Proof of Work VS Proof of Stake: Which One Is Better?
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Detecting Roles of Money Laundering in Bitcoin Mixing Transactions: a Goal Modeling and Mining Framework
ORIGINAL RESEARCH published: 06 July 2021 doi: 10.3389/fphy.2021.665399 Detecting Roles of Money Laundering in Bitcoin Mixing Transactions: A Goal Modeling and Mining Framework Mingdong Liu 1, Hu Chen 2 and Jiaqi Yan 3* 1School of Economics and Management, Southeast University, Nanjing, China, 2School of Software Engineering, South China University of Technology, Guangzhou, China, 3School of Information Management, Nanjing University, Nanjing, China Cryptocurrency has become a new venue for money laundering. Bitcoin mixing services deliberately obfuscate the relationship between senders and recipients, making it difficult to trace suspicious money flow. We believe that the key to demystifying the bitcoin mixing services is to discover agents’ roles in the money laundering process. We propose a goal- oriented approach to modeling, discovering, and analyzing different types of roles in the agent-based business process of the bitcoin mixing scenario using historical bitcoin transaction data. It adopts the agents’ goal perspective to study the roles in the bitcoin money laundering process. Moreover, it provides a foundation to discover real- world agents’ roles in bitcoin money laundering scenarios. Edited by: Keywords: goal modeling, money laundering, bitcoin mixing transactions, data analysis, agents’ roles Xiao Fan Liu, City University of Hong Kong, SAR China INTRODUCTION Reviewed by: Daning Hu, Financial crimes not only directly disturb the national financial order and affect social stability Southern University of Science and but also occur with other crimes to provide financial support for various types of organized Technology, China fi Hong-Liang Sun, crimes. Money laundering is a nancial criminal activity, which mainly refers to the processing Nanjing University of Finance and of illegal income by various means to cover up and conceal its source and nature. -
Bitcoin Tumbles As Miners Face Crackdown - the Buttonwood Tree Bitcoin Tumbles As Miners Face Crackdown
6/8/2021 Bitcoin Tumbles as Miners Face Crackdown - The Buttonwood Tree Bitcoin Tumbles as Miners Face Crackdown By Haley Cafarella - June 1, 2021 Bitcoin tumbles as Crypto miners face crackdown from China. Cryptocurrency miners, including HashCow and BTC.TOP, have halted all or part of their China operations. This comes after Beijing intensified a crackdown on bitcoin mining and trading. Beijing intends to hammer digital currencies amid heightened global regulatory scrutiny. This marks the first time China’s cabinet has targeted virtual currency mining, which is a sizable business in the world’s second-biggest economy. Some estimates say China accounts for as much as 70 percent of the world’s crypto supply. Cryptocurrency exchange Huobi suspended both crypto-mining and some trading services to new clients from China. The plan is that China will instead focus on overseas businesses. BTC.TOP, a crypto mining pool, also announced the suspension of its China business citing regulatory risks. On top of that, crypto miner HashCow said it would halt buying new bitcoin mining rigs. Crypto miners use specially-designed computer equipment, or rigs, to verify virtual coin transactions. READ MORE: Sustainable Mineral Exploration Powers Electric Vehicle Revolution This process produces newly minted crypto currencies like bitcoin. “Crypto mining consumes a lot of energy, which runs counter to China’s carbon neutrality goals,” said Chen Jiahe, chief investment officer of Beijing-based family office Novem Arcae Technologies. Additionally, he said this is part of China’s goal of curbing speculative crypto trading. As result, bitcoin has taken a beating in the stock market. -
Optimal Execution in Cryptocurrency Markets
Claremont Colleges Scholarship @ Claremont CMC Senior Theses CMC Student Scholarship 2020 Optimal Execution in Cryptocurrency Markets Ethan Kurz Follow this and additional works at: https://scholarship.claremont.edu/cmc_theses Part of the Finance Commons, and the Mathematics Commons Recommended Citation Kurz, Ethan, "Optimal Execution in Cryptocurrency Markets" (2020). CMC Senior Theses. 2387. https://scholarship.claremont.edu/cmc_theses/2387 This Open Access Senior Thesis is brought to you by Scholarship@Claremont. It has been accepted for inclusion in this collection by an authorized administrator. For more information, please contact [email protected]. Claremont McKenna College Optimal Execution in Cryptocurrency Markets submitted to Professor Benjamin Gillen and Professor Chiu-Yen Kao written by Ethan Kurz Senior Thesis Spring 2020 May 11, 2020 Acknowledgements I would like to thank my family and friends for keeping my spirits up and being a great support system. I would also like to extend my deepest gratitude towards my thesis readers, Professor Benjamin Gillen and Professor Chiu-Yen Kao for their patience and thoughtful guidance throughout this process. Contents 1 Abstract 1 2 Introduction 2 3 Literature Review 6 3.1 Stock Market Microstructure . .6 3.2 Cryptocurrency Market Microstructure . .8 3.3 Microstructure in Almgren-Chriss . 11 4 Almgren-Chriss model 14 4.1 The “Efficient Frontier" . 14 4.2 Optimal Strategies . 14 4.3 Comparative Statics . 15 4.4 NYSE Stock Parameters and Models . 18 5 Empirical Analysis of Cryptocurrency Markets 23 5.1 Choosing Parameters and Modeling . 23 5.2 Comparison of the Markets . 25 5.2.1 Consumer Value Provided by Coinbase . -
Pwc I 2Nd Global Crypto M&A and Fundraising Report
2nd Global Crypto M&A and Fundraising Report April 2020 2 PwC I 2nd Global Crypto M&A and Fundraising Report Dear Clients and Friends, We are proud to launch the 2nd edition of our Global Crypto M&A and Fundraising Report. We hope that the market colour and insights from this report will be useful data points. We will continue to publish this report twice a year to enable you to monitor the ongoing trends in the crypto ecosystem. PwC has put together a “one stop shop” offering, focused on crypto services across our various lines of services in over 25 jurisdictions, including the most active crypto jurisdictions. Our goal is to service your needs in the best possible way leveraging the PwC network and allowing you to make your project a success. Our crypto clients include crypto exchanges, crypto investors, crypto asset managers, ICOs/IEOs/STOs/stable and asset backed tokens, traditional financial institutions entering the crypto space as well as governments, central banks, regulators and other policy makers looking at the crypto ecosystem. As part of our “one stop shop” offering, we provide an entire range of services to the crypto ecosystem including strategy, legal, regulatory, accounting, tax, governance, risk assurance, audit, cybersecurity, M&A advisory as well as capital raising. More details are available on our global crypto page as well as at the back of this report. 2nd Global Crypto M&A and Fundraising Report April 2020 PwC 2 3 PwC I 2nd Global Crypto M&A and Fundraising Report 5 Key takeaways when comparing 2018 vs 2019 There -
Proof of 'X' and Hash Functions Used
Top 20 Cryptocurrencies on Aggregate market value - Proof of ‘X’ and Hash functions used - 1 ISI Kolkata BlockChain Workshop, Nov 30th, 2017 CRYPTOGRAPHY with BlockChain - Hash Functions, Signatures and Anonymization - Hiroaki ANADA*1, Kouichi SAKURAI*2 *1: University of Nagasaki, *2: Kyushu University Acknowledgements: This work is supported by: Grants-in-Aid for Scientific Research of Japan Society for the Promotion of Science; Research Project Number: JP15H02711 Top 20 Cryptocurrencies on Aggregate market value - Proof of ‘X’ and Hash functions used - 3 Table of Contents 1. Cryptographic Primitives in Blockchains 2. Hash Functions a. Roles b. Various Hash functions used for Proof of ‘X’ 3. Signatures a. Standard Signatures (ECDSA) b. Ring Signatures c. One-Time Signatures (Winternitz) 4. Anonymization Techniques a. Mixing (CoinJoin) b. Zero-Knowledge proofs (zk-SNARK) 5. Conclusion 4 Brief History of Proof of ‘X’ 1992: “Pricing via Processing or Combatting Junk Mail” Dwork, C. and Naor, M., CRYPTO ’92 Pricing Functions 2003: “Moderately Hard Functions: From Complexity to Spam Fighting” Naor, M., Foundations of Soft. Tech. and Theoretical Comp. Sci. 2008: “Bitcoin: A peer-to-peer electronic cash system” Nakamoto, S. Proof of Work 5 Brief History of Proof of ‘X’ 2008: “Bitcoin: A peer-to-peer electronic cash system” Nakamoto, S. Proof of Work 2012: “Peercoin” Proof of Stake (& Proof of Work) ~ : Delegated Proof of Stake, Proof of Storage, Proof of Importance, Proof of Reserves, Proof of Consensus, ... 6 Proofs of ‘X’ 1. Proof of Work 2. Proof of Stake Hash-based Proof of ‘X’ 3. Delegated Proof of Stake 4. Proof of Importance 5. -
Cryptocurrency: the Economics of Money and Selected Policy Issues
Cryptocurrency: The Economics of Money and Selected Policy Issues Updated April 9, 2020 Congressional Research Service https://crsreports.congress.gov R45427 SUMMARY R45427 Cryptocurrency: The Economics of Money and April 9, 2020 Selected Policy Issues David W. Perkins Cryptocurrencies are digital money in electronic payment systems that generally do not require Specialist in government backing or the involvement of an intermediary, such as a bank. Instead, users of the Macroeconomic Policy system validate payments using certain protocols. Since the 2008 invention of the first cryptocurrency, Bitcoin, cryptocurrencies have proliferated. In recent years, they experienced a rapid increase and subsequent decrease in value. One estimate found that, as of March 2020, there were more than 5,100 different cryptocurrencies worth about $231 billion. Given this rapid growth and volatility, cryptocurrencies have drawn the attention of the public and policymakers. A particularly notable feature of cryptocurrencies is their potential to act as an alternative form of money. Historically, money has either had intrinsic value or derived value from government decree. Using money electronically generally has involved using the private ledgers and systems of at least one trusted intermediary. Cryptocurrencies, by contrast, generally employ user agreement, a network of users, and cryptographic protocols to achieve valid transfers of value. Cryptocurrency users typically use a pseudonymous address to identify each other and a passcode or private key to make changes to a public ledger in order to transfer value between accounts. Other computers in the network validate these transfers. Through this use of blockchain technology, cryptocurrency systems protect their public ledgers of accounts against manipulation, so that users can only send cryptocurrency to which they have access, thus allowing users to make valid transfers without a centralized, trusted intermediary. -
Short Selling Attack: a Self-Destructive but Profitable 51% Attack on Pos Blockchains
Short Selling Attack: A Self-Destructive But Profitable 51% Attack On PoS Blockchains Suhyeon Lee and Seungjoo Kim CIST (Center for Information Security Technologies), Korea University, Korea Abstract—There have been several 51% attacks on Proof-of- With a PoS, the attacker needs to obtain 51% of the Work (PoW) blockchains recently, including Verge and Game- cryptocurrency to carry out a 51% attack. But unlike PoW, Credits, but the most noteworthy has been the attack that saw attacker in a PoS system is highly discouraged from launching hackers make off with up to $18 million after a successful double spend was executed on the Bitcoin Gold network. For this reason, 51% attack because he would have to risk of depreciation the Proof-of-Stake (PoS) algorithm, which already has advantages of his entire stake amount to do so. In comparison, bad of energy efficiency and throughput, is attracting attention as an actor in a PoW system will not lose their expensive alternative to the PoW algorithm. With a PoS, the attacker needs mining equipment if he launch a 51% attack. Moreover, to obtain 51% of the cryptocurrency to carry out a 51% attack. even if a 51% attack succeeds, the value of PoS-based But unlike PoW, attacker in a PoS system is highly discouraged from launching 51% attack because he would have to risk losing cryptocurrency will fall, and the attacker with the most stake his entire stake amount to do so. Moreover, even if a 51% attack will eventually lose the most. For these reasons, those who succeeds, the value of PoS-based cryptocurrency will fall, and attempt to attack 51% of the PoS blockchain will not be the attacker with the most stake will eventually lose the most. -
Blockchain & Cryptocurrency Regulation
Blockchain & Cryptocurrency Regulation Third Edition Contributing Editor: Josias N. Dewey Global Legal Insights Blockchain & Cryptocurrency Regulation 2021, Third Edition Contributing Editor: Josias N. Dewey Published by Global Legal Group GLOBAL LEGAL INSIGHTS – BLOCKCHAIN & CRYPTOCURRENCY REGULATION 2021, THIRD EDITION Contributing Editor Josias N. Dewey, Holland & Knight LLP Head of Production Suzie Levy Senior Editor Sam Friend Sub Editor Megan Hylton Consulting Group Publisher Rory Smith Chief Media Officer Fraser Allan We are extremely grateful for all contributions to this edition. Special thanks are reserved for Josias N. Dewey of Holland & Knight LLP for all of his assistance. Published by Global Legal Group Ltd. 59 Tanner Street, London SE1 3PL, United Kingdom Tel: +44 207 367 0720 / URL: www.glgroup.co.uk Copyright © 2020 Global Legal Group Ltd. All rights reserved No photocopying ISBN 978-1-83918-077-4 ISSN 2631-2999 This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations. The information contained herein is accurate as of the date of publication. Printed and bound by TJ International, Trecerus Industrial Estate, Padstow, Cornwall, PL28 8RW October 2020 PREFACE nother year has passed and virtual currency and other blockchain-based digital assets continue to attract the attention of policymakers across the globe. -
The Bitcoin Trading Ecosystem
ArcaneReport(PrintReady).qxp 21/07/2021 14:43 Page 1 THE INSTITUTIONAL CRYPTO CURRENCY EXCHANGE INSIDE FRONT COVER: BLANK ArcaneReport(PrintReady).qxp 21/07/2021 14:43 Page 3 The Bitcoin Trading Ecosystem Arcane Research LMAX Digital Arcane Research is a part of Arcane Crypto, bringing LMAX Digital is the leading institutional spot data-driven analysis and research to the cryptocurrency exchange, run by the LMAX Group, cryptocurrency space. After launch in August 2019, which also operates several leading FCA regulated Arcane Research has become a trusted brand, trading venues for FX, metals and indices. Based on helping clients strengthen their credibility and proven, proprietary technology from LMAX Group, visibility through research reports and analysis. In LMAX Digital allows global institutions to acquire, addition, we regularly publish reports, weekly market trade and hold the most liquid digital assets, Bitcoin, updates and articles to educate and share insights. Ethereum, Litecoin, Bitcoin Cash and XRP, safely and securely. Arcane Crypto develops and invests in projects, focusing on bitcoin and digital assets. Arcane Trading with all the largest institutions globally, operates a portfolio of businesses, spanning the LMAX Digital is a primary price discovery venue, value chain for digital nance. As a group, Arcane streaming real-time market data to the industry’s deliver services targeting payments, investment, and leading indices and analytics platforms, enhancing trading, in addition to a media and research leg. the quality of market information available to investors and enabling a credible overview of the Arcane has the ambition to become a leading player spot crypto currency market. in the digital assets space by growing the existing businesses, invest in cutting edge projects, and LMAX Digital is regulated by the Gibraltar Financial through acquisitions and consolidation. -
An Investigative Study of Cryptocurrency Abuses in the Dark Web
Cybercriminal Minds: An investigative study of cryptocurrency abuses in the Dark Web Seunghyeon Leeyz Changhoon Yoonz Heedo Kangy Yeonkeun Kimy Yongdae Kimy Dongsu Hany Sooel Sony Seungwon Shinyz yKAIST zS2W LAB Inc. {seunghyeon, kangheedo, yeonk, yongdaek, dhan.ee, sl.son, claude}@kaist.ac.kr {cy}@s2wlab.com Abstract—The Dark Web is notorious for being a major known as one of the major drug trading sites [13], [22], and distribution channel of harmful content as well as unlawful goods. WannaCry malware, one of the most notorious ransomware, Perpetrators have also used cryptocurrencies to conduct illicit has actively used the Dark Web to operate C&C servers [50]. financial transactions while hiding their identities. The limited Cryptocurrency also presents a similar situation. Apart from coverage and outdated data of the Dark Web in previous studies a centralized server, cryptocurrencies (e.g., Bitcoin [58] and motivated us to conduct an in-depth investigative study to under- Ethereum [72]) enable people to conduct peer-to-peer trades stand how perpetrators abuse cryptocurrencies in the Dark Web. We designed and implemented MFScope, a new framework which without central authorities, and thus it is hard to identify collects Dark Web data, extracts cryptocurrency information, and trading peers. analyzes their usage characteristics on the Dark Web. Specifically, Similar to the case of the Dark Web, cryptocurrencies MFScope collected more than 27 million dark webpages and also provide benefits to our society in that they can redesign extracted around 10 million unique cryptocurrency addresses for Bitcoin, Ethereum, and Monero. It then classified their usages to financial trading mechanisms and thus motivate new business identify trades of illicit goods and traced cryptocurrency money models, but are also adopted in financial crimes (e.g., money flows, to reveal black money operations on the Dark Web. -
Bitcoin and Cryptocurrencies Law Enforcement Investigative Guide
2018-46528652 Regional Organized Crime Information Center Special Research Report Bitcoin and Cryptocurrencies Law Enforcement Investigative Guide Ref # 8091-4ee9-ae43-3d3759fc46fb 2018-46528652 Regional Organized Crime Information Center Special Research Report Bitcoin and Cryptocurrencies Law Enforcement Investigative Guide verybody’s heard about Bitcoin by now. How the value of this new virtual currency wildly swings with the latest industry news or even rumors. Criminals use Bitcoin for money laundering and other Enefarious activities because they think it can’t be traced and can be used with anonymity. How speculators are making millions dealing in this trend or fad that seems more like fanciful digital technology than real paper money or currency. Some critics call Bitcoin a scam in and of itself, a new high-tech vehicle for bilking the masses. But what are the facts? What exactly is Bitcoin and how is it regulated? How can criminal investigators track its usage and use transactions as evidence of money laundering or other financial crimes? Is Bitcoin itself fraudulent? Ref # 8091-4ee9-ae43-3d3759fc46fb 2018-46528652 Bitcoin Basics Law Enforcement Needs to Know About Cryptocurrencies aw enforcement will need to gain at least a basic Bitcoins was determined by its creator (a person Lunderstanding of cyptocurrencies because or entity known only as Satoshi Nakamoto) and criminals are using cryptocurrencies to launder money is controlled by its inherent formula or algorithm. and make transactions contrary to law, many of them The total possible number of Bitcoins is 21 million, believing that cryptocurrencies cannot be tracked or estimated to be reached in the year 2140. -
Transparent and Collaborative Proof-Of-Work Consensus
StrongChain: Transparent and Collaborative Proof-of-Work Consensus Pawel Szalachowski, Daniël Reijsbergen, and Ivan Homoliak, Singapore University of Technology and Design (SUTD); Siwei Sun, Institute of Information Engineering and DCS Center, Chinese Academy of Sciences https://www.usenix.org/conference/usenixsecurity19/presentation/szalachowski This paper is included in the Proceedings of the 28th USENIX Security Symposium. August 14–16, 2019 • Santa Clara, CA, USA 978-1-939133-06-9 Open access to the Proceedings of the 28th USENIX Security Symposium is sponsored by USENIX. StrongChain: Transparent and Collaborative Proof-of-Work Consensus Pawel Szalachowski1 Daniel¨ Reijsbergen1 Ivan Homoliak1 Siwei Sun2;∗ 1Singapore University of Technology and Design (SUTD) 2Institute of Information Engineering and DCS Center, Chinese Academy of Sciences Abstract a cryptographically-protected append-only list [2] is intro- duced. This list consists of transactions grouped into blocks Bitcoin is the most successful cryptocurrency so far. This and is usually referred to as a blockchain. Every active pro- is mainly due to its novel consensus algorithm, which is tocol participant (called a miner) collects transactions sent based on proof-of-work combined with a cryptographically- by users and tries to solve a computationally-hard puzzle in protected data structure and a rewarding scheme that incen- order to be able to write to the blockchain (the process of tivizes nodes to participate. However, despite its unprece- solving the puzzle is called mining). When a valid solution dented success Bitcoin suffers from many inefficiencies. For is found, it is disseminated along with the transactions that instance, Bitcoin’s consensus mechanism has been proved to the miner wishes to append.