78 percent of Bitcoin currency stashed under digital ...

An Analysis of Attacks on Blockchain Consensus

arXiv:1610.07985
Date: 2016-11-20
Author(s): George Bissias, Brian Neil Levine, A. Pinar Ozisik, Gavin Andresen

Link to Paper


Abstract
We present and validate a novel mathematical model of the blockchain mining process and use it to conduct an economic evaluation of the double-spend attack, which is fundamental to all blockchain systems. Our analysis focuses on the value of transactions that can be secured under a conventional double-spend attack, both with and without a concurrent eclipse attack. Our model quantifies the importance of several factors that determine the attack's success, including confirmation depth, attacker mining power, and any confirmation deadline set by the merchant. In general, the security of a transaction against a double-spend attack increases roughly logarithmically with the depth of the block, made easier by the increasing sum of coin turned-over (between individuals) in the blocks, but more difficult by the increasing proof of work required. In recent blockchain data, we observed a median block turnover value of 6 BTC. Based on this value, a merchant requiring a single confirmation is protected against only attackers that can increase the current mining power by 1% or less. However, similar analysis shows that a merchant that requires a much longer 72 confirmations (~12 hours) will eliminate all potential profit for any double-spend attacker adding mining power less than 40% of the current mining power.

References
  1. Back, A., Corallo, M., Dashjr, L., Mark, F., Maxwell, G., Miller, A., Poelstra, A., Timón, J., Wuille, P.: Enabling Blockchain Innovations with Pegged Sidechains. http://www.opensciencereview.com/papers/123/enablingblockchain-innovations-with-pegged-sidechains (October 2014)
  2. Bissias, G., Ozisik, A.P., Levine, B.N., Liberatore, M.: Sybil-Resistant Mixing for Bitcoin. In: Proc. ACM Workshop on Privacy in the Electronic Society (November 2014), http://forensics.umass.edu/pubs/bissias.wpes.2014.pdf
  3. Confirmation. https://en.bitcoin.it/wiki/Confirmation (February 2015)
  4. Bonneau, J., Miller, A., Clark, J., Narayanan, A., Kroll, J., Felten, E.: Sok: Research perspectives and challenges for bitcoin and cryptocurrencies. In: IEEE S&P. pp. 104–121 (May 2015), http://doi.org/10.1109/SP.2015.14
  5. Bonneau, J.: How long does it take for a bitcoin transaction to be confirmed? https://coincenter.org/2015/11/what-does-it-mean-for-a-bitcoin-transactionto-be-confirmed/ (November 2015)
  6. Croman, K., et al.: On Scaling Decentralized Blockchains . In: Workshop on Bitcoin and Blockchain Research (Feb 2016)
  7. Douceur, J.: The Sybil Attack. In: Proc. Intl Wkshp on Peer-to-Peer Systems (IPTPS) (Mar 2002)
  8. Ethereum Homestead Documentation. http://ethdocs.org/en/latest/
  9. Eyal, I., Sirer, E.G.: Majority Is Not Enough: Bitcoin Mining Is Vulnerable. Financial Cryptography pp. 436–454 (2014), http://doi.org/10.1007/978-3-662-45472-5_28
  10. Fischer, M., Lynch, N., Paterson, M.: Impossibility of distributed consensus with one faulty process. JACM 32(2), 374–382 (1985)
  11. Gervais, A., O. Karame, G., Wust, K., Glykantzis, V., Ritzdorf, H., Capkun, S.: On the Security and Performance of Proof of Work Blockchains. https://eprint.iacr.org/2016/555 (2016)
  12. Heilman, E., Alshenibr, L., Baldimtsi, F., Scafuro, A., Goldberg, S.: Tumblebit: An untrusted bitcoin-compatible anonymous payment hub. Cryptology ePrint Archive, Report 2016/575 (2016), http://eprint.iacr.org/2016/575
  13. Heilman, E., Kendler, A., Zohar, A., Goldberg, S.: Eclipse Attacks on Bitcoin’s Peer-to-peer Network. In: USENIX Security (2015)
  14. Litecoin. http://litecoin.org/
  15. Meiklejohn, S., Pomarole, M., Jordan, G., Levchenko, K., McCoy, D., Voelker, G., Savage, S.: A Fistful of Bitcoins: Characterizing Payments Among Men with No Names. In: Proc. ACM IMC. pp. 127–140 (2013), http://doi.acm.org/10.1145/2504730.2504747
  16. Nakamoto, S.: Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf (May 2009)
  17. Pagnia, H., Vogt, H., Gaertner, F.: Fair Exchange. The Computer Journal, vol. 46, num. 1, p. 55, 2003. 46(1), 55–78 (2003)
  18. Poon, J., Dryja, T.: The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments. http://www.lightning.network/lightning-network-paper.pdf (November 2015)
  19. Ron, D., Shamir, A.: Quantitative analysis of the full bitcoin transaction graph. In: Proc. Financial Crypto. pp. 6–24 (Apr 2013), http://doi.org/10.1007/978-3-642-39884-1_2
  20. Rosenfeld, M.: Analysis of hashrate-based double-spending. https://bitcoil.co.il/Doublespend.pdf (December 2012)
  21. Sapirshtein, A., Sompolinsky, Y., Zohar, A.: Optimal Selfish Mining Strategies in Bitcoin. https://arxiv.org/pdf/1507.06183.pdf (July 2015)
  22. Sasson, E.B., Chiesa, A., Garman, C., Green, M., Miers, I., Tromer, E., Virza, M.: Zerocash: Decentralized anonymous payments from bitcoin. In: IEEE S&P. pp. 459–474 (2014), http://dx.doi.org/10.1109/SP.2014.36
  23. Sompolinsky, Y., Zohar, A.: Secure high-rate transaction processing in Bitcoin. Financial Cryptography and Data Security (2015), http://doi.org/10.1007/978-3-662-47854-7_32
  24. Sompolinsky, Y., Zohar, A.: Bitcoin’s Security Model Revisited. https://arxiv.org/abs/1605.09193 (May 2016)
  25. Tschorsch, F., Scheuermann, B.: Bitcoin and beyond: A technical survey on decentralized digital currencies. IEEE Communications Surveys Tutorials PP(99), 1–1 (2016)
submitted by dj-gutz to myrXiv [link] [comments]

IOHK  Consensus protocols - proof of stake and proof of work IOHK  Consensus protocols - efficiency IOHK  The Daedalus platform IOHK  Developing a secure proof of stake algorithm IOHK  Consensus protocols - algorithmic weight

Citing Shamir and Ron's research, which found that 78 percent of all Bitcoin were not being used in circulation, Eichenwald warned that if a large amount of these hoarding Bitcoin users started to ... Mathematician Dorit Ron and Adi Shamir (the "S" in the widely used RSA cryptography scheme) arrived at that finding by downloading the entire Bitcoin history and following the trail of some ... Bitcoin is a cryptocurrency that changes our perspective on currency, ... is collected into what is called the block chain.” (Ron and Shamir, 2013, p.7) Bitcoin addresses are created by the software picking a random number and creating a public/private key pair, bitcoin address as well as your public and private keys are generated automatically when you set up your wallet. (Ron and Shamir ... (Ron & Shamir, 2012). From its inception in 2008 until 2015 Bitcoin has served approximately . 62.5 million transactions with over 109 million accounts. (Böhme, Christin, Edelman, & Moore, 2015 ... Ron D., Shamir A. (2013) Quantitative Analysis of the Full Bitcoin Transaction Graph. In: Sadeghi AR. (eds) Financial Cryptography and Data Security. FC 2013. Lecture Notes in Computer Science, vol 7859. Springer, Berlin, Heidelberg

[index] [38224] [35530] [55] [18608] [45960] [21192] [41713] [32378] [34025] [17271]

IOHK Consensus protocols - proof of stake and proof of work

Leading cryptographers at the conference included Whitfield Diffie, pioneer of the public key cryptography that made Bitcoin possible, and Ron Rivest, Adi Shamir, and Leonard Adleman, who came up ... Leading cryptographers at the conference included Whitfield Diffie, pioneer of the public key cryptography that made Bitcoin possible, and Ron Rivest, Adi Shamir, and Leonard Adleman, who came up ... Leading cryptographers at the conference included Whitfield Diffie, pioneer of the public key cryptography that made Bitcoin possible, and Ron Rivest, Adi Shamir, and Leonard Adleman, who came up ... RSA was designed by Ron Rivest, Adi Shamir and Leonard Adleman in 1977. #POS : Proof of stake (PoS) is a type of algorithm by which a cryptocurrency blockchain network aims to achieve distributed ... Leading cryptographers at the conference included Whitfield Diffie, pioneer of the public key cryptography that made Bitcoin possible, and Ron Rivest, Adi Shamir, and Leonard Adleman, who came up ...

#