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It Will Cost You Nothing to 'Kill' a Proof-of-Stake Crypto-Currency
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.
... 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. ...
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.
... However, the efficacy of the proof-of-stake technique in averting such attacks has been met with considerable criticism [31]. Huoy [33] posits that despite the integration of proof-of-stake as a security measure in the blockchain network, all cryptocurrencies exhibit inherent vulnerabilities. In his scholarly work, he demonstrated that a blockchain network fortified with proof-of-stake remains susceptible to attacks from dishonest nodes. ...
... Concurrently, he refuted assertions made by the computer science community that proof-ofstake can guarantee immunity from a 51% attack in a blockchain network. He suggests that another approach to mitigating a 51% attack on the network could be the implementation of a private blockchain [33]. ...
This thesis aims to explore the transformative potential of blockchain technology in reshaping the landscape of the banking and financial industry in terms of security, compliance, and risk mitigation. The research will provide a comprehensive review of the literature to assess the potential ramifications of blockchain technology, delve into its merits and demerits, and offer a balanced perspective on its implications for the future of banking and financial services.
Blockchain technology has the capability to enhance security and foster trust by offering a secure and transparent platform for transactions. By significantly reducing human error and making transactions tamper-proof, blockchain can fortify security measures and mitigate risks within the financial sector. Additionally, the digitization and tokenization of financial products can simplify trading, promote inclusivity, increase connectivity, and reduce capital costs.
However, the adoption of blockchain technology in the banking industry poses regulatory challenges and scalability issues. While offering numerous benefits, blockchain requires careful evaluation and planning to mitigate potential pitfalls and maximize its advantages. As the technology continues to evolve and mature, it is crucial for banks to carefully weigh the pros and cons of integrating blockchain into their security and compliance strategies for effective and responsible harnessing of its power.
... This is supported by Kiviat [11] who claims that abolishing intermediaries in the transaction would create double spending problem because there would be no one to preserve the centralized ledger and that allows electronic unit such as dollar to be spent more than once. To prevent such attack from occurring, a technique has been implemented to prevent the attack from happening which is called as proof-of-stake [10,12]. Proof-of-stake is a technique or algorithm that is used to validate the transaction in the blockchain network and ensure that a miner can only mine blocks based on how many blocks he holds. ...
... However, there are several critics on the effectiveness of proof-of-stake technique in preventing such attack from occurring. Huoy [12] claimed that all crypto-currencies have their flaws even though proof-ofstake is integrated in the blockchain network as a security defense against attacks. In his paper, he proved that a blockchain network equipped with proof-of-stake is still vulnerable to be attacked by dishonest nodes, and at the same time denied the claims made by computer science community that proof-of-stake can ensure that a blockchain network is immune to 51% attack. ...
Blockchain, discreetly introduced by Satoshi Nakamoto in 2008, has become one of the top emerging technologies in 2016 and was first used in financial sector as the basis for Bitcoin, a crypto-currency which allows peer to peer money transaction with smart contracts without any third party in between which is different from other payment method such as Paypal or other methods to send money. Many bank institutions have adopted blockchain technology to mainstream day to day operation. Based on the review of related articles, there are three major concerns behind blockchain technology; security, sustainability, and legal. These issues have become a step-back for some companies and banks to adopt blockchain into their daily operations. Hence, this paper posits that more research is required in this area.
... They can use their stake to produce new blocks for each version to maximize their reward instead of choosing which blockchain version they spend their resources on. This problem, referred to as the nothing-at-stake problem could result in a constantly split blockchain, where no transaction can be considered finalized (Nicolas, 2014). ...
... For example, it is hypothesized that Proof-of-Stake blockchains will have a more substantial effect on the riches getting richer . Additionally, these mechanisms have a bigger problem in case of a 51% attack since it cannot be reversed without a fork (Nicolas, 2014). Therefore, we propose to research this mechanism next. ...
The digital transformation facilitates new forms of collaboration between companies along the supply chain and between companies and consumers. Besides sharing information on centralized platforms, blockchain technology is often regarded as a potential basis for this kind of collaboration. However, there is much hype surrounding the technology due to the rising popularity of cryptocurrencies, decentralized finance (DeFi), and non-fungible tokens (NFTs). This leads to potential issues being overlooked. Therefore, this thesis aims to investigate, highlight, and address the current weaknesses of blockchain technology: Inefficient consensus, privacy, smart contract security, and scalability. First, to provide a foundation, the four key challenges are introduced, and the research objectives are defined, followed by a brief presentation of the preliminary work for this thesis. The following four parts highlight the four main problem areas of blockchain. Using big data analytics, we extracted and analyzed the blockchain data of six major blockchains to identify potential weaknesses in their consensus algorithm. To improve smart contract security, we classified smart contract functionalities to identify similarities in structure and design. The resulting taxonomy serves as a basis for future standardization efforts for security-relevant features, such as safe math functions and oracle services. To challenge privacy assumptions, we researched consortium blockchains from an adversary role. We chose four blockchains with misconfigured nodes and extracted as much information from those nodes as possible. Finally, we compared scalability solutions for blockchain applications and developed a decision process that serves as a guideline to improve the scalability of their applications. Building on the scalability framework, we showcase three potential applications for blockchain technology. First, we develop a token-based approach for inter-company value stream mapping. By only relying on simple tokens instead of complex smart-contracts, the computational load on the network is expected to be much lower compared to other solutions. The following two solutions use offloading transactions and computations from the main blockchain. The first approach uses secure multiparty computation to offload the matching of supply and demand for manufacturing capacities to a trustless network. The transaction is written to the main blockchain only after the match is made. The second approach uses the concept of payment channel networks to enable high-frequency bidirectional micropayments for WiFi sharing. The host gets paid for every second of data usage through an off-chain channel. The full payment is only written to the blockchain after the connection to the client gets terminated. Finally, the thesis concludes by briefly summarizing and discussing the results and providing avenues for further research.
... While many experts, including the wider Bitcoin community, continue to emphasise that the security of the tried and tested PoW mechanism is unrivalled (Houy, 2014;Brown-Cohen et al., 2019;Shifferaw and Lemma, 2021), this view is not shared universally (Kiayias et al., 2017;Saleh, 2020;Rieger et al., 2022). Subsequently, the strengths and weaknesses of PoW and PoS from the perspective of economic security and decentralisation remain subject of debates (Nair and Dorai, 2021). ...
... As we illustrate in Figure 1, systems that rely on this consensus mechanism are several orders of magnitude more energy efficient than those that use PoW (Platt et al., 2021;Rieger et al., 2022). While PoS-based systems are arguably more difficult to design and to implement securely and there are doubts about their incentive compatibility in certain conditions (Houy, 2014;Brown-Cohen et al., 2019), the question whether PoW or PoS is more secure is still open. In any case, PoS-based systems enable consumer choice. ...
Some of the most popular decentralised cryptocurrency networks have drawn widespread criticism for consuming vast amounts of electricity and have thus become targets of regulatory interest. Attempts to influence cryptocurrency network operations via policy in the pursuit of sustainability in the past, however, have been widely unsuccessful. Some were abandoned out of fear of jeopardising innovation while others failed due to the highly globalised nature of decentralised systems. Considering Bitcoin as an archetype for cryptocurrencies with high energy demand, this study takes a bottom-up approach by analysing statements made by Nigerian cryptocurrency users () concerning their perception of sustainability issues. Three main findings emerged: 1) Despite self-reporting as highly knowledgeable, most participants significantly underestimate the energy demand of Bitcoin. 2) Those who accurately assess the energy demand of Bitcoin are more likely to support measures targeting its energy demand than those who misestimate it. 3) Those who support measures predominantly hold private actors responsible. In light of these findings, it is concluded that the primary task of policy makers in the context of cryptocurrency sustainability is to enforce consumer education.
... Yet, this will not meaningfully affect the analysis. Finally, in (15) the term −Ts i is modelling the disutility due to the temporary unavailability of the stake; later we shall also consider alternative ways to formalize such disutility. ...
... Equation (15) clarifies that, before the random selection of committee members, the utility level of a node is a random variable. Indeed in case the node is not selected as committee member, which takes place with probability 1 − C N , the amount of money planned to be the stake would not be set aside and remain available to the node. ...
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.
... 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. ...
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.
... This replaces the "honest majority hashing power" model for PoW with the "honest majority stake" model for PoS (Nguyen et al., 2019). The weight on real-world resources such as the energy required to create a block and add this to the chain of existing blocks will be greatly reduced (Houy, 2014). In the PoS consensus, blocks are said to be minted, validated, or forged not mined as in the PoW. ...
Blockchain technology, despite its transformative potential due to privacy, security, and data integrity features, faces challenges in widespread adoption. These challenges stem from vulnerabilities in consensus mechanisms, like Proof-of-Stake (PoS), and the lack of clear regulatory compliance frameworks. This research thesis addresses these challenges in two ways. Firstly, it focuses on enhancing PoS security by examining long-range attacks and leveraging Machine Learning techniques to classify nodes for effective mitigation. A novel dataset specifically designed for PoS node classification in permissionless blockchains is proposed to address this issue. Secondly, the research tackles the evolving threat of host-based cryptojacking through CryptoJackingModel; a novel deep-learning model designed to outperform existing countermeasures by effectively detecting these attacks with minimal false positives and negatives. Finally, the research introduces a novel framework for assessing a blockchain application's regulatory readiness. A healthcare sector case study highlights the consequences of non-compliance and underscores the need for a universally accepted regulatory framework. This framework offers guidance for navigating regulatory complexities and achieving regulatory readiness. By addressing PoS security, cryptojacking threats, and regulatory compliance, this research significantly contributes to the advancement of secure and compliant blockchain applications. These findings provide valuable knowledge for stakeholders, regulators, and solution providers to effectively leverage the benefits of blockchain technology. Furthermore, the research paves the way for future investigations and fosters collaboration to establish robust regulatory frameworks that will facilitate the successful integration of blockchain technology across diverse sectors. iii
... The blockchain is stored on a computer's hard drive when users employ Bitcoin software, while the ledger stores the history of all transactions sent and confirmed on the Bitcoin network, as well as transaction details. More information is added via the proof-of-work mining process (Houy, 2014). Nakamoto (2008) believes proof-of-work implies one vote for every CPU. ...
This study investigated the accounting treatment of Bitcoin, considering whether it should be classified as an asset or a currency. The study also explored the role of blockchain technology in promoting transparency and the potential separation of blockchain from Bitcoin. The study found that cryptocurrencies are significantly impacted by political, economic, and regulatory factors. The study also found that it is challenging to control cryptocurrencies and cross-border transactions in the absence of accounting standards. The study recommends that regulators and accounting standards setters should establish new regulations and accounting standards for cryptocurrencies. Finally, this study identifies the vast majority of the existing literature as lacking adequate, well-rounded knowledge about cryptocurrencies or access to adequate resources, despite their clearly understanding the fundamental concepts of cryptocurrency. Further, the theoretical part of this paper is there to establish some type of accounting approach for Bitcoin.
... The blockchain is stored on a computer's hard drive when users employ Bitcoin software, while the ledger stores the history of all transactions sent and confirmed on the Bitcoin network, as well as transaction details. More information is added via the proof-of-work mining process (Houy, 2014). Nakamoto (2008) believes proof-of-work implies one vote for every CPU. ...
This study investigated the accounting treatment of Bitcoin, considering whether it should be classified as an asset or a currency. The study also explored the role of blockchain technology in promoting transparency and the potential separation of blockchain from Bitcoin. The study found that cryptocurrencies are significantly impacted by political, economic, and regulatory factors. The study also found that it is challenging to control cryptocurrencies and cross-border transactions in the absence of accounting standards. The study recommends that regulators and accounting standards setters should establish new regulations and accounting standards for cryptocurrencies. Finally, this study identifies the vast majority of the existing literature as lacking adequate, well-rounded knowledge about cryptocurrencies or access to adequate resources, despite their clearly understanding the fundamental concepts of cryptocurrency. Further, the theoretical part of this paper is there to establish some type of accounting approach for Bitcoin.
... This replaces the "honest majority hashing power" model for PoW with the "honest majority stake" model for PoS (Nguyen et al., 2019). The weight on real-world resources such as the energy required to create a block and add this to the chain of existing blocks will be greatly reduced (Houy, 2014). In the PoS consensus, blocks are said to be minted, validated, or forged not mined as in the PoW. ...
Blockchain has been viewed as a breakthrough and an innovative technology due to its privacy, security, immutability, and data integrity characteristics. The consensus layer of the blockchain is the backbone and the most important layer of the blockchain architecture because it acts as the performance and security manager of the blockchain. The detection of Long-Range Attacks (LRA) on the Proof-of-Stake (PoS) blockchain is a complex task. Earlier studies have shown various challenges in detecting long-range attacks and monitoring the activities of validator nodes on the blockchain network. Thus, this paper proposes a novel dataset for node classification on a proof-of-stake permissionless blockchain and proposes a Deep Learning method that can be used to classify nodes into malicious or non-malicious nodes to mitigate long-range attacks with high accuracy. The performance metrics for the model are compared and measured which suggest the developed performance of the proposed model. The proposed solution can serve as a guide on how future researchers and blockchain developers can simulate and curate proof-of-stake datasets and goes further to demonstrate that artificial intelligence models can be used as a mitigating checkpoint for long-range attacks. The dataset in the paper is publicly available and can be used by other researchers to detect other activities and behaviors on a permissionless blockchain. These techniques can further enhance security, performance and create fairness on the proof-of-stake consensus.
... Such features let developers also build alternative blockchain-based systems on Ethereum's smart contracts. Over the years, PoS has been proven to be susceptible to many forms of alternative attacks, including the Nothing-at-Stake attack [14], the Reorg and Liveness attacks [28], the Avalanche attack [22]. ...
We propose RPoA, a new consensus protocol that builds on top of some of the best features of the previous protocols, such as PoW, PoS, and PoA, and values active service provided by users on the network. While PoA tried to address some of the issues pertinent to PoS and PoW, it still fell short of solving the issues regarding high energy consumption, high resources needed, high mining latency, and the requirement for private blockchains. Our approach tries to address all the mentioned issues and falls in the service-based protocols category that gives mining credit to users as they serve on the network.
... Nothing at stake [132] refers to that an attacker tries to mine on different forks of the chain to obtain higher benefits. In a PoSbased 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. ...
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.
... 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). ...
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.
... 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). ...
Misinformation is rampant in the modern information age and understanding how social media misinformation diffuses can provide vital insight on how to combat it. With social media becoming a major information source, it is increasingly important to address this concern. Social media misinformation has negatively impacted healthcare response in the past and may have played a major role in how to respond to COVID-19. Understanding how misinformation diffuses through online social networks can provide help healthcare and government entities information on how to mitigate the associated negative impact. This paper proposes a data set as criterion for identifying pandemic specific misinformation and develops a Convolution Neural Network model and. A case study is then conducted to illustrate how diffusion can be explored using labelled misinformation. The work shows a decrease of COVID-19 misinformation over time and a pattern that does not depend on regional geographic location.
... 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). ...
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.
... 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. ...
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.
... Acquiring 51% of the total supply of a cryptocurrency seems to be a complicated endeavor. As described by [43], this can be achieved at almost no cost if the attack happens at a very early stage of the blockchain lifespan. Despite the previously described attack, there is also a threat of forks on public blockchain systems. ...
Health data is one of the most valuable data and highly sensitive. Its careful handling is essential in today' s digitalized world and cloud technology use for sharing. Health Information Systems facilitate the storage and accessibility of health data for better care along the patient path. As the integration of all historical patient data, the Electronic Health Record is at the heart of health data management. The centralization of stored health data represents a single point of failure and trust, making data exchange across institutions difficult and insecure. Blockchain technology builds on consensus mechanisms and immutable chains of blocks for validating and securing data transactions as a modern decentralized approach. The application of blockchain technology for Electronic Health Records is promising but still a young concept. Due to the wide range of discussion, this paper aims at identifying risks by using blockchain technology in the eHealth sector. Based on a systematic literature review, various authors' argumentations and findings are examined and concluded to set up the empirical study. The semistructured qualitative interview study aims to find out the threats of blockchain. The paper concludes with an overall discussion and some implementation recommendations.
... 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. ...
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.
... 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]. ...
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).
... 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. ...
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.
... 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. ...
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.
... 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]. ...
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.
This review article explores the potential of blockchain technology (BCT) as a key enabler for fostering transparency, trust, and citizen engagement in smart governance within smart cities. By examining the benefits of BCT in various aspects of smart city systems, such as data security and privacy, the paper highlights the advantages of implementing consortium blockchain architecture and the Proof of Authority (PoA) consensus algorithm and discusses the challenges of scalability and security concerns. Based on the literature showed in this article, we believe that the use of BCT in smart governance could significantly enhance citizen participation and help manage and deliver public services, paving the way for more effective decision-making processes and improved quality of life for citizens.
Blockchain technology, brought into existence in the year 2008 by Satoshi Nakamoto, is an open and distributed ledger tool offering secure and permanent storage of transactions. It offers decentralized control of transactions. Over the period, three different versions of blockchain have been developed. It is widely used in sectors like healthcare, education, etc. Circular economy is such a production and consumption ecosystem that focuses on waste reduction, reuse, and recycling. The present study tries to analyze the avant-garde state of blockchain technology's application for circular economy by adopting a bibliometric and systematic approach. Taking a filtered sample of 1339 papers from Scopus database, bibliometric analysis was conducted with an aim to understand the evolution of blockchain's usage in circular economy. Later, systematic review of the relevant papers is done that highlighted major prospects and barriers to blockchain's adoption. The study also cites present applications of blockchain by corporates and governments. Finally, it concludes with suggestions for blockchain's better adoption. The present study is one of its kind, true to the knowledge of the authors. Such bibliometric analysis combined with systematic review is an outcome of the original work of the authors. The combined results of the two reviews have not yet been done in the field of study.
We discuss Russia's underlying motives for issuing its government-backed cryptocurrency, CryptoRuble, and the implications thereof and of other likely-soon-forthcoming government-issued cryptocurrencies to some stakeholders (populace, governments, economy, finance, etc.), existing decentralized cryptocurrencies (such as Bitcoin and Ethereum), as well as the future of the world monetary system (the role of the U.S. therein and a necessity for the U.S. to issue CryptoDollar), including a future algorithmic universal world currency that may also emerge. We further provide a comprehensive list of references on cryptocurrencies.
With the rapid development of the Internet of Things (IoT), the importance of data transmission security and efficiency has become increasingly significant. Traditional consensus mechanisms, particularly the Practical Byzantine Fault Tolerance (PBFT) algorithm, face notable challenges in the context of blockchain-based edge computing due to scalability issues. Specifically, as the number of nodes increases, PBFT experiences high communication complexity, which leads to significant performance degradation. To tackle this challenge, this paper proposes a novel consensus algorithm named ACH-PBFT (Adaptive Clustering Hierarchical) that employs a hierarchical cluster structure and node fault tolerance check to enhance the security and efficiency of blockchain-based edge computing in the IoT. ACH-PBFT adaptively selects an appropriate primary node and forms multiple sub-node clusters, facilitating a more scalable consensus process. The system reduces the probability of malicious nodes becoming primary nodes through mutual verification between the primary node cluster and the sub-cluster consensus. Experimental results indicate that the ACH-PBFT algorithm achieves a 19.83% increase in execution speed, a 23.67% improvement in throughput, and an average reduction of 23.05% in communication overhead compared to a similar double-layer PBFT algorithm lacking hierarchical clustering. In the experiments testing against malicious nodes, the ACH-PBFT algorithm exhibited an average increase of 24.73% in the probability of successfully achieving consensus. Overall, this research provides a practical and effective solution for implementing secure and efficient blockchain-based IoT edge computing using a multi-layer architecture to achieve flexible deployment and efficient resource utilization in edge computing environments.
This research aims to investigate the user gratification and growth prospects of Bitcoin in the contemporary digital era. Bitcoin, as a decentralized digital currency, has gained significant attention and adoption over the past decade. This study explores the factors contributing to user satisfaction with Bitcoin, as well as the potential for its continued growth in the evolving digital landscape. Through a combination of qualitative and quantitative methods, the research analyzes user perceptions, motivations, challenges, and the overall outlook for Bitcoin's future.
The Agricultural Internet of Things (Agri-IoT) has emerged to boost food safety and agricultural efficiency, but its integration with centralized servers, even when supplemented by edge computing, presents risks. These include challenges in device security, data privacy, and scalability. In this paper, we integrate blockchain with Agri-IoT and introduce reputation-based secure HotStuff (RSHS), aiming to address these security and scalability issues. Firstly, RSHS calculates the comprehensive reputation of nodes by incorporating both consensus and execution reputations. This facilitates a classification threshold for nodes, enhancing the reliability of nodes in consensus. Secondly, RSHS integrates peer evaluation scores with reputation and a verifiable random function for primary node selection, thereby balancing security and unpredictability. Building on this approach, the phased selection strategy further reduces communication overhead by progressively eliminating low-reputation nodes. Finally, the simulation results reveal that with an increase in both the network size and the proportion of Byzantine nodes, RSHS, in comparison to HotStuff, diminishes the average delay by 68.89% and yields an average throughput that is 3.82 times higher. In terms of fault tolerance, RSHS improves the chain inclusion rate by 39.84% under fork attacks and sees a 17.85% increase under silence attacks. These findings demonstrate that RSHS consistently exhibits superior scalability and good fault tolerance.
This review article explores the potential of blockchain technology (BCT) as a key enabler for fostering transparency, trust, and citizen engagement in smart governance within smart cities. By examining the benefits of BCT in various aspects of smart city systems, such as data security and privacy, the paper highlights the advantages of implementing consortium blockchain architecture and the Proof of Authority (PoA) consensus algorithm and discusses the challenges of scalability and security concerns. Based on the literature showed in this article, we believe that the use of BCT in smart governance could significantly enhance citizen participation and help manage and deliver public services, paving the way for more effective decision-making processes and improved quality of life for citizens.
This exploratory study investigates the relationship between trust and blockchain technology (BCT) in peer-to-peer (P2P) energy trading within smart grids. The research highlights the various benefits BCT brings to P2P energy trading, such as improved efficiency, cost reduction, and the optimization of renewable energy distribution. However, it also identifies significant barriers to the contribution of BCT to the removal of trust in this context. The paper explores how trust is established in blockchain systems and the paradoxical need for trust among parties for BCT adoption in energy trading, despite its trust-removing premise, due to its reliance on oracles for data collection. It also examines the blockchain trilemma and how solutions to the lack of scalability might reintroduce centralisation, affecting trust in BCT-enabled P2P energy trading. The study suggests that BCT may not be able to remove the need for trust and trusted intermediaries in P2P energy trading and calls for more qualitative research to assess the actual impact of BCT on trust in P2P energy trading and to compare traditional and blockchain-based systems in this domain.
The book offers a succinct overview of the technical components of blockchain networks, also known as distributed digital ledger networks. Written from an academic perspective, it surveys ongoing research challenges as well as existing literature. Several chapters illustrate how the mathematical tools of game theory and algorithmic mechanism design can be applied to the analysis, design, and improvement of blockchain network protocols. Using an engineering perspective, insights are provided into how the economic interests of different types of participants shape the behaviors of blockchain systems. Readers are thus provided with a paradigm for developing blockchain consensus protocols and distributed economic mechanisms that regulate the interactions of system participants, thus leading to desired cooperative behaviors in the form of system equilibria. This book will be a vital resource for students and scholars of this budding field.
This review article explores the potential of blockchain technology (BCT) as a key enabler for fostering transparency, trust, and citizen engagement in smart governance within smart cities. By examining the benefits of BCT in various aspects of smart city systems, such as data security and privacy, the paper highlights the advantages of implementing consortium blockchain architecture and the Proof of Authority (PoA) consensus algorithm and discusses the challenges of scalability and security concerns. Based on the literature showed in this article, we believe that the use of BCT in smart governance could significantly enhance citizen participation and help manage and deliver public services, paving the way for more effective decision-making processes and improved quality of life for citizens.
Decentralised cryptocurrency networks, notably those with high energy demand, have faced significant criticism and subsequent regulatory scrutiny. Despite these concerns, policy interventions targeting cryptocurrency operations in the pursuit of sustainability have largely been ineffective. Some were abandoned for fear of jeopardising innovation, while others failed due to the highly globalised nature of blockchain systems. In search of a more effective angle for energy policy measures, this study adopts a consumer-centric perspective, examining the sentiments of Nigerian cryptocurrency users (N = 158) towards Bitcoin’s sustainability, a representative cryptocurrency known for its high electricity demand. Three main findings emerged: 1) Even among those self-identifying as highly knowledgeable, the majority considerably underestimated Bitcoin’s electricity consumption. 2) Participants with a more accurate understanding of Bitcoin’s energy demand were more inclined to support sustainability measures. 3) The majority of this supportive cohort viewed private entities as the primary stakeholders for implementing such measures. Given these findings, we suggest that consumer education should be at the forefront of policy initiatives aimed at cryptocurrency sustainability.
In the last few years, a number of blockchain-based online platforms decided to use consensus procedures other than Proof of Work (PoW), originally adopted by Bitcoin. An alternative protocol, which attracted much attention, is the so-called Proof-of-Stake (PoS), which unlike PoW consensus is not based on solving an energy-consuming cryptopuzzle, but rather on the amount of currency units owned by a user. Different platforms adopted alternative versions of PoS. In this article, we investigate a version of PoS inspired by Algorand, which embodies a number of specific features. Indeed, to confirm a new block in the chain Algorand introduces three steps: proposal, selection , and confirmation of a block. Each step is performed by randomly selected users, where draws are based on PoS. We find explicit solutions for individual money demand, under the main simplifying assumption that a user is rewarded by the system only for the first role that she's drawn for. We do so by considering both exogenous and endogenous money supply. We also discuss the monetary equilibrium of the system, an important element in the analysis because a long-lasting disequilibrium of the economy may cause disappointment and induce some users to leave the system. Our findings suggest that an equilibrium seems to be more likely to take place if users have heterogeneous, rather than homogeneous, preferences.
The Proof-of-Stake (PoS) protocol is booming in blockchain networks because of excessive energy consumption and slow block generation associated with the Proof-of-Work (PoW) protocol. In terms of transaction settlement, does the PoS protocol perform better than PoW? We build a transaction settlement model based on the PoS blockchain, describing how the staking income and costs affect settlement performance, and put forward a Successful Settlement Factor (SSF) to determine whether the settlement will be successful given the block size and block time. In addition, the system developers can adjust block size and block time according to SSF to achieve the best settlement performance. Finally, using historical data for a real-world blockchain network, our model demonstrates that the optimal block time, average settlement time, average settlement fees, and total settlement lag of the PoS blockchain are 23.41%, 23.29%, 23.23%, 23.31%, respectively, less than that of the PoW blockchain.
In this paper, a credit identity ring optimization Blockchain algorithm (CRBFT) based on Practical Byzantine Fault Tolerance (PBFT) is proposed to address the security problem for the network of Internet of things (IoT). The contributions of this work are as following: firstly, combined with the Edge Computing architecture, CRBFT introduces the improved credit grading protocol and improved ring signature scheme into the Blockchain network, rewards or punishes the nodes through their behavior, changes the way of selecting the primary node and ensures that the identity of the primary node will not be disclosed, so as to prevents the primary node from adaptively attack by Byzantine nodes, improves the reliability of the nodes participating in the consensus and enhances the security of the system; secondly, in order to reduce the communication traffic among nodes, CRBFT optimize the consensus protocol, not only reduces the time complexity of the traffic in the consensus stage from O (n
2
) to O (n), but also improves the consensus efficiency of the system while ensuring the system security; finally, aims to measure the performance of CRBFT, this paper is simulated and tested in three aspects: throughput (transactions per second), consistency delay, and communication overhead. Performance evaluation shows that CRBFT achieves lower communication overhead than PBFT. When the number of nodes is the same, CRBFT can obtain higher TPS and lower consistency delay. The results show that compared with PBFT, CRBFT can provide very competitive results.
The trading and communication systems of the wholesale energy market are an essential part of critical national infrastructure. If adversaries were to exploit the vulnerabilities in the wholesale energy trading and communication system, they could disrupt electricity generation and supply nationally, resulting in a devastating chain reaction. In this context, this study provides a review of deployments of security mechanisms for energy market trading and communication systems. This helps to understand the current security controls and challenges better and shines a light on potential research that can be conducted to make trading and communication systems more secure. This review is categorised into four themes: (1) security technologies that can be applied to energy trading and call audit systems, (2) blockchain technology that can be applied to protect energy trading and auditing services, (3) communication technology (voice over IP and video conferencing) that operates in the cloud, and (4) network performance and security management for voice over IP and video conferencing systems. This review investigates the use of blockchain technology that has increasingly emerged in a microgrid (peer-to-peer) energy trading and reveals a gap in using blockchain for macrogrid national energy trading. This study also emphasises the importance of balancing network security and performance when systems are hosted in the cloud.KeywordsBlockchainCyber securityCryptocurrencyPower trading securitySecurity and performanceSecurity technologyNetwork security
Regarding Legality of Crypto Currency: An Overview
With the development of blockchain, and its security issues have attracted the attention of more and more researchers. Currently, the related research is still in its infancy. This paper first reviews the basic technology and development of blockchain, summarized and introduced the blockchain structure. In terms of blockchain security, we analyze and summarizes the domestic and foreign literatures in recent years, and divide blockchain security issues into three aspects: protocol security, privacy security and system security, and the problems of blockchain security in these three aspects are analyzed. At present, protocol security research mainly focuses on the encryption mechanism of blockchain technology and smart contract vulnerabilities; Privacy security research covering mainly the potential security issues facing blockchain applications; The system security research mainly includes the classification of attack methods on blockchain. Then, we summarized the defense strategies to deal with the above security issues and analyzed the shortcomings and problems. Finally, based on the current research status of blockchain, we point out two future research directions.KeywordsBlockchain securityProtocol securityPrivacy securitySystem security
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.
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.
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.
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.
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.
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.
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/