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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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... Be that as it may, blockchains' huge and constantly developing size presents critical difficulties for asset-secured gadgets like portable wallets. Lightweight clients depend on conventions like the Improved on Installment Check (SPV) [1], presented in the first Bitcoin whitepaper, to work without downloading and storing the whole blockchain. SPV decreases capacity and computational overhead by downloading just block headers rather than the full block information. ...
... Whether or not it is imaginable to plan more effective synchronization conventions, which permit lightweight clients to safely and dependably interface with blockchain networks while downloading fewer block headers, remains an open and pressing research issue. An ideal synchronization convention ought to meet a few basic prerequisites: (1) it should save decentralization, guaranteeing that no single party is confided in more than others; (2) it ought to empower clients to derive fundamental realities about the blockchain, for example, the Merkle foundation of record adjusts in Ethereum [2], [3] or the legitimacy of explicit exchanges, in light of the downloaded information; and (3) it ought to accomplish huge decreases in data transmission and computational asset utilization without compromising security. ...
... Empowering lightweight synchronization for blockchain clients was first recognized by Nakamoto in the first Bitcoin whitepaper [1]. Early work zeroed in on conventions like SPV, which established the groundwork for asset-proficient blockchain communications; however, it missed the mark regarding adaptability and productivity as blockchain networks grew. ...
... In the late 90s, Nick Szabo proposed using a blockchain as a secure digital payment system called "bit gold", but it was never implemented. It was not until 2009, when the Bitcoin was launched [15], that blockchain had its first real-world application. ...
... Bitcoin was referred to as a "new electronic cash system that is fully peer-to-peer, without trusted third party." [15] Bitcoin was introduced shortly after the financial collapse of traditional banking infrastructure in 2008. The idea of Bitcoin was set out in a white paper by the pseudonymous Satoshi Nakamoto [15]. ...
... [15] Bitcoin was introduced shortly after the financial collapse of traditional banking infrastructure in 2008. The idea of Bitcoin was set out in a white paper by the pseudonymous Satoshi Nakamoto [15]. Today, Bitcoin is the world's largest cryptocurrency by market capitalisation. ...
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... This setup blocks unauthorized access, tampering, or data corruption, ensuring patient information stays secure and trustworthy. It's a vital tool for protecting sensitive health records [1], [14], [22] -Blockchain: Building Trust without a Boss: By running on a network of computers instead of a single authority, blockchain is like a shared notebook everyone can see but no one can change alone. This openness fosters trust and ensures data accuracy, which is critical in healthcare where mistakes can't be afforded [5], [18], [32] -Blockchain: Giving Patients Control: Blockchain hands patients the keys to their health data, letting them decide who gets access. ...
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... Despite its potential, the adoption of blockchain technology requires overcoming challenges. These include developing robust technological infrastructure, investing in the training of qualified human resources, and formulating public policies that support innovation and digital governance (Nakamoto, 2008). ...
... Blockchain technology originates from a decentralized transaction protocol that operates on a peer-to-peer (P2P) network, allowing participants, who may not trust each other, to interact without relying on a central authority (Nakamoto, 2008). This architecture enables the secure and decentralized exchange of information, effectively eliminating the need for intermediaries. ...
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The application of blockchain technology and the implementation of synthetic diamond production represent innovative strategies to transform the mineral resources sector in Angola, with a specific focus on the province of Lunda Sul, where the Catoca mine is located. Blockchain technology aims to improve the governance model and promote greater transparency and traceability in mining operations, a factor that contributes to the mitigation of corrupt practices and the strengthening of corporate responsibility. In addition, the production of synthetic diamonds emerges as a sustainable alternative, capable of reducing the environmental impact associated with traditional mining, and at the same time increasing the competitiveness of the sector in the global market. To support this work, an exploratory and explanatory methodology was adopted, including interviews with key stakeholders, such as two mining companies and the Department of Mines at the Faculty of Engineering of Agostinho Neto University. The referenced interviews enabled a detailed analysis of the current challenges of the sector and the opportunities related to the integration of disruptive technologies, such as blockchain technology, and sustainable practices, such as diamond synthesis. Therefore, the combination of such approaches can transform the Angolan mineral sector, aligning it with contemporary demands for transparency, sustainability, and operational efficiency.
... When a user submits a transaction to the network, each local record state is updated by applying the changes specified in the transaction. Cryptocurrency ledger behavior is often described by as a deterministic state transition systems [15,7,23,31,28]. The main functionality supported by blockchain ledgers programs is a single atomic operation: the application of a transaction to the given state, and all state updates can be decomposed into applications of single transactions. ...
... transaction outputs) in a UTxO set. This model was first introduced in the BitCoin system [23], and currently in use by the Cardano [19] and Ergo [12]. A UTxO entry contains some funds, together with a specification of what kinds of transactions are allowed to "spend" this record, e.g. ...
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Trace-based properties are the gold standard for program behaviour analysis. One of the domains of application of this type of analysis is cryptocurrency ledgers, both for the purpose of analyzing the behaviour of the ledger itself, and any user-defined programs called by it, known as smart contracts. The (extended) UTxO ledger model is a kind of ledger model where all smart contract code is stateless, and additional work must be done to model stateful programs. We formalize the application of trace-based analysis to UTxO ledgers and contracts, expressing it in the languages of topology, as well as graph and category theory. To describe valid traces of UTxO ledger executions, and their relation to the behaviour of stateful programs implemented on the ledger, we define a category of simple graphs, infinite paths in which form an ultra-metric space. Maps in this category are arbitrary partial sieve-define homomorphisms of simple graphs. Programs implemented on the ledger correspond to non-expanding maps out of the graph of valid UTxO execution traces. We reason about safety properties in this framework, and prove properties of valid UTxO ledger traces.
... The principle of blockchain systems to organize data not in a relational way, but as a chain of cryptographically linked transactions, which enables a tamper-proof transaction record, is attributed to Haber and Stornetta (1991). However, the rise of such blockchain systems has become popular with the publication of the Bitcoin whitepaper by Nakamoto (2008), which was also inspired by prior ideas on electronic cash systems (e.g., ECash, Chaum et al. 1990). Since then, blockchain systems have seen an evolution along application domains and technical advancements, which is reflected in the differentiation of multiple generations. ...
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Distributed ledger technology (DLT) emerged as a disruptive force towards decentralization and has expanded beyond its origins in cryptocurrencies like Bitcoin. At the heart of DLT is an infrastructure that replicates data across multiple network nodes, enabling new opportunities for data integrity, transparency, and trust in distributed business environments. In recent years, technological advances have improved the performance, energy efficiency, and functionality of DLT, expanding its application to various sectors such as finance, healthcare, trade and media, logistics, and the public sector. Despite these advances, adoption remained limited, with notable successes primarily in areas such as decentralized finance and non-fungible tokens. By placing DLT within the historical development of ledgers and distributed databases, this Fundamental provides a business-oriented foundation for structuring and assessing DLT-based solutions. It presents, a unified definition covering blockchain technologies, describes the key characteristics of DLT, and offers a structured analysis of its potential and challenges using a multi-dimensional interaction framework. Ultimately, it serves to carve out where and under which conditions DLT infrastructures add value for interorganizational relationships.
... Ethereum [14] was the first blockchain [15] to support smart contracts by providing a Turing-complete execution environment called the Ethereum Virtual Machine (EVM). Currently, Ethereum is the second blockchain in the world in terms of total market value, after Bitcoin [16], with a total market value of $460 billion as of May 2024. By supporting smart contracts, Ethereum is one of the main choices of Web3 developers who implement decentralized apps (dApps) using smart contracts. ...
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Zero-knowledge proofs (ZKP) are becoming a gold standard in scaling blockchains and bringing Web3 to life. At the same time, ZKP for transactions running on the Ethereum Virtual Machine require powerful servers with hundreds of CPU cores. The current zkProver implementation from Polygon is optimized for x86-64 CPUs by vectorizing key operations, such as Merkle tree building with Poseidon hashes over the Goldilocks field, with Advanced Vector Extensions (AVX and AVX512). With these optimizations, a ZKP for a batch of transactions is generated in less than two minutes. With the advent of cloud servers with ARM which are at least 10% cheaper than x86-64 servers and the implementation of ARM Scalable Vector Extension (SVE), we wonder if ARM servers can take over their x86-64 counterparts. Unfortunately, our analysis shows that current ARM CPUs are not a match for their x86-64 competitors. Graviton4 from Amazon Web Services (AWS) and Axion from Google Cloud Platform (GCP) are 1.6X and 1.4X slower compared to the latest AMD EPYC and Intel Xeon servers from AWS with AVX and AVX512, respectively, when building a Merkle tree with over four million leaves. This low performance is due to (1) smaller vector size in these ARM CPUs (128 bits versus 512 bits in AVX512) and (2) lower clock frequency. On the other hand, ARM SVE/SVE2 Instruction Set Architecture (ISA) is at least as powerful as AVX/AVX512 but more flexible. Moreover, we estimate that increasing the vector size to 512 bits will enable higher performance in ARM CPUs compared to their x86-64 counterparts while maintaining their price advantage.
... Despite these regulatory advances, detecting fraud in BTC transactions remains challenging due to the complex nature of cryptocurrency transactions and the evolving sophistication of illicit activities. Unlike traditional financial systems with known identities, BTC transactions occur between cryptographic addresses without revealing personal information (Nakamoto, 2008). This poses challenges in identifying fraudulent activities, as malicious transactions can appear legitimate while concealing illicit behavior (Weber et al., 2019). ...
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The use of cryptocurrencies corresponds to a remarkable moment in global financial markets. The nature of cryptocurrency transactions, done between cryptographic addresses, poses many challenges to identify fraudulent activities, since malicious transactions may appear as legitimate. Using data with these transactions, one may learn machine learning models targeted to identify the fraudulent ones. The transaction datasets are typically imbalanced, holding a few illicit examples, which is challenging for machine learning techniques to identify fraudulent transactions. In this paper, we investigate the use of a machine learning pipeline with di-mensionality reduction techniques over Bitcoin transaction data. The experimental results show that XGBoost is the best performing method among a large set of competitors. The dimensionality reduction techniques are able to identify adequate subsets suitable for explainability purposes on the classification decision.
... Blockchain underpins Bitcoin, the cryptocurrency introduced in a 2008 whitepaper by the pseudonymous Satoshi Nakamoto [12]. Bitcoin's launch began with the mining of its genesis block on January 3, 2009, followed by the release of its first client application six days later. ...
... After the global financial crisis in 2008-2009, financial institutions recognized the need to restructure financial systems to create better models with enhanced security. In 2009, the fintech world was introduced to Bitcoin (Nakamoto, 2008;Narayanan et al., 2016). The advancement of fintech led to the creation of Google Wallet, Apple Pay, Samsung Pay, AliPay, and many other e-wallets (Alam et al., 2021). ...
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The purpose of this study is to address the concept of e-wallet from a Sharīʿah perspective and its potential Sharīʿah concepts, issues, and challenges and to provide relevant recommendations to overcome those issues and challenges. A qualitative research method is adopted in this study to address the concept of e-wallet, Sharīʿah contracts, issues, and challenges from the Sharīʿah perspective. The collected data of this study is analyzed through an explanatory research approach to fulfill the objectives of this study. The study finds that the Sharīʿah compliant e-wallet is realizable from the Sharīʿah perspective. Although a wadīʿah contract is used for deposit/safekeeping purposes, in this study the concept of qarḍ seems to be a better choice for a contract between user and issuer. However, the cashback and rewards are some issues that arise while using the qarḍ contract since a borrower (issuer) is not allowed to return additional benefits/amount to the lender. In this regard, the study concludes that the benefits of e-wallets either might come from the merchant or the issuer. If those benefits are given by the issuer out of his generosity, and without any condition from the borrower (user), the offer of such benefits will be permissible, on the other hand, if it comes in return for a condition, that will be impermissible. Moreover, the benefits provided by the merchants seem to be permissible due to sale contracts in that transaction. The study also finds that a Sharīʿah compliant e-wallet is required to transfer the funds to a trust account under an Islamic financial institution so that it does not issue an interest for that fund. Additionally, if the fund is allowed to invest, it should be invested in a Sharīʿah compliant investment. The results of this study assist the e-wallet providers to consider Sharīʿah compliance of the e-wallet. In particular, the findings reveal the possibilities of Sharīʿah compliant e-wallet regardless of the issues and challenges it might face. Moreover, it provides room for users who are Islamic fintech enthusiasts. This research presents a deeper insight into wadīʿah and qarḍ contract to be used as underlying contracts between e-wallet providers and users.
... En este sentido la idea básicamente es distribuir el control y la autoridad El concepto de descentralización que se aborda desde este estudio es el relacionado con la cadena de bloques, vista como un vehículo perfecto que proporciona una plataforma para eliminar a los intermediarios y funciona agregando múltiples lideres elegidos a través de mecanismos de consensos. Una verdadera innovación en el paradigma descentralizado que ha iniciado esta nueva era de aplicaciones de descentralización es el consenso descentralizado, que se introdujo con bitcoin [10][11], proporcionando a los usuarios seguridad, confiabilidad y escalabilidad por medio de las plataformas desarrolladas. ...
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... After the global financial crisis in 2008-2009, financial institutions recognized the need to restructure financial systems to create better models with enhanced security. In 2009, the fintech world was introduced to Bitcoin (Nakamoto, 2008;Narayanan et al., 2016). The advancement of fintech led to the creation of Google Wallet, Apple Pay, Samsung Pay, AliPay, and many other e-wallets (Alam et al., 2021). ...
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... To illustrate this, we give a simplified example, inspired by an actual vulnerability we found in the ckBTC contracts. ckBTC [14] is a token on the Internet Computer that is securely backed 1:1 by Bitcoin [15] (BTC), allowing faster and cheaper transactions compared to the Bitcoin network. The ckBTC ledger smart contract manages the users' balances of ckBTC. ...
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... In relation to the developments in artificial intelligence (AI), blockchain, and biometric authentication, immense improvement in the security and efficiency of various sectors has been facilitated by the discoveries, e.g., (Chen et al., 2020;Geebren et al., 2021). Blockchain, which is fundamentally an open-source ledger that encourages return to decentralized and tamper-proof transaction records, has the benefit of solving trust and fraud-related problems (Nakamoto, 2008;. NFC (Near Field Communication) technology has made contactless payment solutions more successful, and people can now easily pay for their purchases on their smartphones. ...
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