Nav: Home

SUTD researchers demystify centralization in cryptocurrency mining

May 14, 2019

Blockchain technology has been considered as the most revolutionizing invention since the Internet. Due to its immutable nature and the associated security and privacy benefits, it has widely attracted the attention of banks, governments, techno-corporations, as well as venture capitalists.

To participate in the blockchain consensus mechanisms, prospective network nodes - also called miners - need to provide proof of some costly resource. This resource may be computational power in protocols with Proof of Work mechanisms or coins of the native cryptocurrency in Proof of Stake mechanisms.

An integral assumption in the security philosophy of public blockchains is that the network of mining nodes remains sufficiently decentralized and distributed. In the extreme case, sufficiently means that no single entity holds 50% or more of the resources but in practice much more decentralization may be desired to safeguard the underlying protocol.

However, currently available data demonstrates that mining resources are much more centralized than originally thought, leading essentially to a reinvention of our current banking system instead of the intended decentralized digital currency of the future, see Figure 1.

Assistant Professor Georgios Piliouras of Singapore University of Technology and Design and Stefanos Leonardos, postdoctoral research fellow at the iTrust Centre for Research in Cyber Security in collaboration with Nikos Leonardos from the National and Kapodistrian University of Athens developed a novel approach to untangle the centralization phenomena in blockchain mining. They employed the rich economic theory of Oceanic Games, originally devised by the 2012 Nobel Laureate in Economics, Loyd S. Shapley.

The application of this theory in the currently evolving blockchain ecosystem unveiled incentives both for active and for newly entering miners to merge and act as single entities. These observations provide an alternative justification of the observed centralization and concentration of power in the mining process of the major cryptocurrencies. Contrary to common perceptions, they amount to the existence of a negative feedback loop in terms of decentralization as a core ingredient in public blockchain philosophy and reveal the need for further research in this direction.

For this work, the research team was accredited with the Best Paper Award in the 1st International Conference on Mathematical Research for Blockchain Economy.
-end-


Singapore University of Technology and Design

Related Technology Articles:

How technology use affects at-risk adolescents
More use of technology led to increases in attention, behavior and self-regulation problems over time for adolescents already at risk for mental health issues, a new study from Duke University finds.
Hold-up in ventures for technology transfer
The transfer of technology brings ideas closer to commercialization. The transformation happens in several steps, such as invention, innovation, building prototypes, production, market introduction, market expansion, after sales services.
The ultimate green technology
Imagine patterning and visualizing silicon at the atomic level, something which, if done successfully, will revolutionize the quantum and classical computing industry.
New technology detects COPD in minutes
Pioneering research by Professor Paul Lewis of Swansea University's Medical School into one of the most common lung diseases in the UK, Chronic Obstructive Pulmonary Disease, has led to the development of a new technology that can quickly and easily diagnose and monitor the condition.
New technology for powder metallurgy
Tecnalia leads EFFIPRO (Energy EFFIcient PROcess of Engineering Materials) project, which shows a new manufacturing process using powder metallurgy.
New milestone in printed photovoltaic technology
A team of researchers at Friedrich-Alexander-Universit├Ąt have achieved an important milestone in the quest to develop efficient solar technology as an alternative to fossil fuels.
Gene Drive Technology: Where is the future?
For this episode of BioScience Talks, we're joined by Gene Drive Committee co-chair James P.
Could Hollywood technology help your health?
The same technology used by the entertainment industry to animate characters such as Gollum in 'The Lord of The Rings' films, will be used to help train elite athletes, for medical diagnosis and even to help improve prosthetic limb development, in a new research center at the University of Bath launched today.
Assessing carbon capture technology
Carbon capture and storage could be used to mitigate greenhouse gas emissions and thus ameliorate their impact on climate change.
New technology for dynamic projection mapping
It has been thought technically difficult to achieve projection mapping onto a moving/rotating object so that images look as though they are fixed to the object.

Related Technology Reading:

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Jumpstarting Creativity
Our greatest breakthroughs and triumphs have one thing in common: creativity. But how do you ignite it? And how do you rekindle it? This hour, TED speakers explore ideas on jumpstarting creativity. Guests include economist Tim Harford, producer Helen Marriage, artificial intelligence researcher Steve Engels, and behavioral scientist Marily Oppezzo.
Now Playing: Science for the People

#524 The Human Network
What does a network of humans look like and how does it work? How does information spread? How do decisions and opinions spread? What gets distorted as it moves through the network and why? This week we dig into the ins and outs of human networks with Matthew Jackson, Professor of Economics at Stanford University and author of the book "The Human Network: How Your Social Position Determines Your Power, Beliefs, and Behaviours".