Blockchain Papers

Johanna Grzywotz, Olaf Markus Köhler, Christian Rückert

No abstract is available for this record.

Angela S.M. Irwin, George Milad

Purpose The purpose of this paper is to look at current discourse on the topic of crypto-currencies, more specifically Bitcoins, and their application to funding acts of terror. The paper clearly establishes the risks posed by this new payment technology and value transfer system to assist in the process of funding, planning and implementing acts of terror. Design/methodology/approach Publications, blogs and sites published and administered by terrorists groups and their supporters are examined to determine their interest in leveraging emerging payment and value transfer systems to facilitate the funding, planning and implementation of terror attacks. Press releases and other publications are also examined to determine whether crypto-currencies have been used by these groups in fund raising, fund transfer or recent terror attacks. Findings Although it is difficult to find concrete evidence of largescale use of Bitcoins and other crypto-currencies by terrorist groups and their supporters, there is strong evidence to suggest that they have been linked to a number of terror attacks in Europe and Indonesia. Supporters of Islamic State of Iraq and Syria (ISIS), jihadists and terrorist organisations are actively looking to and promoting the use of new and emerging technologies, such as Bitcoin, to mitigate some of the risks associated with traditional fund transfer methods. Some websites associated with terrorist organisations have started to collect donations in Bitcoins. Many Bitcoin ATMs and Bitcoin exchanges are located in countries that have seen significant numbers of foreign fighters join ISIS in the Middle East and are also positioned in countries that have seen increased risk of terror attack. These present a significant risk because they allow for the seamless, anonymous transfer of funds to and from terrorist groups and their supporters. The paper highlights the need for further in-depth research into reliable ways to circumvent the current difficulties experienced in differentiating illicit transactions from legitimate ones and establishing reliable means of attribution. Originality/value Using a document published by ISIS, which provides would-be jihadists detailed instructions on how they can get to Syria or Iraq without being detected, a set of models were created showing how this could be achieved using Bitcoins alone. From this scenario, red flag indicators and suspicious behaviour models have been created to determine whether they can be identified during detailed analysis of the Bitcoin blockchain which will be conducted in later stages of research.

Piotr Pryzmont

Bitcoin, a fascinating phenomenon of crypto-technology, has emerged in financial markets as a potential alternative to standard fiat currencies. It represents unique sociotechnical
\necosystem working outside of any traditional markets, and its economy is still not well understood. Dynamics of Bitcoin price proves to be quite a controversial subject, but there is a strong indication that social factors mainly influence its economy.
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\nTechnical flaws and lack of any central authority issuing and controlling this digital currency make it vulnerable to abuse. It has been associated with controversy due to frequent incidents, namely hacks, theft, scam, and illicit use, which affected its ecosystem ever since it gained popularity.
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\nThis thesis adds to the discussion about social aspects of Bitcoin economy by analysing the changes in its price volatility in the context of incidents occurring in its
\necosystem. As empirically proven, those negative events have no impact on the fluctuations of Bitcoin price.

Marco Masoni, Maria Renza Guelfi, Gian Franco Gensini

Illegal activities prosecutable by law in the real life can be committed on the internet alike. In the healthcare domain, we refer mainly to selling of illegal and counterfeit drugs, exchange of pedo-pornographic material and marketing of stolen medical records. These illegal activities are made easier by recent developments of the Internet that medical community must be aware of: darknet and bitcoin. The first allows anonymous surfing and the last anonymous financial transactions. After discussing which healthcare areas are affected by these technological developments of the Internet and the deriving consequences, then the Authors express their opinion on what actions can be taken to protect internet community.

Steven David Brown

Bitcoin has become the currency of choice for cybercriminals. Its distinctive characteristics of decentralisation and pseudo-anonymity are also attractive to criminal actors in general, and yet Bitcoin has been assessed as representing only a low money laundering risk. In many respects, cryptocurrencies are still viewed as an unfamiliar, marginal phenomenon restricted to the purview of specialists. This article seeks: to demystify the Bitcoin concept; to demonstrate that, far from being low-risk, Bitcoin constitutes a substantial danger in terms of criminal enterprise; and to promote the case for greater awareness among criminal justice professionals and law enforcement officers in particular.

Vincent T. Lee, Haozheng Wei

Bitcoin is gaining more popularity because it is designed initially to reduce the transaction cost and improve the online payment security. It is expected to replace the traditional currencies among online transactions. Building on that, we believe that the security issues during Bitcoin payment must be put in high priority. Therefore, we performed some researches on Double-spending issues. In this paper, the root causes of double spending are discussed, we focus on one possible method of double spending under the circumstance that the network connection status is not stable. We further simulate the attacking in a local area with network impairment. In terms of the reasons and specific conditions of this type of attacking, we propose a new mechanism to help these community merchants to recognize the double spending transactions and defend the related attacking. Finally, an analysis is performed among this defending strategies and it proves that the countermeasures are effective to reduce the double-spending risks.

Kevin Liao, Ziming Zhao, Adam Doupé, Gail‐Joon Ahn

Bitcoin, a decentralized cryptographic currency that has experienced proliferating popularity over the past few years, is the common denominator in a wide variety of cybercrime. We perform a measurement analysis of CryptoLocker, a family of ransomware that encrypts a victim's files until a ransom is paid, within the Bitcoin ecosystem from September 5, 2013 through January 31, 2014. Using information collected from online fora, such as reddit and BitcoinTalk, as an initial starting point, we generate a cluster of 968 Bitcoin addresses belonging to CryptoLocker. We provide a lower bound for CryptoLocker's economy in Bitcoin and identify 795 ransom payments totalling 1,128.40 BTC ($310,472.38), but show that the proceeds could have been worth upwards of $1.1 million at peak valuation. By analyzing ransom payment timestamps both longitudinally across CryptoLocker's operating period and transversely across times of day, we detect changes in distributions and form conjectures on CryptoLocker that corroborate information from previous efforts. Additionally, we construct a network topology to detail CryptoLocker's financial infrastructure and obtain auxiliary information on the CryptoLocker operation. Most notably, we find evidence that suggests connections to popular Bitcoin services, such as Bitcoin Fog and BTC-e, and subtle links to other cybercrimes surrounding Bitcoin, such as the Sheep Marketplace scam of 2013. We use our study to underscore the value of measurement analyses and threat intelligence in understanding the erratic cybercrime landscape.

Monica J. Barratt, Jason Ferris, Adam Winstock

No abstract is available for this record.

Monica J. Barratt, Simon Lenton, Alexia Maddox, Matthew Allen

No abstract is available for this record.

Eren Yagdiran

Botnets, in other means zombie computers that await for instructions to execute, are the greatest threat in the internet today. They are one of the leading sources of online crime. Criminals are able to take advantage of using botnets and threaten online businesses, organizations or any entity in the internet. Criminals design and implement botnets in a complex way in order to hide their identities. Most notably the fact that criminals build command-and-control (C&C) infrastructures to manage their botnets. A botnet command-and-control mechanism (C&C) can be designed in various ways. The key principle behind designing a C&C mechanism is anonymity. Hence, criminals can propagate their instructions to botnets without revealing their identities. Since every new C&C mechanism increases the bar of anonymity, it is getting harder to trace and analyze botnets. In this thesis, we designed and implemented a C&C mechanism, btc-botnet, that runs over Bitcoin network. Btcbotnet has significant features over existing C&C mechanisms such as anonymity and resistance by its nature. We built a library that allows to use Bitcoin network as an underlying infrastructure for C&C mechanism. We evaluate our work and show that its feasibility in terms of metrics such as response time, confirmation time and fees.

Bart Custers, J.J. Oerlemans, Ronald Pool

No abstract is available for this record.

J.J. Oerlemans, Bart Custers, Ronald Pool, R. Cornelisse

Het witwassen van geld dat wordt verkregen uit cybercrime vindt in de regel plaats via digitale betalingsmiddelen. De reden daarvoor is dat het geld bij cybercrime vaak wordt verkregen via online betalingsmethoden en virtuele valuta. De hoofdvraag van dit onderzoek luidt: Op welke wijze en door welke actoren wordt geld dat wordt verkregen uit banking malware en ransomware (al dan niet digitaal) witgewassen?De deelvragen van het onderzoek luiden als volgt:Wat wordt verstaan onder het witwassen van door banking malware en ransomware verkregen geld en hoe wordt witwassen juridisch gekwalificeerd?Wat zijn digitale betalingsmiddelen, in het bijzonder virtuele valuta zoals Bitcoin, en hoe werken deze digitale betalingsmiddelen?Op welke wijze en door welke actoren wordt geld witgewassen dat: a door middel van banking malware wordt verkregen? b door middel van ransomware wordt verkregen?Wat zijn de kenmerken van actoren die betrokken zijn bij het witwassen van geld dat wordt verkregen uit banking malware en ransomware?Welke informatie over de modus operandi van actoren, die betrokken zijn het bij het witwassen van geld dat verkregen wordt uit banking malware en ransomware, is beschikbaar op het dark web?Welke rol spelen digitale betalingsmiddelen, in het bijzonder virtuele valuta zoals bitcoins, bij het witwassen van geld dat wordt verkregen uit banking malware en ransomware?

Alin Tomescu, Srinivas Devadas

No abstract is available for this record.

Colin Boyd, Christopher Carr

Client puzzles have been proposed as a mechanism for proving legitimate intentions by providing proofs of work, which can be applied to discourage malicious usage of resources. A typical problem of puzzle constructions is the difference in expected solving time on different computing platforms. We call puzzles which can be solved independently of client computing resources fair client puzzles. We propose a construction for client puzzles requiring widely distributed computational effort for their solution. These puzzles can be solved using the mining process of Bitcoin, or similar cryptocurrencies. Adapting existing definitions, we show that our puzzle construction satisfies formal requirements of client puzzles under reasonable assumptions. We describe a way of transforming our client puzzles for use in denial of service scenarios and demonstrate a practical construction.

Dominik Stroukal, Barbora Nedvědová

Bitcoin and other cryptocurrencies transformed the trade in illegal goods, especially drugs. Thanks to them in conjunction with other anonymization tools could arise dark markets, illegal marketplaces in cyberspace. Despite active intervention by the authorities, their number and quantity of goods on offer is growing significantly. Besides, we observed a tendency to change the structure of the drug market. This article is next to the description of the operation of dark markets based on identified trends and look to the future of how will dark markets look like. . . . . . . . . . . . .

Kelvin Fatt Kin Low, Ernie G. S. Teo

No abstract is available for this record.

David Neilson, Sukhvinder Hara, Ian Mitchell

No abstract is available for this record.

Meropi Tzanetakis, Gerrit Kamphausen, Bernd Werse, Roger von Laufenberg

No abstract is available for this record.

Xun Yi, Xuechao Yang, Andrei Kelarev, Kwok‐Yan Lam · 5 authors

Kriptovalute su digitalni novac utemeljen na kriptografiji i decentraliziranom sustavu. Postoje samo u elektroničkom obliku kao jedinstveni digitalni novčići ("tokeni"). Iza njih ne stoji autoritet države niti ih je moguće svojevoljno proizvesti. Rad se fokusira na značajkama, postavkama, razvoju i svim međuodnosima važnih ekonomskih faktora koji utječu na kriptovalute. U prvom poglavlju navedena su obilježja kriptovaluta. Drugo poglavlje daje primjere i govori o primjeni kriptovaluta u svakodnevnom životu. U trećem poglavlju je raspravljano o trenutnim i budućim regulacijama najmoćnijih zemalja svijeta (G20) , kao i njihovoj zajedničkoj suradnji u želji za jedinstvenim i standardiziranim pravilima, a sve u svrhu što kvalitetnijeg nadzora nad kriptovalutama kako bi se spriječile malverzacije i zaštitili potrošači. Četvrto poglavlje govori o inicijalnoj ponudi kovanica, a peto poglavlje je namijenjeno sigurnosti kriptovaluta. Cilj istraživanja je utvrditi koliko je studentska populacija upoznata i usmjerena prema novim oblicima digitalnog novca, koje značajke kriptovaluta smatraju pozitivnima, a koje negativnima i u kojoj su mjeri investirali ili su spremni investirati dio svojih ulaganja u kriptovalute i sl. Metode istraživanja korištene u radu su kompilacija na temelju proučavanja postojeće literature o temi rada, prikupljanje i analiza podataka vezanih uz kriptovalute, ponajprije podataka vezanih uz cijene i tržišnu kapitalizaciju, anketiranje studenata Ekonomskog fakulteta u Rijeci i metoda dedukcije putem koje su pokazane sve važne karakteristike i obilježja kriptovaluta. Na temelju provedene ankete u kojoj je sudjelovalo 90 studenata Ekonomskog fakulteta u Rijeci zaključak toga dijela istraživanja je da je mlada populacija dobro upoznata s kriptovalutama i njenim glavnim značajkama, ali i određenim nedostatkom informiranosti o tehnologiji (trećina studenata nije čula za pojam "blockchain") i nedovoljnoj odlučnosti oko investiranja i trgovanja u kriptovalute. Povrh toga, dokazan je i negativan utjecaj hakerskih napada i određenih kriminalnih radnji, kao i nestabilnost tržišne cijene na povjerenje studenata, ali i ukupne populacije vezane uz globalni financijski sustav u kriptovalute. Ishod istraživanja omogućio je da zaključimo kako su kriptovalute trenutno u ranoj fazi razvoja i nisu se dovoljno implementirale za široku primjenu u trgovini roba i usluga ili općenito kao sredstvo razmjene. Faktor koji je uključen u istraživanje kako bi opisao veličinu, odnosno obujam neke kriptovalute je tržišna kapitalizacija u dolarima. Temeljna ideja ovog rada je informirati čitatelja o pozitivnim i negativnim značajkama koje se se vežu uz kriptovalute. Na taj način čitatelji će biti bolje informirani i educirani o potencijalnom riziku ulaganja u kriptovalute, kao i većoj razini zaštite prilikom posjedovanja neke digitalne valute.

Mervyn K. Lewis

No abstract is available for this record.

ROBERT AUGUSTUS HARDY, Julia R. Norgaard

Abstract This paper is an analysis of the role reputation plays in the Deep Web using data from the Internet black-market site, The Silk Road. This encrypted online marketplace employed cryptocurrency and functioned over the Tor network. Utilizing a modeling technique, informed by trade auction theory, we investigate the effect of seller reputation. Analysis of the seller's reputation gives us insights into the factors that determine the prices of goods and services in this black marketplace. Data on cannabis listings is parsed from the Silk Road website and covers an 11-month time period, from November 2013 to October 2014. This data demonstrates that reputation acts as a sufficient self-enforcement mechanism to allow transactions. These findings exemplify the robustness of spontaneous order with respect to the Deep Web as an emergent marketplace.

Edward J. Imwinkelried, Jason Luu

Digital forensics must constantly adapt to new technological developments. The advent of Bitcoin is such a development. Bitcoin represents a new model for financial transactions. In many cash transactions between strangers, the underlying model is parties-unknown/transaction-unknown. There is no ledger record of the transaction. In contrast, PayPal illustrates the parties-known/transaction-known model. An intermediary will record both items of information. Bitcoin differs from both of these models; Bitcoin uses a parties-unknown/transaction-known model. The Bitcoin block chain records the transaction, but the user’s Bitcoin address is not expressly tied to an identity. Thus, Bitcoin users enjoy pseudo-anonymity.As the recent experience with Silk Road demonstrates, there is a downside to this pseudo-anonymity. Precisely because of that feature, Silk Road served a marketplace for vendors to sell illegal narcotics, forged identifications, and other illicit goods and services. Given that danger, law enforcement authorities have a felt need to develop techniques to penetrate the pseudo-anonymity. To do so, they have turned to digital forensics experts.This article evaluates two techniques that have been proposed for this purpose. The first is traffic analysis. This technique relies on the entry nodes that users employ to access the Internet. The second is transaction graph analysis. This technique clusters transactions to identify natural chokepoints in the Bitcoin economy, that is, service islands where, for example, the user might convert Bitcoins to fiat currency. The chokepoints becomes a target for a law enforcement subpoena to learn the user’s IP address. After describing each technique, the article assesses the research conducted to date. In particular, the article reviews Alex Biryukov’s research into traffic analysis and Sarak Meiklejohn’s work with transaction graph analysis. The article applies the standards announced in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) to determine whether, given the available data, expert testimony based on either technique would be admissible today. The article explains that it is doubtful whether testimony based on either technique would survive a Daubert admissibility challenge. The article concludes that further research is needed to enable law enforcement authorities to effectively penetrate the pseudo-anonymity of the new parties-unknown/transaction-known model.

Evan L. Greebel, Kathleen H. Moriarty, Claudia Callaway, Gregory E. Xethalis

Purpose – To explain and draw conclusions from six recent bitcoin and virtual currency regulatory and law enforcement developments. Design/methodology/approach – Discusses and draws conclusions from six recent, important developments: two administrative rulings from the Financial Crimes Enforcement Network (FinCEN), recent remarks by New York State Department of Financial Services Superintendent Benjamin Lawsky, remarks by Mark Wetjen of the Commodity Futures Trading Commission (CFTC), a recent Securities and Exchange Commission (SEC) informational sweep of crowdsales of crypto-equity, and the US Department of Justice proceedings against Trendon Shavers. Findings – Rather than trying to stifle or control virtual currencies, US governmental entities recognize the long-term value of virtual currencies and are trying to create a regulatory regime to foster growth and development, and an atmosphere where institutional and retail investors are protected. Originality/value – Provides an overview of the key United States regulatory issues facing companies engaged in Bitcoin-related businesses.

Reza Raeesi

This paper examines the effects of the Silk Road on the global prohibition regime on the international trade in illicit drugs. Situating the FBI’s effort in shutting down the online illicit drugs black market, it is argued that The Silk Road represents a fundamental challenge to this global prohibition regime. The paper will look at how this challenge is shaped through the technological difficulties the complexities of The Silk Road has dealt law enforcement agencies and legislative bodies looking to regulate and expand this prohibition regime in the virtual world. It is also argued that the approach taken by law enforcement efforts in this regard is problematic and doomed to fail. Lastly, this paper looks at controlled samples of social media reactions to gage public response to this phenomenon in order to explain the lack of clear moral opprobrium against this type of criminal activity. Résumé: Cet essai examine les effets de la plateforme Silk Road sur le régime de prohibition globale du commerce international de drogues illicites. Localisant les efforts du FBI visant à fermer le marché noir en ligne de drogues, on reconnaît que Silk Road représente un défi fondamental au régime de prohibition globale. Cet essai explore ensuite les manières dont la technologie a façonné les tactiques et stratégies utilisées par les organismes d’application de la loi et les organes législatifs cherchant à réguler et à combattre ce monde illicite virtuel. Plus spécifiquement, on illustre la problématique de l’approche transparaissant des efforts d’application de la loi à cet égard, argumentant ainsi qu’elle soit vouée à l’échec. Enfin, cet essai analyse des échantillons contrôlés des réactions sur les médias sociaux afin de mesurer la réponse du public à ce phénomène et d’expliquer le manque d’opprobre moral clair contre ce type d’activité criminelle.