Since the introduction of Bitcoin, numerous studies on Bitcoin mining attacks have been conducted, and as a result, many countermeasures to these attacks have been proposed. The reputation-based mining paradigm is a comprehensive countermeasure solution to this problem with the goal of regulating the mining process and preventing mining attacks. This is accomplished by incentivizing miners to avoid dishonest mining strategies using reward and punishment mechanisms. This model was validated solely based on game theoretical analyses and the real-world implications of this model are not known due to the lack of empirical data. To shed light on this issue, we designed a simulated mining platform to examine the effectiveness of the reputation-based mining paradigm through data analysis. We implemented block withholding attacks in our simulation and ran the following three scenarios: Reputation mode, non-reputation mode, and no attack mode. By comparing the results from these three scenarios, interestingly we found that the reputation-based mining paradigm decreases the number of block withholding attacks, and as a result, the actual revenue of individual miners becomes closer to their theoretical expected revenue. In addition, we observed that the confidence interval test can effectively detect block withholding attacks however, the test also results in a small number of false positive cases. Since the effectiveness of the reputation-based model relies on attack detection, further research is needed to investigate the effect of this model on other dishonest mining strategies. / Includes bibliography. / Thesis (MS)--Florida Atlantic University, 2021. / FAU Electronic Theses and Dissertations Collection

1 Atomic swap: a risk for AML regulation? Abstract This thesis deals with atomic swaps. Particularly it deals with their characteristics and relation to AML regulation. The aim of this thesis is to assess the risks that atomic swaps pose to AML regulation and the ways in which these risks can be addressed. The first part of this thesis briefly describes the concepts and technologies needed to understand atomic swaps. Among other things this part describes distributed databases, cryptographic keys, wallets, and virtual currency exchanges. This is followed by a description of the evolution of atomic swaps, how atomic swaps work and what are their advantages and disadvantages. The second part analyses the current regulation against money laundering and terrorist financing from the perspective of FATF, the European Union and the Czech Republic in relation to virtual currencies and atomic swaps. Particularly it focuses on the definition of virtual currencies and obliged entities. After the explanation how atomic swaps work and the analysis of AML regulation in relation to atomic swaps, it is possible to assess whether atomic swaps pose a risk to AML regulation. This is the focus of the third part of this thesis. It first introduces the issue of money laundering and the use of virtual currencies for illicit...

Yes / Amid its rapidly increasing usage and immense public interest the subject of Bitcoin has raised profound economic and societal issues. In this paper we undertake economic and econometric modelling of Bitcoin prices. As with many asset classes we show that Bitcoin exhibits speculative bubbles. Further, we find empirical evidence that the fundamental price of Bitcoin is zero.

Title: Tax aspects of disposal of cryptocurrencies This thesis aims to answer the selected questions from the legal and, above all, the tax- law framework. Cryptocurrencies are a fairly young phenomenon, which is still developing. They are mainly used as an alternative to state-recognized currencies or a specific investment instrument. Because of the significant profits that transactions can bring with them, the issue of determining related tax obligations is important. The work is divided into 4 basic parts. The first part deals with the general definition of the cryptocurrencies and other relevant institutes. The second part deals with personal income tax and the third part deals with value added tax. The final fourth part deals with the issue of the future development of cryptocurrencies regulation. In the first part, focus is placed on the general definition of cryptocurrencies within the rule of law, with emphasis on comparison with selected traditional institutes of financial law. Attention is also paid to the specific features of cryptocurrencies that are relevant in terms of tax administration and related tax duties. Considerable attention is also paid to the criminal law consequences that might arise in the event of non-compliance with tax obligations. At the end of this section, the...

The whole thesis comprises six chapters, where the running theme focuses on the development of statistical methods and distribution theory, with applications to finance. It begins with Chapter 1, which provides the introduction and background to my thesis. This is then followed by Chapters 2 through to 6, which provide the main contributions. The exact distribution of the sum of more than two independent beta random variables is not a known result. Even in terms of approximations, only the normal approximation is known for the sum. Motivated by Murakami (2014), Chapter 2 derives a saddlepoint approximation for the distribution of the sum. An extensive simulation study shows that it always gives better performance than the normal approximation. Jin et al. (2016) proposed a novel moments based approximation based on the gamma distribution for the compound sum of independent and identical random variables, and illustrated their approximation through the use of six examples. Chapter 3 revisits four of their examples, and it is shown that moments based approximations based on simpler distributions can be good competitors. The moments based approximations are also shown to be more accurate than the truncated versions of the exact distribution of the compound sum. Results regarding the performances of the approximations are provided, which could be useful in determining which approximation should be used given a real data set. The estimation of the size of large populations can often be a significant problem. Chapter 4 proposes a new population size estimator and provides a comparison of its performance with two recent estimators known in the literature. The comparison is based on a simulation study and applications to two real big data sets from the Twitter and LiveJournal social networks. The proposed estimator is shown to outperform the known estimators, at least for small sample sizes. In recent years, with a growing interest in big or large datasets, there has been a rise in the application of large graphs and networks to financial big data. Much of this research has focused on the construction and analysis of the network structure of stock markets, based on the relationships between stock prices. Motivated by Boginski et al. (2005), who studied the characteristics of a network structure of the US stock market, Chapter 5 constructs network graphs of the UK stock market using the same method. Four distributions are fitted to the degree density of the vertices from these graphs: the Pareto I, Frechet, lognormal, and generalised Pareto distributions, and their goodness of fits are assessed. Results show that the degree density of the complements of the market graphs, constructed using a negative threshold value close to zero, can be fitted well with the Frechet and lognormal distributions. Chapter 6 analyses statistical properties of the largest cryptocurrencies (determined by market capitalisation), of which Bitcoin is the most prominent example. The analysis characterises their exchange rates versus the US Dollar by fitting parametric distributions to them. It is shown that cryptocurrency returns are clearly non-normal, however, no single distribution fits well jointly to all of the cryptocurrencies analysed. We find that for the most popular cryptocurrencies, such as Bitcoin and Litecoin, the generalised hyperbolic distribution gives the best fit, whilst for the smaller cryptocurrencies the normal inverse Gaussian distribution, generalised t distribution, and Laplace distribution give good fits. The results are important for investment and risk management purposes.

Online content delivery has witnessed dramatic growth recently with traffic consuming over half of today’s Internet bandwidth. This escalating demand has motivated content publishers to move outside the traditional solutions of infrastructure-based content delivery networks (CDNs). Instead, many are employing peer-to-peer data transfers to reduce the service cost and avoid bandwidth over-provision to handle peak demands. Unfortunately, the open access work model of this paradigm, which allows anyone to join, introduces several design challenges related to security, efficiency, and peer availability. In this dissertation, we introduce CacheCash, a cryptocurrency-based decentralized content distribution network designed to address these challenges. CacheCash bypasses the centralized approach of CDN companies for one in which end users organically set up new caches in exchange for cryptocurrency tokens. Thus, it enables publishers to hire caches on an as-needed basis, without constraining these parties with long-term business commitments. To address the challenges encountered as the system evolved, we propose a number of protocols and techniques that represent basic building blocks of CacheCash’s design. First, motivated by the observation that conventional security assessment tools do not suit cryptocurrency-based systems, we propose ABC, a threat modeling framework capable of identifying attacker collusion and the new threat vectors that cryptocurrencies introduce. Second, we propose CAPnet, a defense mechanism against cache accounting attacks (i.e., a client pretends to be served allowing a colluding cache to collect rewards without doing any work). CAPnet features a bandwidth expenditure puzzle that clients must solve over the content before caches are given credit, which bounds the effectiveness of this collusion case. Third, to make it feasible to reward caches per data chunk served, we introduce MicroCash, a decentralized probabilistic micropayment scheme that reduces the overhead of processing these small payments. MicroCash implements several novel ideas that make micropayments more suitable for delay-sensitive applications, such as online content delivery. CacheCash combines the previous techniques to produce a novel service-payment exchange protocol that secures the content distribution process. This protocol utilizes gradual content disclosure and partial payment collection to encourage the honest collaborative work between participants. We present a detailed game theoretic analysis showing how to exploit rational financial incentives to address several security threats. This is in addition to various performance optimization mechanisms that promote system efficiency and scalability. Lastly, we evaluate system performance and show that modest machines can serve/retrieve content at a high bitrate with minimal overhead.

The rapid advancement in encryption and network computing gave birth to new tools and products that have influenced the local and global economy alike. One recent and notable example is the emergence of virtual currencies, also known as cryptocurrencies or digital currencies. Virtual currencies, such as Bitcoin, introduced a fundamental transformation that affected the way goods, services, and assets are exchanged. As a result of its distributed ledgers based on blockchain, cryptocurrencies not only offer some unique advantages to the economy, investors, and consumers, but also pose considerable risks to users and challenges for regulators when fitting the new technology into the old legal framework. This paper attempts to model the volatility of bitcoin using 5 variants of the GARCH model namely: GARCH(1,1), EGARCH(1,1) IGARCH(1,1) TGARCH(1,1) and GJR-GARCH(1,1). Once the best model is selected, an OLS regression was ran on the volatility series to measure the day of the week the effect. The results indicate that the TGARCH (1,1) model best fits the volatility price for the data. Moreover, Sunday appears as the most significant day in the week. A nontechnical discussion of several aspects and features of virtual currencies and a glimpse at what the future may hold for these decentralized currencies is also presented.

This paper analyzes cryptocurrencies as financial instruments. Firstly, we introduced the main features of cryptocurrencies and summarized the brief history. We found out that price of the most famous cryptocurrency Bitcoin follows the hypothesis of efficient markets and it immediately react on publicly announce information. Furthermore, Bitcoin can be seen as standard economic good that is priced by interaction of supply and demand on the market. These factors can be driven by macro financial development or by speculative investors, but there weren't found any significant impact of these factors on price of Bitcoin. CAPM shows the high risk of cryptocurrencies, but it could be still good instrument for diversification.

The main objective of this diploma thesis is to introduce the history and origin of digital currency Bitcoin and how this project works specifically from the perspective of IT. The thesis contains detailed instructions for the process of implementation Bitcoin payments to the company. This diploma thesis describes the possibilities of abuse and security. Further compares advantages and disadvantages with the classical exchange resources. How is it possible to get this currency, use and how it developed its rate against other world currencies. The thesis also mentions similar cryptocurrencies.

Should cryptocurrencies populate modern portfolios, and to what degree? How can von Neumann-Morgenstern utility theory determine which portfolio is best? For this thesis, we take six cryptocurrencies and six stocks to create optimal portfolios from each and a combination of both. Then we compare the expected utility from each portfolio, with and without short selling, to a benchmark. As concluded from our data, cryptocurrencies should be a part of a modern portfolio to increase the Sharpe ratio and expected utility even if they do not take a majority proportion.