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Can We Afford Integrity by Proof-of-Work? Scenarios Inspired by the Bitcoin CurrencyJörg BeckerUniversity of Muenster - Department of Information Systems Dominic BreukerUniversity of Muenster - Department of Information Systems Tobias HeideUniversity of Muenster - Department of Information Systems Justus HollerUniversity of Muenster - Department of Information Systems Hans Peter RauerUniversity of Muenster - Department of Information Systems Rainer BöhmeUniversity of Muenster - Department of Information Systems; ICSI Berkeley; TU Dresden February 24, 2012 Workshop on the Economics of Information Security WEIS 2012, Berlin, Germany Abstract: Proof-of-Work (PoW), a well-known principle to ration resource access in client-server relations, is about to experience a renaissance as a mechanism to protect the integrity of a global state in distributed transaction systems under decentralized control. Most prominently, the Bitcoin cryptographic currency protocol leverages PoW to 1) prevent double spending and 2) establish scarcity, two essential properties of any electronic currency. This paper asks the important question whether this approach is generally viable. Citing actual data, it provides a first cut of an answer by estimating the resource requirements, in terms of operating cost and ecological footprint, of a suitably dimensioned PoW infrastructure and comparing them to three attack scenarios. The analysis is inspired by Bitcoin, but generalizes to potential successors, which fix Bitcoin’s technical and economic teething troubles discussed in the literature.
Number of Pages in PDF File: 17 Keywords: Bitcoin, Proof-of-Work, Block Chain JEL Classification: E42, Q30 Accepted Paper SeriesDate posted: April 18, 2012Suggested CitationContact Information
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