Turning BitCOINS into best-coins
University of Tartu, Estonia
Under the guidance of
Dr. Vitaly Skachek
S. Barber, X. Boyen, E. Shi, and E. Uzun. Bitter to better – how to make bitcoin a better currency. In Financial Cryptography and Data Security, pages 399–414. Springer, 2012.
2013 Bitcoin market reports.
Current Bitcoin trends.
Comparison with other crypto currencies.
Success factors of Bitcoin.
History of Bitcoins
Transferable digital money
– Based on cryptographic signatures and hash functions
P2P system, no central bank or trusted issuer
Self published paper by a person/group with pseudonym "Satashi Nakamoto" in October 2008.
Nakamoto, S.: Bitcoin: A peer-to-peer electronic cash system
3rd of January, 2009 : Announced in the Cryptography mailing list
11th of January, 2009 : launched as open-source project on Sourceforge.
Works like previous e-cash attempts such as Bit-gold, Hashcash.
Verifying ownership - "Double spending".
Trusted central authoritybut .
A public ledger - which creates a time stamped history of all previous transactions.
- Favourite among late comers.
- Cheap, easy and fast.
- First mined : 7th December, 2011
- No limit on amount of coins.
- inflation rate of 1% to adjust scalability.
- First mined on : 16th August, 2012.
- Serves as an alternative Domain Name System (DNS)
- customers buy the .bit domains ; the domain is added to the blockchains
- First mined on : 17th April, 2011.
- Based on prime numbers.
- Network discovers new prime numbers.
- Fastest to mine : 0.5574 minutes to confirm.
- More secure : 9 rounds of encryptions using 6 different encryption algorithms.
- First mined on : 21st July, 2013.
No central point of trust.
Incentives for participation.
Predictable money supply.
Open source and easy-to-implement modules.
Support for scripting.
Irreversibility of transactions.
Low fees of transaction.
Black hat communities hacking the systems.
Digital market shutting down.
Lack of measures to back up.
Mass thefts : hack of marketplace / Bitcoin exchange.
Individual thefts :
Cryptocurrency Stealing Malware (CCSM) :
- Wallet Stealer.
- Credential stealer.
- Man-in-the-middle malware.
- RPC Automation malware.
- Remote Access Trojans (RAT)
- Cryptocurrency Stealing Malware (CCSM) :
- Threshold Cryptography.
Bitcoin ecosystem = Decentralized - Distributed.
Everyone will have the history of transactions.
Bitcoin System = Directed Acyclic Graphs.
- Each vertex represents a single transaction.
Some interesting facts revealed:
Who is the rich Bitcoin user (Transacation code in 2010).
98% of the addresses have fewer than 10 Bitcoins.
47% of the general transactions make less than 0.01 Bitcoins.
84% of the transactions are less than 10 Bitcoins.
Analysis of a user network revealed many things.
Multi-input payment = Involvement of same user.
Mapping features of TCP/IP layers reveal approximate geographical location of the user.
Companies accepting Bitcoins may require email address or personal information == Complete breach of privacy.
- Use of Mixtures.
- Fair Exchange Protocol.
- Data retentions and communication failures.
- Delay associated with transaction confirmation.
- Growing size of private key storage.
Filtering of Bitcoin nodes as Clients and Verifiers.
- May be with the help of trusted third party cloud service.
- Semi-trusted bank as in intermediate
- Pseudo Random Generator for generating private keys and associating expiration dates for public-keys.
- Filtering of Bitcoin nodes as Clients and Verifiers.
Anonymity vs trust
The Bitcoin enforces anonymity and unlinkability.
By allowing users to have different addresses and public keys in every transaction
However not completely anonymous.
Usage of Mixtures.
Fair Exchange Protocol.
Switch to Zerocoin - But not compatiable with Bitcoin.
Fair Exchange Protocol
Avoids the compromising nature of mixers.
works on a backward compatible manner :
Two users can exchange Bitcoins without third party intervention.
Probability of cheating is smaller.
Bitcoins has revolutionized the whole technology and financial world.
Not perfect but scope for improvement.
More companies have started accepting Bitcoins.
Improves global business trends.
 S. Barber, X. Boyen, E. Shi, and E. Uzun. Bitter to better – how to . make bitcoin a better currency. In Financial Cryptography and Data . . Security, pages 399–414.Springer, 2012.  Bitcoin Competitors: What You Should Know About 6 Alternative crypto . currencies : http://goo.gl/KG2NvC  Coin Span of digital currencies: http://bitinfocharts.com/charts.html  Cryptocurrency Market Capitalizations based on available supply
http://coinmarketcap.com/#USD  CoinDesk State of Bitcoin-2014 Report: http://www.coindesk.com/bitcoin-2014-report/ Bitcoin media mentions in the year 2013 using using media database Lexis . Nexis
Turning Bitcoins into Best-Coins