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Cryptocurrency Egalitarianism: A Quantitative Approach

Authors Dimitris Karakostas, Aggelos Kiayias, Christos Nasikas, Dionysis Zindros



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Author Details

Dimitris Karakostas
  • University of Edinburgh, UK
  • IOHK, Hong Kong
Aggelos Kiayias
  • University of Edinburgh, UK
  • IOHK, Hong Kong
Christos Nasikas
  • University of Athens, "Athena" Research Center, Greece
Dionysis Zindros
  • University of Athens, Greece
  • IOHK, Hong Kong

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Dimitris Karakostas, Aggelos Kiayias, Christos Nasikas, and Dionysis Zindros. Cryptocurrency Egalitarianism: A Quantitative Approach. In International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2019). Open Access Series in Informatics (OASIcs), Volume 71, pp. 7:1-7:21, Schloss Dagstuhl - Leibniz-Zentrum für Informatik (2020)
https://doi.org/10.4230/OASIcs.Tokenomics.2019.7

Abstract

Since the invention of Bitcoin one decade ago, numerous cryptocurrencies have sprung into existence. Among these, proof-of-work is the most common mechanism for achieving consensus, whilst a number of coins have adopted "ASIC-resistance" as a desirable property, claiming to be more "egalitarian," where egalitarianism refers to the power of each coin to participate in the creation of new coins. While proof-of-work consensus dominates the space, several new cryptocurrencies employ alternative consensus, such as proof-of-stake in which block minting opportunities are based on monetary ownership. A core criticism of proof-of-stake revolves around it being less egalitarian by making the rich richer, as opposed to proof-of-work in which everyone can contribute equally according to their computational power. In this paper, we give the first quantitative definition of a cryptocurrency’s egalitarianism. Based on our definition, we measure the egalitarianism of popular cryptocurrencies that (may or may not) employ ASIC-resistance, among them Bitcoin, Ethereum, Litecoin, and Monero. Our simulations show, as expected, that ASIC-resistance increases a cryptocurrency’s egalitarianism. We also measure the egalitarianism of a stake-based protocol, Ouroboros, and a hybrid proof-of-stake/proof-of-work cryptocurrency, Decred. We show that stake-based cryptocurrencies, under correctly selected parameters, can be perfectly egalitarian, perhaps contradicting folklore belief.

Subject Classification

ACM Subject Classification
  • Security and privacy → Economics of security and privacy
Keywords
  • blockchain
  • egalitarianism
  • cryptocurrency
  • economics
  • proof-of-work
  • proof-of-stake

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