Bitcoin Payment Research Articles

A Monitoring-Free Bitcoin Payment Channel Scheme With Support for Real-Time Settlement

A Monitoring-Free Bitcoin Payment Channel Scheme With Support for Real-Time Settlement

DiFastBit: Transaction Differentiation Scheme to Avoid Double-Spending for Fast Bitcoin Payments

Bitcoin is a payment system that generates a decentralized digital currency without ensuring temporal constraints in its transactions; therefore, it is vulnerable to double-spending attacks. Karame has proposed a formalization for a successful double-spending attack based on meeting three requirements. This focuses on fast payment scenarios where the product is delivered immediately after the payment is announced in the mempool, without waiting for transaction confirmation. This scenario is key in Bitcoin to increase the probability of a successful double-spending attack. Different approaches have been proposed to mitigate these attacks by addressing one or more of Karame’s three requirements. These include the following: flooding every transaction without restrictions, introducing listeners/observers, avoiding isolation by blocking incoming connections, penalizing malicious users by revealing their identity, and using machine learning and bio-inspired techniques. However, to our knowledge, no proposal deterministically avoids double-spending attacks in fast payment scenarios. In this paper, we introduce DiFastBit: a distributed transaction differentiation scheme that shields Bitcoin from double-spending attacks in fast payment scenarios. To achieve this, we modeled Bitcoin from a distributed perspective of events and processes, reformulated Karame’s requirements based on Lamport’s happened-before relation (HBR), and introduced a new theorem that consolidates the reformulated requirements and establishes the necessary conditions for a successful attack on fast Bitcoin payments. Finally, we introduce the specifications for DiFastBit, formally prove its correctness, and analyze DiFastBit’s confirmation time.

Navigating the Bitcoin Wave: An In-depth Examination of its Advantages and Drawbacks in the Contemporary Economic Landscape

This research delves into the economic implications of Bitcoin, a decentralized digital currency, with a specific focus on its notable surge of 65,000 USD in November 2021. Examining factors such as Bitcoin's supply dynamics, market demand, investor sentiment, and its competitive landscape vis-à-vis other cryptocurrencies, the study aims to elucidate the economic benefits and drawbacks associated with the adoption of Bitcoin payment systems. Despite its facilitation of swift cross-border transactions, the research underscores concerns related to data security as a major challenge. Employing a quantitative approach, utilizing statistical analysis through SPSS, the study establishes robust dependencies among key economic variables. The findings contribute valuable insights into the transformative effects of digital currencies on economic transaction methods, emphasizing the necessity for cautious consideration of associated challenges within the economic landscape. Ultimately, this research achieves its economic objectives by shedding light on Bitcoin's pivotal role and impact on economic transactions in the digital era.

Bitcoin adoption in online payments: examining consumer intentions and word-of-mouth recommendations

Online retailers in emerging markets like South Africa are adopting Bitcoin payments. This study explores factors driving consumer adoption and word-of-mouth (WOM) recommendations for Bitcoin in online transactions. Using an integrated model combining valency theory, social contagion theory, and the technology acceptance model (TAM), we analyse data from 521 South African online shoppers. Findings reveal that perceived usefulness, ease of use, social pressures, trust, and perceived risk significantly influence both adoption and WOM. Importantly, self-efficacy moderates the relationship between these factors and behaviour. This research contributes to the literature by offering a comprehensive understanding of Bitcoin adoption. For business and policy actors, enhancing consumer self-efficacy can foster trust, ease concerns, and encourage positive WOM, ultimately aiding successful Bitcoin implementation and promotion.

Crypto Currency on the Development of Nigeria Banking System with Particular Reference to the First Bank Nigeria Plc

The study examined the effect of crypto currency on the development of Nigerian banking system with particular reference to the first bank Nigeria Plc. The study specifically examined the effect of Bitcoin (BTC) payment system and Litecoin (LTC) payment system, Ethereum (ETH) payment system and Bitcoin Cash payment system on the profit for the year of first bank Nigeria Plc. Data for the study was sourced through annual reports and accounts of first bank Plc for a period of 10 years, data collected were analysed using multiple regression analysis. Result of the analysis shows that Bitcoin (BTC) payment system has a positive and significant effect on the profit for the year of first bank Nigeria Plc. It was also observed that Litecoin (LTC) payment system has a negative significant effect on the profit for the year of first bank Nigeria Plc. The study further shows that that there is a negative effect of Ethereum on Profit for the year of first bank Plc. The study further indicates that Bitcoin Cash has a positive and significant effect on Profit for the year of firs bank Plc. Several financial regulatory authorities and institutions issued casual warnings to the general public, advising of the risks of involvement in digital currencies; however, digital currencies (especially cryptocurrencies) are thriving since the number of businesses and persons who accept them as payment are increasing by the day. A significant number of people are now fully convinced that the digital currency-Bitcoin is legitimate, safe and has value. "Bitcoin is going to be transformative" but unfortunately, since it is virtually untraceable it has been used for a host of nefarious purposes. Although, digital currencies may be very attractive to cybercriminals and fraudsters and present a host of new challenges to law enforcement in Nigeria, its adoption as a tool for national development in the digital age should be widely encouraged.

My Two Bitcoins? Implementation of Double-Spending on Fast Bitcoin Payments

My Two Bitcoins? Implementation of Double-Spending on Fast Bitcoin Payments

Bitcoin double-spending risk and countermeasures at physical retail locations

This research examines vulnerabilities and potential attacks using Bitcoin payment systems at physical retail locations. It also lays a theoretical and practical foundation for effective countermeasures that ensure the integrity of decentralized transactions and bolster the confidence of both merchants and customers. The study focuses on potential double-spend attacks, particularly in the context of instant payments made via non-custodial crypto wallets. It also evaluates alternatives for instant crypto payments that use alternative coins and second-layer blockchain solutions. Research has indicated that Eclipse, Sybil, Majority, Race, and Finney attacks carry a relatively low risk, especially when payment amounts are limited. The paper identifies Replace-By-Fee attacks as the most significant threat and presents a set of countermeasures. These findings are of great importance to cryptocurrency experts, payment tech researchers, retail enterprises, and stakeholders using non-custodial wallets while exploring decentralized blockchain aspects.

Lightning Network Economics: Channels

Compared with existing payment systems, Bitcoin’s throughput is low. Designed to address Bitcoin’s scalability challenge, the Lightning Network (LN) is a protocol allowing two parties to secure bitcoin payments and escrow holdings between them. In a lightning channel, each party commits collateral toward future payments to the counterparty and payments are cryptographically secured updates of collaterals. The network of channels increases transaction speed and reduces blockchain congestion. This paper (i) identifies conditions for two parties to optimally establish a channel, (ii) finds explicit formulas for channel costs, (iii) obtains the optimal collaterals and savings entailed, and (iv) derives the implied reduction in congestion of the blockchain. Unidirectional channels costs grow with the square-root of payment rates, while symmetric bidirectional channels with their cubic root. Asymmetric bidirectional channels are akin to unidirectional when payment rates are significantly different, otherwise to symmetric bidirectional. This paper was accepted by Joshua Gans, business strategy. Funding: Partially supported by SFI (16/IA/4443, 16/SPP/3347), Columbia-IBM Center for Blockchain and Data Transparency, Chaire Fintech at University Paris Dauphine—PSL, Algorand Foundation, and Simons Institute.

Cashing out crypto: state of practice in ransom payments

The fast pace of blockchain technology and cryptocurrencies’ evolution makes people vulnerable to financial fraud and provides a relatively straightforward monetisation mechanism for cybercriminals, in particular ransomware groups which exploit crypto’s pseudo-anonymity properties. At the same time, regulatory efforts for addressing crimes related to crypto assets are emerging worldwide. In this work, we shed light on the current state of practice of ransomware monetisation to provide evidence of their payment traceability, explore future trends, and—above all—showcase that over-regulating cryptocurrencies is not the best way to mitigate their risks. For that purpose, first, we provide an overview of the legislative initiatives currently taken by the USA, the EU, and the OECD to regulate cryptocurrencies, showing that strict laws and the divergences between the regulatory regimes can hardly efficiently regulate the global phenomenon of cryptocurrency, which transcends borders and states. Next, we focus on illicit payments in bitcoin to ransomware groups, illustrating how these payments are siphoned off and how criminals cash out the ransom, often leaving traceable evidence behind. To this end, we leverage a publicly available dataset and a set of state-of-the-art blockchain analysis tools to identify payment patterns, trends, and transaction trails, which are provided in an anonymised form. Our work reveals that a significant amount of illicit bitcoin transactions can be easily traced, and consequently, many cyber crimes like ransomware can actually be tracked down and investigated with existing tools and laws, thus providing fertile ground for better and fairer legislation on crypto.

Implementation of circular blockchain-based approach for food crops supply chain with bitcoin prediction using deep learning

Blockchain technology serves as a framework for addressing the challenge of tracking and marketing materials in distributed networks. Agricultural traceability systems in food production provide farmers with food safety and smart contracts. Smart contracts establish cryptocurrency evidence of delivery with automated bitcoin payments to all parties. In this paper, we propose circular blockchain-based traceability and bitcoin prediction in agricultural food crop system to accomplish transparency and traceability. Bitcoin prediction using LSTM benefits farmers and stakeholders to buy and sell their food crops when the profit is high. Moreover, the proposed system provides safety, consensus, shared ledger, speedy payment, and decentralization. All activities are processed in a distributed shared ledger with connections to a decentralized file system, which makes the supply chain visible and traceable. All the activities that are tied up in the supply chain are transparent to consumers and stakeholders. Traceability of the agricultural product is done efficiently with QR code, which results in a trustable relationship between the farmer and the consumer. Finally, our research shows that the accuracy of LSTM outperforms by 88.67% compared to traditional machine learning algorithms such as SVM and Naive Bayes with accuracy of 62.025 and 75.32% in forecasting the bitcoin price.

Machine Learning-Based Ransomware Classification of Bitcoin Transactions

Ransomware attacks are one of the most dangerous related crimes in the coin market. To increase the challenge of fighting the attack, early detection of ransomware seems necessary. In this article, we propose a high-performance Bitcoin transaction predictive system that investigates Bitcoin payment transactions to learn data patterns that can recognize and classify ransomware payments for heterogeneous bitcoin networks into malicious or benign transactions. The proposed approach makes use of three supervised machine learning methods to learn the distinctive patterns in Bitcoin payment transactions, namely, logistic regression (LR), random forest (RF), and Extreme Gradient Boosting (XGBoost). We evaluate these ML-based predictive models on the BitcoinHeist ransomware dataset in terms of classification accuracy and other evaluation measures such as confusion matrix, recall, and F1-score. It turned out that the experimental results recorded by the XGBoost model achieved an accuracy of 99.08%. As a result, the resulting model accuracy is higher than many recent state-of-the-art models developed to detect ransomware payments in Bitcoin transactions.

Blockchain Technology and Artificial Intelligence Together: A Critical Review on Applications

It is undeniable that the adoption of blockchain- and artificial intelligence (AI)-based paradigms is proceeding at lightning speed. Both paradigms provide something new to the market, but the degree of novelty and complexity of each is different. In the age of digital money, blockchains may automate installments to allow for the safe, decentralized exchange of personal data, information, and logs. AI and blockchains are two of the most talked about technologies right now. Using a decentralized, secure, and trustworthy system, blockchain technology can automate bitcoin payments and provide users access to a shared ledger of records, transactions, and data. Through the use of smart contracts, a blockchain may also regulate user interactions without the need for a central authority. As an alternative, AI provides robots with the ability to reason and make decisions and human-level intellect. This revelation led to a thorough assessment of the AI and blockchain combo created between 2012 and 2022. This critical review contains 121 articles from the recent decade that investigate the present situation and rationale of the AI and blockchain combination. The integration’s practical application is the emphasis of this overview’s meatiest portion. In addition, the gaps and problems of this combination in the linked literature have been studied, with a focus on the constraints.

The Lightning Network: Turning Bitcoin into money

The Lightning Network (LN) is a means of netting Bitcoin payments outside the blockchain. We find a significant association between LN adoption and reduced blockchain congestion, suggesting that the LN has helped improve the efficiency of Bitcoin as a means of payment. This improvement cannot be explained by other factors, such as changes in demand or the adoption of SegWit. We find mixed evidence on whether increased centralization in the Lightning Network has improved its efficiency. Our findings have implications for the future of cryptocurrencies as a means of payment and their environmental footprint.

Blockchain‐based deduplication with arbitration and incentives

Cloud storage is an ideal platform to accommodate massive data. However, with the increasing number of various devices and improved processing power, the amount of generated data is becoming gigantic. Therefore, this calls for a cost-effective way to outsource massively generated data to a remote server. Cloud service providers utilise deduplication technique which deduplicates redundant data by aborting identical uploading requests and deleting redundant files. However, current deduplication mechanisms mainly focus on the storage saving of the server, and ignore the sustainable and long-term financial interests of servers and users. This is not helpful to expand outsourcing and deduplication services. Blockchain is an ideal solution to achieve an economical and incentive-driven deduplication system. Though some current research studiess have integrated deduplication with blockchain, they did not utilise blockchain as a financial tool. Meanwhile, it lacks an arbitration mechanism to settle disputes between the server and the user, especially in a Bitcoin payment where the payment is not confirmed immediately and a dispute may occur. This creates a burden to achieve fair and transparent incentive-based deduplication service. In this work, we construct a deduplication system with financial incentives for the server and the user based on Bitcoin. The data owner will pay money via Bitcoin to the server for outsourcing the file, but this fee can be compensated by charging deduplication users with some fees to acquire the deduplication service. The server and the user can receive revenues using deduplication service. Disputes on the fair distribution of incentives can be settled by our arbitration protocol with chameleon hashes as arbitration tags. We give concrete construction and security requirements for our proposed B D A I. The security analysis shows that our B D A I is theoretically secure. The performance evaluation shows that our proposed B D A I is acceptably efficient for the deduplication. Meanwhile, we evaluate and conclude that 1% of outsourcing fee (or less) is a reasonable and preferable price for each deduplication user to pay as compensation for data owner.

The Drivers of the Behavioral Adoption Intention of BITCOIN Payment from the Perspective of Chinese Citizens

The bitcoin payment innovation has gained wider interest around the world, but its adoption among the general population has been a challenge. Bitcoin as a peer-to-peer technology works with no central authority or banks, and the transaction management and issuing of bitcoin is carried out collectively by the network. One major debate on bitcoin development and diffusion is the critical matter of nongovernment intervention through adequate policy and regulatory framework and thus hinders people’s active participation (acceptance) in the bitcoin market. Consequently, this study is purposed to examine the role government policy and regulations (moderating impact) can have in driving the acceptance of bitcoin payment from the Chinese perspective. The UTAUT was used as the theoretical basis from which a model was developed for testing. The structural equation model (SEM) through the use of SmartPLS was employed to undertake the analysis. The results have demonstrated that government regulation moderates (significant) the influence of both performance expectancy and infrastructure support on the behavioral acceptance of bitcoin payment. However, government regulation contrary to expectations was not significant in moderating the influence of effort expectancy (EE) and security on the acceptance of bitcoin payments. Additionally, the study discovered that performance expectancy, security, EE, and infrastructure support were significant in encouraging bitcoin behavioral adoption. The practical and theoretical implications of these findings on the development and diffusion of bitcoin technology systems are dissected meticulously.

USE OF CRYPTOCURRENCIES BITCOIN AND ETHEREUM IN THE FIELD OF E-COMMERCE: CASE STUDY OF UKRAINE

Abstract. The article examines integration of cryptocurrencies as electronic payment systems in e-commerce enterprises. Practical usage of Ethereum and Bitcoin cryptocurrencies as electronic payment systems, as well as factors that may affect their functionality are studied. Coinbase Commerce and Bitpay, as market leaders in cryptocurrency payment providers, were analyzed to compare integration issues and commission analysis with traditional payment systems LiqPay, PayPal. It is determined that the factors influencing the integration of cryptocurrencies in the enterprise include the field in which this enterprise is operating, instability of the national currency, development of information technology. It has been proven that e-commerce companies specializing on selling consumer goods could use hybrid cryptocurrency payments in Bitcoin in 50% of transactions and Ethereum in 65% of transactions in the studied timeframe to reduce the cost of the transaction compared to the LiqPay system. Key words: electronic payment systems, cryptocurrency, e-commerce, transactions. JEL Classification D2, C50, G23, G41 Formulas: 0; fig.: 9; tabl.: 2; bibl.: 16.

Redesigning Bitcoin’s Fee Market

The Bitcoin payment system involves two agent types: users that transact with the currency and pay fees and miners in charge of authorizing transactions and securing the system in return for these fees. Two of Bitcoin’s challenges are (i) securing sufficient miner revenues as block rewards decrease, and (ii) alleviating the throughput limitation due to a small maximal block size cap. These issues are strongly related as increasing the maximal block size may decrease revenue due to Bitcoin’s pay-your-bid approach. To decouple them, we analyze the “monopolistic auction” [ 16 ], showing (i) its revenue does not decrease as the maximal block size increases, (ii) it is resilient to an untrusted auctioneer (the miner), and (iii) simplicity for transaction issuers (bidders), as the average gain from strategic bid shading (relative to bidding one’s value) diminishes as the number of bids increases.

FinTech і комерційні банки: тенденції розвитку та особливості співпраці

The article reveals the peculiarities of interaction between banks and FinTech companies. The main stages of development of financial technologies and their differences are examined. The most popular financial technologies used in banking activities are presented. It is substantiated that instead of competing with each other, FinTech companies and banks should be interested in cooperation. The main models of such cooperation are generalized, including: acceleration, partnership, contract and absorption. The advantages and disadvantages of each type of such interaction are analyzed, as well as the factors that hinder cooperation, regardless of the chosen model. The article exemplifies trends of technological innovations and their application in banking activities, which include machine learning, distributed access technologies (Blockchain), artificial intelligence (AI), large data sets (BigData), cloud technologies (Cloud Computing), Smart Contracts, Biometrics and others. It is noted that most often these technologies are used in capital management and financial trading, robotic consultations, online payments (contactless payments, Bitcoin payments), in the management of loyalty programs, digital wallets, money transfers, financial monitoring, etc. They allow banks to optimize their own business processes, increase the number of customers and increase their loyalty, adapt to modern challenges. The risks that a banking institution or bank customers may face as a result of these financial technologies are also identified. The main risks include contradictory and imperfect legislation together with legal regulation of digitalization of banking services, ensuring confidentiality and ethics of personal data, protecting the interests of customers, increased cyber threats.

Incentivizing Participation in Crowd-Sensing Applications Through Fair and Private Bitcoin Rewards

In this work we develop a rewarding framework that can be used to enhance existing crowd-sensing applications. Although a core requirement of such systems is user engagement, people may be reluctant to participate as sensitive information about them may be leaked or inferred from submitted data. The use of monetary rewards can help incentivize participation, thereby increasing not only the amount but also the quality of sensed data. Our framework allows users to submit data and obtain Bitcoin payments in a privacy-preserving manner, preventing curious providers from linking the data or the payments back to the user. At the same time, it prevents malicious user behavior such as double-redeeming attempts, where a user tries to obtain rewards for multiple submissions of the same data. More importantly, it ensures the <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">fairness</i> of the exchange in a completely trustless manner; by relying on the Blockchain, the trust placed on third parties in traditional fair exchange protocols is eliminated. Finally, our system is highly efficient as most of the protocol steps do not utilize the Blockchain network. When they do, only the simplest of Blockchain transactions are used as opposed to prior works that are based on the use of more complex smart contracts.

SOTF: Secure Organizational Transactions Framework Based on Bitcoin Payment Bridge

Bitcoin is a decentralized cryptocurrency where all the transactions are saved in a ledger. Blockchains have good features to be used in different finance applications by using smart contract. Also, blockchains are attractive platform for many industrial domains, including the logistics and supply chain industries. Supply chain technology contributes to record every single asset through its flow, tracking orders, receipts, and payments. There are several relay protocols proposed in previous research; these relay protocols are used to connect different types of blockchains. In this paper, we present a Secure Organizational Transactions Framework (SOTF) based on bridge chain to connect private chain or consortium with public chain which reduces interaction with public blockchain and saves the organization details privately in private chain or consortium. The proposed framework makes it possible for smart contract services to acquire means of payment in the consortium and private chain. Moreover, the proposed framework automates the process of updating the payment non-interactively. In this paper, we validate the communication between organizations blockchain and bitcoin, and find out the development cost of the proposed framework which ensures the efficiency and feasibility of the proposed framework. The code of framework implementation is publicly available at GitHub.