The first academic workshop to feature peer-reviewed research on bitcoin took place last week.
The event was put on by the International Financial Cryptography Association, which has been organizing financial cryptography and data security conferences for the past 18 years.
Conference sponsors included Google, CA Technologies, WorldPay, Silent Circle and the US National Science Foundation. The Bitcoin Foundation also sponsored the event, fittingly providing its financial support to the conference in bitcoin. Many of the foundation's board members were also in attendance.
The conference took place on the island of Barbados, and of the 120 total FC14 conference attendees from all over the globe approximately 80 people participated in the BITCOIN’14 workshop.
History of academic interest in bitcoin
Scholars have been studying bitcoin for some time now. The first working papers were published as early as 2011, including a controversial article from scholars at the University College Dublin analyzing bitcoin anonymity.
However, prior to FC14 there had not been another academic event featuring peer-reviewed research which was also fully-dedicated to the topic of bitcoin.
Ten academic papers in total were presented at the BITCOIN 14 workshop, and four additional bitcoin-related papers were also presented at the main FC14 conference.
It should be noted that the vast majority of academic scholarship to date on bitcoin has had a computer science/technology orientation. While academic economists have not shied away from discussing bitcoin, this debate has largely taken place on blogs and newspaper opinion pages.
Turing Award winner, meet Dread Pirate Roberts
One of the most high-profile papers presented at the conference was titled "How Did Dread Pirate Roberts Acquire and Protect His Bitcoin Wealth?" by Dorit Ron and Adi Shamir.
Both Ron, who delivered the workshop presentation, and Shamir hail from the Department of Computer Science and Applied Mathematics in the Weizmann Institute of Science in Israel.
Ron and Shamir previously published a paper analysing bitcoin transactions which showed that nearly 80% of bitcoins had never circulated; more recently they were at the centre of a subsequently disproven finding linking a bitcoin transaction between the Silk Road’s infamous Dread Pirate Roberts and Bitcoin's creator Satoshi Nakamoto.
Ron and Shamir’s BITCOIN 14 paper on the bitcoin holdings of the Dread Pirate Roberts used block chain data to:
Table 1 below summarizes all of the transactions by the Dread Pirate Roberts that Ron and Shamir’s analysis uncovered.
Based on their observations that the months of May, June and September show no earnings the authors conclude that it was likely that the Dread Pirate Roberts was using a different computer than the one seized by the FBI to store bitcoins earned from the Silk Road during these months.
The authors also note that based on estimates that the Silk Road marketplace generated sales revenue of more than 9.5m BTC with an average commission rate of 6.67%, that the Dread Pirate Roberts earned a total of approximately 633,000 BTC, or only one-third of the bitcoins identified by Ron and Shamir in Table 1.
In other words, the FBI only seized 22% of Dread Pirate Roberts' total bitcoin holdings.
The bigger you are, the more likely you’ll be 'DDoSed'
Another paper by Marie Vasek, Micah Thornton, and Tyler Moore of Southern Methodist University conducted an empirical analysis of distributed denial-of-service (DDoS) attacks on operators in the bitcoin economy.
The authors note that DDoS attacks are:
From May 2011 through October 2013, the researchers found 142 unique DDoS attacks on 40 different Bitcoin services. In total, 7% of all known operators in the Bitcoin economy have suffered DDoS attacks.
Overall, the services which are most commonly the targets of DDoS attacks are currency exchanges (40%), followed closely by mining pools (38%); DDoS attacks on gambling (9%), finance (6%), digital wallets (4%) and other services (3%) are far less common.
Empirical analysis shows that DDoS attacks on large mining pools, defined as those with historical hash rates equal to or greater than 5%, are much more likely to be attacked than smaller pools.
In a related paper which employs a game theoretic analysis to analyze mining pool DDoS attacks, Benjamin Johnson, Aron Laszka, Jens Grossklags, Marie Vasek, and Tyler Moore found that mining pools “have a greater incentive to attack large pools than small ones” and that overall “larger mining pools have a greater incentive to attack than smaller ones”.
Growing scholarly interest in bitcoin
Other papers at BITCOIN 14 covered bitcoin transaction analysis, legal and policy issues, network security, and ideas for improving digital currencies. A full list and link to each of these papers is presented below.
Many academics have found bitcoin’s open architecture and rich data set attractive for research purposes, and the significant presence of bitcoin research papers at last week’s conferences suggests that more and more scholars are catching on.
Full list of the BITCOIN 14 workshop papers:
Pirate treasure image via Shutterstock
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.