Article

It Will Cost You Nothing to 'Kill' a Proof-of-Stake Crypto-Currency

Authors:
To read the full-text of this research, you can request a copy directly from the author.

Abstract

It is a widely spread belief that crypto-currencies implementing a proof of stake transaction validation system are less vulnerable to a 51% attack than crypto-currencies implementing a proof of work transaction validation system. In this article, we show that it is not the case and that, in fact, if the attacker's motivation is large enough (and this is common knowledge), he will succeed in his attack at no cost.

No full-text available

Request Full-text Paper PDF

To read the full-text of this research,
you can request a copy directly from the author.

... With all the aforementioned studies, a significant limit of the existing analyses about PoS-based protocols lies in the simplified assumption that ignores the stake trade outside the blockchain network (e.g., at an exchange market) [152]. A study in [153] provides an counterexample for the persistence of PoS in such a situation. The study in [153] assumes no liquidity constraint in a blockchain network, where nodes own the same stake at the beginning stage. ...
... A study in [153] provides an counterexample for the persistence of PoS in such a situation. The study in [153] assumes no liquidity constraint in a blockchain network, where nodes own the same stake at the beginning stage. The author of [153] considers a situation where a determined, powerful attacker attempts to destroy the value of the blockchain by repeatedly buying the stake from each of the other nodes at a fixed price. ...
... The study in [153] assumes no liquidity constraint in a blockchain network, where nodes own the same stake at the beginning stage. The author of [153] considers a situation where a determined, powerful attacker attempts to destroy the value of the blockchain by repeatedly buying the stake from each of the other nodes at a fixed price. After taking into account the belief of the nodes that the attacker will buy more tokens, the interaction between the attackers and the stakeholders is modeled as a Bayesian repeated game. ...
Preprint
Full-text available
The past decade has witnessed the rapid evolution in blockchain technologies, which has attracted tremendous interests from both the research communities and the industry. The blockchain network was originated in the Internet finical sector as a decentralized, immutable ledger system for transactional data ordering. Nowadays, it is envisioned as a powerful backbone/framework for decentralized data processing and data-driven self-organization in flat, open-access networks. In particular, the plausible characteristics of decentralization, immutability and self-organization are primarily owing to the unique decentralized consensus mechanisms introduced by blockchain networks. This survey is motivated by the lack of a comprehensive literature review on the development of decentralized consensus mechanisms in blockchain networks. In this survey, we provide a systematic vision of the organization of blockchain networks. By emphasizing the unique characteristics of incentivized consensus in blockchain networks, our in-depth review of the state-of-the-art consensus protocols is focused on both the perspective of distributed consensus system design and the perspective of incentive mechanism design. From a game-theoretic point of view, we also provide a thorough review on the strategy adoption for self-organization by the individual nodes in the blockchain backbone networks. Consequently, we provide a comprehensive survey on the emerging applications of the blockchain networks in a wide range of areas. We highlight our special interest in how the consensus mechanisms impact these applications. Finally, we discuss several open issues in the protocol design for blockchain consensus and the related potential research directions.
... With all the aforementioned studies, a significant limit of the existing analyses about PoS-based protocols lies in the simplified assumption that ignores the stake trade outside the blockchain network (e.g., at an exchange market) [152]. A study in [153] provides a counterexample for the persistence of PoS in such a situation. The study in [153] assumes no liquidity constraint in a blockchain network, where nodes own the same stake at the beginning stage. ...
... A study in [153] provides a counterexample for the persistence of PoS in such a situation. The study in [153] assumes no liquidity constraint in a blockchain network, where nodes own the same stake at the beginning stage. The author of [153] considers a situation where a determined, powerful attacker attempts to destroy the value of the blockchain by repeatedly buying the stake from each of the other nodes at a fixed price. ...
... The study in [153] assumes no liquidity constraint in a blockchain network, where nodes own the same stake at the beginning stage. The author of [153] considers a situation where a determined, powerful attacker attempts to destroy the value of the blockchain by repeatedly buying the stake from each of the other nodes at a fixed price. After taking into account the belief of the nodes that the attacker will buy more tokens, the interaction between the attackers and the stakeholders is modeled as a Bayesian repeated game. ...
Article
Full-text available
The past decade has witnessed the rapid evolution in blockchain technologies, which has attracted tremendous interests from both the research communities and industries. The blockchain network was originated from the Internet financial sector as a decentralized, immutable ledger system for transactional data ordering. Nowadays, it is envisioned as a powerful backbone/framework for decentralized data processing and data-driven self-organization in flat, open-access networks. In particular, the plausible characteristics of decentralization, immutability, and self-organization are primarily owing to the unique decentralized consensus mechanisms introduced by blockchain networks. This survey is motivated by the lack of a comprehensive literature review on the development of decentralized consensus mechanisms in blockchain networks. In this paper, we provide a systematic vision of the organization of blockchain networks. By emphasizing the unique characteristics of decentralized consensus in blockchain networks, our in-depth review of the state-of-the-art consensus protocols is focused on both the perspective of distributed consensus system design and the perspective of incentive mechanism design. From a game-theoretic point of view, we also provide a thorough review of the strategy adopted for self-organization by the individual nodes in the blockchain backbone networks. Consequently, we provide a comprehensive survey of the emerging applications of blockchain networks in a broad area of telecommunication. We highlight our special interest in how the consensus mechanisms impact these applications. Finally, we discuss several open issues in the protocol design for blockchain consensus and the related potential research directions.
... Secondly, the issue of the disparity between the rich and poor caused by PoS is affirmative. At present, there are still many disputes about PoS [10], [11], and its safety and robustness are not superior to PoW. ...
... Current Pos-based blockchain systems use different methods to produce the randomnes in the creator election to ensure system security [24]- [26]. However, the current PoS is still very controversial [10], [11], and its security and robustness are not superior to PoW. ...
... At present, PoS is still controversial, and there are still many issues that need to be addressed. Nicolas Houy et al. claimed that malicious attackers can easily perform the costfree simulated attacks on the PoS-based blockchain systems [11], while Poelstra claimed that external resource consuming is necessary for blockchain security [10]. In addition, PoS will widen the gap between rich and poor. ...
Preprint
Full-text available
While Proof-of-Work (PoW) is the most widely used consensus mechanism for blockchain, it received harsh criticism due to its massive waste of energy for meaningless hash calculation. Some studies have introduced Proof-of-Stake to address this issue. However, such protocols widen the gap between rich and poor and in the worst case lead to an oligopoly, where the rich control the entire network. Other studies have attempted to translate the energy consumption of PoW into useful work, but they have many limitations, such as narrow application scope, serious security issues and impractical incentive model. In this paper, we introduce AxeChain, which can use the computing power of blockchain to solve practical problems raised by users without greatly compromising decentralization or security. AxeChain achieves this by coupling hard problem solving with PoW mining. We model the security of AxeChain and derive a balance curve between power utilization and system security. That is, under the reasonable assumption that the attack power does not exceed 1/3 of the total power, 1/2 of total power can be safely used to solve practical problems. We also design a novel incentive model based on the amount of work involved in problem solving, balancing the interests of both the users and miners. Moreover, our experimental results show that AxeChain provides strong security guarantees, no matter what kind of problem is submitted.
... This reasoning led researchers to believe that the utility agents derives from the attack must be nonmonetary or, at least, must be generated outside of the blockchain, bringing forward the notion of selfless attacks and Goldfinger attacks that are expected to be performed by governments (to outright destroy blockchains that are used for purchasing illegal goods and services or for tax evasion), organized crime groups (to generally disrupt network functioning), or large investment funds with short positions in cryptocurrencies (to decrease coin value; Kroll et al. 2013). This idea has been incorporated into the mathematical modelling of attacks on PoW and proof-of-stake blockchains with an assumption that a successful attack grants some types of agents an exogenous amount of utility (Houy 2014). Nevertheless, not all researchers shared the optimism of Kroll et al. (2013). ...
... There were no attacks recorded in 2017 (Canellis 2018). This is largely consistent with Kroll et al.'s (2013) and Houy's (2014) assertions: Among these five, only attacks on Terracoin and Feathercoin have had a double-spending motivation. CoiledCoin is believed to be attacked for personal motives (thus, the self less attacker derived exogenous utility); Shift and Krypton were threatened with a 51% attack to extract ransom from the projects' lead developers and consequently attacked after a refusal to pay (out-of-chain financial motivation). ...
... Most well-known and widely implemented consensus algorithms are Proof-of-Work (Bitcoin, Bitcoin Cash, Litecoin, ZCash, etc.) and Proof-of-Stake, including Delegated Proof-of-Stake (EOS, Tezos, Peercoin, Cardano, etc.). There has been a major debate in the blockchain enthusiast community over which of the two solutions is superior in terms of security, sustainability or scalability (Houy, 2014;Zheng et al., 2017;Truby, 2018). Ciaian and Rajcaniova (2018) provide some early empirical evidence for the difference in performance for PoW and PoS coins. ...
... Period of listing effect is of expected sign and much more pronounced, suggesting the applicability of Barry and Brown (1984) differential information theory to cryptocurrency markets. PoS coins are shown to be riskier than PoW coins, possibly evidencing concerns with unconventional attacks on PoS blockchains (see, for example, Houy, 2014;Gazi et al., 2018) are more prominent than the well-known 51% attack issue is for PoW coins (see Shanaev et al., in press). (Newey and West, 1987). ...
Preprint
Full-text available
This study applies Fama-French-style factor loading analysis to cryptocurrency financial performance data to determine the originality of 32 reportedly novel consensus algorithms ("proofs") and 20 hybrid consensus mechanisms as compared to conventional proof-of-work and proof-of-stake using a sample of 302 cryptocurrencies. Only 14 out of 32 new consensus algorithms and 12 out of 20 hybrid mechanisms are found to be truly original. Innovative consensus protocols are not associated with superior returns while original hybrid solutions are. The findings allow investors to select coins with original "proofs" and to explore performance implications of consensus algorithms. For future research, the applicability of market, size, proof and age factors for risk and attribution analysis of cryptocurrency markets is evidenced.
... Only the agent that intends to devaluate the CC obtains the profit outside the system, e.g., payoff in terms of harsh social regulations on blockchains. The attack is typically launched in multiple stages [61]. Each agent, i.e., the attacker or an honest agent, can observe the historical strategies of each other and then optimize its own strategy. ...
... Each agent, i.e., the attacker or an honest agent, can observe the historical strategies of each other and then optimize its own strategy. Therefore, a sequential game is proposed in [61] to model the interaction between the attacker and other agents. In the game, the players include one attacker and some other agents. ...
Article
Over the past decade, blockchain technology has attracted tremendous attention from both academia and industry. The popularity of blockchains was originated from the concept of crypto-currencies to serve as a decentralized and tamper-proof transaction data ledger. Nowadays, blockchains as the key framework in the decentralized public data-ledger have been applied to a wide range of scenarios far beyond crypto-currencies, such as the Internet of Things, healthcare, and insurance. This survey aims to fill the gap between a large number of studies on blockchain networks, where game theory emerges as an analytical tool, and the lack of a comprehensive survey on the game theoretical approaches applied in blockchain-related issues. In this survey, we review the game models proposed to address common issues in the blockchain network. The focus is placed on security issues, e.g., selfish mining, majority attack and denial of service attack, issues regarding mining management, e.g., computational power allocation, reward allocation, and pool selection, as well as issues regarding blockchain economic and energy trading. Additionally, we discuss the advantages and disadvantages of these selected game theoretical models and solutions. Finally, we highlight important challenges and future research directions of applying game theoretical approaches to incentive mechanism design and the combination of blockchain with other technologies.
... Additionally, the ability of the consensus mechanism to resist the quantum attack is indispensable because a quantum computer can provide greater parallel computing power than can a recent traditional computer [11], [12]. Thus, a significant challenge of blockchain security is preventing malicious miners from implementing the 51% attack and the selfish strategy attack by centralizing resources or using a quantum computer [4], [11], [13]. ...
... The core argument is that a resource-based consensus mechanism is susceptible to costless simulation attacks. It implies that such attacks allow construction of an alternate view of history at no cost, and lead to a different currency allocation of blockchain-based cryptocurrency systems [13]. Table 1 presents a comparison of various consensus mechanisms. ...
Article
Full-text available
Blockchain, a type of a decentralized network system that allows mutually distrustful parties to transact securely without involving third parties, has recently been attracting increasing attention. Hence, there must be a consensus mechanism to ensure a distributed consensus among all participants. Such a consensus mechanism may also be used to guarantee fairness, correctness and security of such decentralized systems. Thus, in this paper we propose a novel consensus mechanism named GSCS that is an improved version of PoW. Compared with existing consensus mechanisms (such as PoW, PoS and so on), GSCS provides strong resistance to resource centralization, the quantum attack and other malicious attacks. In this work, we first present the serial mining puzzle to resist collusive mining and the quantum attack. It guarantees that participants can only obtain a negligible advantage by solving the relevant problem in parallel. Second, GSCS considers the influence of participant credibility. The credibility is reflected by the mining behavior of each participant and directly influence to the mining difficulty of participant. Thus, credible participants enjoy a higher probability of winning the mining competition than do participants who are not credible. Finally, performance of GSCS is analyzed in terms of the common prefix, chain quality, chain growth, and power cost. The results indicate that GSCS is security- and incentive-compatible with suitable security parameter settings. In brief, GSCS has the potential to ensure a more secure and robust environment for decentralized blockchain systems.
... Only the agent that intends to devaluate the CC obtains the profit, e.g., law enforcement, outside the system. The attack is typically launched in multiple stages [61], and thus each agent, i.e., the attacker or one of other agents, can observe the historical strategies of each other and then optimize its own strategy. Therefore, a sequential game can be used to model the interaction between the attacker and other agents as proposed in [61]. ...
... The attack is typically launched in multiple stages [61], and thus each agent, i.e., the attacker or one of other agents, can observe the historical strategies of each other and then optimize its own strategy. Therefore, a sequential game can be used to model the interaction between the attacker and other agents as proposed in [61]. In the game, the players include one attacker and other agents. ...
Preprint
Full-text available
In the past decades, the blockchain technology has attracted tremendous attention from both academia and industry. The popularity of blockchain networks was originated from a crypto-currency to serve as a decentralized and tamperproof transaction data ledger. Nowadays, blockchain as the key framework in the decentralized public data-ledger, has been applied to a wide range of scenarios far beyond crypto-currencies, such as Internet of Things (IoT), healthcare, and insurance. This survey aims to fill the gap between the large number of studies on blockchain network, where game theory emerges as an analytical tool, and the lack of a comprehensive survey on the game theoretical approaches applied in blockchain related issues. In this paper, we review game models proposed to address common issues in the blockchain network. The issues include security issues, e.g., selfish mining, majority attack and Denial of Service (DoS) attack, issues regard mining management, e.g., computational power allocation, reward allocation, and pool selection, as well as issues regarding blockchain economic and energy trading. Additionally, we discuss advantages and disadvantages of these selected game models and solutions. Finally, we highlight important challenges and future research directions of applying game theoretical approaches to incentive mechanism design, and the combination of blockchain with other technologies.
... In proof of stake, a validator is selected in a pseudorandom fashion, with the probability of being selected proportional to the validator's share in the network [51] [52]. Naive Proof of Stake consensus mechanisms are prone to attacks like the "nothing at stake" attack, and require further considerations for it to be consensus-safe [53]. Block finality in PoS blockchains is faster compared to PoW blockchains, since there is no computational puzzle solving involved in choosing the validator. ...
Article
Full-text available
The Blockchain technology has revolutionized the digital currency space with the pioneering cryptocurrency platform named Bitcoin. From an abstract perspective, a blockchain is a distributed ledger capable of maintaining an immutable log of transactions happening in a network. In recent years, this technology has attracted significant scientific interest in research areas beyond the financial sector, one of them being the Internet of Things (IoT). In this context, the Blockchain is seen as the missing link towards building a truly decentralized, trustless and secure environment for the IoT and, in this survey, we aim to shape a coherent and comprehensive picture of the current state-of-the-art efforts in this direction. We start with fundamental working principles of blockchains and how blockchain-based systems achieve the characteristics of decentralization, security, and auditability. From there, we build our narrative on the challenges posed by the current centralized IoT models, followed by recent advances made both in industry and research to solve these challenges and effectively use blockchains to provide a decentralized, secure medium for the IoT.
... Since the early proposals, a main concern with PoS has been its security and the possibility of attacks such as malicious forking and double spending (Houy, 2014;BitFury Group, 2015;Narayanan et al., 2016;Kiayias et al., 2017;Brown-Cohen et al., 2018;Fan and Zhou, 2018;Deirmentzoglou et al., 2019). In this paper we focus instead on the system monetary dynamics with PoS, that is on understanding how users may behave in terms of money holding and, based on this, how the whole monetary system would characterize and evolve. ...
Article
Full-text available
In recent years blockchain consensus mechanisms based on Proof of Stake gained increasing attention as an alternative to Proof of Work, which requires high energy consumption. In its original version Proof of Stake hinges on the idea that, for a user, the likelihood to confirm the next block is positively related to the amount of currency units held in the wallet, and possibly also on the time length which the money has been unspent for. In a simple framework with risk neutral users we provide some early insights on the monetary equilibrium of Proof of Stake based platforms. In particular, we find that the aggregate demand and supply of currency may not coincide, which implies that users could hold suboptimal quantities of the currency. Furthermore, we also discuss how symmetric stationary states of the system could be implausible. As a consequence, a long run uniform distribution of money would seem unlikely unless appropriate measures are introduced.
... In view of the resource waste and the long consensus time, the literature [13] proposed the Proof of Stake (PoS). Compared with the PoW, this mechanism reduces the resource consumption caused by mathematical operations, and introduces tokens to shorten the time for consensus. ...
Article
Full-text available
In the blockchain system, the consensus mechanism not only helps the nodes maintain data consistency, but also has certain functions for token issuance and attack prevention. Aiming at the problems of low enthusiasm and weak centralization in Delegated Proof of Stake (DPoS), this paper proposes a weak centralization consensus mechanism with more incentive effect. We replace the voting link with opportunity verification mechanism, and make the voting link that affects the enthusiasm of nodes become the embodiment of their own rights and interests, so as to strive for the maximization of their own interests. And we also introduce the method of random guess to make the selection of representative nodes more random, so as to achieve the situation of weaker center. At last, combined with the existing problems, the paper analyses the feasible solution with this mechanism.
... To avoid sybil attacks, Bitcoin adopted proofof-work, resulting in a huge waste of energy resources. Alternative approaches based on proof-of-X, where X could be stake, space, activity, etc. seem not be able to fully address this problem [32] so far. ...
... The more accumulated the coin age, the more chance there is to win. Once the winning is already, the coin age will be consumed, and the probability of a second win will be reduced [26]. ...
Article
Full-text available
As the core of a blockchain system, the consensus mechanism not only helps to maintain the consistency of node data, but also gets involved in the issuance of tokens and prevention of attacks. Since the first blockchain system was born, it has been continuously improved with the development of blockchain technology and evolved into multiple new branches. Starting with the basic introduction of consensus and the classic Byzantine Generals Problem in distributed computing area, this survey utilizes a thorough classification to explain current consensus protocols in the blockchain system, presents the characteristics of mainstream protocols (PoW, PoS, DPoS, PBFT, etc.) and analyzes the strengths and weaknesses of them. Then we evaluate the performance qualitatively and quantitatively. In the end, we highlight several research directions for developing more practical consensus protocols for the future.
... Eyal and Sirer analyze to which degree Bitcoin may be manipulable by a colluding group of miners [12]. Houy provides a complementary analysis showing that not only proof-of-work transaction validation, but also proof-of-stake validation is vulnerable [17]. Rather than assuming adversarial competition, Lewenberg et al. study how earnings of mining pools can be fairly distributed from a cooperative perspective and highlight problematic parameter constellations [25]. ...
... In practice, this is implemented by slashing participants -redistributing or burning a participant's stake that is committed for validation rewards when they perform a malicious act -who go offline or miss a block that they are supposed to produce. Moreover, there are attacks that are unique to PoS such as the nothing-at-stake and long-range attacks [22,19]. These attacks are impossible in PoW, as resource costs of digital assets are practically zero, especially when compared to costs of natural resources [9]. ...
Preprint
Full-text available
Proof of Stake (PoS) is a burgeoning Sybil resistance mechanism that aims to have a digital asset ("token") serve as security collateral in crypto networks. However, PoS has so far eluded a comprehensive threat model that encompasses both Byzantine attacks from distributed systems and financial attacks that arise from the dual usage of the token as a means of payment and a Sybil resistance mechanism. In particular, the existence of derivatives markets makes malicious coordination among validators easier to execute than in Proof of Work systems. We demonstrate that it is also possible for on-chain lending smart contracts to cannibalize network security in PoS systems. When the yield provided by these contracts is more attractive than the inflation rate provided from staking, stakers will tend to remove their staked tokens and lend them out, thus reducing network security. In this paper, we provide a simple stochastic model that describes how rational validators with varying risk preferences react to changes in staking and lending returns. For a particular configuration of this model, we provide a formal proof of a phase transition between equilibria in which tokens are predominantly staked and those in which they are predominantly lent. We further validate this emergent adversarial behavior (e.g. reduced staked token supply) with agent-based simulations that sample transitions under more realistic conditions. Our results illustrate that rational, non-adversarial actors can dramatically reduce PoS network security if block rewards are not calibrated appropriately above the expected yields of on-chain lending.
... This reasoning led researchers to believe that the utility agents derives from the attack must be non-monetary or at least must be generated outside of the blockchain, bringing forward the notion of "selfless attacks" and "Goldfinger attacks" that are expected to be performed by governments (to outright destroy blockchains that are used for purchasing illegal goods and services or for tax evasion), organised crime groups (to generally disrupt network functioning) or large investment funds with short positions in cryptocurrencies (to decrease coin value) (Kroll et al., 2013). This idea has been incorporated into the mathematical modelling of attacks on proof-of-work and proof-of-stake blockchains with an assumption that a successful attack grants some types of agents an exogenous amount of utility (Houy, 2014). ...
... Although the problem of wasting computing power in PoW has been reduced, it still needs to be mined in essence. The mechanism of coin age accumulation will gradually lead to a situation where "the rich are richer" (Houy, 2014). ...
Chapter
In catering to the needs of the growing e-commerce demand and environmentally friendly urban delivery solutions, parcel logistics companies are increasingly focusing on user experience and sustainable operations such as alternative pickup and delivery options (e.g., lockers) and green delivery vehicles (e.g., electric vehicles). We consider the problem of designing a green location-routing problem with delivery options (GLRP-DO) where the location of lockers to open and the delivery plan of electric vehicles (EVs) are optimized simultaneously to satisfy the total demand, while minimizing the opening cost and handling cost of lockers and the routing cost of EVs. We present an effective branch-and-price (B&P) algorithm to solve it, which is demonstrated to greatly outperform commercial branch-and-cut/bound solvers such as CPLEX in the computational study. Moreover, we provide a thorough analysis of several key parameters of the GLRP-DO (e.g., coverage ranges of lockers and battery driving ranges of EVs), evaluate the impact of delivery options in this green last-mile distribution system and give some useful business insights for parcel logistics companies.
... Snow White 采用与 FruitChains 类似的激励制度, 并且同样采用区块和水果同时生成的挖矿机 制, 交易放在水果中, 水果放在区块中, 将连续几个区块的奖励和其中包含的交易费平均分给区块对应的 出块者, 实现了公平性. (1) 无利害关系攻击 (nothing at stake attack) 无利害关系攻击 [117] 是指攻击者在过去链的不同分叉上挖矿试图获取更高利益. 在 PoS 共识机制中, 制造区块链的分叉不像 PoW 共识机制中需要花费一定的算力成本, 攻击者不会对自身利益造成损失. 如 果没有预防机制, 当区块链出现分叉时, 节点为了增加自身获利的可能性, 在区块链的每个分叉上都挖矿. ...
... For each of them, different flavors exists as well as a large variety of alternative protocols. Having said that, so far all consensus algorithms require trade-offs, or suffer from disadvantage, e.g., scalability issues, security issues, efficiency issues, etc.[79][80]. Hence, consensus algorithms within the context of DLT systems remain a topic of on-going research. The following section briefly introduces the PoW, PoS and PoA consensus algorithms. ...
Thesis
Full-text available
Nowadays, business transactions almost exclusively focus on human-to-human transactions. The persistent growth and expansion of the Internet of Things, the ubiquitousness of so called smart devices, as well as progressing digitalization of our daily life, enables business transactions without human intervention among autonomously acting machine agents; a concept referred to as the Machine-to-Machine (M2M) economy. Besides M2M interactions, machines interact with humans (Machine-to-Human - M2H), or infrastructure components (Machine-to-Infrastructure - M2I). The term Machine-to-Everything (M2X) economy represents a more general view on use cases that involve autonomous smart devices and also encompasses M2M, M2H and M2I scenarios. While the technical concepts of IoT, Smart Homes, Smart Cities and Industry 4.0 that enable the M2X economy have been around for a while now, a widespread adoption as well as applications that use their full potential are still missing. Many isolated applications exist that aim to solve very specific and simplified use cases that fall within the spectrum of the M2X economy. However, an interoperable, integrated, scalable model that facilitates the M2X economy is non-existing. Likewise, concepts for a M2X value transfer and collaborations among machines to achieve shared objectives within this ecosystem are missing as well. This work focuses on the emerging M2X ecosystem in the context of Information System research and makes three contributions: First, it suggests architectural concepts that encompass a blockchain-based interaction-, transaction- and collaboration model for M2X use cases, a business collaboration lifecycle and governance structure as well as a set of modalities for these use cases derived through an exploratory research approach. Second, it presents a decentralized self-sovereign identity solution in combination with a validation and authentication mechanism that is suitable for the M2X ecosystem. Sybil attacks are a common issue of decentralized networks. Thus we present a mechanism to price the costs of a sybil node attack, thereby providing an easy to use metric for the sybil resistance of a decentralized M2X system. As a step towards a formal validation of these novel infrastructural concepts, a Colored Petri Net model is provided covering the protocol-driven data exchange of the M2X identity solution. The developed identity protocols are validated using CPN models and proof-of-concept implementations, while specific aspects of the presented M2X identity solution are evaluated using historical data to asses its suitability. Finally, the feasibility of the M2X interactions-, transactions- and collaboration model as well as the identity solution is demonstrated.
... To avoid sybil attacks, Bitcoin adopted proofof-work, resulting in a huge waste of energy resources. Alternative approaches based on proof-of-X, where X could be stake, space, activity, etc. seem not be able to fully address this problem [32] so far. ...
Preprint
Full-text available
The old mantra of decentralizing the Internet is coming again with fanfare, this time around the blockchain technology hype. We have already seen a technology supposed to change the nature of the Internet: peer-to-peer. The reality is that peer-to-peer naming systems failed, peer-to-peer social networks failed, and yes, peer-to-peer storage failed as well. In this paper, we will review the research on distributed systems in the last few years to identify the limits of open peer-to-peer networks. We will address issues like system complexity, security and frailty, instability and performance. We will show how many of the aforementioned problems also apply to the recent breed of permissionless blockchain networks. The applicability of such systems to mature industrial applications is undermined by the same properties that make them so interesting for a libertarian audience: namely, their openness, their pseudo-anonymity and their unregulated cryptocurrencies. As such, we argue that permissionless blockchain networks are unsuitable to be the substrate for a decentralized Internet. Yet, there is still hope for more decentralization, albeit in a form somewhat limited with respect to the libertarian view of decentralized Internet: in cooperation rather than in competition with the superpowerful datacenters that dominate the world today. This is derived from the recent surge in interest in byzantine fault tolerance and permissioned blockchains, which opens the door to a world where use of trusted third parties is not the only way to arbitrate an ensemble of entities. The ability of establish trust through permissioned blockchains enables to move the control from the datacenters to the edge, truly realizing the promises of edge-centric computing.
... Eyal and Sirer analyze to which degree Bitcoin may be manipulable by a colluding group of miners [12]. Houy provides a complementary analysis showing that not only proof-of-work transaction validation, but also proof-of-stake validation is vulnerable [17]. Rather than assuming adversarial competition, Lewenberg et al. study how earnings of mining pools can be fairly distributed from a cooperative perspective and highlight problematic parameter constellations [25]. ...
Preprint
Full-text available
Cryptocurrency exchanges are frequently targeted and compromised by cyber-attacks, which may lead to significant losses for the depositors and closure of the affected exchanges. These risks threaten the viability of the entire public blockchain ecosystem since exchanges serve as major gateways for participation in public blockchain technologies. In this paper, we develop an economic model to capture the short-term incentives of cryptocurrency exchanges with respect to making security investments and establishing transaction fees. Using the model, we derive conclusions regarding an exchange's optimal economic decisions, and illustrate key features of these conclusions using graphs based on real-world data. Our security investment model exhibits horizontal scaling properties with respect to reducing exposure to losses, and may be of special interest to exchanges operating in markets with high price volatility.
... In order to deal with performance issues, researchers as well as practitioners developed a number of alternative consensus algorithms, such as variations of proof-of-stake (Anh et al., 2018;Bartoletti et al., 2017) and proof-of-activity (Bentov et al., 2014). Proof-of-stake in particular is critically being debated as it divides validators along the number of tokens they hold (Buterin, 2014;Houy, 2014). ...
Article
Blockchain systems continue to attract significant interest from both practitioners and researchers. What is more, blockchain systems come in various types, such as cryptocurrencies or as inter-organizational systems in business networks. As an example of a cryptocurrency, Bitcoin, one of the most prominent blockchain systems to date and born at the time of a major financial crisis, spearheaded the promise of relying on code and computation instead of a central governing entity. Proponents would argue that Bitcoin stood the test of time, as Bitcoin continues to operate to date for over a decade. However, these proponents overlook the never-ending, heated debates “behind the scenes” caused by diverging goals of central actors, which led to numerous alternative systems (forks) of Bitcoin. To accommodate these actors’ interests in the pursuit of their common goal is a tightrope act, and this is where this dissertation commences: blockchain governance. Based on the empirical examples of various types and application domains of blockchain systems, it is the goal of this dissertation to 1) uncover governance patterns by showing, how blockchain systems are governed, 2) derive governance challenges faced or caused by blockchain systems, and, consequently, to 3) contribute to a better understanding to what blockchain governance is. This dissertation includes four parts, each of these covering different thematical areas: In the first part, this dissertation focuses on obtaining a better understanding of blockchain governance’s context of reference by studying blockchain systems from various application domains and system types, for example, led by inter-organizational networks, states, or an independent group of actors. The second part, then, focuses on a blockchain as an inter-organizational system called “cardossier”, a project I was involved in, and its governance as a frame of reference. Hereupon, for one, I report on learnings from my project involvement in the form of managerial guidelines, and, for two, I report on structural problems within cardossier, and problems caused by membership growth and how they can be resolved. The third part focuses on a wider study of blockchains as inter-organizational systems, where I summarize findings of an analysis of 19 blockchain consortia. The findings, for one, answer the question of why blockchain consortia adopt blockchain technology, and, for two, show internal and external challenges these systems faced to derive managerial recommendations. The fourth and last part studies blockchain governance’s evolution and contributes an analysis of blockchain’s governance features and its contrast to established modes of governance. These four parts, altogether, have scientific value as they increase our understanding on blockchain governance. Consequently, this dissertation contributes to the body of knowledge on modes of governance, distributed system governance, and blockchain governance in general. I do so, by grounding the concept of blockchain governance in empirical detail, showing how these systems are governed on various application domains and system types, and by studying empirical challenges faced or caused by these systems. This approach is relevant and necessary, as blockchain systems in general, but particularly outside of cryptocurrencies, mostly still are in pursuit of a sustainable blockchain governance. As blockchains can be expected to continue to mature, the upcoming years offer very fruitful ground for empirical research along the empirical insights and theoretical lines shown in this dissertation.
... Therefore, if an attacker wants to launch an attack similar to 51% attack, he must own enough coins so that even when the coinage is reset, he can still gain more than half of the odds (Tschorsch and Scheuermann, 2015). In addition, Nicolas Houy in (Houy, 2014) proves that PoS is vulnerable to a 51% attack, as the few rich stakeholders can collude to manipulate the state of the ledger. Nevertheless, the probability of a 51% attack in PoS is considered to be lower as compared to the PoW (Gao and Nobuhara, 2017). ...
... In order to deal with performance issues, researchers as well as practitioners developed a number of alternative consensus algorithms, such as variations of proof-of-stake [3,8] and proof-of-activity [19]. Proof-ofstake in particular is critically being debated as it divides validators along the number of tokens they hold [24,80]. ...
Article
Blockchain comes with the promise of being a disruptive technology with the potential for novel ways of interaction in a wide range of applications. Following broader application, scholarly interest in the technology is growing, though an extensive analysis of blockchain applications from a governance perspective is lacking to date. This research pays special attention to the governance of blockchain systems and illustrates decision problems in 14 blockchain systems from four application domains. Based on academic literature, semi-structured interviews with representatives from those organizations, and content analysis of grey literature, common problems in blockchain governance have been singled out and contextualized. Studying their enactment revealed their relevance to major organizational theories in what we labelled “Patrolling the borders,” “External Legitimation,” “Reduction of Discretionality,” and “Temporal Management.” The identification of these problems enriches the scarce body of knowledge on the governance of blockchain systems, resulting in a better understanding of how blockchain governance links to existing concepts and how it is enacted in practice.
... Most well-known and widely implemented consensus algorithms are Proof-of-Work (Bitcoin, Bitcoin Cash, Litecoin, ZCash, etc.) and Proof-of-Stake, including Delegated Proof-of-Stake (EOS, Tezos, Peercoin, Cardano, etc.). There has been a major debate in the blockchain enthusiast community over which of the two solutions is superior in terms of security, sustainability or scalability (Houy, 2014;Zheng et al., 2017;Truby, 2018). Ciaian and Rajcaniova (2018) provide some early empirical evidence for the difference in performance for PoW and PoS coins. ...
... Therefore, if an attacker wants to launch an attack similar to 51% attack, he must own enough coins so that even when the coinage is reset, he can still gain more than half of the odds (Tschorsch and Scheuermann, 2015). In addition, Nicolas Houy in (Houy, 2014) proves that PoS is vulnerable to a 51% attack, as the few rich stakeholders can collude to manipulate the state of the ledger. Nevertheless, the probability of a 51% attack in PoS is considered to be lower as compared to the PoW (Gao and Nobuhara, 2017). ...
... We want to encourage other researchers to adapt our approach to make a comparison of the consensus mechanisms possible. For example, it is hypothesized that Proof-of-Stake blockchains will have a stronger effect of the riches get richer (Zheng et al., 2018) and additionally, have a bigger problem in case of a 51% attack, since it cannot be reversed without a fork (Houy, 2014). Therefore, we propose to research this mechanism next. ...
Conference Paper
Full-text available
The blockchain technology has gained significant popularity among different users around the world by promising them a fully decentralized network independent from trusted third parties, governments or other central authorities. Instead of trusting a single instance, the trust is distributed among a large group of people, that validate transactions and add those to the blockchain. This process, referred to as "mining", has experienced trends of centralization, possibly presenting a major threat to the security and usability of blockchains. So far there is only a limited understanding of the mechanisms behind centralization of mining power. To better understand the underlying mechanisms, we investigated the major Proof-of-Work blockchains (Bitcoin, Ethereum and Litecoin) as well as their successful forks (Bitcoin Cash, Bitcoin SV, Ethereum Classic). We found that the mining ecosystem seems to be self regulating and adapts timely to foreseeable changes. Only unforeseeable adjustments, such as a split of the blockchain, result in strong temporary fluctuations and centralization. Our results provide a thorough understanding of the mining ecosystem and gives reliable indicators for governance control in major public blockchains.
... Therefore, the PoS algorithm does not fundamentally solve the problem of low transaction efficiency and poor scalability of the PoW algorithm in real-world scenarios. In addition, for those nodes that hold a large number of tokens, they can gain tokens more easily than other nodes, which further consolidates the monopoly position of a few nodes [15]. As a latecomer in the blockchain system, it is almost impossible to surpass the earlier nodes in the number of coins and coin age. ...
Article
Full-text available
As the core of blockchain technology, the consensus algorithm plays an important role in determining the security, data consistency, and efficiency of blockchain systems. The existing mainstream consensus algorithm is experiencing difficulties satisfying the needs of efficiency, security, and decentralization in real-world scenarios. This paper proposes a hybrid consensus algorithm based on modified Proof-of-Probability and Delegated Proof-of-Stake. In this method, the work of block generation and validation is, respectively, completed by the nodes using the modified Proof-of-Probability consensus algorithm and Delegated Proof-of-Stake consensus algorithm. When a transaction occurs, the system sends several target hash values to the whole network. Each modified Proof-of-Probability node has a different sorting algorithm, so they have different mining priorities. Every time a hash is decrypted by a modified Proof-of-Probability node, the modulo operation is done to the value of nonce, which is then compared with the expected value given by the supernode selected by the Delegated Proof-of-Stake nodes. If they are not the same, the Proof-of-Probability node enters the waiting time and the other Proof-of-Probability nodes continue to mine. By adopting two consensus algorithms, the malicious nodes must control more than 51% of the nodes that adopt the two consensus algorithms, at the same time, to effectively attack the system, that is, they must have more than 51% of the computing power and more than 51% of the tokens. This not only increases the cost of malicious attacks, but also reduces waste of computing power. In addition, the efficiency of the DPoS algorithm makes up for the deficiency of the PoP algorithm in system efficiency, and the mining behavior based on probability in the PoP algorithm also significantly weakens the ability of supernodes in the DPoS algorithm to conduct monopoly behavior or other malicious behaviors. In a word, the combination of the two algorithms makes the system perform better in terms of security, system efficiency, and decentralization.
... It is assumed the cost for a 51% attack is lower on POW based blockchain systems as for certain alternative consensus mechanisms [3]. However, objections to this claim exist [39]. ...
Technical Report
Full-text available
This work provides a short but technical introduction to the main building blocks of a blockchain. It argues that a blockchain is not a revolutionary technology but rather a clever combination of three fields: cryptography, decentralization and game theory. In addition, it summaries the differences between a public, private and federate blockchain model and the two prominent consensus mechanism Proof-of-Work (POW) and Proof-of-Stake (POS).
... This reasoning led researchers to believe that the utility agents derives from the attack must be non-monetary or at least must be generated outside of the blockchain, bringing forward the notion of "selfless attacks" and "Goldfinger attacks" that are expected to be performed by governments (to outright destroy blockchains that are used for purchasing illegal goods and services or for tax evasion), organised crime groups (to generally disrupt network functioning) or large investment funds with short positions in cryptocurrencies (to decrease coin value) (Kroll et al., 2013). This idea has been incorporated into the mathematical modelling of attacks on proof-of-work and proof-of-stake blockchains with an assumption that a successful attack grants some types of agents an exogenous amount of utility (Houy, 2014). ...
Article
In this article, an event studies approach is utilised to assess the influence of 51% attacks on proof-of-work cryptocurrency prices. The study uses an exhaustive sample of 14 individual attacks on 13 cryptocurrencies. Across multiple event studies techniques, majority attacks on blockchains are consistently shown to immediately decrease corresponding coin prices by 12 to 15 percent. Significantly negative price response is robust in various event windows. Coin prices do not recover to pre-attack levels one week after the event. There is evidence of pump-and-dump schemes prior to the 51% attack, however the market demonstrates high efficiency after the attacks. 51% attacks are suggested to be a fundamental risk factor for cryptocurrency investments, primarily characteristic of small proof-of-work coins with low hash rates.
... Taking over of the blockchain based ledger system is hard achievement. Fixed costs of system for achieving this is rather high (Houy, 2014). In order to properly articulate feasibility we will assume total market cap at the analyzed moment on the network as the value of the assets of ledger system. ...
... Nothing at stake [124] refers to that an attacker tries to mine on different forks of the chain to obtain higher benefits. In a PoS-based blockchain, to generate a fork is not as costly as that in a PoW-based blockchain, where a huge amount of computational power might be required. ...
Preprint
Full-text available
Sharding is the prevalent approach to breaking the trilemma of simultaneously achieving decentralization, security, and scalability in traditional blockchain systems, which are implemented as replicated state machines relying on atomic broadcast for consensus on an immutable chain of valid transactions. Sharding is to be understood broadly as techniques for dynamically partitioning nodes in a blockchain system into subsets (shards) that perform storage, communication, and computation tasks without fine-grained synchronization with each other. Despite much recent research on sharding blockchains, much remains to be explored in the design space of these systems. Towards that aim, we conduct a systematic analysis of existing sharding blockchain systems and derive a conceptual decomposition of their architecture into functional components and the underlying assumptions about system models and attackers they are built on. The functional components identified are node selection, epoch randomness, node assignment, intra-shard consensus, cross-shard transaction processing, shard reconfiguration, and motivation mechanism. We describe interfaces, functionality, and properties of each component and show how they compose into a sharding blockchain system. For each component, we systematically review existing approaches, identify potential and open problems, and propose future research directions. We focus on potential security attacks and performance problems, including system throughput and latency concerns such as confirmation delays. We believe our modular architectural decomposition and in-depth analysis of each component, based on a comprehensive literature study, provides a systematic basis for conceptualizing state-of-the-art sharding blockchain systems, proving or improving security and performance properties of components, and developing new sharding blockchain system designs.
Article
Full-text available
In this paper, we revisit the fundamental question of Bitcoins se- curity against selfish-mine attack introduced by I. Eyal and E. G. Sirer in [5]. We study the state machine of Bitcoin’s network under the influence of one pool miner adopting the self- ish mine strategy while the rest of the community following the standard protocol. We prove that the process following by the states of Bitcoin’s system is a irreducible, positive-recurrent, aperiodic, and discrete Markov chain. We give an invariant (stationary) distribution for this Markov chain and deduce easily the rate of convergence towards the stationary equilibrium situation.
Article
In the paper we investigate consensus formation, from an economic perspective, in a Proof-of-Stake (PoS) based platform inspired by the Algorand blockchain. In particular, we consider PoS in relation to governance, focusing on two main issues. First we discuss alternative sampling schemes, which can be adopted to select voting committees and to define the number of votes of committee members. The selection probability is proportional to one’s stake and increases with it. Participation in governance allows users to affect the platform’s decisions as well as to obtain a reward. Then, based on such preliminary analysis, we introduce a microeconomic model to investigate the optimal stake size for a generic user. In the model we conceptualize an optimal stake, for a user, as striking the balance between having Algos immediately available for transactions and setting aside currency units to increase the probability of becoming a committee member. Our main findings suggest that the optimal stake can be quite sensitive to the user’s preferences and to the rules for selecting committees. We believe the findings may support policy decisions in PoS based platforms.
Chapter
Blockchain, as a decentralized network system, has been attracting increasing attention in recent years. In a blockchain system, there must be a consensus mechanism to ensure the distributed consensus among all parties. Such consensus mechanism may also be applied to guarantee fairness, correctness, and sustainability of such decentralized systems. In this paper, we propose a novel consensus mechanism, named Proof-of-Credibility (PoC), which is an improved version of Proof-of-Work (PoW). Compared with existing consensus mechanisms, PoC provides strong resistance to resource centralization and other malicious attacks. First, we present the Serial Mining Puzzle (SMP) to resist collusive mining. SMP guarantees that participants only get negligible advantage by parallel solving. Second, PoC considers the influence of participant credibility, which is reflected by the mining behaviour of a participant. Thus, credible participants get higher probability of winning the mining competition than incredible ones. Finally, the performance of PoC is analyzed in terms of common prefix, chain quality and power cost. Our analysis indicates that PoC is security and incentive compatible with suitable security parameter settings.
Article
The Internet of Things (IoT) is increasingly being utilized, by both businesses and individuals, for many applications. This utilization means increases in the smart devices that are connected to the Internet of Things, which will significantly increase the challenges related to devices' interconnectivity and management, data and user privacy, and network, data, and device security. At the same time, blockchain approaches provide a decentralized, immutable, and peer-to-peer ledger technology that could be the right answer to these challenges. Significant challenges, however, accompany the integration of blockchain into the Internet of Things, since IoT smart devices may suffer from resource and power constraints and blockchain is associated with scalability and delay issues. In this paper, a practical incorporation of blockchain into the Internet of Things is demonstrated using Ethereum Proof of Authority (PoA). This provides performance analyses, which include measurement of the transaction arrival time, the system end-to-end latency for different network implementations over cellular and Wi-Fi, and the average power consumption. This includes the study of the effect of network bandwidth on the stability and synchronization of all nodes on the blockchain network.
Chapter
Blockchain is a new technology resulting from a continuous research on consensus mechanisms to ensure the integrity of a distributed shared replica. It represents a data structure built on a hash function and distributed among the various participants according to previously agreed consensus rules. This work aims to carry out a comprehensive survey of the consensus mechanism that forms the heart of blockchain technology and its suitability for the Internet of Things. It begins by explaining blockchain technology from a historical and technical point of view before approaching the different philosophical approaches within the consensus mechanism, their disadvantage, and their suitability for the IoT sector.
Chapter
Proof of Activity (PoA) is a key algorithm to reach consensus among nodes. In current PoA, N online representative nodes are only used to create one transaction block, and the probability of creating a block by malicious nodes cannot be controlled, which leads to a serious waste of computing power. An improved algorithm proposed in this paper introduces credit reward mechanism to replenish the missing trust in current PoA. It also can control the probability that the node obtains the right of creating block head and trading block according to the credit value and set up the reward and punishment scheme according to the proportion of credit value, which decrease the cost of good node generating block with increasing credit value and increase the cost of malicious node creating block significantly. The algorithm uses Byzantine fault tolerant idea and follow-the-Satoshi mechanism to select representative nodes through multi-level selection and set different workload for the nodes at different levels, by which the probability of malicious nodes creating transaction blocks is reduced effectively. The experimental results show that the number of transaction blocks in a block header in CPoA is 1.75 times increase than PoA. The reward and punishment scheme can achieve the purpose of dealing with malicious nodes quickly. When the proportion of malicious nodes increased from 30% to 70%, the average decline rate of their overall credit value increased about 1.7 times, which reduces the probability of malicious nodes creating blocks, increases the cost of malicious nodes creating blocks, and enhances the stability of the system.
Article
K-medoids cluster-based Proof of Action consensus algorithm (KPoA) is proposed by us in order to mainly decrease the computing power wast and Malicious information dissemination in Proof of Activity consensus algorithm (PoA). In PoA, offline participant nodes cause block headers to be discarded, then the terrible wastage of computing power takes place. Moreover, the efficiency of consensus is greatly affected because the malicious nodes are not handled in time. KPoA uses K-medoids clustering and follow-the-satoshi mechanism to select participant nodes and accounting nodes successively to ensure the unpredictability of accounting nodes. All nodes are grouped by K-medoids clustering, which help to achieve transaction blocks' hierarchical consensus and reduce the spread of malicious information. Multiple accounting nodes take turns to create transaction blocks in the same block header, which nicely increases the number of transaction blocks and reduces the waste of computing power. In order to improve the activity of nodes, the reward and punishment scheme based on credit is set up. The credit value is used to adjust the probability of a node creating blocks. Also malicious nodes can be eliminated in time according to credit value. Experimental results show that KPoA creates transaction blocks at an acceleration of about 2.5 times that of PoA. And its stability is better than PoA.
Conference Paper
A smart contract is a program that resides its binary code and states in blockchain to provide contract-like functionality. The binary code is unchangeable once it is deployed into the chain. This can ensure the underlying blockchain to be an append-only decentralized and secure database, but it may also bring potential threats. For example, Selfdestruct is a typical command used to disable a smart contract and clean all relevant information. It is believed that if an address of a deactivated contract is inaccessible, it is impossible for an attacker to explore. However, in this work, we identify that instead of erasing or overwriting the previously recorded data, the smart contract’s running environment may store its latest data and states in the latest block even after using Selfdestruct. Motivated by this observation, we show how these remained traces can reveal private information, i.e., how a privatized function can be externally accessed, and discuss how to attack the contract without knowing its application binary interface (ABI). In the end, we also discuss some potential solutions to protect information leakage in such scenario.
Chapter
Blockchain is a kind of decentralized distributed ledger technology. Consensus algorithm is one of the main technologies of blockchain. Its efficiency and security directly affect the overall performance of the blockchain systems. Nowadays, Practical Byzantine Fault Tolerance (PBFT) algorithm is widely applied in the consortium blockchain systems. However, this consensus algorithm cannot identify and remove Byzantine nodes in time. In order to address these problems, this paper proposes an Optimized Practical Byzantine Fault Tolerant (OPBFT) consensus algorithm. It contains an improved reputation model that evaluates the node’s credibility for different behaviors of the nodes during the consensus process, and integrates byzantine detection and degradation mechanisms to reduce the probability of malicious nodes becoming consensus nodes and solve the problem of increased transaction delay caused by it; Simultaneously, it adopts an optimized consistency protocol to reduce communication overhead and improve consensus efficiency. Finally, the argumentation and analysis are carried out from the aspects of communication overhead, throughput, delay and security.
Article
Blockchain technology has gained considerable attention for different types of stakeholders due to its stable implementation in the field of digital currency like Bitcoin. Some users use Bitcoin for payment exchanges against any business while others use the Bitcoin network for earning Bitcoins itself, and there is also another type of user who called hackers those flood different types of attacks to illegally earn some Bitcoins or collapsing overall network. There are also numerous uses of blockchain technology, e.g. health, automation industry, energy sector, security and authentication in smart grids. In this study, we have elaborated on different critical aspects of Blockchain technology like its style of working mechanism, possible improvement suggestions by using Proof-of-Stake, and other custom variations, attempting seven types of challenges by different novel techniques. Moreover, we have also explained the current state-of-the-artwork in blockchain’s non-financial applications like Healthcare in which contribution of four-layered custom blockchain models related to precision medicine and the clinical trial was notable. Moreover, a mobile app model called HDG for the automation of medical records without compromising privacy was also a prominent contribution.
Conference Paper
Full-text available
The Bitcoin cryptocurrency records its transactions in a public log called the blockchain. Its security rests critically on the distributed protocol that maintains the blockchain, run by participants called miners. Conventional wisdom asserts that the mining protocol is incentive-compatible and secure against colluding minority groups, that is, it incentivizes miners to follow the protocol as prescribed. We show that the Bitcoin mining protocol is not incentive-compatible. We present an attack with which colluding miners obtain a revenue larger than their fair share. This attack can have significant consequences for Bitcoin: Rational miners will prefer to join the selfish miners, and the colluding group will increase in size until it becomes a majority. At this point, the Bitcoin system ceases to be a decentralized currency. Unless certain assumptions are made, selfish mining may be feasible for any group size of colluding miners. We propose a practical modification to the Bitcoin protocol that protects Bitcoin in the general case. It prohibits selfish mining by pools that command less than \(1/4\) of the resources. This threshold is lower than the wrongly assumed \(1/2\) bound, but better than the current reality where a group of any size can compromise the system.
Article
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.
The economics of Bitcoin mining, or Bitcoin in the presence of adversaries
  • Kroll
[Kroll et al., 2013] Kroll J.A., Davey I.C. and Felten E.W. (2013) " The economics of Bitcoin mining, or Bitcoin in the presence of adversaries ", Mimeo.
Adam Smith hates Bitcoin " . NYTimes blog
  • P Krugman
[Krugman, 2013] Krugman P. (2013) " Adam Smith hates Bitcoin ". NYTimes blog. http://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hates-bitcoin/