Double-spending Attacks Research Articles

Profitable Double-Spending Attacks

Our aim in this paper is to investigate the profitability of double-spending (DS) attacks that manipulate an a priori mined transaction in a blockchain. It was well understood that a successful DS attack is established when the proportion of computing power an attacker possesses is higher than that of the honest network. What is not yet well understood is how threatening a DS attack with less than 50% computing power used can be. Namely, DS attacks at any proportion can be a threat as long as the chance to make a good profit exists. Profit is obtained when the revenue from making a successful DS attack is greater than the cost of carrying out one. We have developed a novel probability theory for calculating a finitetime attack probability. This can be used to size up attack resources needed to obtain the profit. The results enable us to derive a sufficient and necessary condition on the value of a transaction targeted by a DS attack. Our result is quite surprising: we theoretically show how a DS attack at any proportion of computing power can be made profitable. Given one’s transaction value, the results can also be used to assess the risk of a DS attack. An example of profitable DS attack against BitcoinCash is provided.

A novel quantum blockchain scheme base on quantum entanglement and DPoS

In this paper, a novel quantum blockchain scheme is proposed to optimize the security of blockchain. Firstly, we propose the definition of quantum blockchain and provide its construction in detail. Additionally, its advantages are also summarized in this work. Secondly, based on the quantum no-cloning theorem, we define a new type of cryptocurrency which we call it quantum coin. Meanwhile, we adopt quantum entanglement and DPoS to design a novel quantum blockchain scheme. At last, we analyze the security of this proposed scheme in terms of the secret keys and quantum coin. It is shown that some attacks, such as man-in-the-middle attack, double spending attack and state-estimation attack, can be resisted. More specifically, under quantum computing attacks, the scheme is also secure. To sum up, through the principles of quantum cryptography and DPoS, this novel quantum blockchain obviously provides better security and higher efficiency.

The Cost of Bitcoin Mining Has Never Really Increased

The Bitcoin network is burning a large amount of energy for mining. In this paper, we estimate the lower bound for the global mining energy cost for a period of ten years from 2010 to 2020, taking into account changes in energy costs, improvements in hashing technologies and hashing activity. We estimate energy cost for Bitcoin mining using two methods: Brent Crude oil prices as a global standard and regional industrial electricity prices weighted by the share of hashing activity. Despite a ten-billion-fold increase in hashing activity and a ten-million-fold increase in total energy consumption, we find the cost relative to the volume of transactions has not increased nor decreased since 2010. This is consistent with the perspective that, in order to keep the Blockchain system secure from double spending attacks, the proof or work must cost a sizable fraction of the value that can be transferred through the network. We estimate that in the Bitcoin network this fraction is of the order of 1%.

Empirical analysis of transaction malleability within blockchain-based e-Voting

Blockchain is a disruptive technology that has been used to address a wide range of challenges in diverse domains including voting, logistics, healthcare and finance. Transaction malleability is one of the critical threats for blockchain, which can facilitate double-spending attacks by tampering with the state of a blockchain. This paper investigates the potential of transaction malleability attack within a blockchain-based application (e-voting) with the aim to identify settings which can lead to a successful transaction malleability attack. Therein, we aim to highlight conditions which can cause transaction malleability attack so as to help develop appropriate protection mechanisms. In particular, a successful execution of transaction malleability attack is presented which was conducted on a blockchain testbed hosting an e-voting application. The experiments identified significance of parameters such as network delay and block generation rate to successfully execute transaction malleability attack and have highlighted directions for future research.

Endex: Degree of Mining Power Decentralization for Proof-of-Work Based Blockchain Systems

Proof of Work (PoW) is one of the key consensus mechanisms for blockchain systems to ensure trust and secure service. The PoW process, which is also known as mining, is computationally intensive, because the miners need to solve a well-crafted puzzle to add a new block to the chain. With cryptocurrency such as Bitcoin becoming more popular, it requires greater levels of mining power for successful mining. Most miners tend to join specific mining pools to share rewards contributed by their mining power. This leads to more centralized PoWbased blockchain systems, which contradicts the design goal of decentralization for blockchain. Mining power concentration may damage the trust and secure level of blockchain systems. However, no tools or studies could timely and quantitatively tell us how decentralized in terms of mining power the PoW blockchain system is. in this article, we design a decentralization index, called Endex, to efficiently quantify the degree of mining power decentralization and timely capture the abnormal phenomena of PoW blockchain systems. We then validate the effectiveness and accuracy of Endex over real mining datasets of four popular blockchain systems. The empirical study demonstrates that Endex can well capture the changes in mining power for these blockchain systems and detect in time the abnormal incidents such as double spending attack and hard fork.

Direct Acyclic Graph-Based Ledger for Internet of Things: Performance and Security Analysis

Direct Acyclic Graph (DAG)-based ledger and the corresponding consensus algorithm has been identified as a promising technology for Internet of Things (IoT). Compared with Proof-of-Work (PoW) and Proof-of-Stake (PoS) that have been widely used in blockchain, the consensus mechanism designed on DAG structure (simply called as DAG consensus) can overcome some shortcomings such as high resource consumption, high transaction fee, low transaction throughput and long confirmation delay. However, the theoretic analysis on the DAG consensus is an untapped venue to be explored. To this end, based on one of the most typical DAG consensuses, Tangle, we investigate the impact of network load on the performance and security of the DAG-based ledger. Considering unsteady network load, we first propose a Markov chain model to capture the behavior of DAG consensus process under dynamic load conditions. The key performance metrics, i.e., cumulative weight and confirmation delay are analysed based on the proposed model. Then, we leverage a stochastic model to analyse the probability of a successful double-spending attack in different network load regimes. The results can provide an insightful understanding of DAG consensus process, e.g., how the network load affects the confirmation delay and the probability of a successful attack. Meanwhile, we also demonstrate the trade-off between security level and confirmation delay, which can act as a guidance for practical deployment of DAG-based ledgers.

Why Fixed Costs Matter for Proof-of-Work Based Cryptocurrencies

We assess how the cost structure of cryptocurrency mining affects the response of miners to exchange rate fluctuations and the immutability of cryptocurrency ledgers that rely on proof-of-work. We show that the amount of mining power supplied to currencies that rely on specialized hardware, such as Bitcoin, responds less to adverse exchange rate shocks than other currencies respond to such shocks, a fact that is instrumental to avoiding double-spending attacks. The results may change if mining equipment used for one cryptocurrency can be transferred to another. For smaller currencies with low exchange rate correlation, transferability eliminates the protection that fixed costs provide. Our results weaken doomsday predictions for Bitcoin and other cryptocurrencies with declining block rewards.

Bitcoin and Blockchain: Security and Privacy

Blockchain is a technology that was proposed to enable the decentralized digital currency, Bitcoin. Since its inception, blockchain has been widely used in many other areas, including tracing sensor data and mitigating its duplication in IoT applications, the healthcare industry, and e-voting. In this article, we provide a comprehensive review and analysis of the major security and privacy issues of Bitcoin and blockchain, the major challenges, and opportunities in utilizing the technology. First, we present a comprehensive background of Bitcoin and the preliminary on security. Second, the major security threats and countermeasures of Bitcoin are investigated. We analyze the risk of double-spending attacks, evaluate the probability of success in performing the attacks, and derive the profitability for the attacker to perform such attacks. Third, we analyze the underlying Bitcoin peer-to-peer network security risks and Bitcoin storage security. We compare three types of Bitcoin wallets in terms of security, types of services, and their tradeoffs. Finally, we discuss the security and privacy features of alternative cryptocurrencies and present an overview of emerging technologies today. Our results can help Bitcoin users to determine a tradeoff between the risk of double-spending attempts and the transaction time delay or confidence before accepting transactions. These results can also assist miners to develop suitable strategies to get involved in the mining process and maximize their profits.

BLOCKCHAIN DOUBLE-SPEND ATTACK DURATION

Many cryptocurrencies including Bitcoin are susceptible to a so-called double-spend attack, where someone dishonestly attempts to reverse a recently confirmed transaction. The duration and likelihood of success of such an attack depends on the recency of the transaction and the computational power of the attacker, and these can be related to the distribution of time for counts from one Poisson process to exceed counts from another by some desired amount. We derive an exact expression for this distribution and show how it can be used to obtain efficient simulation estimators. We also give closed-form analytic approximations and illustrate their accuracy.

The Cost of Bitcoin Mining Has Never Really Increased

The Bitcoin network is burning a large amount of energy for mining. In this paper we estimate the lower bound for the global energy cost for a period of ten years from 2010, taking into account changing oil costs, improvements in hashing technologies and hashing activity. Despite a ten-billion-fold increase in hashing activity and a ten-million-fold increase in total energy consumption, we find the cost relative to the volume of transactions has not increased nor decreased since 2010. This is consistent with the perspective that, in order to keep a the Blockchain system secure from double spending attacks, the proof or work must cost a sizable fraction of the value that can be transferred through the network. We estimate that in the Bitcoin network this fraction is of the order of 1%.

Mitigations on Sybil-Based Double-Spend Attacks in Bitcoin

Double-spending is a potential flaw in cryptocurrencies. In recent years, double-spend attacks have caused severe economic damage to many Bitcoin consumers, thus double-spending problems have attracted wide attention. Studying related countermeasures and mitigations against such attacks is imperative. In this article, we briefly introduce a new form of combined attack: double-spending with a Sybil attack in the Bitcoin network and discuss how to mitigate it. We propose two mitigations such as charging an identity fee and setting a deadline to defend against this attack, and we evaluate the effect of these two mitigations through an economic analysis.

Circuit Copyright Blockchain: Blockchain-Based Homomorphic Encryption for IP Circuit Protection

The fast development of Blockchain technology makes it widely applied in several fields of digital transactions, like e-government affairs and the protection of financial transactions. In this article, we propose a homomorphic encryption-based Blockchain for circuit copyright protection that effectively addresses the issues in the protection of circuit copyright transactions, such as low security of private data, low efficiency in transaction data storage, cooperation and supervision. First, we establish a homomorphic encryption-based mathematical model by utilizing Blockchain and intelligent contract, and next, the algorithms that include Blockchain generation, homomorphic chain encryption/decryption, and intelligent contract are designed. As the intelligent contract is correctly executed in Blockchain, a fully homomorphic encryption-based identity authentication protocol is tackled for Blockchain, given that it ensures the change operation of any third-party in Blockchain and realizes real-time verification. The system is apposite for circuit copyright protection in a blockchain network, due to the use of distributed identity authentication and real-time extensible storage improves the security and extensibility of blockchain-based circuit copyright protection. The experimental results show that the proposed algorithm has reduced the transmission cost and improved the efficiency of data storage and supervision. In addition, it is resilient to several common attacks (e.g., double-spending attacks), yet incurs low cost/overhead and has a higher level of security when compared to three other competing algorithms.

Analytical modeling of the attack of double costs on a blockchain system with a probabilistic consensus protocol

To build safe and reliable distributed decentralized systems using blockchain technology, a continuous chain of blocks is created, the unauthorized modification of which is not allowed by the applied cryptographic mechanisms. This is achieved by using unidirectional, collision resistant and search prototypes of cryptographic functions whose hash values from previous blocks are included in subsequent blocks. As a result, an unauthorized change in at least one bit of data in the previous blocks will be immediately detected. However, in the case of distributed storage of information, there is an additional requirement of synchronization of individual chains of blocks that are stored by various nodes. These and other issues are resolved by applying consensus building mechanisms, through which, after a certain sequence of actions, a continuous sequence of blocks (blockchain chain) becomes the same on all nodes of a decentralized network. This work examines one of the main vulnerabilities of blockchain systems built by consensus with probabilistic completion, namely, a double-spend attack. Based on the model of “independent players”, an analytical expression is obtained for calculating the probability of an attacker's successful double-spending attack. The quantitative values of the probability of a successful attack are given for various abilities of an attacker, a different number of generated blocks and a different race duration. Using computer simulation, the calculated values are experimentally verified. All empirical estimates were obtained with high accuracy (relative error not higher than 1%) and reliability (confidence level of at least 99%). To confirm the adequacy of the results obtained, a comparison of empirical results with theoretical calculations is given.

Probability of a successful attack of double costs on a blockchain system with a probabilistic consensus protocol

Most traditional information systems are built on a centralized hierarchical principle. In such systems, there is a single decision-making center, to which other nodes are subordinate, therefore, they must certainly perceive and follow centralized instructions. In addition, the presence of a decision center causes additional threats, since to disrupt the operation of the entire system it is enough to destroy or compromise the main node. Decentralized systems are more stable and secure, especially in a situation of complete distrust of each other. They are more reliable for storing important information, such as digital assets, registries, inventories and the like. That is why blockchain technologies for building decentralized systems are becoming increasingly popular and widespread. However, when deploying decentralized systems, the task of coordinating the state of various network nodes arises. This is especially true when the nodes operate in a mode of complete distrust of each other, that is, if situations are possible where the proportion of nodes is controlled by intruders. This problem is solved using consensus protocols, that is, such rules and algorithms that, when executed, achieve the same state for most nodes of a decentralized system. This article discusses probabilistic consensus protocols, that is, when the occurrence of a certain state is a random event. Coordination of system states is possible in various ways, including possible false cases that are imposed by attackers. For example, attackers can double their electronic assets by spending them twice. Of course, if most nodes are controlled by intruders, the system will not work properly. But even with a smaller share of resources, attackers can also with a certain probability impose a false state of the system and thus implement a double-spend attack. The article discusses various situations and possible states of the system, analytically deriving formulas for calculating the probability of a successful double spending attack on a blockchain system with a probabilistic consensus protocol. When conducting research, the model of independent players was used, which, unlike the well-known works, takes into account the complete set of elementary events and system states. Based on the results obtained, recommendations are given on the safe functioning of a decentralized system.

Secure, fair and instant data trading scheme based on bitcoin

Data trading scheme based on Bitcoins faces many challenges. One of them is the transactions’ fairness. That is, the distrust between the unfamiliar parties involved in the transaction is likely to cause unfair trade. For example, the party can provid inveracious data or refuse to pay after receiving the authentic data. Another one is the Bitcoin transaction latency, which causes the inability to reach an instant transaction. The third one is the illegal trading of data, for example, malicious agencies buy and sell users’ private data to make a profit. In order to address these challenges, we propose a secure, fair and instant data trading scheme. In this paper, we adopt a special Bitcoin script to reduce transaction latency. The script requires the payee to provide the payer the encryption key of data or he will not get Bitcoin. This effectively ensures fairness. If the same account is spent twice, the transaction’s script will expose the private key of the account. This allows Bitcoin transactions are completed instantly without waiting. In addition, by using identity-based signature and attribute-based encryption, we achieve the goal that only legitimate users can buy and sell data. What’s more, the data seller stores the data in the cloud, and the cloud server performs data auditing to ensure data integrity. Security analysis shows that our scheme is not only fair and reasonable, but also resistant to collusion attacks and double-spending attacks. Performance analysis shows that our scheme has a shorter execution time and is more suitable for real scenarios than other existing schemes.

Tullock Contest: A Model of Proof-of-Work Mining in Cryptocurrencies

This paper presents an N-player Tullock contest where players purchases shares in a lottery at a fixed common cost. Once all players have purchased their shares, a common value reward is raffled off. The model has some similarities to all-pay auctions, however the assignment mechanism differs. This difference ensures that, unlike all-pay auctions, the N-player Tullock contest has an unique pure strategy Nash equilibrium. This article presents also a new kind of Tullock contest that integrates the main mechanism behind proof-of-work mining of cryptocurrencies such as Bitcoin. The application of the model is expanded to analyze some topics of proof-of-work protocols, such as concentration of hashing power, double-spending attacks and environmental externalities.

Vulnerability of Scale-Free Cryptocurrency Networks to Double-Spending Attacks

Cryptocurrencies including Bitcoin are known to be vulnerable to so-called “doublespending” attacks, where the same digital currency is used to execute multiple different transactions simultaneously. Little is known, however, about the underlying reasons for this vulnerability. Here we develop an agent-based model to study how features of cryptocurrency networks contribute to their vulnerability to double-spending attacks. Perhaps surprisingly, we find neither the number of network nodes nor its path length seem to influence the probability of successful attacks. We find robust evidence that the network’s clustering coefficient has substantial influence. In particular, scale-free networks, with their small clustering coefficients, are more than twice as likely to succumb to double-spending attacks than are networks with larger coefficients, such as regular networks. The implication is that cryptocurrency networks, which are scale-free, may be uniquely susceptible to double-spending attacks.

Analysis of Proof-of-Work-Based Blockchains Under an Adaptive Double-Spend Attack

In this article, we study the performance of blockchains by analyzing the common prefix depth, chain quality coefficient, and chain growth speed coefficient. These three parameters characterize the liveness and consistency of transactions which are important for the proper operation of the blockchain. We examine how these three parameters are affected under an adaptive double-spend attack (ADSA). To maintain the performance of a blockchain against ADSA, the user nodes can use a larger number, $z$ , of confirmation blocks for validating a transaction. A comparison of the values of $z$ needed to achieve a given target probability of successful attack is provided for ADSA and the traditional double-spend attack with different system models. The results indicate that a larger value of $z$ is required under ADSA. A more realistic reward model for attackers is also introduced. It is found that the expected reward of an attacker decreases rapidly to zero as $z$ is increased.

Too Big to Cheat: Mining Pools' Incentives to Double Spend in Blockchain Based Cryptocurrencies

In most blockchain based cryptocurrencies majority of verification power is required for facilitating a successful double spending attack, i.e. using the same funds multiple times. Because possibility to double spend sharply deteriorates trust and value, concentration is traditionally considered to be a significant problem. We model agents’ incentives to facilitate double spending attacks under opportunity costs. Contrary to a host of previous literature, our main findings indicate that under meager economic profits large pools have higher incentives to act honestly than outsiders, our results hold for 13 major proof-of-work cryptocurrencies. Intuitively, this stems from the fact that mining pools holding more power in a cryptocurrency have stronger vested interest in it.

Majority can earn more: A new coin mining strategy for miner with superior computing power in blockchain

Abstract Blockchain is the technology basis of future financial technology, which combines the cryptography algorithms and P2P network. In previous papers, scholars raised attacks like double spending attack which spends the same money twice and sybil attack which isolates nodes and break the P2P network. All these attacks earn illegal income in a destructive way. Our contribution is that we present the concept of mining strategy then present a mining strategy to evaluate how the minor with major computing power (but less than 51%) earns more without doing harm to the financial technology system in a specific model.