Blockchain Papers

Alexander Eisl, S. Gasser, Karl Weinmayer

No abstract is available for this record.

Ifigeneia Georgoula, Demitrios E. Pournarakis, Christos Bilanakos, Dionisios N. Sotiropoulos · 5 authors

This paper uses time-series analysis to study the relationship between Bitcoin prices and fundamental economic variables, technological factors and measurements of collective mood derived from Twitter feeds. Sentiment analysis has been performed on a daily basis through the utilization of a state-of-the-art machine learning algorithm, namely Support Vector Machines (SVMs). A series of short-run regressions shows that the Twitter sentiment ratio is positively correlated with Bitcoin prices. The short-run analysis also reveals that the number of Wikipedia search queries (showing the degree of public interest in Bitcoins) and the hash rate (measuring the mining difficulty) have a positive effect on the price of Bitcoins. On the contrary, the value of Bitcoins is negatively affected by the exchange rate between the USD and the euro (which represents the general level of prices). A vector error-correction model is used to investigate the existence of long-term relationships between cointegrated variables. This kind of long-run analysis reveals that the Bitcoin price is positively associated with the number of Bitcoins in circulation (representing the total stock of money supply) and negatively associated with the Standard and Poor's 500 stock market index (which indicates the general state of the global economy).

Lam Pak Nian, David Lee Kuo Chuen

No abstract is available for this record.

Joseph Bonneau, Jeremy Clark, Steven Goldfeder

Abstract. We formalize the use of Bitcoin as a source of publicly-verifiable randomness. As a side-effect of Bitcoin’s proof-of-work-based consensus system, random values are broadcast every time new blocks are mined. We can derive strong lower bounds on the computational min-entropy in each block: currently, at least 68 bits of min-entropy are produced every 10 minutes, from which one can derive over 32 near-uniform bits using standard extractor techniques. We show that any attack on this beacon would form an attack on Bitcoin itself and hence have a monetary cost that we can bound, unlike any other construc-tion for a public randomness beacon in the literature. In our simplest construction, we show that a lottery producing a single unbiased bit is manipulation-resistant against an attacker with a stake of less than 50 bitcoins in the output, or about US$12,000 today. Finally, we propose making the beacon output available to smart contracts and demonstrate that this simple tool enables a number of interesting applications. 1

Sarah Meiklejohn, Claudio Orlandi

No abstract is available for this record.

Jordi Herrera‐Joancomartí

No abstract is available for this record.

Marie Vasek, Tyler Moore

No abstract is available for this record.

Trevor Kiviat

The buzz surrounding Bitcoin has reached a fever pitch. Yet in academic legal discussions, disproportionate emphasis is placed on bitcoins (that is, virtual currency), and little mention is made of blockchain technology—the true innovation behind the Bitcoin protocol. Simply, blockchain technology solves an elusive networking problem by enabling “trustless” transactions: value exchanges over computer networks that can be verified, monitored, and enforced without central institutions (for example, banks). This has broad implications for how we transact over electronic networks. This Note integrates current research from leading computer scientists and cryptographers to elevate the legal community’s understanding of blockchain technology and, ultimately, to inform policymakers and practitioners as they consider different regulatory schemes. An examination of the economic properties of a blockchain-based currency suggests the technology’s true value lies in its potential to facilitate more efficient digital-asset transfers. For example, applications of special interest to the legal community include more efficient document and authorship verification, title transfers, and contract enforcement. Though a regulatory patchwork around virtual currencies has begun to form, its careful analysis reveals much uncertainty with respect to these alternative applications.

Caitlin Lustig, Bonnie Nardi

In this paper, I propose a new concept for understanding the role of algorithms in daily life: algorithmic authority. Algorithmic authority is the legitimate power of algorithms to direct human action and to impact which information is considered true. I use this concept to examine the culture of users of Bitcoin, a crypto-currency and payment platform. Through Bitcoin, I explore what it means to trust in algorithmic authority. My study of the Bitcoin community utilizes interview and survey data. I found that Bitcoin users prefer algorithmic authority to the authority of conventional institutions which they see as untrustworthy. However, I argue that Bitcoin users do not have blind faith in algorithms; rather, they acknowledge the need for mediating algorithmic authority with human judgment. I examine the tension between members of the Bitcoin community who would prefer to integrate Bitcoin with existing institutions and those who would prefer to resist integration.

William J. Luther, Alexander William Salter

On March 16, 2013, Cyprus announced that it would accept a bailout that required imposing a one-time levy on bank deposits. It has been argued that, by making traditional deposit accounts seem less secure, the bailout announcement prompted some to consider — or reconsider — using the cryptocurrency bitcoin. Relying on rank data for a subset of apps, existing studies maintain that interest in bitcoin increased following the announcement, especially in countries with troubled banks. We argue that (1) focusing on a subset of apps does not allow one to distinguish a general increase in the demand for bitcoin apps from a substitution between bitcoin apps and (2) changes in rank data are a poor predictor of changes in the number of downloads. In order to address these concerns, we collect rank data for all fifteen bitcoin apps available at the time and use an established technique to estimate an index of downloads for each country considered. We find that, while downloads of bitcoin apps increased following the announcement, the observed effect was not especially pronounced in countries thought to have had troubled banking systems at the time.

Yu Zhang, Jiangtao Wen

Nowadays, the development of traditional business models become more and more mature that people use them to guide various kinds of E-business activities. Internet of things(IoT), being an innovative revolution over the Internet, becomes a new platform for E-business. However, old business models could hardly fit for the E-business on the IoT. In this article, we 1) propose an IoT E-business model, which is specially designed for the IoT E-business; 2) redesign many elements in traditional E-business models; 3) realize the transaction of smart property and paid data on the IoT with the help of P2P trade based on the Blockchain and smart contract. We also experiment our design and make a comprehensive discuss.

Luke Valenta, Brendan Rowan

No abstract is available for this record.

Arthur Gervais, Hubert Ritzdorf, Ghassan Karame, Srđjan Čapkun

Given the increasing adoption of Bitcoin, the number of transactions and the block sizes within the system are only expected to increase. To sustain its correct operation in spite of its ever-increasing use, Bitcoin implements a number of necessary optimizations and scalability measures. These measures limit the amount of information broadcast in the system to the minimum necessary. In this paper, we show that current scalability measures adopted by Bitcoin come at odds with the security of the system. More specifically, we show that an adversary can exploit these measures in order to effectively delay the propagation of transactions and blocks to specific nodes for a considerable amount of time---without causing a network partitioning in the system. Notice that this attack alters the information received by Bitcoin nodes, and modifies their views of the ledger state. Namely, we show that this allows the adversary to considerably increase its mining advantage in the network, and to double-spend transactions in spite of the current countermeasures adopted by Bitcoin. Based on our results, we propose a number of countermeasures in order to enhance the security of Bitcoin without deteriorating its scalability.

Christian Decker, Roger Wattenhofer

No abstract is available for this record.

Feroz Ahmad Ahmad, Prashant Kumar, Gulshan Shrivastava, Med Salim Bouhlel

ON 12 JANUARY 2009 a pseudonymous entity signed a transaction that instructed a distributed network to transfer a small amount of digital currency to Hal Finney, one ofthe key figures of the cypherpunk movement. After a few minutes, the transaction was recorded on a distributed public ledger, permanently updating the balance ofbothparties. This transaction— the first Bitcoin transaction—marked the beginning of a new era of decentralized payment systems, ushering in a variety of financial Services that do not depend on any centralized clearinghouse or other financial middleman. Bitcoin is regarded by many as a powerful technological innovation that could disrupt many sectors, in the realm of finance and beyond. But the underlying technology on which the network operates, the Bitcoin blockchain can do much more than that. Just as the internet did in the early-1990s, blockchain technology carries with it a whole new range of promises concerning how decentralization can support and promote individual freedoms and autonomy. Blockchain proponents believe that Bitcoin and other cryptocurrency platforms will revolutionize mechanisms of value exchange in the same way that the internet transformed information sharing, by providing a platform for people to exchange digital resources, in a secure and decentralized manner without the need to rely on any intermediary or trusted authority. But this revolutionary potential also carries with it serious implications for censorship, intellectual property, and the regulated flow of information. A blockchain is a decentralized database of transactions maintained by a distributed network of computers, which all contribute to the verification and the validation of transactions. Once accepted, these transactions are recorded inside a “block” of transactions, which incorporates a reference to previous blocks. This creates a long chain of blocks—a “blockchain”—that stores the history of all transactions in a chronological order. Every block contains information about a particular set of transactions, a reference to the preceding block in the blockchain, and the answer to a complex mathematical puzzle that is used to validate the data associated with that block. A copy of the blockchain is stored on every computer in the network, making it virtually impossible for anyone unilaterally to modify the data stored on this decentralized database: if anyone tries to modify any transaction the fraud will be immediately detected by all other network participants.

Yonatan Sompolinsky, Aviv Zohar

No abstract is available for this record.

David Yermack

No abstract is available for this record.

Juan A. Garay, Aggelos Kiayias, Nikos Leonardos

Bitcoin is the first and most popular decentralized cryptocurrency to date. In this work, we extract and analyze the core of the Bitcoin protocol, which we term the Bitcoin backbone , and prove three of its fundamental properties which we call Common Prefix , Chain Quality, and Chain Growth in the static setting where the number of players remains fixed. Our proofs hinge on appropriate and novel assumptions on the “hashing power” of the protocol participants and their interplay with the protocol parameters and the time needed for reliable message passing between honest parties in terms of computational steps. A takeaway from our analysis is that, all else being equal, the protocol’s provable tolerance in terms of the number of adversarial parties (or, equivalently, their “hashing power” in our model) decreases as the duration of a message passing round increases. Next, we propose and analyze applications that can be built “on top” of the backbone protocol, specifically focusing on Byzantine agreement (BA) and on the notion of a public transaction ledger. Regarding BA, we observe that a proposal due to Nakamoto falls short of solving it, and present a simple alternative which works assuming that the adversary’s hashing power is bounded by 1/3. The public transaction ledger captures the essence of Bitcoin’s operation as a cryptocurrency, in the sense that it guarantees the liveness and persistence of committed transactions. Based on this notion, we describe and analyze the Bitcoin system as well as a more elaborate BA protocol and we prove them secure assuming the adversary’s hashing power is strictly less than 1/2. Instrumental to this latter result is a technique we call 2-for-1 proof-of-work (PoW) that has proven to be useful in the design of other PoW-based protocols.

Florian Tschorsch, Björn Scheuermann

Besides attracting a billion dollar economy, Bitcoin revolutionized the field of digital currencies and influenced many adjacent areas. This also induced significant scientific interest. In this survey, we unroll and structure the manyfold results and research directions. We start by introducing the Bitcoin protocol and its building blocks. From there we continue to explore the design space by discussing existing contributions and results. In the process, we deduce the fundamental structures and insights at the core of the Bitcoin protocol and its applications. As we show and discuss, many key ideas are likewise applicable in various other fields, so that their impact reaches far beyond Bitcoin itself.

Michael Mainelli, Mike Smith

Mutual distributed ledgers (MDLs) have the potential to transform the way people and organizations handle identity, transaction and debt information. MDL technology provides an electronic public transaction record of integrity without central ownership. The ability to have a globally available, verifiable and untamperable source of data provides anyone wishing to provide trusted third-party services, i.e., most financial services firms, the ability to do so cheaply and robustly. Blockchain technology is a form of MDL. The InterChainZ project was a consortium research project to share learning on MDLs during the summer of 2015. The study found that InterChainZ showcased several distributed ledger configurations and numerous variants, exploring how they might work in a set of agreed “use cases.” The outputs were a series of functioning, interlinked MDLs along with software, explanatory materials and website information. The research consortium concluded that MDLs incorporating trusted third parties for some functions had significant potential in financial services, such as know-your-customer (KYC), anti- money laundering (AML), insurance, credit and wholesale financial services.

Gareth W. Peters, Efstathios Panayi

In this chapter we provide an overview of the concept of blockchain technology and its potential to disrupt the world of banking through facilitating global money remittance, smart contracts, automated banking ledgers and digital assets. In this regard, we first provide a brief overview of the core aspects of this technology, as well as the second-generation contract-based developments. From there we discuss key issues that must be considered in developing such ledger based technologies in a banking context.

Marcella Atzori

La versione italiana di questo documento è disponibile al seguente link: http://ssrn.com/abstract=2731132 The core technology of Bitcoin, the blockchain, has recently emerged as a disruptive innovation with a wide range of applications, potentially able to redesign our interactions in business, politics and society at large. Although scholarly interest in this subject is growing, a comprehensive analysis of blockchain applications from a political perspective is severely lacking to date. This paper aims to fill this gap and it discusses the key points of blockchain-based decentralized governance, which challenges to varying degrees the traditional mechanisms of State authority, citizenship and democracy. In particular, the paper verifies to which extent blockchain and decentralized platforms can be considered as hyper-political tools, capable to manage social interactions on large scale and dismiss traditional central authorities. The analysis highlights risks related to a dominant position of private powers in distributed ecosystems, which may lead to a general disempowerment of citizens and to the emergence of a stateless global society. While technological utopians urge the demise of any centralized institution, this paper advocates the role of the State as a necessary central point of coordination in society, showing that decentralization through algorithm-based consensus is an organizational theory, not a stand-alone political theory.

Aaron Wright, Primavera De Filippi

No abstract is available for this record.

David Yermack

Blockchains represent a novel application of cryptography and information technology to ag-eold problems of financial record-keeping, and they may lead to far-reaching changes in corporate governance. Many major players in the financial industry have began to invest in this new technology, and stock exchanges have proposed using blockchains as a new method for trading corporate equities and tracking their ownership. This essay evaluates the potential implications of these changes for managers, institutional investors, small shareholders, auditors, and other parties involved in corporate governance. The lower cost, greater liquidity, more accurate recordkeeping, and transparency of ownership offered by blockchains may significantly upend the balance of power among these cohorts.