Can We Afford Integrity by Proof-of-Work? Scenarios Inspired by the Bitcoin Currency

Workshop on the Economics of Information Security WEIS 2012, Berlin, Germany

17 Pages Posted: 18 Apr 2012

See all articles by Jörg Becker

Jörg Becker

University of Münster - Department of Information Systems

Dominic Breuker

University of Münster - Department of Information Systems

Tobias Heide

University of Münster - Department of Information Systems

Justus Holler

University of Münster - Department of Information Systems

Hans Rauer

University of Münster - Department of Information Systems

Rainer Böhme

University of Innsbruck; University of Münster - Department of Information Systems; Massachusetts Institute of Technology (MIT) - MIT Media Laboratory; ICSI Berkeley; TU Dresden

Date Written: February 24, 2012

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.

Keywords: Bitcoin, Proof-of-Work, Block Chain

JEL Classification: E42, Q30

Suggested Citation

Becker, Jörg and Breuker, Dominic and Heide, Tobias and Holler, Justus and Rauer, Hans and Böhme, Rainer, Can We Afford Integrity by Proof-of-Work? Scenarios Inspired by the Bitcoin Currency (February 24, 2012). Workshop on the Economics of Information Security WEIS 2012, Berlin, Germany, Available at SSRN: https://ssrn.com/abstract=2041492

Jörg Becker

University of Münster - Department of Information Systems ( email )

Germany

Dominic Breuker (Contact Author)

University of Münster - Department of Information Systems ( email )

Germany

Tobias Heide

University of Münster - Department of Information Systems ( email )

Leonardo Campus 3
Muenster, 48149
Germany

Justus Holler

University of Münster - Department of Information Systems ( email )

Germany

Hans Rauer

University of Münster - Department of Information Systems ( email )

Germany

Rainer Böhme

University of Innsbruck ( email )

Technikerstraße 21A
Innsbruck, Innsbruck 6020
Austria

HOME PAGE: http://informationsecurity.uibk.ac.at/people/rainer-boehme/

University of Münster - Department of Information Systems ( email )

Leonardo-Campus 3
Muenster, NRW D-48143
Germany

HOME PAGE: http://www.wi.uni-muenster.de/security/

Massachusetts Institute of Technology (MIT) - MIT Media Laboratory ( email )

20 Ames St.
Cambridge, MA 02139-4307
United States

ICSI Berkeley ( email )

1947 Center Street, Ste. 600
Berkeley, CA 94704
United States

TU Dresden ( email )

Dresden, 01062
Germany

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
1,900
Abstract Views
12,301
Rank
16,087
PlumX Metrics