Blockchain Papers

V. Denisova, Alexey Mikhaylov, Evgeniy Lopatin

The paper proposes the link between cryptocurrency implementation in the financial sector and energy consumption worldwide. The underlying mechanism of this blockchain infrastructure is described, practical cases of its adoption in various segments of the financial sector are provided. This paper tries to explain the power consumption of the cryptocurrency mining at the case of Bitcoin, Ethereum, Monero, Litecoin. Since mining is not regulated by the state, and even banned in some countries, it is difficult to find accurate data on how much electricity is spent on it. Method of Herfindahl–Hirschman is used for efficiency estimate of crypto market.Keywords: energy consumption, mining pools, bitcoin, blockchain, cryptocurrency, cloud mining.JEL Classifications: G32, G34, O33.DOI: https://doi.org/10.32479/ijeep.7685

Emilio Jesús Gallego Arias

A blockchain is a tamper-proof distributed transaction registry; first popularized by Bitcoin [1], it has now been extended to support storage of arbitrary state and computations in-ledger. Ethereum [2] and its smart contract model have proven to be a very popular choice for this task, routinely managing assets valued in the billions. However, development of such contracts has been anything but easy. While formally specified, the Ethereum execution platform is based on a low-level machine, quite similar to assembly; semantics for contract operations such as call are quite complex, and the need for resource management creates unanticipated modes of failure. The dominant day-to-day programming platform for Ethereum is Solidity [3], an Object-Oriented language that identifies contracts with objects. While reasoning about Solidity programs is much easier than for their bytecode counterparts, it is not extent of challenges either, and moreover, Solidity lacks a source-level semantics, which forces developers to reason over output bytecode again. In this short paper we explore the main barriers to lift in order to achieve a principled compilation strategy for Solidity. We will review the standard concepts on verified and secure compilation, and frame them in the context of the Ethereum platform.

Yaoqing Liu, Guchuan Sun, Stephanie Schuckers

Biometrics have been used increasingly heavily for identity authentication in many critical public services, such as border passes or security check points. However, traditional biometrics-based identity management systems collect and store personal biometrical data in a centralized server or database, and an individual has no control over how her biometrics will be used for what purpose. Such kind of systems can result in serious security and privacy issues for sensitive personal data. In this paper, we design a novel approach to leveraging biometrics and blockchain/smart contract to enable secure and privacy preserving identity management. The basic idea is to use blockchain to store an authority's attestation and the transformed value of an individual's biometrics. The stored data on the blockchain is then controlled by smart contracts which define various access control policies, e.g., access parties, access times, etc. The owner of the biometrical data can flexibly change the access control policies through a white list, a timer and other methods to any identity verifiers. We used the well-known Ethereum platform to implement the proposed approach and tested the effectiveness as well as the flexibility of various access control policies.

Monika di Angelo, Gernot Salzer

Ethereum is still the most prominent platform for smart contracts. For the deployment of contracts on its blockchain, the so-called deployment code is executed by Ethereum's virtual machine. As it turns out, deployment code can do a lot more than merely deploying a contract. This paper identifies less-anticipated uses of contract deployment in Ethereum by analyzing the available blockchain data. In particular, we analyze the specifics of deployment code used beyond actually deploying a contract in a quantitative and qualitative manner. To this end, we identify code patterns in deployment code by distilling recurring code skeletons from all external transactions and internal messages that contain deployment code. Tracking the use of these patterns reveals a set of vulnerabilities in contracts targeted by skillfully crafted deployment code. We summarize the encountered exploitative cases of collateral use of deployment code and report respective quantities. Example scenarios illustrate the recent usage. Collateral use of deployment code starts to appear in the middle of 2018 and becomes dominant among contract creations in autumn of 2018. We intend to raise awareness about the less obvious uses of deployment code and its potential security issues.

Subhi Alrubei, Jonathan Rigelsford, Callum. A Willis, Edward A. Ball

Blockchain technology is a distributed database `distributed ledger' and offers features such as autonomy, decentralisation and a trustless environment. These features make blockchain suitable to be applied to different applications within the Internet of Things (IoT) realm. This paper provides a practical implementation of Proof of Authority (PoA) Ethereum blockchain on an IoT system in a real-world use case. This implementation was practically accomplished in order to investigate and highlight some of the possible issues that could affect the integration of blockchain with IoT, to lay the ground for future research and possible solutions to these issues.

Sanghyeok Kim, Je-Ho Song, Sangyeon Woo, Youngjae Kim · 5 authors

Advances in blockchain technology have made a significant impact on a wide range of research areas due to the features such as transparency, decentralization and traceability. With the explosive growth of blockchain transactions, there has been a growing interest in improving the scalability of blockchain network. Sharding is one of the methods to solve this scalability problem by partitioning the network into several shards so that each shard can process the transactions in parallel. Ethereum places each transaction statically on a shard based on its account address without considering the complexity of the transaction or the load generated by the transaction. This causes the transaction load on each shard to be uneven, which makes the transaction throughput of the network decrease. In this paper, we propose a dynamic load balancing mechanism among Ethereum shards called D-GAS. The D-GAS dynamically balances the transaction load of each shard by relocating the accounts based on the gas consumption to maximize the transaction throughput. Ethereum gas is a unit that represents the amount of computational effort needed to execute operations in a transaction. Benchmarking results show that the D-GAS outperforms existing techniques by up to 12% in transaction throughput and decreases the makespan of transaction latency by about 74% under various conditions.

David Prechtel, Tobias Gros, Tilo Müller

We present an approach for analyzing Ethereum smart contracts regarding to the issue of `gasless send' [1, p. 8]. Gasless send is about contracts which lose the ability to receive Ether due to gas depletion when executing the contract's fallback function. Our approach is based on the security analysis tool Mythril which is a framework for analyzing security issues in Ethereum smart contracts. Mythril's analysis engine is based on symbolic code execution and features different analyses for security vulnerabilities in smart contracts. We upgraded the analysis engine in order to model the gas usage of Ethereum smart contracts during execution. In order to utilize the newly acquired data, we added an analysis module to detect fallback functions, whose execution may exceed the defined threshold of gas. Our analysis of 167,698 smart contracts currently deployed to the live Ethereum network shows that a total of 96.3 thousand (or 57%) might be affected by the issue of gasless send.

Sebastian Henningsen, Daniel Teunis, Martin Florian, Björn Scheuermann

Ethereum is a decentralized Blockchain system that supports the execution of Turing-complete smart contracts. Although the security of the Ethereum ecosystem has been studied in the past, the network layer has been mostly neglected. We show that Go Ethereum (Geth), the most widely used Ethereum implementation, is vulnerable to eclipse attacks, effectively circumventing recently introduced (Geth v1.8.0) security enhancements. We responsibly disclosed the vulnerability to core Ethereum developers; the corresponding countermeasures to our attack where incorporated into the v1.9.0 release of Geth. Our false friends attack exploits the Kademlia-inspired peer discovery logic used by Geth and enables a low-resource eclipsing of long-running, remote victim nodes. An adversary only needs two hosts in distinct /24 subnets to launch the eclipse, which can then be leveraged to filter the victim's view of the Blockchain. We discuss fundamental properties of Geth's node discovery logic that enable the false friends attack, as well as proposed and implemented countermeasures.

Yue Gao, Jinqiao Shi, Xuebin Wang, Qingfeng Tan · 6 authors

Ethereum, one of the most popular cryptocurrencies, has attracted increasing attention of people in various fields. As the backbone of Ethereum, its peer-to-peer network has an effect on almost every aspect of the ecosystem. Consequently, it's necessary to understand the topological properties of Ethereum P2P network. In this paper, we conducted a measurement of Ethereum P2P network. Our result shows that the graphs of Ethereum network have a small average shortest path length and a large clustering coefficient, and the degree distribution of nodes does not follow a pure power-law distribution. These indicate that Ethereum network is very close to a small world network. Though there are a large number of stale nodes and useless nodes, Ethereum is still resilient to both random failures and targeted attacks. What's more, we find that there are around one hundred abnormal nodes in the network. The IP addresses of nodes included in the neighbors messages they reply are replaced with their own IP addresses. Those nodes might have a bad influence on network routing.

Victor Cook, Zachary Painter, Christina Peterson, Damian Dechev

Smart contract transactions demonstrate issues of performance and correctness that application programmers must work around. Although the blockchain consensus mechanism approaches ACID compliance, use cases that rely on frequent state changes are impractical due to the block publishing interval of $O(10^1)$ seconds. The effective isolation level is Read-Committed, only revealing state transitions at the end of the block interval. Values read may be stale and not match program order, causing many transactions to fail when a block is committed. This paper perceives the blockchain as a transactional data structure, using this analogy in the development of a new algorithm, Hash-Mark-Set (HMS), that improves transaction throughput by providing a Read-Uncommitted view of state variables. HMS creates a directed acyclic graph (DAG) from the pending transaction pool. The transaction order derived from the DAG is used to provide a Read-Uncommitted view of the data for new transactions, which enter the DAG as they are received. An implementation of HMS is provided, interoperable with Ethereum and ready for use in smart contracts. Over a wide range of transaction mixes, HMS is demonstrated to improve throughput. A side product of the implementation is a new technique, Runtime Argument Augmentation (RAA), that allows smart contracts to communicate with external data services before submitting a transaction. RAA has use cases beyond HMS and can serve as a lightweight replacement for blockchain oracles.

İbrahim Korkmaz Kahraman, Habib Küçükşahin, Emin ÇAĞLAK

Forecasting models based on the assumption that returns are normally distributed do not perform sufficiently on shallow markets. These models are more likely to fail in the estimation of the extreme points that can be reached especially at high volatility markets, and this situation is led to investors in predicting volatility. In the volatility forecasting of crypto money, which is seen as an alternative investment tool for the financial investors, single volatility models such as, ARCH, GARCH, T-GARCH, GARCH-M, E-GARCH, and I-GARCH and long memory models (AP-GARCH and C-GARCH) was utilized. In addition, the most suitable model was tried to be tested among the models used for volatility estimation. In this context, the price data of Bitcoin, Ethereum and Ripple cryptocurrency with the highest market value in the crypto money market have been utilized between 24/08/2016-07/05/2018. According to the results of the research, for Bitcoin and Ethereum, the volatility effect of the shocks is permanent and the effect of the positive shocks is more than that of the negative shocks, whereas for Ripple, the volatility effect of the shocks is transient and the passivity of the volatility is short.

Alpen Sheth, Hemang Subramanian

Purpose The purpose of this paper is to model blockchain-based smart contracts specifically for the insurance industry. The authors introduce the concept of smart contracts and further discuss the implementation of a decentralized insurance marketplace, namely Etherisc, using smart contracts on the Ethereum blockchain platform. Design/methodology/approach The authors employ three methods in this paper. The first one is a design illustration of a live application, namely, Etherisc. The second one is an economic model using demand–supply and equilibrium economics. The third one is an illustration using principal–agent modeling using constrained optimization. Findings The findings illustrate the following: in the design discussion, the authors demonstrate the architecture of a live Ethereum-based smart contract system. In the economic model, the authors illustrate how decentralized smart contract systems can increase social welfare by shifting demand and supply by reducing transactional costs. In the principal–agent model, the authors show how both the principal and agent are positively benefited by various mechanisms. Originality/value The paper is an original contribution and can be used as a reference model to study insurance or other similar marketplaces and the underlying economic transformations happening therein.

Mark Grabowski

Cryptocurrency is the latest step in the evolution of money. This chapter covers the pioneers, breakthroughs and developments that led to the birth and growth of cryptocurrency. Key topics include David Chaum, the godfather of cryptocurrency; Satoshi Nakamoto, the mysterious figure behind the world’s first cryptocurrency, Bitcoin, and inventor of blockchain technology; Vitalik Buterin, a young rising star who created Ethereum and was dubbed by Vice “the blockchain’s movement’s biggest celebrity”; Silk Road, the illegal online marketplace that first created demand for cryptocurrency; and the ups and downs of the volatile cryptocurrency market, including the parabolic gains of 2017 and the great recession of 2018. Understanding this context helps explain how cryptocurrency became so revolutionary, acclaimed and controversial. The chapter concludes discussing cryptocurrency’s hotly debated future. Naysayers such as Warren Buffett predict the market is a bubble that will end poorly, while enthusiasts point to Bitcoin’s previous crashes and multiple comebacks.

Oliver Stengele, Andreas Baumeister, Pascal Birnstill, Hannes Hartenstein

The integrity of executable binaries is essential to the security of any device that runs them. At best, a manipulated binary can leave the system in question open to attack, and at worst, it can compromise the entire system by itself. In recent years, supply-chain attacks have demonstrated that binaries can even be compromised unbeknownst to their creators. This, in turn, leads to the dissemination of supposedly valid binaries that need to be revoked later.

João Antônio Aparecido Cardoso, Felipe Takeshi Ishizu, Jeferson Tadeu De Lima, Jefferson de Souza Pinto

Goal: The present work aims to present how the use of a blockchain two-factor authentication solution 2FA on a page developed on WordPress can contribute to the information security regarding user authentication. Design/Methodology/Approach: The research method employed is characterized as an exploratory research, since all the analysis is based on the theoretical reference data available on the subject. A field research was carried out in relation to the implementation of the multi-factor authentication plugin Hydro Raindrop MFA, which uses blockchain technology offered by The Hydrogen Technology Corporation and the Project Hydro platform over the Ethereum network. Thus, this paper sought to present and conceptualize some of the technologies used, pointing out their contribution to information security. Results: The main results showed that the use of decentralized technology, such as blockchain and the Hydro Raindrop Plugin, can contribute considerably in the process of user authentication, which may strengthen the safeguard of the information and assets of individuals and organizations by inhibiting or reducing the possibility of successful a hacker attack. This solution is at the forefront of innovation with regard to data security because it uses advanced blockchain technology. It might contribute in a satisfactory way to the preservation of critical data and information that are the core value of many organizations of the industry 4.0. Limitations of the investigation: This research was limited to analyzing how the implementation of the Hydro Raindrop multi-factor authentication solution on a WordPress page can be beneficial to ensure information security. Practical implications: This study’s findings can contribute to entities interested in cybersecurity. As a suggestion for future works, analyses of plugins or similar solutions available on the market in distinct types of websites, or performance comparisons between them, may be relevant to contribute to scientific research. Originality/Value: This work can contribute in an innovative way to scientific research, since it addresses a recently created solution that uses blockchain technology as its basis for a safer method of authentication.

Jérémy Charlier, Radu Statem, Jean Hilger

Smart contracts are autonomous software executing predefined conditions. Two of the biggest advantages of the smart contracts are secured protocols and transaction costs reduction. On the Ethereum platform, an open-source blockchain-based platform, smart contracts implement a distributed virtual machine on the distributed ledger. To avoid denial of service attacks and monetize the services, payment transactions are executed whenever code is being executed between contracts. It is thus natural to investigate if predictive analysis is capable to forecast these interactions. We have addressed this issue and propose an innovative application of the tensor decomposition CANDECOMP/PARAFAC to the temporal link prediction of smart contracts. We introduce a new approach leveraging stochastic processes for series predictions based on the tensor decomposition that can be used for smart contracts predictive analytics.

Xiaolong Liu, Khan Muhammad, Jaime Lloret, Yu‐Wen Chen · 5 authors

No abstract is available for this record.

Victor Zakhary, Mohammad Javad Amiri, Sujaya Maiyya, Divyakant Agrawal · 5 authors

Permissionless blockchains (e.g., Bitcoin, Ethereum, etc) have shown a wide success in implementing global scale peer-to-peer cryptocurrency systems. In such blockchains, new currency units are generated through the mining process and are used in addition to transaction fees to incentivize miners to maintain the blockchain. Although it is clear how currency units are generated and transacted on, it is unclear how to use the infrastructure of permissionless blockchains to manage other assets than the blockchain's currency units (e.g., cars, houses, etc). In this paper, we propose a global asset management system by unifying permissioned and permissionless blockchains. A governmental permissioned blockchain authenticates the registration of end-user assets through smart contract deployments on a permissionless blockchain. Afterwards, end-users can transact on their assets through smart contract function calls (e.g., sell a car, rent a room in a house, etc). In return, end-users get paid in currency units of the same blockchain or other blockchains through atomic cross-chain transactions and governmental offices receive taxes on these transactions in cryptocurrency units.

Indri Septiani

Nama : Indri Septiani, NIM : 151300901, Judul : Pandangan Hukum Islam Tentang Investasi Cryptocurrency Cryptocurrency adalah sebuah teknologi mata uang virtual yang menggunakan sistem kriptografi untuk mengamankan transaksinya dan tidak dapat dipalsukan macam-macam cryptocurrency diantaranya bitcoin,ripple, ethereum,dogecoin,stellar dan lain-lain. Seiring berjalanya perkembangan zaman investasi melalui mata uang digital atau cryptocurrency sudah mulai marak di Indonesia sehingga dilirik pembisnis digital investasi bitcoin meskipun nilainya sangat fluktuatif, pergerakan harga yang sangat volatil tak hanya menjadi potensi besar para investor untuk mendapat profit dalam waktu cepat, tetapi juga menimbulkan risiko yang tinggi, fluktuasi harga sangat tidak bisa diprediksi karena tidak ada satu negara pun yang mengandalikan mata uang digital ini dalam hal ini investor dapat mengalami kerugian yang besar dalam waktu singkat. Dalam pandangan hukum Islam investasi pada bitcoin belum mendapatkan Fatwa yang resmi terkait hukum yang menjadi dasar investasi tersebut Berdasarkan latar belakang diatas, maka di dapat rumusan masalahnya adalah: 1). Bagaimana perlindungan hukum bagi investor cryptocurrency menurut Undang-Undang No 8 tahun 1999 tentang Perlindungan Konsumen 2). Bagaimana pandangan hukum Islam tentang investasi cryptocurrency. Tujuan penelitian ini untuk 1). mengetahui untuk mengetahui perlindungan hukum bagi investor cryptocurrency menurut UndangUndang No 8 tahun 1999 tentang Perlindungan Konsumen dan 2). untuk mengetahui pandangan hukum Islam tentang investasi cryptocurrency. Penelitian ini merupakan library research atau penelitan kepustakaan, teknik pengumpulan data yang digunakan yaitu mengemukakan beberapa Pendapat Ulama perihal pandangan hukum Islam bitcoin sebagai alat investasi menurut hukum islam. Dari kesimpulan ini pemerintah harus melindungi investor yang melakukan investasi bitcoin yakni dari segi aturannya pemerintah harus membuat regulasi secara khusus dalam menangani perlindungan hukum bagi investor. dan dalam pandangan hukum Islam bitcoin sebagai alat investasi adalah haram karena mengandung unsur, spekluasi maysir dan gharar.

Andrew Clark, Alexander Mihailov

This paper begins by a recap on the ambition and mechanism behind Bitcoin, followed by an overview of the top 10 cryptocurrencies by market capitalization. Our focus is on their price dynamics and volatility relative to those of fiat paper money and gold, assets that have traditionally served the functions of money and international reserves. We then perform a counterfactual analysis using the Bank of England's foreign currency reserves to determine the hypothetical performance in terms of relative volatility of two alternative reserve portfolios consisting of 0.1%, 1%, or 10% holdings of either Bitcoin only, since July 2010, or of a portfolio of 50% Bitcoin and 50% Ethereum, since July 2015. Revisiting in this light the functions of money and international reserves, we expound on why private cryptocurrencies do not meet the inherent requirements for both money and international reserve assets, whereas central bank digital currencies do meet these requirements. We, finally, "scale" the magnitude and dynamics of the recent Bitcoin bubble into a historical perspective, and conclude by a discussion of areas where blockchain-based and FinTech technologies could be beneficial in international trade, payments, banking and finance.

Colin M. Fowler

Developments in Blockchain, smart contract, and decentralized application (“dApps”) technology have enabled new types of software that can improve efficiency within law firms by increasing speed at which attorneys may draft and execute contracts. Smart contracts and dApps are self-executing software that reside on a blockchain. Custom smart contracts can be built in a modular manner in order to emulate contracts that are commonly generated and executed in law firms. Such contracts include those for the transfer of services, goods, and title. This article explores exactly how implementations of smart contracts for law firms may look.

W\"ustholz, Valentin, Maria Christakis

Automatic test generation typically aims to generate inputs that explore new paths in the program under test in order to find bugs. Existing work has, therefore, focused on guiding the exploration toward program parts that are more likely to contain bugs by using an offline static analysis. In this paper, we introduce a novel technique for targeted greybox fuzzing using an online static analysis that guides the fuzzer toward a set of target locations, for instance, located in recently modified parts of the program. This is achieved by first semantically analyzing each program path that is explored by an input in the fuzzer's test suite. The results of this analysis are then used to control the fuzzer's specialized power schedule, which determines how often to fuzz inputs from the test suite. We implemented our technique by extending a state-of-the-art, industrial fuzzer for Ethereum smart contracts and evaluate its effectiveness on 27 real-world benchmarks. Using an online analysis is particularly suitable for the domain of smart contracts since it does not require any code instrumentation---instrumentation to contracts changes their semantics. Our experiments show that targeted fuzzing significantly outperforms standard greybox fuzzing for reaching 83% of the challenging target locations (up to 14x of median speed-up).

Jonas Schlund, Reinhard German

In this paper we propose and analyze a community-driven platform for flexibility provision based on a distributed ledger. We introduce and analyze the platform for the use case of a self-organized decentralized virtual power plant consisting of a local community of individual prosumers with photovoltaic-storages located on a low voltage feeder. Like a virtual power plant, it aggregates small-scale assets and is able to provide ancillary services in the form of active power provision to the electrical power system. However, the decentralized virtual power plant provides a direct flexibility market access of the distributed assets without the need for a third party. Thus, balancing group managers or system operators can directly interact with the distributed assets in an aggregated way without the need for an aggregator. The solution approach uses a heuristic algorithm for the coordination combined with a distributed ledger and democratic consensus within the community. We propose the concept in detail, describe the prototypical implementation based on a consortium Ethereum blockchain and discuss results of the proof-of-concept. Our numerous test runs with up to 20 participants showed that the coordinated flexibility provision, energy sharing and according financial settlement works in practice, but would need an upgrade concerning the smart-meter hardware for an implementation in the field. We analyze the impact of the coordination interval on the community self-sufficiency and determine that one minute intervals are enough to reach 96% of the optimum. We evaluate the storage and communication effort and conclude with suggestions for future improvements and other possible applications of the decentralized platform like aggregated flexibility coordination between balancing group managers and system operators.

Hisham S. Galal, Amr Youssef

The wide deployment of tokens for digital assets on top of Ethereum implies the need for powerful trading platforms. Vickrey auctions have been known to determine the real market price of items as bidders are motivated to submit their own monetary valuations without leaking their information to the competitors. Recent constructions have utilized various cryptographic protocols such as ZKP and MPC, however, these approaches either are partially privacy-preserving or require complex computations with several rounds. In this paper, we overcome these limits by presenting Trustee as a Vickrey auction on Ethereum which fully preserves bids' privacy at relatively much lower fees. Trustee consists of three components: a front-end smart contract deployed on Ethereum, an Intel SGX enclave, and a relay to redirect messages between them. Initially, the enclave generates an Ethereum account and ECDH key-pair. Subsequently, the relay publishes the account's address and ECDH public key on the smart contract. As a prerequisite, bidders are encouraged to verify the authenticity and security of Trustee by using the SGX remote attestation service. To participate in the auction, bidders utilize the ECDH public key to encrypt their bids and submit them to the smart contract. Once the bidding interval is closed, the relay retrieves the encrypted bids and feeds them to the enclave that autonomously generates a signed transaction indicating the auction winner. Finally, the relay submits the transaction to the smart contract which verifies the transaction's authenticity and the parameters' consistency before accepting the claimed auction winner. As part of our contributions, we have made a prototype for Trustee available on Github for the community to review and inspect it. Additionally, we analyze the security features of Trustee and report on the transactions' gas cost incurred on Trustee smart contract.