2,290 research outputs found
Blockchain Mining Games with Pay Forward
We study the strategic implications that arise from adding one extra option
to the miners participating in the bitcoin protocol. We propose that when
adding a block, miners also have the ability to pay forward an amount to be
collected by the first miner who successfully extends their branch, giving them
the power to influence the incentives for mining. We formulate a stochastic
game for the study of such incentives and show that with this added option,
smaller miners can guarantee that the best response of even substantially more
powerful miners is to follow the expected behavior intended by the protocol
designer
Cryptocurrency Mining Games with Economic Discount and Decreasing Rewards
In the consensus protocols used in most cryptocurrencies, participants called miners must find valid blocks of transactions and append them to a shared tree-like data structure. Ideally, the rules of the protocol should ensure that miners maximize their gains if they follow a default strategy, which consists on appending blocks only to the longest branch of the tree, called the blockchain. Our goal is to understand under which circumstances are miners encouraged to follow the default strategy. Unfortunately, most of the existing models work with simplified payoff functions, without considering the possibility that rewards decrease over time because of the game rules (like in Bitcoin), nor integrating the fact that a miner naturally prefers to be paid earlier than later (the economic concept of discount). In order to integrate these factors, we consider a more general model where issues such as economic discount and decreasing rewards can be set as parameters of an infinite stochastic game. In this model, we study the limit situation in which a miner does not receive a full reward for a block if it stops being in the blockchain. We show that if rewards are not decreasing, then miners do not have incentives to create new branches, no matter how high their computational power is. On the other hand, when working with decreasing rewards similar to those in Bitcoin, we show that miners have an incentive to create such branches. Nevertheless, this incentive only occurs when a miner controls a proportion of the computational power which is close to half of the computational power of the entire network
Questions related to Bitcoin and other Informational Money
A collection of questions about Bitcoin and its hypothetical relatives
Bitguilder and Bitpenny is formulated. These questions concern technical issues
about protocols, security issues, issues about the formalizations of
informational monies in various contexts, and issues about forms of use and
misuse. Some questions are formulated in the more general setting of
informational monies and near-monies.
We also formulate questions about legal, psychological, and ethical aspects
of informational money. Finally we formulate a number of questions concerning
the economical merits of and outlooks for Bitcoin.Comment: 31 pages. In v2 the section on patterns for use and misuse has been
improved and expanded with so-called contaminations. Other small improvements
were made and 13 additional references have been include
Trends in crypto-currencies and blockchain technologies: A monetary theory and regulation perspective
The internet era has generated a requirement for low cost, anonymous and
rapidly verifiable transactions to be used for online barter, and fast settling
money have emerged as a consequence. For the most part, e-money has fulfilled
this role, but the last few years have seen two new types of money emerge.
Centralised virtual currencies, usually for the purpose of transacting in
social and gaming economies, and crypto-currencies, which aim to eliminate the
need for financial intermediaries by offering direct peer-to-peer online
payments.
We describe the historical context which led to the development of these
currencies and some modern and recent trends in their uptake, in terms of both
usage in the real economy and as investment products. As these currencies are
purely digital constructs, with no government or local authority backing, we
then discuss them in the context of monetary theory, in order to determine how
they may be have value under each. Finally, we provide an overview of the state
of regulatory readiness in terms of dealing with transactions in these
currencies in various regions of the world
Betrayal, Distrust, and Rationality: Smart Counter-Collusion Contracts for Verifiable Cloud Computing
Cloud computing has become an irreversible trend. Together comes the pressing
need for verifiability, to assure the client the correctness of computation
outsourced to the cloud. Existing verifiable computation techniques all have a
high overhead, thus if being deployed in the clouds, would render cloud
computing more expensive than the on-premises counterpart. To achieve
verifiability at a reasonable cost, we leverage game theory and propose a smart
contract based solution. In a nutshell, a client lets two clouds compute the
same task, and uses smart contracts to stimulate tension, betrayal and distrust
between the clouds, so that rational clouds will not collude and cheat. In the
absence of collusion, verification of correctness can be done easily by
crosschecking the results from the two clouds. We provide a formal analysis of
the games induced by the contracts, and prove that the contracts will be
effective under certain reasonable assumptions. By resorting to game theory and
smart contracts, we are able to avoid heavy cryptographic protocols. The client
only needs to pay two clouds to compute in the clear, and a small transaction
fee to use the smart contracts. We also conducted a feasibility study that
involves implementing the contracts in Solidity and running them on the
official Ethereum network.Comment: Published in ACM CCS 2017, this is the full version with all
appendice
Using Blockchain for Digital Card Game
In recent years, the popularity of both online card games and blockchain technology have grown exponentially. While combining these two does not immediately seem like an obvious idea, they in fact complement each other nicely. Blockchain allows for players to actually own their cards, in a way that was unheard of in the digital format just a few years ago. It also gives them the freedom to use them in any way they like, just like in real life. In this thesis we will look into how viable this idea really is. We use the Ethereum virtual machine to simulate a publicly available blockchain that implements this concept and evaluate the results. This thesis should show that further work needs to be done, but that the concept is viable
MMM: May I Mine Your Mind?
Consider the following set-up for the plot of a possible future episode of
the TV series Black Mirror: human brains can be connected directly to the net
and MiningMind Inc. has developed a technology that merges a reward system with
a cryptojacking engine that uses the human brain to mine cryptocurrency (or to
carry out some other mining activity). Part of our brain will be committed to
cryptographic calculations (mining), leaving the remaining part untouched for
everyday operations, i.e., for our brain's normal daily activity. In this short
paper, we briefly argue why this set-up might not be so far fetched after all,
and explore the impact that such a technology could have on our lives and our
society.Comment: 4 pages, 0 figure, Accepted at the "Re-Coding Black Mirror" workshop
of the International World Wide Web Conferences (WWW
Majority is Not Required: A Rational Analysis of the Private Double-Spend Attack from a Sub-Majority Adversary
We study the incentives behind double-spend attacks on Nakamoto-style
Proof-of-Work cryptocurrencies. In these systems, miners are allowed to choose
which transactions to reference with their block, and a common strategy for
selecting transactions is to simply choose those with the highest fees. This
can be problematic if these transactions originate from an adversary with
substantial (but less than 50\%) computational power, as high-value
transactions can present an incentive for a rational adversary to attempt a
double-spend attack if they expect to profit. The most common mechanism for
deterring double-spend attacks is for the recipients of large transactions to
wait for additional block confirmations (i.e., to increase the attack cost). We
argue that this defense mechanism is not satisfactory, as the security of the
system is contingent on the actions of its users. Instead, we propose that
defending against double-spend attacks should be the responsibility of the
miners; specifically, miners should limit the amount of transaction value they
include in a block (i.e., reduce the attack reward). To this end, we model
cryptocurrency mining as a mean-field game in which we augment the standard
mining reward function to simulate the presence of a rational, double-spending
adversary. We design and implement an algorithm which characterizes the
behavior of miners at equilibrium, and we show that miners who use the
adversary-aware reward function accumulate more wealth than those who do not.
We show that the optimal strategy for honest miners is to limit the amount of
value transferred by each block such that the adversary's expected profit is 0.
Additionally, we examine Bitcoin's resilience to double-spend attacks. Assuming
a 6 block confirmation time, we find that an attacker with at least 25% of the
network mining power can expect to profit from a double-spend attack
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