• Electronic financial transactions and payment systems have traditionally relied on third party institutions, such as banks or credit card companies, to ensure secure transfers between parties. Users of such systems must trust that third party institutions will be honest and follow through with their claims. Trust-based systems are difficult to establish in the digital realm without a governing body regulating and securing transfers. Systems using this model have many downfalls that make them risky and undesirable for Internet use. With the requirement of all transactions being completely digital, how can we transfer funds securely without a trusted third party?
• All types of currencies share many common problems such as stability, control, and inflation. As time passes, the relative value of a currency usually decreases (meaning that prices increase). If this happens too quickly, it can cause major problems if prices increase beyond the means of the populace who uses the currency. Another problem is stability because the currency should not be subject to dramatic exchange rate fluctuations under the influence of a single individual or party. Control over a currency, or lack thereof, is also important. Typical fiat currencies depend on a mint and the promise that the mint will continue its operations. If the mint were to close indefinitely, the currency would likely die out in a relatively short period of time. Therefore, the mint has some level of control over the currency.
• Bitcoin is a digital currency introduced in 2009, based on a self-published paper by Satoshi Nakamoto[1]. Bitcoin enables payments that are based on proof, rather than trust, in a manner that is similar to cash. A seller given a cash payment can inspect the currency and, with a good degree of confidence, assert whether the payment is valid or invalid. Bitcoins works using a similar concept that make coins and coin ownership easy to verify. An important difference between this virtual currency and typical fiat currency is that Bitcoin's validity can be verified.
• During this workshop we showed attendees the verification process as well as the algorithms and technologies that make verification possible. The audience learned about online money transaction, then analyzed standard techniques and form comparisons between them. The workshop then proceeded to discuss the history and purpose of Bitcoins along with an overview of its concepts and terminologies.
• The workshop continues to compare Bitcoins with other transaction techniques discussed and talk about the pros and the cons. We also go though the problems that Bitcoin will be able to solve and what new problems it will introduce.
• Attendees will learn the details of Bitcoins and its implementations. From Asymmetric cryptography algorithms to hashing and digital signatures to proof of work, the audience will be walked though all the technologies that make Bitcoin possible.
• The workshop will take attendees through actual Bitcoin transactions and the details of the transaction process as it will allow them to see how the Bitcoin system overcome problems such as double spending. The audience was also taught about Bitcoin generation and how Bitcoins are generated out of thin air. For context, we covered how much coins are worth and how people are already profiting from services other than mining. The details of Bitcoin blocks and chains were demystified in a manner that was detailed but simple to understand.
• The Bitcoin network was one of the main focuses - how a distributed and completely public network can maintain the anonymity of its users. It was discussed in detail about how transactions are validated through the network and about the transaction databases that is on the distributed network. The audience learned how the distributed database handles failures, delay, and is able to work effectively with only a subset of the entire database. The audience learned concepts such as merkle trees and how they help the Bitcoin network to maintain the database. We answer questions such as how Bitcoins control the expansion of its own currency when the Bitcoin network may double in size in a short period of time. The many interesting characteristics of the network were unveiled during this engaging demonstration.
• Attacks and malicious hosts are constantly a threat to modern day electronic transactional systems and this also applies to Bitcoin. We mapped out the architectural features that make Bitcoin naturally resilient to many common attacks, as well as the features that make it vulnerable. We discussed possible attacks on the Bitcoin network as well as attack mitigation and ways in which end users can protect themselves.
• Another interesting issue is anonymity. Bitcoin is regarded as being anonymous by many people, yet Bitcoins can be traced from the original miner all the way to the current owner. A Bitcoin address itself is just a number and cannot identify anyone. However if a person manages to collect enough information about the owner of that address (perhaps through forums) then the owner can be exposed.
• To conclude, in this workshop we explored everything from cryptographic algorithms to the massive peer-to-peer network. We took a security perspective for an in-depth exploration of Bitcoin attacks and attack mitigation. We ended our workshop with a look at how Bitcoin might change the e-commerce landscape, followed by an open discussion.
Anonymity in Bitcoin, a peer-to-peer electronic currency system, is a complicated issue. Within the system, users are identified by public-keys only. An attacker wishing to de-anonymize its users will attempt to construct the one-to-many mapping between users and public-keys and associate information external to the system with the users. Bitcoin tries to prevent this attack by storing the mapping of a user to his or her public-keys on that user's node only and by allowing each user to generate as many public-keys as required. In this chapter we consider the topological structure of two networks derived from Bitcoin's public transaction history. We show that the two networks have a non-trivial topological structure, provide complementary views of the Bitcoin system and have implications for anonymity. We combine these structures with external information and techniques such as context discovery and flow analysis to investigate an alleged theft of Bitcoins, which, at the time of the theft, had a market value of approximately half a million U.S. dollars.
Peters (2011a) defined an optimal leverage which maximizes the time-average growth rate of an investment held at constant leverage. It was hypothesized that this optimal leverage is attracted to 1, such that, e.g., leveraging an investment in the market portfolio cannot yield long-term outperformance. This places a strong constraint on the stochastic properties of prices of traded assets, which we call "leverage efficiency." Market conditions that deviate from leverage efficiency are unstable and may create leverage-driven bubbles. Here we expand on the hypothesis and its implications. These include a theory of noise that explains how systemic stability rules out smooth price changes at any pricing frequency; a resolution of the so-called equity premium puzzle; a protocol for central bank interest rate setting to avoid leverage-driven price instabilities; and a method for detecting fraudulent investment schemes by exploiting differences between the stochastic properties of their prices and those of legitimately-traded assets. To submit the hypothesis to a rigorous test we choose price data from different assets: the S&P500 index, Bitcoin, Berkshire Hathaway Inc., and Bernard L. Madoff Investment Securities LLC. Analysis of these data supports the hypothesis.
Harry Kalodner, Miles Carlsten, Paul Ellenbogen, Joseph Bonneau · 5 authors
Secure decentralized namespaces have recently become possible due to cryptocurrency technology. They enable a censorship-resistant domainname system outside the control of any single entity, among other applications. Namecoin, a fork of Bitcoin, is the most prominent example. We initiate the study of decentralized namespaces and the market for names in such systems. Our extensive empirical analysis of Namecoin reveals a system in disrepair. Indeed, our methodology for detecting “squatted” and otherwise inactive domains reveals that among Namecoin’s roughly 120,000 registered domain names, a mere 28 are not squatted and have nontrivial content. Further, we develop techniques for detecting transfers of domains in the Namecoin block chain and provide evidence that the market for domains is thin-tononexistent. We argue that the state of the art in mechanism design for decentralized namespace markets is lacking. We propose a model of utility of different names to different participants, and articulate desiderata of a decentralized namespace in terms of this utility function. We use this model to explore the design space of mechanisms and analyze the trade-offs.
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.
ICT-lawyer (partner) at time.lex, a Brussels based law firm with focus on business law in the information society. His areas of interest are legal management of ICT-projects, data protection and privacy, e-business, electronic contracting, outsourcing and service level agreements, intellectual property, security, electronic invoicing, copyright, trade marks, e-money, e-banking and payments etc. He is also an associate researcher at the Interdisciplinary Centre for Law and Information Technology (ICRI) at the University of Leuven, and assistant at the University of Antwerp. Bitcoin is a free open source peer-to-peer electronic cash system that is completely decentralised, without the need for a central server or trusted parties. This article focuses briefly on some legal issues related to financial regulatory aspects about e-money and payment services.
Abstract. 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 verifying 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 processing power of the Bitcoin peer-to-peer network; a network used to mint and trade digital cash. 1 Introductory Remarks Consider the scenario where Alice makes an important discovery. It is important to her that she receives recognition for her breakthrough, however she would also like to keep it a secret until she can establish a suitable infrastructure for monetizing it. By forgoing publication of her discovery, she risks Bob independently making the same discovery and publicizing it as his own. Folklore suggests that Alice might mail herself a copy of her discovery and leave the letter sealed, with the postal service’s timestamp intact, for a later resolution time. If Bob later claims the same discovery, the
Formalist positions towards money are considered from a perspective of formal methods in computing. The Formaleuro (FEUR) as a dimension for monetary quantities is proposed as well as the Formalbitcoin (FBTC) which represents an item ready for circulation in a model of informational money. An attempt is made to understand the concept of money from scratch. In order to provide a definition of money the need is felt to make use of a tailored theory of definition. To that end a theory of imaginative definitions is presented and its implications for definitions of money are sketched. It is argued that a theory of money may be dependent on the role of its holder. A survey of some roles is given, with the so-called subordinate administrative role (SAR) in a central position. The concepts of virtual memory and virtual machine are taken as the point of departure for a definition of the notion of virtual money. It is argued that from the perspective of a component (division) of a large organization (ORG) its local financial system (LFS) provides a virtual money vm(LFS, ORG) which may well fail to meet the most common general and acknowledged moneyness criteria. Inverse moneyness preference is coined as phrase to assert the tendency of top-management of ORG to make its virtual money deviate from these criteria.
Bitcoin is the first digital medium to allow global, "purely peer-to-peer" exchange. At the height of the Great Recession, Bitcoin's pseudonymous creator introduced the electronic cash to sidestep political and economic institutions. Today, it is praised as an opportunity for the unbanked, a liberating force, and a pioneering technology. It is also infamously associated with volatility, illicit activities, and profligate energy consumption. Bitcoin has also flown under the radar of political science, whereas computer scientists, economists, and legal scholars have written extensively about it. To address the gap in the literature, I describe Bitcoin as an actor in global affairs, explain how Bitcoin and blockchain technology work, and discuss why Bitcoin is relevant to political science as the archetypal case of blockchain technology. I argue that Bitcoin is a form of contentious politics uniquely suited to the twenty-first century. Examining Bitcoin as a form of contentious politics sheds light on how a purportedly borderless technology has actually fared in subverting state authority: not entirely well. Nonetheless, Bitcoin has succeeded in at least two respects: it is an unprecedented form of untraceable electronic cash that coordinates unrivaled levels of computing resources from voluntary contributors and it has become a resilient, global social movement. As an archetype of blockchain technology, Bitcoin inspires research of blockchain's capacity to facilitate collective action, uses in international cooperation and competition, and prospects for human development. The thesis concludes with a set of implications for blockchain research and policy.
Abstract — The volatile nature of cryptocurrency markets has spurred interest in predictive models to aid investment and trading strategies. This study extends previous works by incorporating all available technical indicators, leveraging the TA library, and evaluating multiple deep learning architectures for Bitcoin price prediction. Using daily OHLC data for Bitcoin (BTC) sourced from Yahoo Finance, we implement Transformer-based Multi-Head Attention with GRU and LSTM layers, along with standalone LSTM and GRU models. These architectures are compared in terms of predictive accuracy to identify the most effective approach for capturing market dynamics. Our results provide a comprehensive analysis of model performance, highlighting the potential of advanced neural network architectures and technical indicators for improving cryptocurrency price prediction.
Security breaches of the cryptocurrency exchanges usually cause the price fluctuation in the market. Approximately one hundred cryptocurrency thefts, including hacks and scams, has occurred since 2012 to 2018, half of which are hacks of Bitcoins. Based on the thirty Bitcoin hacks, this study portrays the general price pattern during the hack. And it illustrates the link between the size of the hack and the subsequent price change of Bitcoin. The tests reveal that the larger the volume of the hack, the stronger the price drop. However, a similar obvious relationship does not exist for the recovery of the price. The study might be the first piece of research focus on the hacks and the price pattern in a short time period.
The still raging financial crisis of 2007–2008 has enabled the emergence of several alternative practices concerning the production, circulation, and use of money. This essay explores the political economy of the Bitcoin ecosystem. Specifically, we examine the context in which this digital currency is emerging as well as its nature, dynamics, advantages, and disadvantages. We conclude that Bitcoin, a truly interesting experiment, exemplifies “distributed capitalism” and should be mostly seen as a technological innovation. Rather than providing pragmatic answers and solutions to the current views on the financial crisis, Bitcoin provides some useful and timely questions about the principles and bases of the dominant political economy. A ECONOMIA POLÍTICA DO BITCOINResumoO aquecimento da crise financeira de 2007-2008 permitiu o surgimento de várias práticas alternativas em matéria de produção, circulação e uso do dinheiro. Este ensaio explora a economia política do ecossistema Bitcoin. Especificamente, vamos examinar o contexto em que essa moeda digital está emergindo, bem como a sua natureza, dinâmica, vantagens e desvantagens. Concluímos que Bitcoin, uma experiência verdadeiramente interessante, exemplifica "capitalismo distribuído" e deve ser visto principalmente como uma inovação tecnológica. Em vez de fornecer respostas e soluções pragmáticas para os pontos de vista atuais sobre a crise financeira, Bitcoin fornece algumas perguntas úteis e oportunas sobre os princípios e as bases da economia política dominante.