Although Bitcoin was intended to be a decentralized digital currency, in practice, mining power is quite concentrated. This fact is a persistent source of concern for the Bitcoin community. We provide an explanation using a simple model to capture miners' incentives to invest in equipment. In our model, $n$ miners compete for a prize of fixed size. Each miner chooses an investment $q_i$, incurring cost $c_i q_i$, and then receives reward $\frac{q_i^α}{\sum_j q_j^α}$, for some $α\geq 1$. When $c_i = c_j$ for all $i,j$, and $α= 1$, there is a unique equilibrium where all miners invest equally. However, we prove that under seemingly mild deviations from this model, equilibrium outcomes become drastically more centralized. In particular, (a) When costs are asymmetric, if miner $i$ chooses to invest, then miner $j$ has market share at least $1-\frac{c_j}{c_i}$. That is, if miner $j$ has costs that are (e.g.) $20\%$ lower than those of miner $i$, then miner $j$ must control at least $20\%$ of the \emph{total} mining power. (b) In the presence of economies of scale ($α> 1$), every market participant has a market share of at least $1-\frac{1}α$, implying that the market features at most $\fracα{α- 1}$ miners in total. We discuss the implications of our results for the future design of cryptocurrencies. In particular, our work further motivates the study of protocols that minimize "orphaned" blocks, proof-of-stake protocols, and incentive compatible protocols.
In this paper, we consider the problem of fair scheduling of transactions of multiple types that are submitted to a permissioned blockchain system. Permissioned blockchains are being increasingly used for enterprise applications and by design are heterogeneous in nature, with different peer organizations performing different business functions. Transactions execute different smart contract operations that may have widely varying business importance. In such a setting, we argue that the typically adopted First-In-First-Out ordering mechanism for transactions in a blockchain system, which is a performance-limited resource, is inefficient and unfair. We propose a weighted fair queueing strategy for ordering transactions that can support differentiated quality of service for submitted transactions on the blockchain. The main challenge we address in this paper is to support fair allocation and differentiation in a decentralized manner, as there is no single authority that can facilitate this as in traditional systems. We demonstrate such a fair scheduling strategy and support multiple transaction types with different priorities on Hyperledger Fabric.
Muhammad Ahmad Zafar, Falak Sher, Muhammad Umar Janjua, Salman Baset
Could smart contracts written in Solidity, a popular language among blockchain developers for Ethereum, be run on other blockchain platforms such as Hyperleger Fabric. To run Solidity smart contracts on another blockchain platform, one can either incorporate the Ethereum Virtual Machine (EVM) in the target blockchain, or perform a source-to-source translation of the Solidity contracts to a smart contract language for the target platform. This paper presents Sol2js, an open source source-to-source translation tool that generates Javascript smart contracts for Hyperledger Fabric from Solidity contracts, and provides a conceptual mapping of Ethereum constructs to that of Hyperleger Fabric, where possible. Presently, the tool is able to successfully translate 65-70% of Solidity constructs including major types, functions, inheritance, and events. The preliminary results show that the average of the lines of code (loc) across translated contracts is 7.5x more than the average of Solidity contracts loc while preserving contract semantics.
F. SchĂŒĂler, Pezhman Nasirifard, HansâArno Jacobsen
Despite the very high volatility of the cryptocurrency markets, the interest in the development and adaptation of existing cryptocurrencies such as Bitcoin as well as new distributed ledger technologies is increasing. Therefore, understanding the security and vulnerability issues of such blockchain systems plays a critical role. In this work, we propose a configurable distributed simulation framework for analyzing Bitcoin-like blockchain systems which are based on Proof-of-Work protocols. The simulator facilitates investigating security properties of blockchain systems by enabling users to configure several characteristics of the blockchain network and executing different attack scenarios, such as double-spending attacks and flood attacks and observing the effects of the attacks on the blockchain network.
Aditya M. Deshpande, Pezhman Nasirifard, HansâArno Jacobsen
Cryptocurrencies and Distributed Ledger Technologies, such as Ethereum have received extensive attention over the past few years. With the increasing popularity of Ethereum, comprehensive understanding of its various properties plays a critical role in the widespread adaptation. However, due to the significant requirements for deploying a full Ethereum blockchain and high running costs, it is challenging to study the dynamic properties of the Ethereum. In this work, we propose eVIBES, a configurable simulation framework for gaining empirical insights into the dynamic properties of Ethereum.
Mohamed Riswan Abdul Lathif, Pezhman Nasirifard, HansâArno Jacobsen
Directed Acyclic Graph (DAG) based Distributed Ledger Technologies (DLT) such as IOTA Tangle has been proposed to address the inefficiencies of traditional blockchains, including the issues with scalability, high resource consumptions, and the increasing transaction fees. Despite the promising features introduced by IOTA, the properties of DAG-based distributed ledgers are not yet comprehensively studied. In this work, we propose CIDDS, a configurable and interactive DAG-based DLT simulation framework. CIDDS enables the user to perform large-scale simulations with thousands of nodes and to investigate different characteristics of the network under controlled conditions.
Blockchains and distributed ledger technology (DLT) that rely on Proof-of-Work (PoW) typically show limited performance. Several recent approaches incorporate Byzantine fault-tolerant (BFT) consensus protocols in their DLT design as Byzantine consensus allows for increased performance and energy efficiency, as well as it offers proven liveness and safety properties. While there has been a broad variety of research on BFT consensus protocols over the last decades, those protocols were originally not intended to scale for a large number of nodes. Thus, the quest for scalable BFT consensus was initiated with the emerging research interest in DLT. In this paper, we first provide a broad analysis of various optimization techniques and approaches used in recent protocols to scale Byzantine consensus for large environments such as BFT blockchain infrastructures. We then present an overview of both efforts and assumptions made by existing protocols and compare their solutions.
Zsolt IstvĂĄn, Alessandro Sorniotti, Marko VukoliÄ
Processing at block granularity and blockchains seem inseparable. The original role of blocks is to amortize the cost of cryptography (e.g., solving proof-of-work) and to make data transfers more efficient in a geo-distributed setting. While blocks are a simple and powerful tool for amortizing these costs, today in permissioned distributed ledgers, that are often neither geo-distributed, nor require proof-of-work, the benefits of operating on blocks are overshadowed by the large latencies they introduce.
Purpose The purpose of this paper is to assess the channels of education financing as they exist currently in Iraq. It argues that the current model of financing is highly centralized and in order to encourage a school-based management and better school outcomes, there needs to be decentralization of financing. The paper considers block grants as a mechanism for decentralization and explores other country experiences in this area. Design/methodology/approach The paper opts for both an analytical and exploratory study of the financing channels in the education sector in Iraq based on both primary field-based surveys and secondary sources of information such as World Bank and UN documents. For understanding other country experience of school block grant provision, the paper reviews literature and attempts to find learnings for Iraq. Findings The paper provides a detailed insight into the service delivery modal and channels of education financing in Iraq across multiple tiers. It argues that the centralized model of education financing is one of the factors that contribute to weak school governance and school performance indicators. It explores the idea of school block grants as a model of decentralized financing and a review of other country experiences on provision of school block grants gives some interesting insights into what might work for Iraq. Research limitations/implications Economic wars, sanctions and conflict have severely affected the country and as a consequence there are very limited data and information available and this has impacted the study. Furthermore, though the country has been liberated from ISIS, the peace is fragile and any research findings have to be seen in this background. Practical implications The paper does not stop at identifying the problem, i.e. centralization of financing but attempts to explore and provide a way to get around this in the form of provision of school block grants. Originality/value There are very few studies that explore the service delivery model and financing channels in the education sector in Iraq and therefore this paper should add value to any discussion on post-conflict reconstruction.
Blockchain is highly secure in design and can hand huge data efficiently. A smart contract, based on a blockchain, can automate the entire process and make the contract self-executing in nature. Since the first introduction of these technologies in the 1990s, they have been at the center interest for academia and industry. Numerous researchers and practitioners have investigated the principles and usage of blockchain and smart contracts. However, little is coincidental regarding estimating the consumerâs additional willingness to pay (WTP) and analyzing the relationship with socio-economic characteristics of the consumer for blockchain and smart contracts in the insurance sector. This study conducted the survey on 1000 heads of the household or homemakers who represent population well in South Korea and estimated additional WTP using one-and-one-half-bounded dichotomous choice contingent valuation (OOHB DC CV) method. About 65% of sample respondents answered they are willing to pay some additional premium for blockchain and smart contracts. The mean WTP has the value of KRW 28,425.43 (USD 25.38) and the median WTP is KRW 16,111.71 (USD 14.39). Those with high incomes, high education and more insurance contracts are more likely to pay extra for insurance policies using blockchain and smart contracts. Considering the total number of households in South Korea, the aggregated additional WTP is about 8 percent of the net income of the insurance industry in fiscal year of 2017. Consequently, strategic development of insurance products using block chains and smart contracts targeting educated consumers with high-income will increase the number of policyholders, which can in turn increase premium revenues.
The Industry 4.0 concept describes a decentralized production chain that extends from design to the supply chain, production, distribution as well as customer service. Cyber Physical Systems (CPS) employ software and internet-connected machines that communicate in real-time to reduce error rates and increase efficiency. The basis is the co-operation of separate control units that are capable of autonomous decision-making, managing the assigned technological unit and in particular becoming an independent and full member of comprehensive production units. The Industry 4.0 concept requires continuous innovation and education that not only depends on the peoplesâ skills but also on organizational culture. Appropriate managerial approaches play a vital role in the development of organizational culture. Most studies discuss technical aspects, but do not pay attention to managerial approaches and organizational culture, which are a major factor influencing the success of this concept. The aim of the paper is to examine the level of organizational culture in the Czech Republic and to seek appropriate managerial approaches for the development of organizational culture that can support the environment for innovation in the organization and therefore facilitate the entrepreneurship in the Industry 4.0 concept. A partial goal will be, among other things, to identify the implications of Industry 4.0 for human resources. In order to determine organizational culture in organizations, a large study was carried out in the form of a questionnaire survey â the Czech translation of Wallachៜs Questionnaire (1983). According to the findings, the respondents perceive the organizational culture in the organizations under review is more bureaucratic and supportive than innovative. In their view the signs of innovative culture are not so striking. It is necessary to change managerial approaches to support innovative solutions.
The success and growing popularity of blockchain technology has lead to a significant increase in load on popular permissionless blockchains such as Ethereum. With the current design, these blockchain systems do not scale with additional nodes since every node executes every transaction. Further efforts are therefore necessary to develop scalable permissionless blockchain systems.
Understanding the principles of consensus in communities and finding ways to optimal solutions beneficial for entire community becomes crucial as the speeds and scales of interaction in modern distributed systems increase. Such systems can be both social and information computer networks that unite the masses of people as well as multi-agent computing platforms based on peer-to-peer interactions including those operating on the basis of distributed ledgers. It is now becoming possible for hybrid ecosystems to emerge, having such systems including both humans and computer systems using artificial intelligence. We propose a new form of consensus for all of the listed systems, based on the reputation of the participants, calculated according to the principle of liquid democracy. We believe that such a system will be more resistant to social engineering and reputation manipulation than the existing systems. In this article, we discuss the basic principles and options for implementing such a system, and also present preliminary practical results.
In the last decade, Latin American and Caribbean governments have advanced toward a systemic management of the citizen security and justice issues, integrating strategies of crime and violence prevention and control, the application of justice, and social rehabilitation. The region has moved from reactive and punitive approaches to the design and implementation of comprehensive models focused on human rights and multisectoral coordination. Likewise, security institutions have been decentralized to incorporate multiple institutional and social actors at the different government levels. In addition, in terms of public policies, the governments have proposed a range of tools for management by results, coordination, planning, financing, and evaluation of programs. Unfortunately, conceptual and doctrinal advances have not been incorporated with the necessary speed to address the high levels of crime and violence faced by the region. The four main institutional challenges to citizen security are: (i) comprehensiveness, (ii) multisectoriality, (iii) rigorousness, and (iv) sustainability and scalability. The document proposes 10 actions to accelerate the transformation of the security governance.
This article examines the use of the blockchain to create limited editions of digital art with a particular focus on the business models of two companies: Monegraph and Ascribe. For some, the development of blockchain technologies and smart contracts suggests an opportunity for artists to protect their work from misuse and expropriation. For others, it suggests the possibility of stronger forms of digital rights management, going forward, that may negatively impact digital culture. However, this article argues that the aim of limited editions on the blockchain is not usually to institute stronger restrictions over use or a new form of digital rights management but rather to create new kinds of tradable digital assets. In turn, this trend implies a different operation of intellectual property rights with respect to digital culture, one where alienation rather than exclusion is significant, and a different operation of scarcity with respect to digital cultural goods, where their free circulation is not necessarily antithetical to profit.
Abstract Whilst blockchain technology has attracted substantial attention within the scholarly literature of a number of disciplines, including economics, finance, law and technology, it has been subject to minimal discussion and scrutiny within the scholarly accounting literature. This article argues that this is a missed opportunity and that the maturation of blockchain technology may represent as profound a shift in accounting as the emergence and adoption of doubleâentry accounting.
Understanding the principles of consensus in communities and finding ways to optimal solutions beneficial for entire community becomes crucial as the speeds and scales of interaction in modern distributed systems increase. Such systems can be both social and information computer networks that unite the masses of people as well as multi-agent computing platforms based on peer-to-peer interactions including those operating on the basis of distributed ledgers. It is now becoming possible for hybrid ecosystems to emerge, having such systems including both humans and computer systems using artificial intelligence. We propose a new form of consensus for all of the listed systems, based on the reputation of the participants, calculated according to the principle of "liquid democracy". We believe that such a system will be more resistant to social engineering and reputation manipulation than the existing systems. In this article, we discuss the basic principles and options for implementing such a system, and also present preliminary practical results.
We propose factor models for the cross-section of daily cryptoasset returns and provide source code for data downloads, computing risk factors and backtesting them out-of-sample. In "cryptoassets" we include all cryptocurrencies and a host of various other digital assets (coins and tokens) for which exchange market data is available. Based on our empirical analysis, we identify the leading factor that appears to strongly contribute into daily cryptoasset returns. Our results suggest that cross-sectional statistical arbitrage trading may be possible for cryptoassets subject to efficient executions and shorting.
A blockchain system is a replicated state machine that must be fault tolerant. When designing a blockchain system, there is usually a trade-off between decentralization, scalability, and security. In this paper, we propose a novel blockchain system, DEXON, which achieves high scalability while remaining decentralized and robust in the real-world environment. We have two main contributions. First, we present a highly scalable sharding framework for blockchain. This framework takes an arbitrary number of single chains and transforms them into the \textit{blocklattice} data structure, enabling \textit{high scalability} and \textit{low transaction confirmation latency} with asymptotically optimal communication overhead. Second, we propose a single-chain protocol based on our novel verifiable random function and a new Byzantine agreement that achieves high decentralization and low latency.
As a disruptive technology, blockchain, particularly its original form of bitcoin as a type of digital currency, has attracted great attentions. The innovative distributed decision making and security mechanism lay the technical foundation for its success, making us consider to penetrate the power of blockchain technology to distributed control and cooperative robotics, in which the distributed and secure mechanism is also highly demanded. Actually, security and distributed communication have long been unsolved problems in the field of distributed control and cooperative robotics. It has been reported on the network failure and intruder attacks of distributed control and multi-robotic systems. Blockchain technology provides promise to remedy this situation thoroughly. This work is intended to create a global picture of blockchain technology on its working principle and key elements in the language of control and robotics, to provide a shortcut for beginners to step into this research field.
Elisabeth Kapsammer, Birgit Pröll, Werner Retschitzegger, Wieland Schwinger · 6 authors
Since the emergence of Bitcoin, blockchains (BCs) have been applied not only in the finance sector, but also in various other domains like health care, education or Industry 4.0 resulting in numerous different BC platforms and substantial research work. This plenty of efforts yielded to several valuable scientific surveys classifying and evaluating existing BC platforms. Although each of them puts forward a somewhat consolidated view on the field, it is still challenging to get rid of the "blockchain muddle" preventing even a common perception of the core functionality of BCs. Instead of providing yet another BC overview we conduct a meta survey of existing BC studies and report on lessons learned in this paper, being the basis for our vision towards a UML-based reference model considering both, structural and behavioral aspects of BCs and thereby identifying the nucleus of BCs.
Lei Wang, Haining Wang, Ying-fei CHAO, Shuhong Shi · 5 authors
This paper discussed the application of blockchain technology in power trading business, and focused on solving the information security problems which currently faced by power trading, including protecting the privacy of market entities, encrypting key data. This paper proposes the idea of controlling user access through CA nodes, using zero-knowledge proof mechanism to protect user privacy, and adopting pluggable way to set consensus mechanism. This paper proposes an innovative vision for building a power trading blockchain, providing advice for future power trading blockchains.
Blockchains yield to new workloads in database management systems and K/V-Stores. Distributed Ledger Technology (DLT) is a technique for managing transactions in 'trustless' distributed systems. Yet, clients of nodes in blockchain networks are backed by 'trustworthy' K/V-Stores, like LevelDB or RocksDB in Ethereum, which are based on Log-Structured Merge Trees (LSM-Trees). However, LSM-Trees do not fully match the properties of blockchains and enterprise workloads.