A Comprehensive Analysis on Security and Privacy Issues of Digital Currency: Preliminary Evidence From Nigeria

A Comprehensive Analysis on Security and Privacy Issues of Digital Currency Preliminary Evidence From Nigeria

Abstract on A Comprehensive Analysis on Security and Privacy Issues of Digital Currency: Preliminary Evidence From Nigeria

A Comprehensive analysis on security and privacy issues of digital currency: preliminary evidence from Nigeria

Bitcoin is the most successful cryptocurrency to date. Given the amount of money at stake, Bitcoin is an obvious target for adversaries. Indeed, numerous attacks have been described targeting different aspects of the system, including double spending [2], netsplit [3], transaction malleability [4], networking attacks [5], or attacks targeting mining [6] [7] [8] and mining pools [9]. In [10], authors claim that “Bitcoin works in practice and not in theory” due to the lack of security research to find out theoretical foundation for Bitcoin protocols. Until today, the incomplete existence of a robust theoretical base forces the security research community for dismissing the use of bitcoins. Existing security solutions for Bitcoin lacks the required measures that could ensure an adequate level of security for its users. We believe that security solutions should cover all the major protocols running critical functions in Bitcoin, such as blockchain, consensus, key management, and networking protocols.

In this paper, we present a systematic survey that covers the security and privacy aspects of Bitcoin. We start by presenting an overview of the Bitcoin protocol and its major components along with their functionality and interactions within the system. We review the existing vulnerabilities in Bitcoin and its underlying major technologies such as blockchain and PoW based consensus protocol. These vulnerabilities lead to the execution of various security threats to the normal functionality of Bitcoin. We then discuss the feasibility and robustness of the state-of-theart security solutions. Additionally, we present current privacy and anonymity considerations in Bitcoin and discuss the privacyrelated threats to Bitcoin users along with the analysis of the existing privacy-preserving solutions. Finally, we summarize the critical open challenges and suggest directions for future research towards provisioning stringent security and privacy techniques for Bitcoin.

Contents

ABSTRACT. 2

CHAPTER ONE. 2

INTRODUCTION.. 2

BACKGROUND OF THE STUDY. 2

STATEMENT OF THE PROBLEM.. 4

1.3 RESEARCH OBJECTIVES. 4

1.4 RESEARCH QUESTIONS. 4

1.5 SIGNIFICANCE OF THE STUDY. 5

1.6 SCOPE OF THE STUDY. 5

1.7 LIMITATIONS OF THE STUDY. 5

CHAPTER TWO.. 6

LITERATURE REVIEW… 6

2.1 OVERVIEW OF BITCOIN.. 6

2.2 Transaction and Proof-of-Work. 7

2.3 Blockchain and Mining. 11

2.4 Consensus Protocol 15

2.5 Networking Infrastructure. 17

2.6 Benefits and Challenges. 19

2.7 SECURITY: ATTACKS ON BITCOIN SYSTEMS. 22

2.8 Client-side Security Threats. 28

2.9 Bitcoin Network Attacks. 30

2.10 Practical attack incidents on Bitcoin. 36

2.11 SECURITY: COUNTERMEASURES FOR BITCOIN ATTACKS. 38

CHAPTER THREE. 59

Methodology. 59

3.1        Research Design. 59

3.2     The Study Area. 60

3.3    Population of the Study. 60

3.4        Sample Size and Sampling Techniques. 60

3.5 Sources of Data Collection. 60

3.6 Instrument for Data Collection. 60

3.7        Validity of Research Instrument 60

3.8        Reliability of the Instrument 61

3.9        Administration of the Instrument 61

3.10 Methods of Data Analysis. 61

References. 62

CHAPTER FOUR. 62

DATA ANALYSIS AND INTERPRETATION.. 62

Preamble. 62

4.2 Demographic Characteristics of Respondents. 62

4.3 TABLES BASED ON RESEARCH QUESTIONS. 64

4.4 Result and Discussions. 65

CHAPTER FIVE. 66

SUMMARY, CONCLUSION AND RECOMMENDATIONS. 66

5.1        Preamble. 66

Summary. 66

Conclusion. 67

Recommendations. 68

REFERENCES. 68

Appendix 1. 78