Blockchain Papers

Clemens H. Cap

No abstract is available for this record.

George Selgin

No abstract is available for this record.

Marco Aurelio Felizardo de Andrade, Wladston Viana Ferreira Filho, Francisco Chaves de Carvalho Marinho, Bruna Andreata Avelar · 6 authors

Resumo. A ampla utilizacao e disponibilizacao de tecnologias criptograficas, juntamente com a internet, possibilitou a troca segura, anonima e distribuida de mensagens. Utilizando essas tecnologias como base, foi desenvolvido um protocolo para um sistema financeiro anonimo, seguro, distribuido, e sem controle central chamado Bitcoin. Hoje ja sao transacionados milhoes de dolares cada dia em Bitcoins, e nos Estados Unidos e Europa muitos comercios e prestadores de servicos estao aceitando pagamentos nessa moeda. Essa plataforma tem um potencial imenso para aumentar as liberdades individuais dos cidadaos, caso seja amplamente utilizada, pois torna os bancos obsoletos ao disponibilizar um sistema seguro, privado e anonimo. O custo das transacoes e quase zero, e nao ha restricoes para transacoes financeiras para outros paises. Neste artigo sera explicado como funciona, as vantagens e desvantagens, e serao mostrados exemplos de utilizacao.

Cozmei Catalina, Caloian Florentin

The explosion and crisis of the financial markets, the increasing variety of economic transactions and higher levels of risk and uncertainty are the cardinal vectors in outlining the new economic landscape, where the value of the physical currencies is weaker than ever. In this ecosystem, the deployment of a digital currency has became a reality.This article looks more in-depth at Bitcoin economy in order to dissipate the illusions of this innovative monetary technology, ruled by a lot of speculation and few hard data. Moreover, it unveils the potential tax issues raised by this dematerialised form of money.

F. E. Guerra-Pujol

What is the legal status of a “bitcoin,” a decentralized peer-to-peer digital currency? Is the use of bitcoins even legal? Should it be? The bitcoin cybercurrency thus poses a puzzle. Unlike centralized and publicly-created metallic or paper currencies, bitcoin is a privately-created, decentralized medium of exchange and thus is not backed by any national or transnational government or by any public or private bank. As such, the legal status of the bitcoin cybercurrency is murky and unclear at best. Despite this legal uncertainty, the demand for bitcoins on the Internet continues to grow. The authors will present a legal, normative, and game-theoretic analysis of the bitcoin cybercurrency. To provide a theoretical background to our legal and normative analysis, the first part of the paper will present an analytical model of the behavior of bitcoin users. In summary, the use of bitcoins can be modeled as a Prisoner’s Dilemma. That is, because of the limited supply of bitcoins and the rising demand of this cybercurrency, the temptation to defect by hoarding this currency -- rather than using bitcoins for the exchange of goods and services -- threatens the stability of the bitcoin cybercurrency as a whole. In the second part of the paper, the authors consider the legal status of bitcoins, discuss the policy and normative arguments for and against the legalization of bitcoins, and propose several possible legal frameworks for protecting the bitcoin cybercurrency and solving the bitcoin puzzle.

Higinio Raventós, Marta Anadón Rosinach

This paper analyses 26 time series that measure daily data for different attributes of the Bitcoin network and studies how the virtual currency behaves compared to a basket of currencies containing the Brazil Real (BRL), the Chinese Yuan (CNY), the Euro (EUR), and the Japan Yen (JPY) against the US Dollar (USD).
\nBasic statistics about the time series have been taken and stationarity has been studied in order to build sterilized fact data and meaningful cointegrations have been found among them. By applying a Vector Autoregressive (VAR) model, a regression has been built among the currencies and the Granger causality test has been applied in order to determine whether one time series (of a given currency) is useful in forecasting another and to observe causal relationships among the currencies studied.

H. Clemens

Abstract: There is no formal framework for describing the core structural concepts of Bitcoin or for attempting a correctness proof of the algorithm. This contribution presents several elements which may serve as building blocks. A distributed model for describing the states enclosed in a Bitcoin network is provided. Concepts for modeling the swarm behavior of Bitcoin are analyzed. 1

Mike Small

Blockchain, a continuously growing tamper resistant data structure, was developed as the technology underlying the Bitcoin crypto-currency and it is now being applied to a wide range of problems as a form of ‘Distributed Ledger’. The promise of this technology has been recognised by governments and the financial industry. It also has application to enhance privacy of personal information, to secure the Internet of things and to change electronic identity. This study explains what a Blockchain is and how it works. It describes some actual and the potential applications of this technology together with some of the risks associated with its use.

Lei Fan

Digital currency,with the functions of transactions media,price evaluation,value saving and payment means,is an ideal resource exchange mode. Bitcoin is pure P2P digital cash and could meet the possible requirement of decentralization and contain the inflation of money. Based on this,the trust mechanism is introduced into the system so that nodes could build their reputation and thus help optimize the whole economic environment. So a protocol is proposed,which allows the nodes with more-than-needed money to provide trust amount and capital turnover for appliers and thus to help them build their trust evaluation.

Jan Vornberger

No abstract is available for this record.

Jörg Becker, Dominic Breuker, Tobias Heide, Justus Holler · 6 authors

No abstract is available for this record.

Jacob Aron

No abstract is available for this record.

Jeremy Clark, Aleksander Essex

In the standard definition of a commitment scheme, the sender commits to a message and immediately sends the commitment to the recipient interested in it. However the sender may not always know at the time of commitment who will become interested in it. Further, when the interested party does emerge, it could be critical to establish when the commitment was made. Employing a proof of work protocol at commitment time will later allow anyone to carbon date when the commitment was made, approximately, without trusting any external parties. We present CommitCoin, an instantiation of this approach that harnesses the existing computational power of the Bitcoin peer-to-peer network; a network used to mint and trade digital cash.

Danielle Drainvile

In a world that relies heavily on technology, privacy is sought by many. Privacy, among other things, is especially desired when making an online payment. This motivates the use of electronic cash, a form of electronic payment system based on the paper cash system used daily. The most successful and widely used of these services is Bitcoin – a decentralized peer-to-peer electronic cash system. This paper provides a broad introduction to Bitcoin, while analyzing its construction and investigating some of its perks and flaws. It can be seen that, when compared to paper cash and electronic cash, Bitcoin is in a class of its own.

Sonal Mittal

In 2009, a curious new virtual currency called Bitcoin made its first appearance on the Internet. While it remains a “niche” currency relative to other major denominations like the U.S. dollar, Bitcoin has experienced significant growth since its inception. The total number of Bitcoins in circulation is about 12.5 million, with a recent market price of about $500 each. Today, Bitcoin’s total market capitalization is about $6 billion, and in the past it has been as high as $13 billion. The average number of Bitcoin transactions per day has averaged over 60,000 since January 2014, reflecting between $20 million and $100 million worth of transactions per day. The numbers show that in the five years since its first appearance, Bitcoin has grown tremendously in popular knowledge and usage. Although it is clear that Bitcoin can be used to purchase goods and services, and can be given an explicit dollar value, questions remain about the economic and legal status of Bitcoin and other virtual currencies that have emerged in its wake. Members of the Bitcoin developer and user community believe “Bitcoin is an innovative payment network and new kind of money.” Others, like the U.S. Internal Revenue Service, take the position that Bitcoin is a type of commodity or property. Whether Bitcoin is a new form of virtual money or simply an electronic commodity requires an investigation into what constitutes money, and an assessment of whether Bitcoin comfortably fits into the parameters of what we consider to be money. This paper finds that, at this stage in its development, Bitcoin is not money and more closely resembles a commodity or property. This paper begins by giving a brief overview of Bitcoin and how it operates. It then describes two major theories of money — the conventional and constitutional theories — that differ in their accounts of how money emerges within a society or political grouping. The paper assesses how well Bitcoin fits under each theory by assessing Bitcoin’s economic properties and implementation. It then turns to the impact of the Bitcoin on the two theories of money, finding it likely does not support the conventional creation story of money and instead lends credence to the constitutional theory.

Sunny King, Scott Nadal

A peer-to-peer crypto-currency design derived from Satoshi Nakamoto’s Bitcoin. Proof-of-stake replaces proof-of-work to provide most of the network security. Under this hybrid design proof-of-work mainly provides initial minting and is largely non-essential in the long run. Security level of the network is not dependent on energy consumption in the long term thus providing an energyefficient and more cost-competitive peer-to-peer crypto-currency. Proof-of-stake is based on coin age and generated by each node via a hashing scheme bearing similarity to Bitcoin’s but over limited search space. Block chain history and transaction settlement are further protected by a centrally broadcasted checkpoint mechanism.

Nikolei M. Kaplanov

In 1601, Elizabeth I and her government devalued the Irish coin from nine ounces fine to three ounces fine of silver in order to finance the high cost of the Nine Years War in Ireland. 1 This unilateral move by the English government, combined with the failure to remove the old sterling from circulation, caused catastrophic problems throughout Ireland. 2 In addition to rapid inflation in common foodstuffs, the people in Ireland would only accept the new coin at its reduced intrinsic value rather than face value. 3 Further, merchants refused to accept the devalued coin in commercial transactions leading to a shortage of vital goods from England. 4

Ghassan Karame, Elli Androulaki, Srđjan Čapkun

Bitcoin is a decentralized payment system that is basedonProof-of-Work. Bitcoiniscurrentlygaining popularity as a digital currency; several businesses are starting to accept Bitcoin transactions. An examplecaseofthegrowinguseofBitcoinwasrecently reported in the media; here, Bitcoins were used as a form of fast payment in a local fast-food restaurant. In this paper, we analyze the security of using Bitcoin for fast payments, where the time between the exchange of currency and goods is short (i.e., in the order of few seconds). We focus on doublespending attacks on fast payments and demonstrate that these attacks can be mounted at low cost on currently deployed versions of Bitcoin. We further showthatthemeasuresrecommendedbyBitcoindevelopersfortheuseofBitcoininfasttransactionsare not always effective in resisting double-spending; we show that if those recommendations are integrated in future Bitcoin implementations, double-spending attacks on Bitcoin will still be possible. Finally, we leverage on our findings and propose a lightweight countermeasurethatenablesthedetectionofdoublespending attacks in fast transactions. 1

Simon Barber, Xavier Boyen, Elaine Shi, Ersin Uzun

Abstract. Bitcoin is a distributed digital currency which has attracted a substan-tial number of users. We perform an in-depth investigation to understand what made Bitcoin so successful, while decades of research on cryptographic e-cash has not lead to a large-scale deployment. We ask also how Bitcoin could become a good candidate for a long-lived stable currency. In doing so, we identify several issues and attacks of Bitcoin, and propose suitable techniques to address them. 1

Elli Androulaki, Ghassan Karame, Marc Roeschlin, Tobias Scherer · 5 authors

Abstract. Bitcoin is quickly emerging as a popular digital payment system. However, in spite of its reliance on pseudonyms, Bitcoin raises a number of privacy concerns due to the fact that all of the transactions that take place are publicly announced in the system. In this paper, we investigate the privacy guarantees of Bitcoin in the setting where Bitcoin is used as a primary currency for the daily transactions of individuals. More specifically, we evaluate the privacy that is provided by Bitcoin (i) by analyzing the genuine Bitcoin system and (ii) through a simulator that faithfully mimics the operation of Bitcoin in the context where Bitcoin is used for all transactions within a university. In this setting, our results show that the profiles of almost 40 % of the users can be, to a large extent, recovered even when users adopt privacy measures recommended by Bitcoin. To the best of our knowledge, this is the first work that comprehensively analyzes, and evaluates the privacy implications of Bitcoin. As a by-product, we have designed and implemented the first simulator of Bitcoin; our simulator can be used to model the interaction between Bitcoin users in generic settings. 1

Dorit Ron, Adi Shamir

Abstract. The Bitcoin scheme is a rare example of a large scale global payment system in which all the transactions are publicly accessible (but in an anonymous way). We downloaded the full history of this scheme, and analyzed many statistical properties of its associated transaction graph. In this paper we answer for the first time a variety of interesting questions about the typical behavior of users, how they acquire and how they spend their bitcoins, the balance of bitcoins they keep in their accounts, and how they move bitcoins between their various accounts in order to better protect their privacy. In addition, we isolated all the large transactions in the system, and discovered that almost all of them are closely related to a single large transaction that took place in November 2010, even though the associated users apparently tried to hide this fact with many strange looking long chains and fork-merge structures in the transaction graph.

Meni Rosenfeld

In this paper we describe the various scoring systems used to calculate rewards of participants in Bitcoin pooled mining, explain the problems each were designed to solve and analyze their respective advantages and disadvantages.

Reuben Grinberg

Bitcoin is a digital, decentralized, partially anonymous currency, not backed by any government or other legal entity, and not redeemable for gold or other commodity. It relies on peer-to-peer networking and cryptography to maintain its integrity. Compared to most currencies or online payment services, such as PayPal, bitcoins are highly liquid, have low transaction costs, and can be used to make micropayments. This new currency could also hold the key to allowing organizations such as Wikileaks, hated by governments, to receive donations and conduct business anonymously. Although the Bitcoin economy is flourishing, Bitcoin users are anxious about Bitcoin's legal status. This Article examines a few relevant legal issues, such as the recent conviction of the Liberty Dollar creator, the Stamp Payments Act, and the Federal Securities Acts.

Moshe Babaioff, Shahar Dobzinski, Sigal Oren, Aviv Zohar

Many large decentralized systems rely on information propagation to ensure their proper function. We examine a common scenario in which only participants that are aware of the information can compete for some reward, and thus informed participants have an incentive not to propagate information to others. One recent example in which such tension arises is the 2009 DARPA Network Challenge (finding red balloons). We focus on another prominent example: Bitcoin, a decentralized electronic currency system. Bitcoin represents a radical new approach to monetary systems. It has been getting a large amount of public attention over the last year, both in policy discussions and in the popular press. Its cryptographic fundamentals have largely held up even as its usage has become increasingly widespread. We find, however, that it exhibits a fundamental problem of a different nature, based on how its incentives are structured. We propose a modification to the protocol that can eliminate this problem. Bitcoin relies on a peer-to-peer network to track transactions that are performed with the currency. For this purpose, every transaction a node learns about should be transmitted to its neighbors in the network. The current implemented protocol provides an incentive to nodes to not broadcast transactions they are aware of. Our solution is to augment the protocol with a scheme that rewards information propagation. Since clones are easy to create in the Bitcoin system, an important feature of our scheme is Sybil-proofness. We show that our proposed scheme succeeds in setting the correct incentives, that it is Sybil-proof, and that it requires only a small payment overhead, all this is achieved with iterated elimination of dominated strategies. We complement this result by showing that there are no reward schemes in which information propagation and no self-cloning is a dominant strategy.