Bitcoin relies on the Unspent Transaction Outputs (UTXO) \nset to efficiently verify new generated transactions. Every unspent output, \nno matter its type, age, value or length is stored in every full node. \nIn this paper we introduce a tool to study and analyze the UTXO set, \nalong with a detailed description of the set format and functionality. Our \nanalysis includes a general view of the set and quantifies the difference \nbetween the two existing formats up to the date. We also provide an accurate \nanalysis of the volume of dust and unprofitable outputs included \nin the set, the distribution of the block height in which the outputs where \nincluded, and the use of non-standard outputs.
Distributed ledger technology (DLT) is a database architecture which enables the keeping and sharing of records in a distributed and decentralized way, while ensuring its integrity through the use of consensus-based validation protocols and cryptographic signatures. In principle, DLT has the potential to reduce costs and increase the efficiency of securities settlement, the ultimate step of every security transaction. In this paper, we first examine to what extent DLT could add value and change securities settlement. We then characterize the innovation process in the post-trade industry and finally, we describe the economics of a hypothetical DLT-based security settlement industry. Our main conclusions are that: i) DLT has the potential to improve efficiency and reduce costs in securities settlement, but the technology is still evolving and it is uncertain at this point what form, if any, a DLT-based solution for securities settlement will ultimately take, ii) technological innovation in the post-trade industry is more likely to achieve its potential with some degree of co-ordination which could be facilitated by the relevant authorities, and iii) if DLT-based securities settlement becomes a reality, then it is likely to be concentrated among few providers which, in the absence of regulation, could result in inefficient monopoly pricing or efficient price discrimination with service providers capturing much of the market surplus.
Luis Ibáñez, Elena Simperl, Fabien Gandon, Henry Story
The web was originally conceived as decentralized and universal, but during its popularization, its big value was built on centralized servers and nonuniversal access. A key element to redecentralize the web is to be able to generate trustable, secure, and accountable updates among autonomous participants without a central server. The authors believe that the marriage between distributed ledgers and linked data can provide this functionality and unlock the web's true potential. As a first step toward it, the authors propose a minimal vocabulary to describe and link distributed ledgers.
The know-your-customer (KYC) due diligence process is outdated and generates costs of up to USD 500 million per year per bank. We propose a new system, based on distributed ledger technology (DLT) that reduces the costs of the core KYC verification process for financial institutions and improves the customer experience. In the proposed system, the core KYC verification process is only conducted once for each customer, regardless of the number of financial institutions with which the customer intends to work. Thanks to DLT, the result of the core KYC verification can be securely shared by customers with all the financial institutions that they intend to work with. This system allows for efficiency gains, cost reduction, improved customer experience, and increased transparency throughout the process of onboarding a customer.
Jan 1, 2017·Proceedings of the ... Annual Hawaii International Conference on System Sciences/Proceedings of the Annual Hawaii International Conference on System Sciences
Technological innovation and consequential decentralisation are driving forces in the ongoing evolution and increasing openness of digital infrastructures and services. One of the most discussed and allegedly disruptive innovations is the distributed database technology referred to as blockchain. Although it is still in its technological infancy, experimental adoption and customization seem to be in full progress in various potential fields of application ranging from decentralized grids for computation and storage to global financial services. However, the technology and its path of development still entail a lot of common unknowns for practitioners and researchers alike. Especially regarding the question how the technology could amend or be incorporated into the existing landscape of digital services, processes and infrastructures. Hence, in this article we develop an ontology that (1) clearly delineates common terminology, core concepts and components, their relationships as well as innovative features of blockchain technology. It further (2) connects these insights with implications for relevant types of digital market models. Our framework is of high theoretical and practical value as it provides researchers and practitioners a common basis for communication and means for guided analysis of blockchain applicability.
Ujan Mukhopadhyay, Anthony Skjellum, Oluwakemi Hambolu, Jon Oakley · 6 authors
Cryptocurrencies have emerged as important financial software systems. They rely on a secure distributed ledger data structure; mining is an integral part of such systems. Mining adds records of past transactions to the distributed ledger known as Blockchain, allowing users to reach secure, robust consensus for each transaction. Mining also introduces wealth in the form of new units of currency. Cryptocurrencies lack a central authority to mediate transactions because they were designed as peer-to-peer systems. They rely on miners to validate transactions. Cryptocurrencies require strong, secure mining algorithms. In this paper we survey and compare and contrast current mining techniques as used by major Cryptocurrencies. We evaluate the strengths, weaknesses, and possible threats to each mining strategy. Overall, a perspective on how Cryptocurrencies mine, where they have comparable performance and assurance, and where they have unique threats and strengths are outlined.
Adem Efe Gencer, Robbert van Renesse, Emin Gün Sirer
The rise of blockchain-based cryptocurrencies has led to an explosion of services using distributed ledgers as their underlying infrastructure. However, due to inherently single-service oriented blockchain protocols, such services can bloat the existing ledgers, fail to provide sufficient security, or completely forego the property of trustless auditability. Security concerns, trust restrictions, and scalability limits regarding the resource requirements of users hamper the sustainable development of loosely-coupled services on blockchains. This paper introduces Aspen, a sharded blockchain protocol designed to securely scale with increasing number of services. Aspen shares the same trust model as Bitcoin in a peer-to-peer network that is prone to extreme churn containing Byzantine participants. It enables introduction of new services without compromising the security, leveraging the trust assumptions, or flooding users with irrelevant messages.
Roman Matzutt, Oliver Hohlfeld, Martin Henze, Robin Rawiel · 6 authors
As transaction fees skyrocket today, blockchains become increasingly expensive, hurting their adoption in broader applications. This work tackles the saving of transaction fees for economic blockchain applications. The key insight is that other than the existing "default'' mode to execute application logic fully on-chain, i.e., in smart contracts, and in fine granularity, i.e., user request per transaction, there are alternative execution modes with advantages in cost-effectiveness. On Ethereum, we propose a holistic middleware platform supporting flexible and secure transaction executions, including off-chain states and batching of user requests. Furthermore, we propose control-plane schemes to adapt the execution mode to the current workload for optimal runtime cost. We present a case study on the institutional accounts (e.g., coinbase.com) intensively sending Ether on Ethereum blockchains. By collecting real-life transactions, we construct workload benchmarks and show that our work saves 18%\sim 47%18%-47% per invocation than the default baseline while introducing 1.81%\sim 16.59%1.81%-16.59% blocks delay.
Bitcoin is a digital payment system empowered by a distributed database called blockchain. The blockchain is an open ledger containing records of every transaction within Bitcoin system maintained by Bitcoin nodes all over the world. Because of its availability and robustness, the blockchain could be utilized as a record-keeping tool for information not related to any Bitcoin transactions. We propose a method of utilizing the blockchain of Bitcoin system to publish information by embedding an arbitrary size of data into Bitcoin transactions. By publishing information using the blockchain, the information also carries the characteristics of Bitcoin transaction: anonymous, decentralized, and permanent. The proposed protocol could be used to extend the functionality of asset management systems which are limited to a maximum of 80 bytes data. The proposed method also offers an efficiency of the transaction fee by 18 percent compared to Bitcoin Messaging protocol.
In many technical systems, such as smart grids, the central issue is to enable multiple devices to solve a resource allocation problem. Because centralized solutions usually struggle with an increasing number of agents, regio-central or completely decentralized mechanisms, which solve the problem in a cooperative manner, are of utmost interest in large-scale systems. In this paper, we present a coalition-based algorithm that allows a multi-agent system to cooperatively solve a single-resource allocation problem. Our approach uses self-organization to dynamically identify groups of agents whose decisions have to be coordinated, while optimistically refraining from coordinating the actions between these coalitions. The basic idea of our algorithm is inspired by the way pressure compensates in gas or fluid pipeline systems. It therefore operates on the basis of an overlay network, i.e., a graph, that defines a topology of possible resource flows as well as resistances in the form of costs of transferring a resource from one agent to another. Throughout this paper, the problem of compensating for imbalances between energy production and consumption in autonomous power management systems serves to illustrate our algorithm and results.
Aug 1, 2016·2016 IEEE Intl Conference on Computational Science and Engineering (CSE) and IEEE Intl Conference on Embedded and Ubiquitous Computing (EUC) and 15th Intl Symposium on Distributed Computing and Applications for Business Engineering (DCABES)
Bitcoin is a digital currency based on peer-to-peer network to propagate and verify transactions. Bitcoin differs from traditional currencies in that, it does not rely on a centralised authority. In this paper, we present a simulation model of Bitcoin peer-to-peer network which is an event based simulation. Large scale measurements of the real Bitcoin network are performed in order to enable a precise parameterisation of the presented simulation model. In addition, we perform validation results revealing that the presented simulation model behaves as close as the real Bitcoin network. Based on the developed simulation model, evaluation of our proposed Bitcoin Clustering Based Super Node (BCBSN) protocol as a mechanism to speed up information propagation in Bitcoin network is presented. Evaluation results show that the presented clustering protocol is able to reduce the transaction propagation delay with a reasonable proportion.
Dimitris Chatzopoulos, Sujit Gujar, Boi Faltings, Pan Hui
The popularity of digital currencies, especially cryptocurrencies, has been continuously growing since the appearance of Bitcoin. Bitcoin is a peer-to-peer (P2P) cryptocurrency protocol enabling transactions between individuals without the need of a trusted authority. Its network is formed from resources contributed by individuals known as miners. Users of Bitcoin currency create transactions that are stored in a specialised data structure called a block chain. Bitcoin's security lies in a proof-of-work scheme, which requires high computational resources at the miners. These miners have to be synchronised with any update in the network, which produces high data traffic rates. Despite advances in mobile technology, no cryptocurrencies have been proposed for mobile devices. This is largely due to the lower processing capabilities of mobile devices when compared with conventional computers and the poorer Internet connectivity to that of the wired networking. In this work, we propose LocalCoin, an alternative cryptocurrency that requires minimal computational resources, produces low data traffic and works with off-the-shelf mobile devices. LocalCoin replaces the computational hardness that is at the root of Bitcoin's security with the social hardness of ensuring that all witnesses to a transaction are colluders. It is based on opportunistic networking rather than relying on infrastructure and incorporates characteristics of mobile networks such as users' locations and their coverage radius in order to employ an alternative proof-of-work scheme. Localcoin features (i) a lightweight proof-of-work scheme and (ii) a distributed block chain.
Jul 1, 2016·2016 Intl IEEE Conferences on Ubiquitous Intelligence & Computing, Advanced and Trusted Computing, Scalable Computing and Communications, Cloud and Big Data Computing, Internet of People, and Smart World Congress (UIC/ATC/ScalCom/CBDCom/IoP/SmartWorld)
Till Neudecker, Philipp Andelfinger, Hannes Hartenstein
Flooding Peer-to-Peer (P2P) networks form the basis of services such as the electronic currency system Bitcoin. The decentralized architecture enables robustness against failure. However, knowledge of the network's topology can allow adversaries to attack specific peers in order to, e.g., isolate certain peers or even partition the network. Knowledge of the topology might be gained by observing the flooding process, which is inherently possible in such networks,, performing a timing analysis on the observations. In this paper we present a timing analysis method that targets flooding P2P networks, show its theoretical, practical feasibility. A validation in the real-world Bitcoin network proves the possibility of inferring network links of actively participating peers with substantial precision, recall (both ~ 40%), potentially enabling attacks on the network. Additionally, we analyze the countermeasure of trickling, quantify the tradeoff between the effectiveness of the countermeasure, the expected performance penalty. The analysis shows that inappropriate parametrization can actually facilitate inference attacks.
Address clustering tries to construct the one-to-many mapping from entities to addresses in the Bitcoin system. Simple heuristics based on the micro-structure of transactions have proved very effective in practice. In this paper we describe the primary reasons behind this effectiveness: address reuse, avoidable merging, super-clusters with high centrality, and the incremental growth of address clusters. We quantify their impact during Bitcoin's first seven years of existence.
Irni Eliana Khairuddin, Corina Sas, Sarah Clinch, Nigel Davies
This paper presents an exploratory study focusing on user experience with Bitcoin technology. We describe interviews with 9 Bitcoin users and report findings related to users' motivations for buying and using bitcoins. Our initial findings capture three main motivations such as Bitcoin's predicted role in a monetary revolution, users' increased empowerment, and their perception of a real value of Bitcoin currency. We conclude with reflections on the value of these findings for HCI researchers.
In January 3, 2009, Satoshi Nakamoto gave rise to the "Bitcoin Block Chain" creating the first block of the chain hashing on his computers central processing unit (CPU). Since then, the hash calculations to mine Bitcoin have been getting more and more complex, and consequently the mining hardware evolved to adapt to this increasing difficulty. Three generations of mining hardware have followed the CPU's generation. They are GPU's, FPGA's and ASIC's generations. This work presents an agent based artificial market model of the Bitcoin mining process and of the Bitcoin transactions. The goal of this work is to model the economy of the mining process, starting from GPU's generation, the first with economic significance. The model reproduces some "stylized facts" found in real time price series and some core aspects of the mining business. In particular, the computational experiments performed are able to reproduce the unit root property, the fat tail phenomenon and the volatility clustering of Bitcoin price series. In addition, under proper assumptions, they are able to reproduce the price peak at the end of November 2013, its next fall in April 2014, the generation of Bitcoins, the hashing capability, the power consumption, and the mining hardware and electrical energy expenses of the Bitcoin network.
Brendan Benshoof, Andrew Rosen, Anu G. Bourgeois, Robert W. Harrison
We present D3NS, a system to replace the current top level DNS system and certificate authorities, offering increased scalability, security and robustness. D3NS is based on a distributed hash table and utilizes a domain name ownership system based on the Bitcoin blockchain. It addresses previous criticism that a DHT would not suffice as a DNS replacement. D3NS provides solutions to current DNS vulnerabilities such as DDOS attacks, DNS spoofing and censorship by local governments. D3NS eliminates the need for certificate authorities by providing a decentralized authenticated record of domain name ownership. Unlike previous DNS replacement proposals, D3NS is reverse compatible with DNS and allows for incremental implementation within the current system.
Bitcoin was recently introduced as a peer-to-peer electronic currency in order to facilitate transactions outside the traditional financial system. The core of Bitcoin, the Blockchain, is the history of the transactions in the system maintained by all nodes as a distributed shared register. New blocks in the Blockchain contain the last transactions in the system and are added by nodes (miners) after a block mining process that consists in solving a resource consuming proof-of-work (cryptographic puzzle). The reward is a motivation for mining process but also could be an incentive for attacks such as selfish mining. In this paper we propose a solution for one of the major problems in Bitcoin : selfish mining or block withholding attack. This attack is conducted by adversarial or selfish nodes in order to either earn undue rewards or waste the computational power of honest nodes. Contrary to recent solutions, our solution, ZeroBlock, prevents block withholding using a technique free of forgeable timestamps. Moreover, we show that our solution is also compliant with nodes churn.
Cryptocurrencies that are based on Proof-of-Work (PoW) often rely on special purpose hardware to perform so-called mining operations that secure the system, with miners receiving freshly minted tokens as a reward for their work. A notable example of such a cryptocurrency is Bitcoin, which is primarily mined using application specific integrated circuit (ASIC) based machines. Due to the supposed profitability of cryptocurrency mining, such hardware has been in great demand in recent years, in-spite of high associated costs like electricity. In this work, we show that because mining rewards are given in the mined cryptocurrency, while expenses are usually paid in some fiat currency such as the United States Dollar (USD), cryptocurrency mining is in fact a bundle of financial options. When exercised, each option converts electricity to tokens. We provide a method of pricing mining hardware based on this insight, and prove that any other price creates arbitrage. Our method shows that contrary to the popular belief that mining hardware is worth less if the cryptocurrency is highly volatile, the opposite effect is true: volatility increases value. Thus, if a coin's volatility decreases, some miners may leave, affecting security. We compare the prices produced by our method to prices obtained from popular tools currently used by miners and show that the latter only consider the expected returns from mining, while neglecting to account for the inherent risk in mining, which is due to the high exchange-rate volatility of cryptocurrencies. Finally, we show that the returns made from mining can be imitated by trading in bonds and coins, and create such imitating investment portfolios. Historically, realized revenues of these portfolios have outperformed mining, showing that indeed hardware is mispriced.
Bitcoin is a rising digital currency and exemplifies the grow- ing need for systematically gathering and analyzing pub- lic transaction data sets such as the blockchain. However, the blockchain in its raw form is just a large ledger listing transfers of currency units between alphanumeric character strings, without revealing contextually relevant real-world information. In this demo, we present GraphSense, which is a solution that applies a graph-centric perspective on digital currency transactions. It allows users to explore transactions and follow the money ow, facilitates analytics by semantically enriching the transaction graph, supports path and graph pattern search, and guides analysts to anomalous data points. To deal with the growing volume and velocity of transaction data, we implemented our solution on a horizontally scalable data processing and analytics infrastructure. Given the ongoing digital transformation in financial services and technologies, we believe that our approach contributes to development of analytics solutions for digital currency ecosystems, which is relevant in fields such as financial analytics, law enforcement, or scientific research