Barber, S., Boyen, X., Shi, E.,

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With the rise in e-commerce in the recent years, the idea of having a decentralized currency to be used for secure online transactions has gained interest. Although the concept of electronic cash has been around since 1982, when it was first proposed by Chaum, Bitcoin was the first e-cash system to gain widespread popularity and success. The authors of this paper have sought to decode the mystery of the unprecedented success of the Bitcoin in a climate where other digital currencies failed to make a mark. As is true with any emerging technology, the Bitcoin also has many opponents who claim that it is eventually doomed to fail (Preistley, 2016). Keeping in mind such fears, the authors of the article have taken on the task of evaluating Bitcoin’s potential as a long-term stable digital currency by identifying the weaknesses of the model and by suggesting possible improvements to overcome these weaknesses. Satoshi Nakamoto, the inventor of Bitcoin, was unknown in the cryptocurrency community until 2008, but the e-cash model he has devised has overtaken 3 decades of ongoing research to gain swift success. After investigating the currency in depth, the authors have come to the conclusion that although it is not complex Bitcoin has some sophisticated machinery at work that is responsible for its acceptance. Bitcoin does not need to be backed by a central authority but is instead backed by a widely distributed network. This feature appeals to individuals who are interested in a freely traded currency that is not controlled by the government or a bank. There is an economic incentive for investing time and computing power in Bitcoins-bitcoin ‘miners’ can earn transaction fees for their efforts. New bitcoins become available at a fixed rate, so Bitcoin also offers more peace of mind for people who appreciate that the money supply is predictable. The larger the ‘Bitcoin community’ the more complex the computational puzzle becomes that is required to mine new Bitcoins, and the more valuable the coins become. While discussing factors that have led to its success one cannot miss the ease with which Bitcoin can be divided to make any denomination possible, and the irreversibility of Bitcoin transactions which secures them against credit card fraud and chargebacks. Bitcoin also boasts very low transaction fees, openness, and versatility of design and the availability of implementations for computers as well as mobile phones. The authors have also identified current and potential problems with the Bitcoin model and suggested modifications to the system to overcome these. It is a paradox of the Bitcoin system that can cause its intrinsic strength to become its greatest weakness; the fact that the supply of Bitcoins is limited could lead to a deflationary spiral. Also, Bitcoins have a high likelihood of being hoarded due to their appreciation potential. If circulation drops too low it can result in a loss of interest in the system referred to as ‘Bit Rot’. One antidote to this problem is developing a feedback system that controls the global mining rate based on the transaction volume statistics. All Bitcoins transactions are public knowledge, and what gives users the security that their Bitcoins will belong to them is the possession of an associated private key. Theft or forgery of these private keys is the equivalent of theft in this world. Malware attacks are one method through which these private keys are being stolen and the authors mention several solutions to this threat, such as threshold cryptography. Threshold cryptography only allows the currency to be used when a certain number of devices are collaborating. Although this is a good form of security, it is also often seen as an inconvenience. The ‘Super-wallet’ is an idea of a personal bank where most of the user’s bitcoins are stored. This is split across multiple computational devices. The user also carries a ‘sub-wallet’ through which small transactions can be made from their smartphones. Funds can be transferred from the super wallet to the sub-wallet in small amounts to keep them safe. Human failure can also result in the accidental loss of Bitcoins as happened in the case of Bitomat. The company lost nearly 200,000 dollars’ worth of bitcoins due to the loss of a private wallet file. Simple methods such as backups can help solve this problem. Pseudo-random keys can also be generated from a master key that never changes using a pseudo-random generator (PRG). Another method that can be combined with pseudo-random keys is the encryption of one's wallet through password protection. Offline single password encryption and online multiple password encryption can be used to boost up the security of one’s wallet. All of these security measures can be combined with a trusted path. These enable humans to input data and read encrypted data out of reach of malware devices. The authors go into depth in this article to understand why Bitcoin has become the success that it has. They also want to look into the future potential of Bitcoin as a currency for the world. Perhaps this is the biggest strength of the article as it discusses the feasibility of Bitcoin as an everyday currency. This is one of the earliest articles on the topic that go in depth into the workings of this currency and what might hold it back. The in-depth review of bitcoin as a currency and its inner workings as well as future potential are perhaps what set this article apart from others on the topic. The authors perform a comparative study on the subject in which they determine why Bitcoin has taken off, unlike other e-cash currencies in the past three decades. This study tells us more about the currency than we would ever have known ourselves. They list down factors that are influencing buyer behavior which really helps us understand the currency on a better level. Another strength of this article is section 3 which goes ‘Under the hood’ of bitcoin and discusses concepts such as spending, vetting, blocks, coin creation and minting. This section helps us understand different cogs in the Bitcoin system and how they work together to make the currency what it is. Perhaps the biggest strength of this article is that the authors analyze the strengths and weaknesses of Bitcoin by criticizing its design in order to pre-empt potential threats. They not only outline potential threats and weaknesses but also offer ways to overcome these by suggesting redesigns and improvements such as the fail-safe mixer protocol outlined in section 7. Their conclusion is that the Bitcoin could be an amazing decentralized currency if done right. In terms of weaknesses, there aren’t many when it comes to this article. I feel that the authors have done their due diligence in exploring this topic and supporting their conclusions with empirical as well as theoretical data.

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