The top 10 most influential cryptocurrency research papers of 2015

Four years ago, Reuben Grinberg published the first academic article on Bitcoin, “Bitcoin: An Innovative Alternative Digital Currency,” in a 2011 issue of the Hastings Journal of Technology and the Law.

Since then, the pace of Bitcoin research has accelerated, and it has also welcomed its own peer-reviewed journal: Ledger.

In this post, I present a list of the top 10 research papers published in 2015. This list is not a definitive (and mostly subjective) list, but it reviews the most influential cryptocurrency papers of the year, several of which have been recognized in academia but are little known in the Bitcoin community.

The list of papers spans engineering, science, and economics, and contributed to early cryptocurrency research.

10. SoK: Research perspectives and challenges of Bitcoin and cryptocurrency

Authors: Joseph Bonneau, Andrew Miller, Jeremy Clark, Arvind Narayanan, Joshua A. Kroll and Edward W Felten.

Given Bitcoin's cypherpunk roots, its scattered documentation and the lack of a formal specification, authors Bonneau, Miller, Clark, Narayanan, Kroll and Felten have undertaken the task of providing the first systematic exposition of Bitcoin.

Although the paper is in the form of a review article, it synthesizes a large amount of existing work, from academic sources spanning three decades, to IRC logs, online forum exchanges, and developer mailing lists.

The authors identify three components of Bitcoin’s design: (1) transactions and scripts, (2) consensus and mining, and (3) a peer-to-peer communication network.

This is a must-read paper for anyone who wants to study cryptocurrency.

9. Eclipse Attack on Bitcoin Peer-to-Peer Network

By: Ethan Heilman, Alison Kendler, Aviv Zohar and Sharon Goldberg

Security researchers have been eager to find new ways to attack the Bitcoin network since the authors of the “selfish mining” paper were widely praised in 2013.

On August 24, at the USENIX Security Symposium in Washington, authors Heilman, Kendler, Zohar and Goldberg unveiled an "eclipse attack" in which an attacker "is able to monopolize all incoming and outgoing connections to a victim, thereby isolating the victim from the rest of the network's peers."

An attacker could provide false information about the ledger state to deceive the victim, or redirect the victim’s mining power for ulterior motives.

8. Confidential Transactions

By Gregory Maxwell

The Bitcoin community is more liberal, so it is not surprising that community members desire Bitcoin financial privacy. Gregory Maxwell has extensive research in privacy-enhancing technologies.

The paper is the latest in a long line of cutting-edge research designed by Maxwell after he invented “coinjoin” in 2013. “Confidential Transactions” is a technique that allows users to hide the value of their payments while revealing (through novel cryptographic methods) enough information for miners to verify the total amount of coins in a transaction.

Implementing confidential transactions in the Bitcoin system requires major changes to the Bitcoin protocol. Currently, experiments with this technology are being conducted on Blockstream's sidechain.

7. Does management have an impact on pricing? Cross-national evidence from the Bitcoin market

By Robert Viglione

In this paper, doctoral student Robert Viglione uses statistics to prove the inverse relationship between economic freedom and Bitcoin price premium.

His methodology represents a potential market for updating economic freedom in real time, rather than annually as defined by experts. This could provide the data we need to run event studies.

It also shows that even in its early, volatile phase, Bitcoin is generating useful macro data.

6. Bitcoin in Islamic Banking and Finance

By Charles W Evans

Considering that Muslims make up about 25% of the world's population and Bitcoin is interest-free, Professor Charles Evans believes that there is great compatibility between hard currency supporters and Islamic finance, and the two communities can build a bridge of knowledge.

This paper expanded the influence of Bitcoin to a wider range, causing many Muslims around the world to become interested in Bitcoin.

5. Bitcoin-NG Scalable Blockchain Protocol

Authors: Ittay Eyal, Adem Efe Gencer, Emin Gun Sirer and Robbert van Renesse

Following up on their influential original “Selfish Mining” paper in 2013, Cornell University researchers Eyal, Gencer, Sirer and van Renesse have once again published influential research.

Bitcoin-NG is a radical scalability solution that uses “microblocks” and “keyblocks” to circumvent the trade-off between transaction throughput and latency of the Bitcoin peer-to-peer communication network.

In addition to using a large-scale Bitcoin network emulator to validate their proposal, the authors also proposed several new metrics such as consensus delay and mining power for quantifying the security and efficiency of blockchain protocols.

4. Digital Currency

Author: Bank for International Settlements, Committee on Payments and Market Infrastructures

In November, the BIS committee released a research report recognizing Bitcoin’s distributed ledger technology (blockchain) as a “real innovative element within the digital currency project.”

The report notes that blockchain ledgers may offer lower fees to end users than existing centralized protocols, while digital currencies such as Bitcoin may fill gaps in traditional payment services.

3. Should cryptocurrencies be included in the Central Bank of Barbados’ portfolio of international reserve assets?

By Winston Moore and Jeremy Stephen

Coming from former Barbados Central Bank economists Winston Moore and Jeremy Stephen, the paper concludes that it could be beneficial for small island nations to hold a small portion of Bitcoin as a reserve asset.

Proper portfolio allocation can both improve returns and increase resistance to speculative attacks.

The authors acknowledge that “digital currencies could become the dominant form of settlement of transactions” and that central banks will need to assess their potential impact.

The paper is significant because it reveals that the emerging world is waking up to Bitcoin as a useful store of value.

2. The Bitcoin Backbone Protocol

Authors: Juan A Garay, Aggelos Kiayias and Nikos Leonardos

With 24 papers citing the protocol, a testament to its influence, the Bitcoin Backbone Protocol provides the first “provably secure” model for consensus algorithms in cryptocurrencies.

The authors Garay, Kiayias and Leonardos extract and analyze the core of the Bitcoin protocol, formulating two new properties of analysis, which they call common prefix and chain quality.

The shared prefix property concerns the ability of the network to converge on a single history, while the chain quality property describes the extent to which a malicious entity can gain an advantage beyond its mining hashrate.

1. Bitcoin Lightning Network: Scalable Off-Chain Instant Payments

By Joseph Poon and Thaddeus Dryja

In what was arguably the most influential paper of 2015, Poon and Dryja presented their invention: the Bitcoin Lightning Network, which allows any number of participants to transact instantly via two-party payment channels.

Lightning Network transactions are also normal Bitcoin transactions, but, except in rare cases, these transactions do not actually occur on the Bitcoin blockchain. Because a large amount of transaction data is stored privately, Lightning Network transactions are more economical than on-chain Bitcoin transactions, making the Bitcoin network affordable for small payments.

Poon and Dryja’s vision may soon come to fruition, as Blockstream is working hard to advance the Lightning Network, making the protocol possible.