Article

Bitcoin: A Peer-to-Peer Electronic Cash System

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Abstract

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.

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... After the release of Nakamotos' paper in 2009 the idea of blockchain as known today came about, as a result of the establishment of the Proof-of-Work (PoW) consensus mechanism that permitted for the development of the arguably most essential trait of the system -trust [9]. A consensus mechanism is the protocol over which users taking part in maintaining a blockchain agree to validate new (and old) blocks. ...
... European economy and society. 9 The EU Cyber Security Act introduces an EU-wide cybersecurity certification framework for ICT products, services and processes. ...
... The European Securities and Markets Authority (ESMA) identified the most significant risks regarding crypto-assets as fraud, cyber-attacks, 8 See Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union. 9 See Proposal for a Directive of the European Parliament and the Council on measures for a high common level of cyber security across the Union, repealing Directive (EU) 2016/1148. money laundering, and market manipulation. ...
Conference Paper
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Blockchain technology has taken off rapidly in the last decade, as blockchain-based applications have expanded across sectors and acquired substantial global user support. This rise has been accelerated in the domain of cryptocurrencies, as one of blockchains' most famous (or infamous) applications. This relatively novel type of a financial asset class with increasingly large market valuation has sparked the interest of regulators and law makers. As a means of fostering fintech innovation, the EU has stated its support for adoption and development of blockchain and cryptocurrencies in the European Economic Area. Nevertheless, cryptocurrencies lie at the top of a potentially dangerous feedback loop mediated by market valuation. Cyber-attacks targeting cryptocurrencies (and the underlying blockchain technology) have been on the rise, costing users and businesses millions of euros. From a European Union regulatory standpoint, high cyber security resilience is a precondition for sustainable innovation in an increasingly digitalized financial sector, where protecting users and businesses is a priority. In this paper, we discuss aspects of blockchains' technical vulnerabilities and related cyber-attacks in order to develop a deeper understanding of the extent and efficiency of possible regulatory remedies concerning crypto-assets in the EU. We present a regulatory overview of the emerging fields of cyber risk and blockchain in Europe and illustrate a techno-regulatory gap which requires further attention. We underline the difficulty of assigning traditional cyber regulatory measures due to certain technical characteristics related to blockchains. We maintain how the relationship between cyber law and technology may evolve in the near future, as decentralized technologies and the cyber risks that go with them, continue to develop rapidly. By providing an interdisciplinary perspective of cyber security in the blockchain domain, we aim to bridge the gap that exists between legal and technical research, supporting policy makers in their regulatory decisions concerning crypto-assets, decentralized technologies and associated cyber risks.
... Records cannot be forged because changing the information in the chain requires that the majority of nodes in the network approve this change and write it into a general ledger. Such a ledger is also referred to as a "Blockchain" (Nakamoto, 2009). ...
... Nonetheless, safety plays a vigilant role in trading and dealing with virtual currencies. When Nakamoto (2009) proposed his electronic cash system, he argued that, due to the expansion of online commerce, financial institutions deprave to trusted third parties handling electronic payment processes, while continuing to inherit the weaknesses of being based on the trust model. It is not possible for financial institutions to reverse a transaction, such as when an individual is not liquid or when an operation is canceled without additional costs. ...
... These additional costs even increase in the case of non-reversible payments of non-reversible services. Therefore, Nakamoto (2009) recommends, "an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party". Following this line of argumentation, this system would protect sellers from fraud because it would be computationally impractical to reverse transactions, and buyers would be safeguarded through routine escrow mechanisms. ...
Thesis
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The individual behavior of economic entities, such as agents, firms or industries, and their interaction in markets may create complex economic dynamics and regularities in the aggregate. This doctoral thesis seeks to demonstrate how, and under which conditions, such dynamics may arise, leading to and explaining certain cyclicities in macroeconomic fluctuations, tie formation processes in economic networks and persis- tent distributional properties in foreign exchange and virtual currency markets.
... As of today, a new, disruptive technology starts growing, faster than we think: Blockchain. Described as a Distributed Ledger, Decentralised and Peer-To-Peer Network, Blockchain technology appeared in 2008 (Nakamoto, 2008), with its most known application-Bitcoin. Crypto-currencies are seen as the only application of Blockchain, disrupting the financial industry. ...
... Blockchain technology has emerged with the creation of Bitcoin, in 2008, by a person, group or organisation named "Satoshi Nakamoto" (Nakamoto, 2008). Bitcoin, along with other cryptocurrencies (digital, peer-to-peer versions of electronic cash), is only one application of the whole technology behind. ...
... In a blockchain, each member of the network is called a "node" (Nakamoto, 2008). Information is shared between those nodes. ...
Research
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Blockchain technology is developing fast. It is gaining momentum among individuals, businesses, institutions and governments, notably with its most famous application-Cryptocurrencies. However, that is only a small part of what Blockchain can do. This study aims at exploring Tokenisation, an under-studied application of Blockchain technology. More specifically, it intends to combine three key notions to understand how they interact with each other and influence one another: Tokenisation, Entrepreneurial Opportunities and Business Model Innovation. Eventually, a new model is developed, to understand the theoretical and practical impacts of Blockchain and Tokenisation on business.
... In 2008, the pseudonym Satoshi Nakamoto published the Bitcoin white paper and thus introduced the blockchain technology with the aim of changing the traditional financial sector by making trusted third parties superfluous [1]. Blockchain technology allows the processing and verification of data transactions based on a distributed peer-to-peer network. ...
... This includes block structures of backward-linked blocks, transaction processing, hashing, and the functionality of consensus algorithms. The concept is based on the functionality of the Bitcoin network, including the Proof-of-Work consensus algorithms as described by Satoshi Nakamoto [1]. After understanding the basic functionality of blockchain technology and cryptocurrencies, the second part of the workshop extends the operating modes with a simple smart contract. ...
... Each block contains a balance table and the respective data entries. According to the blockchain structure introduced by Satoshi Nakamoto [1] each block must contain the hash of the previous block. To simplify this procedure for the workshop participants, the first four digits of the typically 64 digit long hash value is sufficient. ...
... In 2008, the pseudonym Satoshi Nakamoto published the Bitcoin white paper and thus introduced the blockchain technology with the aim of changing the traditional financial sector by making trusted third parties superfluous [1]. Blockchain technology allows the processing and verification of data transactions based on a distributed peer-to-peer network. ...
... This includes block structures of backward-linked blocks, transaction processing, hashing, and the functionality of consensus algorithms. The concept is based on the functionality of the Bitcoin network, including the Proof-of-Work consensus algorithms as described by Satoshi Nakamoto [1]. After understanding the basic functionality of blockchain technology and cryptocurrencies, the second part of the workshop extends the operating modes with a simple smart contract. ...
... Each block contains a balance table and the respective data entries. According to the blockchain structure introduced by Satoshi Nakamoto [1] each block must contain the hash of the previous block. To simplify this procedure for the workshop participants, the first four digits of the typically 64 digit long hash value is sufficient. ...
Conference Paper
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Blockchain is a technology for the secure processing and verification of data transactions based on a distributed peer-to-peer network that uses cryptographic processes, consensus algorithms, and backward-linked blocks to make transactions virtually immutable. Within supply chain management, blockchain technology offer potentials in increasing supply chain transparency, visibility, automation, and efficiency. However, its complexity requires future employees to have comprehensive knowledge regarding the functionality of blockchain-based applications in order to be able to apply their benefits to scenarios in supply chain and production. Learning factories represent a suitable environment allowing learners to experience new technologies and to apply them to virtual and physical processes throughout value chains. This paper presents a concept to practically transfer knowledge about the technical functionality of blockchain technology to future engineers and software developers working within supply chains and production operations to sensitize them regarding the advantages of decentralized applications. First, the concept proposes methods to playfully convey immutable backward-linked blocks and the embedment of blockchain smart contracts. Subsequently, the students use this knowledge to develop blockchain-based application scenarios by means of an exemplary product in a learning factory environment. Finally, the developed solutions are implemented with the help of a prototypical decentralized application, which enables a holistic mapping of supply chain events.
... A decade ago, Satoshi Nakamoto presented his now famous Bitcoin protocol [11]. Nakamoto assembled some stimulating techniques in an attractive package, such that the result was more than just the sum of its parts. ...
... Literally anybody can participate, as long as "honest nodes collectively control more CPU power than any cooperating group of attacker nodes." [11] In Section 6 of his seminal paper, Nakamoto argues that it is rational to be honest thanks to block rewards and fees. However, it turns out that Nakamoto was wrong, and rational does not imply honest. ...
... To the best of our knowledge, our design is the first to provably allow for rational mining. Nakamoto [11] needed "honest nodes collectively control more CPU power than any cooperating group of attacker nodes". With our design it is possible to turn the word honest into the word rational. ...
Preprint
This work proposes a novel proof-of-work blockchain incentive scheme such that, barring exogenous motivations, following the protocol is guaranteed to be the optimal strategy for miners. Our blockchain takes the form of a directed acyclic graph, resulting in improvements with respect to throughput and speed. More importantly, for our blockchain to function, it is not expected that the miners conform to some presupposed protocol in the interest of the system's operability. Instead, our system works if miners act selfishly, trying to get the maximum possible rewards, with no consideration for the overall health of the blockchain.
... Distributed ledgers (also known as blockchains) were first proposed by Nakamoto in 2009 [21] in the implementation of Bitcoin, as a method to eliminate trustable third parties in electronic payment systems. Modern blockchains incorporate smart contracts [28], [33], which are state-full programs stored in the blockchain that describe the functionality of the transactions, including the exchange of cryptocurrency. ...
... Ethereum [33], one of the most popular blockchains, is limited to less than 4 blocks per minute, each containing less than two thousand transactions. Bitcoin [21] offers even lower throughput. These figures are orders of magnitude slower than what many decentralized applications require, and can ultimately jeopardize the adoption of the technology in many promising domains. ...
Preprint
Full-text available
Blockchain technologies are facing a scalability challenge, which must be overcome to guarantee a wider adoption of the technology. This scalability issue is mostly caused by the use of consensus algorithms to guarantee the total order of the chain of blocks (and of the operations within each block). However, total order is often overkilling, since important advanced applications of smart-contracts do not require a total order of all the operations. Hence, if a more relaxed partial order (instead of a total order) is allowed under certain safety conditions, a much higher scalability can be achieved. In this paper, we propose a distributed concurrent data type, called Setchain, that allows implementing this partial order and increases significantly blockchain scalability. A Setchain implements a grow-only set object whose elements are not totally ordered, unlike conventional blockchain operations. When convenient, the Setchain allows forcing a synchronization barrier that assigns permanently an epoch number to a subset of the latest elements added. With the Setchain, operations in the same epoch are not ordered, while operations in different epochs are. We present different Byzantine-tolerant implementations of Setchain, prove their correctness and report on an empirical evaluation of a direct implementation. Our results show that Setchain is orders of magnitude faster than consensus-based ledgers to implement grow-only sets with epoch synchronization. Since the Setchain barriers can be synchronized with block consolidation, Setchain objects can be used as a sidechain to implement many smart contract solutions with much faster operations than on basic blockchains.
... Since the advent of Bitcoin [29], blockchain systems have grown to an entire field of study in computer science. At a high level, a blockchain is a tamper-proof ledger of blocks of data issued by the system members. ...
... At a high level, a blockchain is a tamper-proof ledger of blocks of data issued by the system members. As a baseline, the chain of data blocks keep record of asset transfers between the participants [29], but often it offers more general functionality [12]. To reach agreement on the order in which data blocks appear in the chain, blockchains resort to the fundamental problem of consensus. ...
Preprint
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In a secret single leader election protocol (SSLE), one of the system members is chosen as a leader and no other member can know who the leader is, unless she decides to reveal herself. Leader-election oracles are known to be instrumental in designing efficient consensus protocols, and one can expect that secret leader election may help in developing long-lived blockchain systems that are secure with respect to the adaptive adversary. In this paper, we introduce secret leader sortition (SLS) that we believe to perfectly match progress and security expectations of proof-of-stake (PoS) blockchains. An SLS protocol produces an unpredictable permutation of system members that can be fed to an accompanying blockchain protocol in order to ensure deterministic finality. We describe Homomorphic Sortition, an SLS protocol based on Threshold Fully Homomorphic Encryption (ThFHE). An interesting novelty of our protocol is a cryptographic hash function evaluation under ThFHE and, somewhat surprisingly, we show that all ThFHE stimuli required for our protocol can be efficiently and proactively constructed in a parallelizable fashion. In contrast to existing secret leader election protocols, our SLS solution is purely asynchronous and it fairly leverages the stake distribution among the system members: the probability distribution for each position in the permutation is proportional to the stakes of remaining candidates. As we demonstrate, our SLS protocol seamlessly partners with a large family of PoS blockchain implementations.
... Therefore, another critical challenge is how to design/develop a secure and reliable decentralized FL framework without the need to rely on a single server. Since Satoshi Nakamoto proposed a peer-to-peer electronic cash system in 2008, the blockchain technology has been a major means for distributed data-storage and bookkeeping [12]. Blockchain is essentially a decentralized database facilitated by a decentralized network of peer nodes. ...
... 5) Consensus Algorithm: Although the use of digital signatures can partially solve the authentication problem emerging from decentralization, it still cannot completely avoid the double-spending problem [39]. Satoshi Nakamoto proposed the proof-of-work (PoW) consensus algorithm in the Bitcoin system to achieve Byzantine fault tolerance (BFT) for resolving the double-spending problem [12], but it is very time-consuming to undertake the PoW consensus algorithm since users (miners) often need to check for many nonces to find the right solution [40]. Thus, the PoW consensus algorithm may not be a suitable method for consortium and private blockchains. ...
Preprint
Recent research in Internet of things has been widely applied for industrial practices, fostering the exponential growth of data and connected devices. Henceforth, data-driven AI models would be accessed by different parties through certain data-sharing policies. However, most of the current training procedures rely on the centralized data-collection strategy and a single computational server. However, such a centralized scheme may lead to many issues. Customer data stored in a centralized database may be tampered with so the provenance and authenticity of data cannot be justified. Once the aforementioned security concerns occur, the credibility of the trained AI models would be questionable and even unfavorable outcomes might be produced at the test stage. Lately, blockchain and AI, the two core technologies in Industry 4.0 and Web 3.0, have been explored to facilitate the decentralized AI training strategy. To serve on this very purpose, we propose a new system architecture called APPFLChain, namely an integrated architecture of a Hyperledger Fabric-based blockchain and a federated-learning paradigm. Our proposed new system allows different parties to jointly train AI models and their customers or stakeholders are connected by a consortium blockchain-based network. Our new system can maintain a high degree of security and privacy as users do not need to share sensitive personal information to the server. For numerical evaluation, we simulate a real-world scenario to illustrate the whole operational process of APPFLChain. Simulation results show that taking advantage of the characteristics of consortium blockchain and federated learning, APPFLChain can demonstrate favorable properties including untamperability, traceability, privacy protection, and reliable decision-making.
... The concept of BT was devised by an unknown person using the pseudonym Satoshi Nakamoto [16] and was initially developed as the backbone for Bitcoin as a peer-to-peer payment system based on BT. BT is the most popular decentralized digital currency [16] and has been confirmed to be a viable solution in creating trust in a trust-less ecosystem, without a central authority for financial transactions, such as banks and financial institutions. ...
... The concept of BT was devised by an unknown person using the pseudonym Satoshi Nakamoto [16] and was initially developed as the backbone for Bitcoin as a peer-to-peer payment system based on BT. BT is the most popular decentralized digital currency [16] and has been confirmed to be a viable solution in creating trust in a trust-less ecosystem, without a central authority for financial transactions, such as banks and financial institutions. Figure 1 displays the architecture of BT. ...
Article
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An Enterprise Resource-Planning (ERP) system is a complex, highly integrated software package for business organizations. However, an ERP system still has its limits, since the ERP business model is centered around individual enterprises. Today there is a great need for closer interactions between enterprises worldwide, a necessity that ERP systems face great difficulties with, when expanding to a full-on ecosystem. By integrating Blockchain Technology (BT) with ERP, we are entering a new epoch of decentralization, allowing organizations to function frictionless in a unified ecosystem. This study highlights the importance of integrating BT and ERP systems as well as explores the major prospective pillars for utilizing BT and ERP. This paper contributes to the academic literature, since there is little research evidence concerning the technical and business aspects of BT and ERP, so it fills the gap by exploring the main potential areas for deploying BT and ERP systems.
... While none of the previous academic work seems to have received considerable adoption, the first practical emergence of privacy-oriented digital payment systems happened in the context of cryptocurrencies. Researchers developed privacy-oriented modifications of Bitcoin (Nakamoto, 2008), as the use of a public distributed ledger increased the need for a privacy-enhancing design. The two arguably most relevant academic studies in this context are Zerocoin, which hides transaction parties but not the transaction amount (Miers et al., 2013), and Zerocash ( Zerocash is no different than cash" (Garman et al., 2016, p. 81). ...
Thesis
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This dissertation studies issues related to digital currencies and monetary policy. In particular, it analyzes the determinants of the monetary policy of the European Central Bank (ECB) and examines design aspects of central bank digital currencies (CBDCs), e.g., related to financial stability, monetary policy, and privacy. Almost 15 years ago, the US bank Lehman Brothers went bankrupt. This incident marked the beginning of the global financial crisis — a crisis that shook the monetary system. Central banks worldwide introduced unprecedented monetary policy measures to stimulate inflation and economic activity. Since then, the environment for conducting monetary policy has changed due to the structural effects of the crisis. Assets prices, public debt, and the size of central banks’ balance sheets increased substantially and reached all their all-time highs in the euro area in 2021. Besides these economic effects, the global financial crisis was also the starting point of a monetary revolution. As a reaction to the crisis, Satoshi Nakamoto (Nakamoto, 2008) — a pseudonym whose identity remains unknown — initiated a novel decentralized payment system that operates without banks, central banks, and government interference: Bitcoin was born. Originating from Bitcoin, by December 2021, more than 10,000 such cryptocurrencies with a market capitalization of more than two trillion US dollars emerged (Coinmarketcap, 2021). As a consequence of these monetary innovations and the ongoing digitization of payments, central banks consider issuing own digital currencies, so-called CBDCs. CBDCs promise to combine the advantages of (physical) cash and (digital) bank deposits, e.g., cheap, convenient, and safe payments in the digital realm. However, they could also impair financial stability and undermine data privacy. As CBDCs have not been introduced in advanced economies yet, substantial theory-based analyses are required to study their benefits and risks adequately. Chapter 1 addresses the question, which factors influenced the ECB’s monetary policy in the period from 1999 to 2018. After identifying potential monetary policy determinants based on a literature review and textual analysis of the ECB’s public communication, we use an empirical Bayesian model averaging (BMA) approach to determine key variables that impacted the ECB’s monetary policy decisions before and after the global financial crisis. While in the literature, researchers typically select one model to study monetary policy determinants, using BMA allows accounting for uncertainty about the choice of the respective empirical model. This uncertainty arises, amongst others, from the heterogeneity in the ECB’s decision-making body, the Governing Council. Our analysis considers approximately 33,000 different empirical models that can be constructed from the identified potential relevant determinants. Our results suggest the following: First, in the time period analyzed, the ECB mainly focused on the inflation rate when setting interest rates. Second, economic activity indicators were in the focus of the ECB before the financial crisis. Third, over the last decade, the role of economic activity decreased, thereby supporting the hypothesis that inflation was the main driver of monetary policy decisions in the post-crisis period. This result is supported by findings from textual analysis. These results show that, in recent years, official ECB communication mentioned terms related to inflation more frequently than terms related to economic activity. Fourth, when setting interest rates, central bankers appeared to consider more than one model, favoring the use of averaging techniques for studying monetary policy determinants. Chapter 2 focuses on CBDCs. It studies the effects of CBDCs on the financial sector and monetary policy, and analyzes which measures the central bank can undertake to prevent destabilizing effects for the economy. While CBDCs might offer several benefits for their users, they potentially impose threats to the financial sector. They could disintermediate commercial banks and facilitate bank runs since CBDCs, in contrast to commercial bank money, constitute digital forms of central bank money with marginal risk. Thus, in times of crises, private agents could decide to convert substantial amounts of commercial bank money in CBDC, thereby posing a risk to banks’ liquidity. To analyze these concerns in the absence of any CBDC-specific empirical data, we develop a New Keynesian dynamic stochastic general equilibrium model and simulate a financial crisis in a world with and without CBDC. In particular, we compare the effects of remunerated (interest-bearing) and non-remunerated (non-interest-bearing) CBDCs. We find that CBDCs indeed crowd out bank deposits and negatively affect bank funding. However, this crowding-out effect can be mitigated if the central bank chooses to provide additional central bank funds or to disincentivize large-scale CBDC accumulation via low or potentially even negative interest rates. Thus, our results suggest that a CBDC does not necessarily impair the financial sector if the central bank chooses adequate design and policy measures. Chapter 3 studies the design of CBDCs in more detail and addresses the question of how a CBDC should be designed to ensure a high degree of data privacy while taking legal requirements into account. While physical cash allows anonymous transactions, i.e., transaction data is only observable for the two transaction parties involved and not for third parties, such as banks and central banks, CBDC data is generally recorded in a digital database. Opponents of CBDCs criticize that data access for the central bank could incentivize the misuse of CBDC payment data by public sector entities and could undermine citizens’ data privacy. In Chapter 3, utilizing a design science research approach, we propose a CBDC system that preserves citizens’ payment privacy. Despite being often perceived as a tradeoff, we show that it is feasible to provide anonymity for CBDC payments while also complying with regulations related to anti-money laundering and combating the financing of terrorism. Privacy and compliance are guaranteed by zero-knowledge proofs, cryptographic innovations.
... The introduction of blockchain technology [24] has changed the traditional financial ecosystem. With the advent of Ethereum, smart contracts became the basis for the development and implementation of DeFi. ...
Preprint
Decentralized finance (DeFi), which is a promising domain since the era of blockchain 2.0, locked \$200 billion in April 2022. However, it quickly dropped to \$100 billion in May 2022, which makes us realize that security issues in this area are still a challenging job. DeFi is more complex than traditional finance because it is decentralized through blockchain and without a trustworthy third-party institution to act as a guarantee. So it owns not only financial properties but also technical aspects. Existing synthesis work for DeFi tends to ignore the relevance of various layers of security for the whole system. In addition, distinct layers have different means of protection against specific vulnerabilities, which is not considered by existing analytical work. In this paper, we perform a vulnerability analysis for the entire technology layer of the DeFi application, and then we collect the most impactive attacks in recent years. Finally, we summarize the existing optimization approaches for different layers and provide some challenges and future directions.
... 2008 yılında yaşanan küresel ekonomik kriz sonrasında, Bitcoin'in merkeziyetsiz bir yapıya sahip olması onu dünya genelinde dikkat çeken bir kripto para haline getirmiştir. Bitcoin'in dünyada hızla dikkat çekmesinde işlem sürecindeki kolaylığı, düşük işlem maliyetleri, şifrelenmiş yüksek güvenlik düzeyi, arzının 21 milyon ile sınırlı olması ve elektronik bir finansal mekanizma ile yapılan tüm işlemleri blockchain yapısında saklama (Nakamoto, 2008) imkânı sunması büyük rol oynamıştır. ...
Book
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İnsanlığın para ve finansmana olan ilgisi, finansal enstrümanlara her geçen gün yeni bir aracın eklenmesi sonucunu doğurmuştur. Günümüzde, teknolojinin her geçen gün gelişmesi ve inovasyonların da etkisiyle finansal araçların daha güvenlikli bir hale gelmesi mümkün olmuştur. Son dönemde bilgi teknolojilerindeki gelişmelerin etkisiyle, finansal enstrümanlar arasına kripto paralar ya da başka bir ifadeyle dijital paralar dahil olmuştur. Kripto paraların hızla dünyada adını duyurmalarıyla beraber, finans çevrelerince olumlu ya da olumsuz çok fazla düşünce öne sürülmüş ve hala ileri sürülmeye devam etmektedir. Kripto para, dijital ortamda saklanabilen, kâğıt paraya alternatif yenilikçi bir finansal araçtır. Kripto paralar içerisinde dünyada en yaygın olarak kullanılan ve kabul gören Bitcoin'dir.
... Only authorized nodes can read, update, delete and modify signatures in blockchain [22]. Types of blockchains available are Public [23][24][25], Private [26] and Consortium blockchain [27,28]. Public blockchain are most widely used blockchain where each user can participate. ...
Article
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Data security and confidentiality are major goals now days due to the extensive use of the internet for data sharing. In modern era, most of the networks are compromised by intruders to grab access to private, confidential, and highly secured data. An intrusion detection system (IDS) is widely used to secure the network from getting compromised by intruders. Most of the IDS share the signatures of the novel attacks detected by anomaly approach for improving the detection rate and processing time. Security of signature shared by nodes is becoming a considerable problem. This paper presents a novel framework blockchain based hybrid intrusion detection system (BC-HyIDS), which uses the blockchain framework for exchanging signatures from one node to the other in distributed IDS. BC-HyIDS works in three phases where it uses both detection methods and blockchain in the third phase to provide security to data transferred through the network. This system makes use of a cryptosystem to encrypt the data stored in blocks to improve security one level higher. Hyperledger fabric v2.0 and Hyperledger sawtooth is used to implement system. Blockchain framework is created as a prototype using distributed ledger technology which helps in securing signature exchange. Performance of BC-HyIDS is evaluated in terms of accuracy, detection rate, and false alarm rate. From results, it is observed that a 2.8% increase in accuracy, 4.3% increase in detection rate, and a reduction of 2.6% in FAR is achieved. Blockchain performance is evaluated using Hyperledger fabric v2.0 and Hyperledger sawtooth on throughput, processing time, and average latency. BC-HyIDS shows improved performance when used with blockchain.
... The validation of Bitcoin transactions is enabled by its proof-of-work (PoW) consensus mechanism 1 . Bitcoin miners perform scanning for hash value to compete for obtaining the right of recording the block of transactions, and the successful creator of each block is rewarded by a certain amount of bitcoins. ...
Article
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Bitcoin mining is not only the fundamental process to maintain Bitcoin network, but also the key linkage between the virtual cryptocurrency and the physical world. A variety of issues associated with it have been raised, such as network security, cryptoasset management and sustainability impacts. Investigating Bitcoin mining from a spatial perspective will provide new angles and empirical evidence with respect to extant literature. Here we explore the spatial distribution of Bitcoin mining through bottom-up tracking and geospatial statistics. We find that mining activity has been detected at more than 6000 geographical units across 139 countries and regions, which is in line with the distributed design of Bitcoin network. However, in terms of computing power, it has demonstrated a strong tendency of spatial concentration and association with energy production locations. We also discover that the spatial distribution of Bitcoin mining is dynamic, which fluctuates with diverse patterns, according to economic and regulatory changes.
... In the copyright confirmation work, we hope to achieve a copyright management system without the third party, which can protect users' privacy and finish the transaction with fair process. Blockchain technology may be a promising technology and was first proposed by Nakamoto in his paper [15] in 2008. Since the emergence of the first Genesis block, blockchain technology has been developed for thirteen years. ...
Article
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Online education is popular for its flexibility and high accessibility. The transactions of educational multimedia data resources can effectively promote the development of educational informatization and solve the island situation of educational resources. However, educational resources may be facing severe illegal redistribution. And the copyright is not well protected. In most of existing transaction schemes for educational multimedia data, there is always a centralized third party, which may lead to dispute, distrust, or privacy issues. In this paper, we propose a fair and accountable trading scheme for educational multimedia data based on blockchain. We combine anti-collusion code named BIBD-ACC and asymmetric fingerprinting technology to achieve a relatively strong copyright protection. To realize a fair trading, we implement a smart contract with a reasonable pricing model. In addition, we leverage TEE to solve the privacy issues of public chain and IPFS to mitigate the storage cost of the blockchain. We implemented and evaluated the scheme in Ethereum. The results show that our scheme can achieve well copyright protection and preserve the users’ privacy. The overall overhead is reasonable.
... Aquesta tecnologia, té una data de naixement, que és l'any 2008, i que alguns situen amb el paper "Bitcoin: A Peer-to-Peer Electronic Cash System" (Nakamoto, 2008) de Satoshi Nakamoto, autor de biografia desconeguda (García-Morales, 2018). En aquest article es va definir "una estructura distribuïda entre iguals, que es podria utilitzar per resoldre el problema de mantenir l'ordre de les transaccions i evitar el problema de la doble de despesa" (Casino et al., 2019) en anglès anomenat double spending. ...
Thesis
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Blockchain disruptive technology maybe provides solutions to the phenomenon of deepfake and try to solve the problems of image authentication in a post-truth era. With a systematic review, this study selected sixteen significant articles for analysis. The scientific and academic community poses deepfake's phenomenon as a menace because of its social, political and economic impact. The characteristics of the blockchain, such as traceability, tracking, transparency and trust, make it optimal to authenticate and curb the deepfake phenomenon. Goals with distributed file systems, peer-to-peer networks for sharing and storing, DLTs and blockchain framework seem satisfactory. Blockchain technical and methodological characteristics, which are its own such as the use of smart contracts, proof-of-authority, hash values and other parameters, must be combined with artificial intelligence detection systems, watermark technology and complicity and commitment of large tech companies and social media platforms, in the authentication and preservation of digital pristine content and detection of its tampering.
... Nodes issue these transactions in the tangle. If a new transaction is to be added to the chain, in Bitcoin [9] it would be added to the block after a node solves a very complex puzzle or mathematical problem. On the contrary, the tangle would be the approval of two previous transactions. ...
Conference Paper
Blockchain has challenged many of the conventions around digital security. In essence, blockchain supports a decentralized platform maintained by peers instead of a single entity. Furthermore, the data in the blockchain is immutable and is being held in a secure and encrypted way. However, running the blockchain on resource-limited devices, such as a consumer PC or a low-power Raspberry Pi as opposed to dedicated servers, is demanding due to the resource limitation in energy, memory, and time taken to validate the transaction on the blockchain. This paper explores the limitations by evaluating and benchmarking the blockchain framework Geth: a terminal interface for the Ethereum blockchain which makes it possible to create a private blockchain in addition to joining the actual blockchain. This article employs a private blockchain within Geth and benchmarks the blockchain to highlight the differences (and limitations) between the devices. Specifically, we make the following observations: (i) the time it takes to validate and add the transaction to the blockchain on a Raspberry Pi 4 is markedly slower compared to an Intel i9-10885H CPU @ 2.40GHz, (ii) the transaction between PCs compared to transactions between Pis is around two orders of magnitude higher. These valuable insights can be used to help researchers in the design and implementation of blockchain-driven security architectures for distributed systems, such as industrial IoT deployments and UAV swarms.
... Bitcoin was introduced as the system that solved the Double Spend problem [3], a common issue with inherent Digital Cash systems. Nonetheless, the impact in the following years was greater. ...
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Bitcoin is a kind of cryptocurrency that has become a popular stock market investment and it has been steadily rising in recent years, and occasionally falling without warning, on the stock market. Because of its fluctuations, an automated tool for predicting bitcoin on the stock market is required. However, because of its volatility, investors will need a prediction tool to help them make investment decisions in bitcoin or other cryptocurrencies. In this paper, Deep learning mechanisms like Recurrent Neural Network (RNN) and Long short-term memory (LSTM) are proposed to develop a model to forecast the bitcoin price trend in the market. Finally, the predictions result for the Bitcoin price trend are presented over the next 15, 30, and 60 days. Each model is evaluated in terms of Mean Absolute Percentage Error (MAPE) and Root Mean Squared Error (RMSE) forecasting error values. The LSTM model is found to be the better mechanism for time-series cryptocurrency price prediction, but it takes longer to compile.
... In 2009 with the emergence of the Bitcoin application (Nakamoto, 2008), the world became aware of the blockchain, a disruptive technology capable of offering several properties, such as immutability, privacy, reliability, and security. Although distributed systems are commonly used and well understood, the blockchain proposed mechanisms for applications to operate in a decentralized manner, without a single point of failure, forming a new type of application, the Decentralized Autonomous Organization (DAOs). ...
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The blockchain's immutability has allowed previously centralized operations to operate in a new way. The possibility of applications having a new architecture is given thanks to the innovative properties of the technology, which brought alternative control designs for distributed systems and allowed applications to work without the need for a central controlling point. The expansion of blockchain to other areas beyond cryptocurrencies has shown the need for applications to implement solutions to deal with corrective operations. Blockchain 3.0 applications bring new solutions for business needs. However, as opposed to immutability, the revoking functionality is much more complex to be implemented in this type of architecture, but paramount to applications resilience, allowing faulty or invalid information to be revoked, ensuring thus that the blockchain can still be trusted. This work assesses and discusses revocation mechanisms to contribute to the technical feasibility of several applications, which require corrective operations. We present a model in the academic area, which can be replicated for other types of systems in other areas.
... The blockchain hubs cannot straightforwardly handle the off-chain information. Furthermore, arrangements for off-chain capacity complicate exchange checks [10][11][12][13][14][15]. While verifying transactions, blockchain hubs had the opportunity to request information from the off-chain stockpiling frameworks about the transactions that had occurred. ...
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The history of cryptocurrencies like Bitcoin and Litecoin and even the meme coins like Dogecoin have developed fast. Blockchain, the technology that underpins these digital currencies, has drawn considerable interest from the academic community and the business community, including on Twitter. Aside from security and privacy, the blockchain has several other advantages. The average time it takes for a transaction to be validated and stored in each peer node so that it cannot be reversed or revoked is used to measure the performance of blockchain networks. Even though this is referred to as “throughput,” it should not be confused with the number of transactions processed at any given time. To put it another way, the ability of a blockchain network to handle more transactions and more nodes is called scalability. Yet, scalability is problematic to reach a more robust platform of users and transaction load. We will focus on scalability issues and ways to maintain them efficiently. We will also go through the research challenges and future work for blockchain. Hence, researchers working on blockchain have aimed for a lower level of scalability to let the network’s throughput growsub-linearly because the size of the network increases. The resulting schemes are mostly mentioned as scale-out blockchains. We have heard of Sharding, Lightning Network or Ethereum Plasma and Matic; they all will be considered as scale-out solutions to the matter of blockchain scalability.
... Miner is allowed to add the block to the ledger only when solving a math puzzle, and as a result, they are awarded a reward [13]. ...
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With the rapid spread of technology in life and the necessary need to increase the speed of payment processes, confidentiality, and privacy, cryptocurrencies appeared. A cryptocurrency is a virtual and intangible currency, in which transactions are made through the internet. These currencies are characterized by decentralization, transparency, and privacy. Because transactions are carried out through a cryptography process and depend on Blockchain technology it is highly protected. Blockchain generally is a distributed ledger or a decentralized database. The Blockchain architecture combines advanced cryptography, consensus mechanisms, and a complex system of incentives. In cryptocurrency, transactions are created, transferred, and verified through an integrated process called mining. Blockchain technology architecture has given cryptocurrencies many advantages and features that increase their strength and distinction from regular financial transactions such as decentralization, confidentiality, anonymity, very low fees, unrestricted by geography, transparency, protection from Inflation, and the peer-to-peer network. The misuse of powerful features in cryptocurrencies and Blockchain technology has led to many disadvantages such as the risks of lack of knowledge, the lack of wide This work is licensed under a Creative Commons Attribution 4.0 International License International Journal of Applied Sciences and Smart Technologies Volume 4, Issue 1, pages 1-20 p-ISSN 2655-8564, e-ISSN 2685-9432 2 acceptance, the high risk of investment, its volatile nature, and the inability to return missing payments. This study concentrates on cryptocurrencies in terms of advantages and disadvantages.
... Now, it has evolved to various decentralized network web services, such as ZeroNet, Beaker, and SafeNetwork in recent years. As the essential characteristics of cloud computing services that directly connect consumers and providers [3], these services download required data from the client-side using blockchain [4] or BitTorrent [5] in order to use a web service without servers via a peer-topeer (P2P) service. is structure is different from that of a centralized service, which processes a response by a single web server in general. Decentralized network web services are difficult to access via generally used web browsers. ...
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Recently, various decentralized network web services are emerging. However, the decentralized network web service is not well exposed to general users because it is difficult to access it using a general portal search engine. This point is similar to the deep web, and in the case of Tor (The Onion Routing), a kind of deep web. It has been used for various online crimes such as distribution of child pornography and online drug dealing, and its usage is continuously increasing. Therefore, the decentralized network web service is also likely to be abused for crimes, and forensic investigation techniques are needed to respond to the crime of the decentralized network web service. This paper is about artifact analysis to identify traces of users accessing and actioned on ZeroNet, which is one of the decentralized network web services, and the digital forensic method for applying to forensic investigations for decentralized network web services. As a result, the method of acquiring artifacts for meaningful user access trace analysis and the storage structure of access record trace data were analyzed for a total of five platforms including Windows and macOS. As a result of analyzing the acquired data, it was able to identify users who distributed decentralized network web services through the illegal decentralized network web service address accessed by the user, a list of files downloaded to access the decentralized network web service and BitTorrent. In addition, it constructed a hypothetical scenario and presented a plan to use it from the perspective of forensic investigation. Through this thesis, when ZeroNet, a kind of decentralized network web service, is found on the user’s PC during a forensic investigation, it contributes to the development of forensic investigation techniques by presenting a method to obtain a list of decentralized network web service addresses, downloaded files, and users sharing files.
... In today's world, "voting" has become a ubiquitous notion that includes any decentralized decision-making protocol or system, where the voters are often abstract entities ("virtual"), and the voting process automated; and the purpose of reaching consensus is often non-social and non-political, such as to enhance the overall security of an industrial operation or infrastructure (Garcia-Molina (1982); Lamport et al. (1982)). Examples include cloud computing (Armbrust et al. (2009); Dean and Ghemawat (2008)), smart power grids (Huang and Baliga (2009)), and more recently, trading or payment platforms and exchanges built upon the blockchain technology (Nakamoto (2008); Wood (2014)). ...
Preprint
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We propose and study a new class of polynomial voting rules for a general decentralized decision/consensus system, and more specifically for the PoS (Proof of Stake) protocol. The main idea, inspired by the Penrose square-root law and the more recent quadratic voting rule, is to differentiate a voter's voting power and the voter's share (fraction of the total in the system). We show that while voter shares form a martingale process, their voting powers follow a super-martingale that decays to zero over time. This prevents any voter from controlling the voting process, and thus enhances decentralization. When the initial total volume of votes (or stakes) is large, we show a phase transition in share stability (or the lack thereof), corresponding to the voter's initial share relative to the total. We also study the scenario in which trading (of votes/stakes) among the voters is allowed, and quantify the level of risk sensitivity (or risk averse) that will remove any incentive for a voter to trade.
... The so-called miners then collect transactions, pack transactions into blocks, and append blocks to the blockchain. The whole network follows a consensus protocol (e.g., Nakamoto consensus [26]) allowing honest participants to agree on a consistent version of the blockchain. Transactions waiting to be confirmed on-chain are stored in the so-called mempool 2 . ...
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Financial speculators often seek to increase their potential gains with leverage. Debt is a popular form of leverage, and with over 39.88B USD of total value locked (TVL), the Decentralized Finance (DeFi) lending markets are thriving. Debts, however, entail the risks of liquidation, the process of selling the debt collateral at a discount to liquidators. Nevertheless, few quantitative insights are known about the existing liquidation mechanisms. In this paper, to the best of our knowledge, we are the first to study the breadth of the borrowing and lending markets of the Ethereum DeFi ecosystem. We focus on Aave, Compound, MakerDAO, and dYdX, which collectively represent over 85% of the lending market on Ethereum. Given extensive liquidation data measurements and insights, we systematize the prevalent liquidation mechanisms and are the first to provide a methodology to compare them objectively. We find that the existing liquidation designs well incentivize liquidators but sell excessive amounts of discounted collateral at the borrowers’ expenses. We measure various risks that liquidation participants are exposed to and quantify the instabilities of existing lending protocols. Moreover, we propose an optimal strategy that allows liquidators to increase their liquidation profit, which may aggravate the loss of borrowers.
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Abstract: Cryptocurrency is a digital means of exchange of non-physical or digital currencies. It is a universal currency system which resolves the problem of currency exchange between two different nations with different currencies. Thus, cryptocurrencies have risen as imperative financial software systems in various countries. It is dependent on a secure distributed ledger data structure for the transactions. The exchange rates on the cryptocurrencies are not stable and keep changing with time, thus it is exploited the most by the traders. Mining is a method through which new units of cryptocurrencies are generated and earned. It also adds past transactions to the distributed and open ledger among the users known as the blockchain. In this paper, we shall discuss the mining techniques, growth of cryptocurrencies and the associated risks and returns.
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Nowadays, cloud system is laid low with cyber-attack that underpin a great deal of today’s social group options and monetary development. To grasp the motives behind cyber-attacks, we glance at cyber-attacks as societal events related to social, economic, cultural and political factors (Kumar and Carley in 2016 IEEE conference on intelligence and security information science (ISI). IEEE, 2016 [1]). To seek out factors that encourage unsafe cyber activities, we have a tendency to build a network of mixture country to country cyber-attacks, and compare the network with different country-to-country networks. During this paper, we gift a completely unique approach to find cyber-attacks by exploitation of three attacks (Zero, Hybrid and Fault) which may simply break the cyber system. In hybrid attack, we use two attacks, dictionary attack and brute-pressure attack. Firstly, we analyze the system and then lunch the attacks. We have a tendency to observe that higher corruption and an oversized Web information measure favor attacks origination. We have a tendency to additionally notice that countries with higher per-capita-GDP and higher info and communication technologies (ICT) infrastructure are targeted a lot often (Kumar and Carley in 2016 IEEE conference on intelligence and security information science (ISI). IEEE, 2016 [1]).
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In recent decades, the industrial applications of the internet of things (IoT) have been attracting massive motivation for research and improvement of industrial operations. The IoT technology integrates various smart objects (or things) to form a network, share data among the connected objects, store data, and process data to support business applications. It is challenging to find a univocal architecture as a reference for different business applications, which can relate to many sensors, intelligence devices, networks, and protocols for operations. Moreover, some of the IoT infrastructural components are a shortage of computational processing power, locally saving ability, and data communication capacity, and these components are very vulnerable to privacy and security attacks. This chapter presents an overview of different IoT-based architectures and security-related issues. Finally, the chapter discusses the challenges of cryptography and blockchain-based solutions after reviewing the threats of IoT-based industry-specific business cases.
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To establish that a document was created after a given moment in time, it is necessary to report events that could not have been predicted before they happened. To establish that a document was created before a given moment in time, it is necessary to cause an event based on the document, which can be observed by others. Cryptographic hash functions can be used both to report events succinctly, and to cause events based on documents without revealing their contents. Haber and Stornetta have proposed two schemes for digital time-stamping which rely on these principles [HaSt 91]. We reexamine one of those protocols, addressing the resource constraint required for storage and verification of time-stamp certificates. By using trees, we show how to achieve an exponential increase in the publicity obtained for each time-stamping event, while reducing the storage and the computation required in order to validate a given certificate. We show how time-stamping can be used in certain circumstances to extend the useful lifetime of different kinds of cryptographic certifications of authenticity, in the event that the certifying protocol is compromised. This can be applied to digital signatures, or to time-stamping itself, making the digital time-stamping process renewable.
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The prospect of a world in which all text, audio, picture, and video documents are in digital form on easily modifiable media raises the issue of how to certify when a document was created or last changed. The problem is to time-stamp the data, not the medium. We propose computationally practical procedures for digital time-stamping of such documents so that it is infeasible for a user either to back-date or to forward-date his document, even with the collusion of a time-stamping service. Our procedures maintain complete privacy of the documents themselves, and require no record-keeping by the time-stamping service. Appeared, with minor editorial changes, in Journal of Cryptology, Vol. 3, No. 2, pp. 99--111, 1991. 0 Time's glory is to calm contending kings, To unmask falsehood, and bring truth to light, To stamp the seal of time in aged things, To wake the morn, and sentinel the night, To wrong the wronger till he render right. The Rape of Lucrece, l. 941 1 Introduction ...
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The increasing use of digital documents, and the need to refer to them conveniently and unambiguously, raise an important question: can one "name" a digital document in a way that conveniently enables users to find it, and at the same time enables a user in possession of a document to be sure that it is indeed the one that is referred to by the name? One crucial piece of a complete solution to this problem would be a method that provides a cryptographically verifiable label for any bit-string (for example, the content, in a particular format, of the document). This problem has become even more acute with the emergence of the WorldWide Web, where a document (whose only existence may be on-line) is now typically named by giving its URL, which is merely a pointer to its virtual location at a particular moment in time. Using a one-way hash function to call files by their hash values is cryptographically verifiable, but the resulting names are unwieldy, because of their length and randomn...