pages throughout the land since the infamous demise of Woolworths back in 2009. The Centre for Retail Research predicts that online sales in the UK, Germany, France, Sweden, the Netherlands, Italy, Poland and Spain are expected to grow from £132.05bn in 2014 to £156.67bn this year, reaching an anticipated £185.44bn by 2016.1
Rainer Böhme, Nicolas Christin, Benjamin Edelman, Tyler Moore
Bitcoin is an online communication protocol that facilitates the use of a virtual currency, including electronic payments. Bitcoin's rules were designed by engineers with no apparent influence from lawyers or regulators. Bitcoin is built on a transaction log that is distributed across a network of participating computers. It includes mechanisms to reward honest participation, to bootstrap acceptance by early adopters, and to guard against concentrations of power. Bitcoin's design allows for irreversible transactions, a prescribed path of money creation over time, and a public transaction history. Anyone can create a Bitcoin account, without charge and without any centralized vetting procedure—or even a requirement to provide a real name. Collectively, these rules yield a system that is understood to be more flexible, more private, and less amenable to regulatory oversight than other forms of payment—though as we discuss, all these benefits face important limits. Bitcoin is of interest to economists as a virtual currency with potential to disrupt existing payment systems and perhaps even monetary systems. This article presents the platform's design principles and properties for a nontechnical audience; reviews its past, present, and future uses; and points out risks and regulatory issues as Bitcoin interacts with the conventional financial system and the real economy.
Joseph Bonneau, Andrew Miller, Jeremy Clark, Arvind Narayanan · 6 authors
Bit coin has emerged as the most successful cryptographic currency in history. Within two years of its quiet launch in 2009, Bit coin grew to comprise billions of dollars of economic value despite only cursory analysis of the system's design. Since then a growing literature has identified hidden-but-important properties of the system, discovered attacks, proposed promising alternatives, and singled out difficult future challenges. Meanwhile a large and vibrant open-source community has proposed and deployed numerous modifications and extensions. We provide the first systematic exposition Bit coin and the many related crypto currencies or 'altcoins.' Drawing from a scattered body of knowledge, we identify three key components of Bit coin's design that can be decoupled. This enables a more insightful analysis of Bit coin's properties and future stability. We map the design space for numerous proposed modifications, providing comparative analyses for alternative consensus mechanisms, currency allocation mechanisms, computational puzzles, and key management tools. We survey anonymity issues in Bit coin and provide an evaluation framework for analyzing a variety of privacy-enhancing proposals. Finally we provide new insights on what we term disinter mediation protocols, which absolve the need for trusted intermediaries in an interesting set of applications. We identify three general disinter mediation strategies and provide a detailed comparison.
The recent increase in reported incidents of surveillance and security breaches compromising users' privacy call into question the current model, in which third-parties collect and control massive amounts of personal data. Bit coin has demonstrated in the financial space that trusted, auditable computing is possible using a decentralized network of peers accompanied by a public ledger. In this paper, we describe a decentralized personal data management system that ensures users own and control their data. We implement a protocol that turns a block chain into an automated access-control manager that does not require trust in a third party. Unlike Bit coin, transactions in our system are not strictly financial -- they are used to carry instructions, such as storing, querying and sharing data. Finally, we discuss possible future extensions to block chains that could harness them into a well-rounded solution for trusted computing problems in society.
The editorial board announced this article has been retracted on July 19, 2016. If you have any further question, please contact us at: cis@ccsenet.org
Purpose – This paper aims to explore the challenge posed by Bitcoin to regulators, particularly anti-money laundering regulators. Bitcoin is a crypto-currency based on open-source software and protocols that operates in peer-to-peer networks as a private irreversible payment mechanism. The protocol allows cross-border payments, for large and small items, with little or no transactional costs. Design/methodology/approach – Case studies and case law are examined as are relevant reports by regulators. Findings – Bitcoin is based on complex computer code supported by a robust community in a peer-to-peer network. Unlike other virtual currencies, Bitcoin appears to have obtained purchase and as such poses unique challenges to regulators. Research limitations/implications – Bitcoin is at a nascent stage and the evolution of the virtual currency is difficult to predict. Practical implications – Those who study financial systems, anti-money laundering regimes and asset forfeiture laws will have an interest in this topic. Originality/value – This is a new and emerging currency; there is limited literature on the implications of this currency to anti-money laundering systems.