Bitcoin has experienced massive growth and popularity since its introduction in 2008. As the first decentralized digital currency, Bitcoin introduced novel technical solutions for issues like double spending, decentralized consensus, and anonymity. Many questions still remain around its technological underpinnings, economic implications, and potential applications. This has led to a rising body of academic research on Bitcoin and cryptocurrencies. In this article, we summarize some of the most comprehensive and impactful Bitcoin research papers published in 2018.
An early 2018 paper by Peter Cielens from Ripple provides a technical overview of the Bitcoin protocol in order to help academics and businesses better understand its workings. Titled “Bitcoin: An Overview for Professionals and Business Leaders”, the paper delves into key aspects of Bitcoin like its decentralized network, transaction processing via blocks and mining, scripting language, digital signature schemes, and the economic incentives underpinning the system. The paper is aimed to serve as a starting point for researchers and industry professionals unfamiliar with Bitcoin’s inner workings. While not introducing new research, it helpfully condensed Bitcoin’s complex technical underpinnings into an easy to understand yet comprehensive overview.
Another highly cited 2018 paper comes from Kathleen Breitstone of the MIT Digital Currency Initiative titled “Risk Analysis of Passing Ownership in Bitcoin”. It aims to systematically evaluate the security and privacy risks involved when ownership of bitcoin is transferred between parties. The paper first discusses the core operations needed to transfer bitcoin like generating addresses, crafting transactions, passing transactions to the network, and incorporating them into the blockchain. It then analyzes in detail how each step is susceptible to different attack vectors like transaction malleability, double spends, address reuse, and sybil attacks. The paper provides practical recommendations for mitigating these risks and outlines open problems that need further research attention. Its painstaking risk evaluation has helped improve the security of bitcoin transfers.
Researchers from the University College London published the paper “Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction” in April 2018. This accessible primer paper condenses Bitcoin and cryptocurrency concepts like blockchain, mining, digital signatures, wallets etc into simple and easy to understand explanations. Alongside covering introductory technical topics, it also discusses use cases, economics, politics and policies around cryptocurrencies. The paper aims to introduce readers to this new multidisciplinary domain in a comprehensive yet approachable manner. By thoroughly but briefly explaining core concepts, equations and terminology, it has become a foundational reference for novices and a useful teaching resource. Its wide coverage and reader-friendly style have made it a popular introductory paper on Bitcoin and digital currencies.
In July 2018, researchers at Cornell University published the detailed paper “Analysis of Attack Costs in Cryptocurrencies”. It quantitatively analyzed how market manipulation, double spending and 51% attacks are influenced by various economic factors in cryptocurrencies. The paper models how the costs to execute such attacks depend upon parameters like coin value, mining hash rates, block time and rewards. It finds that blockchains with lower values, slower confirmation times and lower hash rates are more vulnerable to attacks. Using empirical data from Bitcoin, Ethereum, Litecoin etc, the paper calculates concrete estimates of how much an attacker would need to spend to execute different attacks against different cryptocurrencies. Its frameworks and in-depth cost analysis provide valuable risk assessment metrics for the community. The paper helps improve blockchain security by objectively highlighting weaknesses.
Another comprehensive contribution came from researchers at the University of South Carolina, who published “The Anatomy of a Cryptocurrency Pump-and-Dump Scheme” in November 2018. Studying real data from thousands of pump and dump schemes on the popular ‘CryptoPumpSignals’ Telegram channel, the paper analyzed their covert coordination and impact. Findings showed that pumps typically led to short-term price spikes followed by crashes, with organizers and collaborators profiting at the expense of unsuspecting retail investors. The paper discussed technical strategies used by organizers to synchronize pumps while evading detection. It recommended countermeasures like exchange delistings, legal regulations against market manipulation, and user education. Given the rising reports of such scam activities targeting cryptocurrencies with thin order books, this empirical analysis provided important insight into an emerging sociological problem in the space.
One of the most comprehensive academic papers published in 2018 on Bitcoin’s technical architecture and economics was authored by researchers from the Luxembourg Centre of Logistics and Supply Chain Management, University of Liege, and University of Luxembourg. Titled “Bitcoin: An Innovative Alternative Digital Currency”, the paper systematically covered Bitcoin from its core data structures and protocols, to mining competitions, economic incentives, and comparison with other payment systems. Going beyond simplification for accessibility, it conveyed nuanced technical details alongside their economic rationales. The paper also evaluated several criticisms against Bitcoin like its energy consumption, scalability challenges and susceptibility to manipulation. Weighing perspectives objectively using a combination of literature surveys, modeling, and critical analyses positioned this paper as one of the most thorough treatments of Bitcoin’s complex research landscape in 2018.
This article highlighted some of the most impactful academic contributions on Bitcoin and cryptocurrency research published during 2018. Ranging from introductory primers to sophisticated empirical analyses, the papers covered key technical, economic and sociological aspects related to digital currencies. While cryptocurrencies and blockchains present many open research questions, the continuously rising volume of quality academic work is helping the community better understand this rapidly evolving field. Going forward, further research will be crucial to realizing cryptocurrencies’ full potential while addressing issues around their security, scalability, regulatory status and environmental impact.
Andrew Stroud