Three American universities are set to conduct wide-ranging research on cryptocurrencies using roughly $3m in grant funding from the National Science Foundation, a US government agency that supports and funds scientific research.
Cornell, the University of Maryland and the University of California Berkeley will focus on developing new cryptocurrency systems that, according to principal investigator Elaine Shi, will address "pain points" attributed to bitcoin and other existing networks.
The Initiative for Cryptocurrency and Contracts (IC3) will also involve Cornell researcher Emin Gun Sirer; Dawn Song from UC Berkeley; and Jonathan Katz, David van Horn and Michael Hicks from the University of Maryland. The funding itself will be used to support the researchers involved with the project.
According to Shi, the growing ecosystem of startups focusing on digital currency research and rising interest among a broad range of parties necessitates "a rigorous science for cryptocurrencies".
She told CoinDesk:
"We believe that our research can help establish cryptocurrency as a prominent research area, and make a big impact in shaping the future of financial transactions and e-commerce."
According to National Science Foundation acting deputy division director Nina Amla, funding for the initiative comes from the Secure and Trustworthy Cyberspace program, an initiative devoted to funding research into cyber security and digital privacy. That program saw $75m in grants awarded last year, a figure that the agency hopes to meet or exceed this year.
Focus on smart contracts
The initiative will devote resources to developing new systems that enable expanded transaction scalability, privacy and user functionality. Smart contracts will be a major focus of the initiative, building on prior work by University of Maryland researchers.
One such project is Hawk, a blockchain system that enables private smart contracts to be written but not disclosed to the public. Developed jointly by Cornell and the University of Maryland, Hawk was unveiled in early June and will see further refinement and development as the IC3 project commences, according to Shi.
The work builds off previous efforts conducted at the University of Maryland last fall, during which time faculty and students formed a smart contracts laboratory to explore potential issues and opportunities. A research paper on that initiative can be found here.
One of the major findings, according to Shi, was that "it is extremely easy to make mistakes programming smart contracts". This, she explained, raises the risk that funds can be irretrievably lost or diverted by "a selfish counterparty" as a result of such an error.
"This is where we can greatly benefit from formal program analysis techniques," she said.
Latest investment in cryptocurrency research
The IC3 initiative isn't the first time the NSF has invested in a program devoted to conducting research into cryptocurrency.
The agency, which received more than $7b in funding from Congress for Fiscal Year 2015, has funded other efforts aimed at exploring cryptocurrencies, including one initiative at Princeton University and another at the University of California-Irvine.
The NSF's Amla echoed Shi by saying the proposal offers a way to address a number of cross-disciplinary subjects, related to not only cryptocurrency in particular but also cybersecurity, digital privacy and financial innovation more broadly.
"There's a lot of really good technical issues here that they have identified and have proposed to study," she said.
Shi hopes the initiative will lead to "closer collaborations" between companies in the industry and academic researchers working on cryptocurrency issues or related projects.
"We have been faced with many challenges in trying to bring formal rigor to cryptocurrency design. Personally, I am particularly excited about cross-disciplinary research challenges, and I believe that cryptocurrency can serve as a central playground for synergizing disparate research communities."
Ultimately, the goal is to seek potentially new ways of developing and implementing cryptocurrency technology.
"I believe that our research will help solve some of the fundamental challenges and most difficult problems in cryptocurrency design, and make a big impact," Shi concluded.
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