We propose BlockLot, a blockchain based verifiable lottery. BlockLot provides transparent, immutable, fair, and verifiable lottery services enhanced by recent blockchain technologies such as append-only (replicated) distributed ledger and smart contract. In addition, BlockLot allows all participants to perform various verification to ensure that the system is actually working as expected. We implement BlockLot services which includes open, query, subscribe, and draw in smart contracts. We also develop webbased user interface for using the lottery services provided by BlockLot. The web interface allows the user to verify the lottery as well.
Lottery is a game with many people's dreams. But corruptions of lottery centers make the lottery unfair. To address this unfair issue, fair lottery schemes have been studied for several years. In these schemes, delay functions or aggregation protocols can be used to generate the winning numbers fairly. However, to the best of our knowledge, none of the existing schemes can achieve the winning number generated randomly, while the randomness can be verified fairly. In this article, we first propose a [B]lockchain based sm[a]rt co[n]tract for [F]air and [E]fficient [L]ottery (BanFEL) scheme. We further present a winning number random generation smart contract, by which players submit the purchased numbers and the non-tampering property is protected. Security analysis and experiments show that the fairness of BanFEL is protected better than the existing works. Meanwhile, the verification cost of this scheme are at least 0.03s lower than the traditional Grumbach's scheme between 1000 and 10000 players.
Blockchain Technology Applications and Security
Gambling Behavior and Treatments
Advanced Steganography and Watermarking Techniques
Oliver James Scholten, Nathan Hughes, Sebastian Deterding, Anders Drachen · 6 authors
Ethereum crypto-games are a booming and relatively unexplored area of the games industry. While there is no consensus definition yet, 'crypto-games' commonly denotes games that store tokens, e.g. in-game items, on a distributed ledger atop a cryptocurrency network. This enables the trading of game items for cryptocurrency, which can then be exchanged for regular currency. Together with their chance-based mechanics, this makes crypto-games part of the recent convergence of digital gaming and gambling. In a first effort to scope the field, this paper surveys popular crypto-games, which use the Ethereum cryptocurrency, to tease out characteristic technical properties and gameplay. It then compares the games' features with criteria found in current legal and psychological definitions of gambling. We find that the popular crypto-games selected meet a combined legal and psychological definition of gambling, and conclude with ramifications for future research.
Oliver James Scholten, David Zendle, James Alfred Walker
This paper describes the York Combined Transaction Set (YCTS), which offers a single consolidated list of publicly available gambling related transactions derived from the Ethereum blockchain. This data includes over 1.4M individual transactions across 17,000+ unique addresses, which represent spending on decentralised gambling smart contracts. These contracts, and corresponding applications, have been selected based on their popularity as presented by an officially recognised ranking service, and have transacted over £240M by naive estimation over the past 10 months. Given the historical opacity of data driven gambling research, our contribution is to identify, and make available in a simple form, the transaction data found on the Ethereum blockchain such that existing questions surrounding player spending can be explored, and differences between decentralised and traditional forms of gambling can be identified.
Games have their own economic models. Today, players can not only collect digital currencies, but they can also use real currencies to buy virtual goods. Business models in games such as freemium and in-app purchases, for example, sustain this structure. Within this context, there is also the expansion of models outside the game realm like eSports, which happens in the form of tournaments. With this, there is constant exchange of value that emerges from games, which could also include the use of cryptocurrencies. In this chapter, we give an overview of the current state of the art of economic models within games and eSports. The current chapter aims to situate and analyse the application of these business models derived from games, e-sport and the future of ludic economies.
Cryptocurrencies are newly emerging asset class that has received a lot of at- tention recently. Many investors are considering investing in them as a way of portfolio diversification. This thesis examines whether cryptocurrencies are gambling assets which could be important for investors' decision making and also for better understanding of the cryptocurrencies themselves. Gambling asset is understood in terms of stocks and therefore a comparison of crypto- currency and stock lottery characteristics is made. It is shown that in most time periods it cannot be said that cryptocurrencies exhibit larger lottery characteristics. Furthermore, it is shown that Litecoin, Ethereum, Ripple, Dash and Monero would classify as gambling asset, however, Bitcoin would not. JEL classification C12, C38, C55, G11, O33 Keywords cryptocurrencies, Bitcoin, gambling, gambling asset, investment Author's e-mail novotnyf1@gmail.com Supervisor's e-mail ladislav.kristoufek@fsv.cuni.cz 1
We review the so called selfish mining strategy in the Bitcoin network and compare its profitability to honest mining.We build a rigorous profitability model for repetition games. The time analysis of the attack has been ignored in the previous literature based on a Markov model,but is critical. Using martingale's techniques and Doob Stopping Time Theorem we compute the expected duration of attack cycles. We discover a remarkable property of the bitcoin network: no strategy is more profitable than the honest strategy before a difficulty adjustment. So selfish mining can only become profitable afterwards, thus it is an attack on the difficulty adjustment algorithm. We propose an improvement of Bitcoin protocol making it immune to selfish mining attacks. We also study miner's attraction to selfish mining pools. We calculate the expected duration time before profit for the selfish miner, a computation that is out of reach by the previous Markov models.
Purpose This paper aims to gather together the minimum units of users’ identity in the Bitcoin network (i.e. the individual Bitcoin addresses) and group them into representations of business entities, what we call “super clusters”. While these clusters can remain largely anonymous, the authors are able to ascribe many of them to particular business categories by analyzing some of their specific transaction patterns (TPs), as observed during the period from 2009 to 2015. The authors are then able to extract and create a map of the network of payment relationships among them, and analyze transaction behavior found in each business category. They conclude by identifying three marked regimes that have evolved as the Bitcoin economy has grown and matured: from an early prototype stage; to a second growth stage populated in large part with “sin” enterprise (i.e. gambling, black markets); to a third stage marked by a sharp progression away from “sin” and toward legitimate enterprises. Design/methodology/approach Data mining. Findings Four primary business categories are identified in the Bitcoin economy: miners, gambling services, black markets and exchanges. Common patterns of transaction behavior between the business categories and their users are a “one-day” holding period for bitcoin transactions is somewhat typical. That is, a one-day effect where traders, gamblers, black market participants and miners tend to cash out on a daily basis. There seems to be a strong preference to do business within the bitcoin economy in round lot amounts, whether it is more typical of traders exchanging for fiat money, gamblers placing bets or black market goods being bought and sold. Distinct patterns of transaction behavior among the business categories and their users are flows between traders and exchanges average just around 20 BTC, and traders buy or sell on average every 11 days. Meanwhile, gamblers wager just 0.5 BTC on average, but re-bet often within the same day. Three marked regimes have evolved, as the Bitcoin economy has grown and matured: from an early prototype stage, to a second growth stage populated in large part with “sin” enterprises (i.e. gambling, black markets), to a third stage marked by a sharp progression away from “sin” and toward legitimate enterprises. This evolution of the Bitcoin economy suggests a trend toward legitimate commerce. Originality/value The authors propose a new theoretical framework that allows investigating and exploring the network of payment relationships in the Bitcoin economy. This study starts by gathering together the minimum units of Bitcoin identities (the individual addresses), and it goes forward in grouping them into approximations of business entities, what is called “super clusters”, by using tested techniques from the literature. A super cluster can be thought of as an approximation of a business entity in that it describes a number of individual addresses that are owned or controlled collectively by the same beneficial owner for some special economic purposes. The majority of these important clusters are initially unknown and uncategorized. The novelty of this study is given by the pure user group and the TP analyses, by means of which the authors are able to ascribe the super clusters into specific business categories and outline a map of the network of payment relationships among them.
Lotteries are an excellent use case for Ethereum. Like pyramids, lotteries were among the first contracts on the Ethereum blockchain. Results are provably fair, enabling the lottery to be run without a central authority taking a cut of the winnings, and without anchoring its operation in any single legal jurisdiction. It is highly likely that the lotteries of the future will be conducted on a blockchain. This chapter covers the primary roadblock to running a good lottery—random-number generation—and develops a series of increasingly complex lottery contracts. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
Since its initial inception, cryptocurrency has hit the world with both intrigue and skepticism. It was acting as an alternative form of currency that people could use that required no regulative authority to back it. As such, people had the option to make purchases in anonymous manners, leading to what most would consider unethical behaviours, and ultimately resulted in cryptocurrency gaining a poor reputation. However, specific trends in society have helped cryptocurrency growth to continue. A societal loss of trust in the traditional banking system and the positive perception towards the blockchain technology, which is a peer-to-peer system that cryptocurrencies, such as Bitcoin, operate on are two such trends. Furthermore, recent years have witnessed exponential increases in the prices of cryptocurrencies, such as Bitcoin. This has led to widespread stories of people getting rich through cryptocurrency ownership, having been “wise-enough” to buy in on the cryptocurrency trend early enough to reap in the rewards of such as decision. And as a result, leading to more people wanting to be the next big success story and buying in on the cryptocurrency trend. This growing trend has also gained the attention of several multi-national companies, such as Expedia, Subway and Microsoft, who have begun accepting cryptocurrency as a form of payment. Even though specific cases have seen this strategy implemented successfully, the volatility of cryptocurrency still poses a risk that has hindered the ability of cryptocurrency to become a widespread payment option. Given the current trend surrounding cryptocurrency, this thesis serves the purpose is to investigate another alternative option for cryptocurrency use. That option being the potential for cryptocurrency to be used as an alternative payment option in the online gambling industry. Where it has been used as a payment option in other areas, it would be interesting to identify whether there is potential for the cryptocurrency to be adopted and used in this particular industry as well. In order to investigate this phenomenon from both the consumer and industry point-of-views, this thesis used a mixed-methods study, which consisted of a qualitative study and quantitative study. Our qualitative study focused on the industry side of the phenomena. To carry it out, we conducted a series of semi-structured interviews with managers of a large online gambling company in order to gain deeper knowledge on their perspectives regarding their perceptions towards how cryptocurrency adoption would affect the online gambling industry. Based on the information gained from the interviews, specific themes were identified and further analyzed through a thematic analysis. Those themes included blockchain in online gambling, holding cryptocurrency, regulation and the reputation of cryptocurrency. Our results indicated that managers did not believe the industry was ready to adopt cryptocurrency due to specific regulatory factors, but that it had future potential, mainly regarding its association to blockchain. Our quantitative study focused on interpreting the perceptions of online gamblers regarding cryptocurrency use in online gambling. Specifically, identifying what would motivate them to use cryptocurrency in online gambling and if they were willing to accept it as a payment option. Based on the results obtained through a survey we distributed, we used linear regression to identify if online gamblers were willing to accept cryptocurrency. The resulting outcome was a moderate level of rejection towards cryptocurrency acceptance. The linear regression model also allowed us to interpret which predictor variables held the greatest level of importance towards predicting cryptocurrency acceptance. Those specific variables included cryptocurrency anonymity, usability, ownership, and belief in the future of cryptocurrency. When comparing the results from both studies through triangulation, we were able to conclude that both consumers and the industry were not ready to fully accept cryptocurrency usage in online gambling. However, both sides indicated positive outlooks towards its future potential as a payment method.
Fintech business models based on distributed ledgers -- and their smart-contract variants in particular -- offer the prospect of democratizing access to faster, anywhere-accessible, lower cost, reliable-and-secure high-quality financial services. In addition to holding great, economically transformative promise, these business models pose new, little-studied risks and transaction costs. However, these risks and transaction costs are not evident during the demonstration and testing phases of development, when adopters and users are drawn from the community of developers themselves, as well as from among non-programmer fintech evangelists. Hence, when the new risks and transaction costs become manifest -- as the fintech business models are rolled out across the wider economy -- the consequences may also appear to be new and surprising. The present study represents an effort to get ahead of these developments by delineating risks and transaction costs inherent in distributed-ledger- and smart-contracts-based fintech business models. The analysis focuses on code risk and moral-hazard risk, as well as on mixed-economy risks and the unintended consequences of replicating bricks-and-mortar-generation contract forms within the ultra-low transaction-cost environment of fintech.
This paper discusses the game theory behind self-contained smart contract provably fair casinos, how they can be gamed by attackers with a large amount of money and computing power, as well as what are the necessary conditions to assure the system cannot be taken advantage of under various configurations.
We present cryptocurrency-based lottery protocols that do not require any collateral from the players. Previous protocols for this task required a security deposit that is $O(N^2)$ times larger than the bet amount, where $N$ is the number of players. Our protocols are based on a tournament bracket construction, and require only $O(\log N)$ rounds. Our lottery protocols thus represent a significant improvement, both because they allow players with little money to participate, and because of the time value of money. The Ethereum-based implementation of our lottery is highly efficient. The Bitcoin implementation requires an $O(2^N)$ off-chain setup phase, which demonstrates that the expressive power of the scripting language can have important implications. We also describe a minimal modification to the Bitcoin protocol that would eliminate the exponential blowup.
Open access
3 source records
Blockchain Technology Applications and Security
Cryptography and Data Security
Advanced Steganography and Watermarking Techniques
Abstract—A recent result in Bitcoin is the selfish mining strategy in which a selfish cartel withholds blocks they mine to gain an advantage. This strategy is both incentive-compatible and harmful to Bitcoin. In this paper we introduce a new defense against selfish mining that improves on the previous best result, we raise the threshold of mining power necessary to profitably selfishly mine from 25 % to 32 % under all propagation advantages. While the security of our system uses unforgeable timestamps, it is robust to their compromise. Additionally, we discuss the difficulty a mining conspiracy would face attempting to keep the compromise of our scheme secret and we analyze incentives for getting miners to adopt these changes. I.
This paper presents an analysis of the money laundering risks of two virtual currencies, the Linden dollar, the in-world currency of the interactive online environment Second Life, and Bitcoin, an experimental virtual currency that allows for the transfer of value through peer-to-peer software. The paper will demonstrate that although these virtual currencies have money laundering utility, they are currently unsuitable for laundering on a large scale. The paper also considers whether either of these virtual currencies fall under the scope of the Money Laundering Regulations 2007 and draws on similarities with online gambling to suggest a method of incorporating the Linden dollar and Bitcoin within the anti-money laundering framework.