Related papers: Bitcoin: A Natural Oligopoly
The energy sustainability of blockchains, whose consensus protocol rests on the Proof-of-Work, nourishes a heated debate. The underlying issue lies in a highly energy-consuming process, defined as mining, required to validate crypto-asset…
Forks in the Bitcoin network result from the natural competition in the blockchain's Proof-of-Work consensus protocol. Their frequency is a critical indicator for the efficiency of a distributed ledger as they can contribute to resource…
The security of blockchain systems is fundamentally based on the decentralized consensus in which the majority of parties behave honestly, and the content verification process is essential to maintaining the robustness of blockchain…
Bitcoin is the world's first decentralized digital currency. Its main technical innovation is the use of a blockchain and hash-based proof of work to synchronize transactions and prevent double-spending the currency. While the qualitative…
This research paper presents a thorough economic analysis of Bitcoin and its impact. We delve into fundamental principles, and technological evolution into a prominent decentralized digital currency. Analysing Bitcoin's economic dynamics,…
A soft control of the network activity through varying reward in a proof-of-work (PoW) cryptocurrency is reported. Rewards are the necessity to incent the contributors activities (i.e., mining) in order to maintain the PoW network. Contrary…
Bitcoin is the most successful cryptocurrency so far. This is mainly due to its novel consensus algorithm, which is based on proof-of-work combined with a cryptographically-protected data structure and a rewarding scheme that incentivizes…
Since Bitcoin's inception in 2008, it has became attractive investments for both trading and mining. To mine Bitcoins, a miner has to invest in computing power and pay for electricity to solve cryptographic puzzles for rewards, if it…
The Bitcoin Lightning Network (LN) is designed to improve the scalability of blockchain systems by using off-chain payment paths to settle transactions in a faster, cheaper, and more private manner. This work aims to empirically study LN's…
We propose DIPS Difficulty-based Incentives for Problem Solving), a simple modification of the Bitcoin proof-of-work algorithm that rewards blockchain miners for solving optimization problems of scientific interest. The result is a…
This paper integrates Austrian capital theory with repeated game theory to examine strategic miner behaviour under different institutional conditions in blockchain systems. It shows that when protocol rules are mutable, effective time…
Proof-of-work computation used in cryptocurrencies has witnessed significant growth in the U.S. and many other regions around the world. One of the most significant bottlenecks for the scalable deployment of such computation is its energy…
Blockchains protect an ecosystem worth more than $500bn with strong security properties derived from the principle of decentralization. Is today's blockchain decentralized? In this paper, we empirically studied one of the least…
A hard-fork reconfiguration of the peer to peer Bitcoin network is described that substitutes tamper-evident logs and proof-of-stake consensus for proof-of-work consensus. The block creation rewards and transaction fees are reallocated to…
Blockchains offer a decentralized and secure execution environment strong enough to host cryptocurrencies, but the state-replication model makes on-chain computation expensive. To avoid heavy on-chain workloads, systems like Truebit and…
In a Proof-of-Work blockchain such as Bitcoin mining hashrate is increasing in the block reward. An increase in hashrate reduces network vulnerability to attack (a reduction in security cost) while increasing carbon emissions and…
Mining blocks in a blockchain using the \textit{Proof-of-Work} consensus protocol involves significant risk, as network participants face continuous operational costs while earning infrequent capital gains upon successfully mining a block.…
A cryptocurrency is a decentralized digital currency that is designed for secure and private asset transfer and storage. As a currency, it should be difficult to counterfeit and double-spend. In this paper, we review and analyze the major…
This paper proposes a conceptual framework for the analysis of reward sharing schemes in mining pools, such as those associated with Bitcoin. The framework is centered around the reported shares in a pool instead of agents and results in…
Optimization methods are used to determine equilibria of investment in cryptocurrencies. The basic assumptions involve existence of a core group (the "wealthy") that fears the loss of substantial assets through government seizure.…