Document Open Access Logo

Cryptocurrency Egalitarianism: A Quantitative Approach

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

PDF
Thumbnail PDF

File

OASIcs.Tokenomics.2019.7.pdf
  • Filesize: 0.77 MB
  • 21 pages

Document Identifiers

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

Funding

Research partially supported by H2020 projects PRIVILEDGE #780477 and MHMD #732907.

Cite AsGet BibTex

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

Metrics

  • Access Statistics
  • Total Accesses (updated on a weekly basis)
    0
    PDF Downloads
    0
    Metadata Views

References

  1. U.S. Energy Information Administration. Electric Power Monthly with Data for November 2018. Technical report, U.S. Energy Information Administration, January 2019. URL: https://www.eia.gov/electricity/monthly/current_month/epm.pdf.
  2. Joël Alwen, Jeremiah Blocki, and Krzysztof Pietrzak. Depth-robust graphs and their cumulative memory complexity. In Annual International Conference on the Theory and Applications of Cryptographic Techniques, pages 3-32. Springer, 2017. Google Scholar
  3. Alex Biryukov and Dmitry Khovratovich. Egalitarian Computing. In USENIX Security Symposium, pages 315-326, 2016. Google Scholar
  4. Joseph Bonneau, Andrew Miller, Jeremy Clark, Arvind Narayanan, Joshua A. Kroll, and Edward W. Felten. SoK: Research perspectives and challenges for bitcoin and cryptocurrencies. In 2015 IEEE Symposium on Security and Privacy, pages 104-121. IEEE Computer Society Press, May 2015. URL: https://doi.org/10.1109/SP.2015.14.
  5. Lars Brünjes, Aggelos Kiayias, Elias Koutsoupias, and Aikaterini-Panagiota Stouka. Reward Sharing Schemes for Stake Pools. Computer Science and Game Theory (cs.GT) arXiv:1807.11218, 2018. URL: http://arxiv.org/abs/1807.11218.
  6. Vitalik Buterin et al. A next-generation smart contract and decentralized application platform. white paper, 2014. Google Scholar
  7. Vitalik Buterin and Virgil Griffith. Casper the friendly finality gadget. arXiv preprint, 2017. URL: http://arxiv.org/abs/1710.09437.
  8. dEBRYUNE and dnaleor. PoW change and key reuse. Available at: https://www.getmonero.org/2018/02/11/PoW-change-and-key-reuse.html, February 2018.
  9. The Decred Developers. Decred Documentation. Available at: https://docs.decred.org/, 2016.
  10. John R Douceur. The sybil attack. In International workshop on peer-to-peer systems, pages 251-260. Springer, 2002. Google Scholar
  11. Cynthia Dwork and Moni Naor. Pricing via Processing or Combatting Junk Mail. In Ernest F. Brickell, editor, CRYPTO'92, volume 740 of LNCS, pages 139-147. Springer, Heidelberg, August 1993. Google Scholar
  12. Ittay Eyal and Emin Gün Sirer. Majority Is Not Enough: Bitcoin Mining Is Vulnerable. In Nicolas Christin and Reihaneh Safavi-Naini, editors, FC 2014, volume 8437 of LNCS, pages 436-454. Springer, Heidelberg, March 2014. URL: https://doi.org/10.1007/978-3-662-45472-5_28.
  13. Giulia Fanti, Leonid Kogan, Sewoong Oh, Kathleen Ruan, Pramod Viswanath, and Gerui Wang. Compounding of Wealth in Proof-of-Stake Cryptocurrencies. In International Conference on Financial Cryptography and Data Security. Springer, 2019. Google Scholar
  14. Juan A. Garay, Aggelos Kiayias, and Nikos Leonardos. The Bitcoin Backbone Protocol: Analysis and Applications. In Elisabeth Oswald and Marc Fischlin, editors, EUROCRYPT 2015, Part II, volume 9057 of LNCS, pages 281-310. Springer, Heidelberg, April 2015. URL: https://doi.org/10.1007/978-3-662-46803-6_10.
  15. Juan A. Garay, Aggelos Kiayias, and Nikos Leonardos. The Bitcoin Backbone Protocol with Chains of Variable Difficulty. In Jonathan Katz and Hovav Shacham, editors, CRYPTO 2017, Part I, volume 10401 of LNCS, pages 291-323. Springer, Heidelberg, August 2017. Google Scholar
  16. Richard M Karp. Reducibility among combinatorial problems. In Complexity of computer computations, pages 85-103. Springer, 1972. Google Scholar
  17. Olga Kharif. Many Bitcoin Miners Are at Risk of Turning Unprofitable. Bloomberg, April 2018. URL: https://www.bloomberg.com/news/articles/2018-04-18/bitcoin-miners-facing-a-shakeout-as-profitability-becomes-harder.
  18. Aggelos Kiayias, Elias Koutsoupias, Maria Kyropoulou, and Yiannis Tselekounis. Blockchain mining games. In Proceedings of the 2016 ACM Conference on Economics and Computation, pages 365-382. ACM, 2016. Google Scholar
  19. Aggelos Kiayias, Alexander Russell, Bernardo David, and Roman Oliynykov. Ouroboros: A Provably Secure Proof-of-Stake Blockchain Protocol. In Jonathan Katz and Hovav Shacham, editors, CRYPTO 2017, Part I, volume 10401 of LNCS, pages 357-388. Springer, Heidelberg, August 2017. Google Scholar
  20. Daniel Larimer and the EOS developers. EOS.IO Technical White Paper v2, 2017. URL: https://github.com/EOSIO/Documentation/commits/master/TechnicalWhitePaper.md.
  21. Charles Lee. Litecoin, 2011. Google Scholar
  22. George B Mathews. On the partition of numbers. Proceedings of the London Mathematical Society, 1(1):486-490, 1896. Google Scholar
  23. Robert McMillan. Ex-Googler Gives the World a Better Bitcoin. WIRED, August 2013. URL: https://www.wired.com/2013/08/litecoin/.
  24. Satoshi Nakamoto. Bitcoin: A peer-to-peer electronic cash system. Available at: https://bitcoin.org/bitcoin.pdf, 2008.
  25. Rafael Pass, Lior Seeman, and Abhi Shelat. Analysis of the blockchain protocol in asynchronous networks. In Annual International Conference on the Theory and Applications of Cryptographic Techniques, pages 643-673. Springer, 2017. Google Scholar
  26. Rafael Pass and Elaine Shi. FruitChains: A fair blockchain. In Elad Michael Schiller and Alexander A. Schwarzmann, editors, 36th ACM PODC, pages 315-324. ACM, July 2017. Google Scholar
  27. Colin Percival and Simon Josefsson. The scrypt password-based key derivation function. Technical report, Internet Engineering Task Force, 2016. Google Scholar
  28. Ayelet Sapirshtein, Yonatan Sompolinsky, and Aviv Zohar. Optimal Selfish Mining Strategies in Bitcoin. In Jens Grossklags and Bart Preneel, editors, FC 2016, volume 9603 of LNCS, pages 515-532. Springer, Heidelberg, February 2016. Google Scholar
  29. Michael Bedford Taylor. Bitcoin and the age of bespoke silicon. In Proceedings of the 2013 International Conference on Compilers, Architectures and Synthesis for Embedded Systems, page 16. IEEE Press, 2013. Google Scholar
  30. Nicolas Van Saberhagen. CryptoNote v2.0, 2013. URL: https://cryptonote.org/whitepaper.pdf.
  31. Gavin Wood. Ethereum: A secure decentralised generalised transaction ledger. Ethereum project yellow paper, 151:1-32, 2014. Google Scholar
© 2023-2024 Schloss Dagstuhl – LZI GmbH Imprint Privacy Contact