The fragility of decentralised trustless socio-technical systems

The blockchain technology promises to transform finance, money and even governments. However, analyses of blockchain applicability and robustness typically focus on isolated systems whose actors contribute mainly by running the consensus algorithm. Here, we highlight the importance of considering trustless platforms within the broader ecosystem that includes social and communication networks. As an example, we analyse the flash-crash observed on 21st June 2017 in the Ethereum platform and show that a major phenomenon of social coordination led to a catastrophic cascade of events across several interconnected systems. We propose the concept of “emergent centralisation” to describe situations where a single system becomes critically important for the functioning of the whole ecosystem, and argue that such situations are likely to become more and more frequent in interconnected socio-technical systems. We anticipate that the systemic approach we propose will have implications for future assessments of trustless systems and call for the attention of policy-makers on the fragility of our interconnected and rapidly changing world

Game Theory Meets Network Security: A Tutorial at ACM CCS

The increasingly pervasive connectivity of today's information systems brings up new challenges to security. Traditional security has accomplished a long way toward protecting well-defined goals such as confidentiality, integrity, availability, and authenticity. However, with the growing sophistication of the attacks and the complexity of the system, the protection using traditional methods could be cost-prohibitive. A new perspective and a new theoretical foundation are needed to understand security from a strategic and decision-making perspective. Game theory provides a natural framework to capture the adversarial and defensive interactions between an attacker and a defender. It provides a quantitative assessment of security, prediction of security outcomes, and a mechanism design tool that can enable security-by-design and reverse the attacker's advantage. This tutorial provides an overview of diverse methodologies from game theory that includes games of incomplete information, dynamic games, mechanism design theory to offer a modern theoretic underpinning of a science of cybersecurity. The tutorial will also discuss open problems and research challenges that the CCS community can address and contribute with an objective to build a multidisciplinary bridge between cybersecurity, economics, game and decision theory

Decentralized Service: An Initiation of Blockchain Value Creation into Service Science

How value is created through service has recently undergone massive changes. Centralized service provision with clear distinctions between service offerers and beneficiaries is increasingly superseded by value creation within decentralized networks of distributed actors integrating digital resources equally. One of the drivers of this transformation is blockchain technology. Applying the lens of service-dominant logic and discussing examples of blockchain-based decentralized finance, we shed light on how properties of decentralized technology stimulate value creation in service ecosystems. With this conceptual research, we postulate five propositions of decentralized value creation along the axiomatic foundations of the service-dominant logic. We provide first definitions for decentralized service as well as decentralized service ecosystems. Thereby, we contribute with an extension of the service-dominant logic to the context of decentralized ecosystems. To our knowledge, this research is among the first to add to the growing literature on blockchain value creation from a service science perspective

A "Social Bitcoin" could sustain a democratic digital world

A multidimensional financial system could provide benefits for individuals, companies, and states. Instead of top-down control, which is destined to eventually fail in a hyperconnected world, a bottom-up creation of value can unleash creative potential and drive innovations. Multiple currency dimensions can represent different externalities and thus enable the design of incentives and feedback mechanisms that foster the ability of complex dynamical systems to self-organize and lead to a more resilient society and sustainable economy. Modern information and communication technologies play a crucial role in this process, as Web 2.0 and online social networks promote cooperation and collaboration on unprecedented scales. Within this contribution, we discuss how one dimension of a multidimensional currency system could represent socio-digital capital (Social Bitcoins) that can be generated in a bottom-up way by individuals who perform search and navigation tasks in a future version of the digital world. The incentive to mine Social Bitcoins could sustain digital diversity, which mitigates the risk of totalitarian control by powerful monopolies of information and can create new business opportunities needed in times where a large fraction of current jobs is estimated to disappear due to computerisation.Comment: Contribution to EPJ-ST special issue on 'Can economics be a Physical Science?', edited by S. Sinha, A. S. Chakrabarti & M. Mitr

Virtual EQ – the talent differentiator in 2020?

In an increasingly competitive, globalised world, knowledge-intensive industries/ services are seen as engines for success. Key to this marketplace is a growing army of ‘talent’ i.e. skilled and dedicated knowledge workers. These knowledge workers engage in non-routine problem solving through combining convergent, divergent and creative thinking across organizational and company boundaries - a process often facilitated though the internet and social media, consequently forming networks of expertise. For knowledge workers, sharing their learning with others through communities of practice embedded in new information media becomes an important element of their personal identity and the creation of their individual brand or e-social reputation. Part of the new knowledge/skills needed for this process becomes not only emotional intelligence (being attuned to the emotional needs of others) but being able to do this within and through new media, thus the emergence of virtual emotional intelligence (EQ). Our views of current research found that HRD practitioners in 2020 might need to consider Virtual EQ as part of their talent portfolio. However it seems that new technology has created strategies for capturing and managing knowledge that are readily duplicated and that a talent differentiator in 2020 might simply be the ability and willingness to learn

On Cyber Risk Management of Blockchain Networks: A Game Theoretic Approach

Open-access blockchains based on proof-of-work protocols have gained tremendous popularity for their capabilities of providing decentralized tamper-proof ledgers and platforms for data-driven autonomous organization. Nevertheless, the proof-of-work based consensus protocols are vulnerable to cyber-attacks such as double-spending. In this paper, we propose a novel approach of cyber risk management for blockchain-based service. In particular, we adopt the cyber-insurance as an economic tool for neutralizing cyber risks due to attacks in blockchain networks. We consider a blockchain service market, which is composed of the infrastructure provider, the blockchain provider, the cyber-insurer, and the users. The blockchain provider purchases from the infrastructure provider, e.g., a cloud, the computing resources to maintain the blockchain consensus, and then offers blockchain services to the users. The blockchain provider strategizes its investment in the infrastructure and the service price charged to the users, in order to improve the security of the blockchain and thus optimize its profit. Meanwhile, the blockchain provider also purchases a cyber-insurance from the cyber-insurer to protect itself from the potential damage due to the attacks. In return, the cyber-insurer adjusts the insurance premium according to the perceived risk level of the blockchain service. Based on the assumption of rationality for the market entities, we model the interaction among the blockchain provider, the users, and the cyber-insurer as a two-level Stackelberg game. Namely, the blockchain provider and the cyber-insurer lead to set their pricing/investment strategies, and then the users follow to determine their demand of the blockchain service. Specifically, we consider the scenario of double-spending attacks and provide a series of analytical results about the Stackelberg equilibrium in the market game

DRMs, Innovation and Creation

DRMs are intellectual property institutions. They transpose the empirical principle of copyright, which implicitly recognizes that specific ownership rules should be attached to non scientific creation, into the digital era. The legal protection of DRMs, a private means of enforcing content excludability, participates in the "privatization" of copyright protection. This, in turn, means that a proprietary software — governed by intellectual property rights, reinforced by public law — becomes the key to the vertical relations shaped by exclusive copyright. DRMs consequently represent a major stake in the competition to capture network effects in the content distribution vertical chaincopyright; distribution; DRMs; network effects