Extracting a probabilistic model from Bitcoin data

title:Extracting a probabilistic model from Bitcoin data
keywords:Bitcoin, formal modelling, data mining, data analysis
topics:Case studies and Applications, Dependability, security and performance
contact:dr. A. Fehnker


Description

In circulation since 2009, Bitcoin is a well-known cryptocurrency.  At the end of 2016, there were around 183,864,738 transactions conducted with approximately 16,075,400 bitcoins in circulation Bitcoinchart, making it the most popular digital currency.  Bitcoin's popularity is a result of its capability to eliminate the need for a trusted third party such as a broker or a bank to process payments.   Due to its decentralised control many merchants have started accepting bitcoins as a currency.

Bitcoin operates using peer-to-peer network generally referred to as peers.  Every peer in the Bitcoin network keeps the collection of all transactions which is referred to as a ledger.  This so-called ledger is organised into separate blocks all which are linked to their immediate predecessor forming a chain.  The protocol uses the proof-of-work solution to induce a unique order on blocks, also known as mining.

The aim of this prject is to buld a formal model that captures the behaviour of mining pools. This model should be based on an evlauation of the transaction graphs, block chain and other publically available information of transactions, bock chain and pools. The evalution of this data should give a sense of the probability of double spending, blockchain forks and orphaned blocks. This data should be used in the model to check if pools do indeed behave as the model predicts. 

A prerequiste for this project is knowledge of and affinity to use tools to collect publically available data, and make it available for further analysis. Experience with  formal modelling tools would be considered an advantage, but is not a prerequisite.

References

  1. Michael Fleder and Michael S. Kester and Sudeep Pillai. Bitcoin Transaction Graph Analysis (Digital version available here)
  2. Ron, Dorit and Shamir, Adi. Quantitative Analysis of the Full Bitcoin Transaction Graph (Digital version available here)
  3. Kaylash Chaudhary,Ansgar Fehnker ,Jaco van de Pol and Marielle Stoelinga. Modeling and Verification of the Bitcoin Protocol (Digital version available here)