Award Abstract # 1421689
TWC: Small: Addressing the challenges of cryptocurrencies: Security, anonymity, stability

NSF Org: CNS
Division Of Computer and Network Systems
Recipient: THE TRUSTEES OF PRINCETON UNIVERSITY
Initial Amendment Date: June 30, 2014
Latest Amendment Date: June 30, 2014
Award Number: 1421689
Award Instrument: Standard Grant
Program Manager: Shannon Beck
CNS
 Division Of Computer and Network Systems
CSE
 Directorate for Computer and Information Science and Engineering
Start Date: July 1, 2014
End Date: June 30, 2018 (Estimated)
Total Intended Award Amount: $500,000.00
Total Awarded Amount to Date: $500,000.00
Funds Obligated to Date: FY 2014 = $500,000.00
History of Investigator:
  • Arvind Narayanan (Principal Investigator)
Recipient Sponsored Research Office: Princeton University
1 NASSAU HALL
PRINCETON
NJ  US  08544-2001
(609)258-3090
Sponsor Congressional District: 12
Primary Place of Performance: Princeton University
NJ  US  08544-2020
Primary Place of Performance
Congressional District:
12
Unique Entity Identifier (UEI): NJ1YPQXQG7U5
Parent UEI:
NSF Program(s): Secure &Trustworthy Cyberspace
Primary Program Source: 01001415DB NSF RESEARCH & RELATED ACTIVIT
Program Reference Code(s): 7434, 7923
Program Element Code(s): 806000
Award Agency Code: 4900
Fund Agency Code: 4900
Assistance Listing Number(s): 47.070

ABSTRACT

Secure digital payments are essential for e-commerce and cybersecurity. Cryptocurrencies, which are virtual currencies designed using cryptographic principles, are well suited for digital payments but face several hurdles to adoption for legitimate e-commerce. The hurdles include (1) poor software security that has led to very high rates of theft and closures of services, (2) users may be deanonymized, negating the putative privacy benefits and (3) there are concerns over long-term stability, either due to inherent flaws in the mechanism used to incentivize participants or due to the ability of adversaries to subvert this mechanism.

This project designs and implements security and anonymity improvements for existing cryptocurrencies that are immediately and incrementally deployable, and develops a framework to analyze the behavior of participants of cryptocurrencies. This framework will be used both to understand and predict the behavior of the current system as well as to explore alternative, more resilient designs. The main challenge for research on cryptocurrencies is that these systems rely on an intricate interplay of three main components: cryptography, distributed systems, and incentive driven behavior. Accordingly, the project develops tools and techniques in all three categories and seek to find novel ways to unify and apply these tools in combination. Successful completion of the project will lead to a cryptocurrency that is robust against adversaries, paving the way for a secure, private, and stable payment system, which has long been a research goal in computer science.

PUBLICATIONS PRODUCED AS A RESULT OF THIS RESEARCH

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Gennaro, Rosario, Steven Goldfeder, and Arvind Narayanan. ""Threshold-optimal DSA/ECDSA signatures and an application to Bitcoin wallet security."" In International Conference on Applied Cryptography and Network Security. , 2016
Kalodner, Harry and Möser, Malte and Lee, Kevin and Goldfeder, Steven and Plattner, Martin and Chator, Alishah and Narayanan, Arvind "BlockSci: Design and applications of a blockchain analysis platform." Usenix Security Symposium , 2020 https://doi.org/ Citation Details
Malte Möser, Kyle Soska, Ethan Heilman, Kevin Lee, Henry Heffan, Shashvat Srivastava, Kyle Hogan, Jason Hennessey, Andrew Miller, Arvind Narayanan, Nicolas Christin "An Empirical Analysis of Traceability in the Monero Blockchain" Privacy Enhancing Technologies Symposium (PETS) , 2018
Miles Carlsten, Harry Kalodner, S. Matthew Weinberg, Arvind Narayanan. "On the instability of Bitcoin without the block reward" ACM Conference on Computer and Communications Security. , 2016
Steven Goldfeder, Harry Kalodner, Dillon Reisman, Arvind Narayanan. "When the cookie meets the blockchain: Privacy risks of web payments via cryptocurrencies" Privacy Enhancing Technologies Symposium (PETS) , 2018
Steven Goldfeder, Joseph Bonneau, Rosario Gennaro, Arvind Narayanan. "Escrow protocols for cryptocurrencies: How to buy physical goods using Bitcoin" Financial Cryptography and Data Security , 2017

PROJECT OUTCOMES REPORT

Disclaimer

This Project Outcomes Report for the General Public is displayed verbatim as submitted by the Principal Investigator (PI) for this award. Any opinions, findings, and conclusions or recommendations expressed in this Report are those of the PI and do not necessarily reflect the views of the National Science Foundation; NSF has not approved or endorsed its content.

Modern cryptocurrencies were introduced in 2008-2009. Initially a hobbyist community developed the technology, and research was scattered in posts on mailing lists, forums, and blogs, along with a small number of academic papers. In this project, we surveyed and unified the nascent research to produce a "systematization of knowledge" paper. This paper helped legitimize cryptocurrencies as a topic of academic research, set the research agenda, and showed the broader community that cryptocurrencies stood on a firm conceptual footing. To widely disseminate this knowledge, we also created a textbook and a Massive Open Online Course (MOOC). The textbook has been used in over 120 courses around the country and worldwide; the MOOC has had over 300,000 students to date.

In contrast to government-backed currencies, cryptocurrencies are regulated technologically. Thus, it is the responsibility of computer scientists and engineers to find and fix problems with cryptocurrencies. We studied the three  major risks faced by users of these systems: having one's financial activities exposed (privacy), theft of funds (security), and risks to the overall health of the system (stability). In terms of privacy, we showed how third-party web trackers can deanonymize users cryptocurrencies. We also showed how privacy weaknesses can be exploited by analysis of public blockchain data. We designed mitigations for these privacy vulnerabilities. Turning to security, a device lost or hacked means cryptocurrency irrevocably lost. To address this problem, we designed a threshold signature scheme, which allows splitting up a private key between devices in such a way that the key is safe even if some the devices are compromised. We also studied how an e-commerce platform can securely hold cryptocurrency payments in escrow when the goods are being shipped. Finally, cryptocurrency stability relies on an intricate alignment of individual incentives with the goals of the system. We showed that without protocol changes, cryptocurrency stability will unravel once the "block reward" becomes insignificant (it halves every four years), contradicting a widely held belief in the community. Our paper contains theoretical results that match up precisely with the results of simulation. We released our simulator as open-source software.

The project also contributed to public policy, regulation, and law enforcement around cryptocurrencies.

 


Last Modified: 02/11/2019
Modified by: Arvind Narayanan

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