Abstract

http://ssrn.com/abstract=2041492
 


 



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


Jörg Becker


University of Muenster - Department of Information Systems

Dominic Breuker


University of Muenster - Department of Information Systems

Tobias Heide


University of Muenster - Department of Information Systems

Justus Holler


University of Muenster - Department of Information Systems

Hans Peter Rauer


University of Muenster - Department of Information Systems

Rainer Böhme


University 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 Series


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Date posted: April 18, 2012  

Suggested Citation

Becker, Jörg and Breuker, Dominic and Heide, Tobias and Holler, Justus and Rauer, Hans Peter 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: http://ssrn.com/abstract=2041492

Contact Information

Jörg Becker
University of Muenster - Department of Information Systems ( email )
Germany
Dominic Breuker (Contact Author)
University of Muenster - Department of Information Systems ( email )
Germany
Tobias Heide
University of Muenster - Department of Information Systems ( email )
Leonardo Campus 3
Muenster, 48149
Germany
Justus Holler
University of Muenster - Department of Information Systems ( email )
Germany
Hans Peter Rauer
University of Muenster - Department of Information Systems ( email )
Germany
Rainer Böhme
University of Muenster - Department of Information Systems ( email )
Leonardo-Campus 3
Muenster, NRW D-48143
Germany
HOME PAGE: http://www.wi.uni-muenster.de/security/
ICSI Berkeley ( email )
1947 Center Street, Ste. 600
Berkeley, CA 94704
United States
TU Dresden ( email )
Dresden, 01062
Germany
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