SmartExchange: Decentralised Trustless Cryptocurrency Exchange

  • Filip AdamikEmail author
  • Sokol Kosta
Conference paper
Part of the Lecture Notes in Business Information Processing book series (LNBIP, volume 339)


Trading cryptocurrency on current digital exchange platforms is a trust-based process, where the parties involved in the exchange have to fully trust the service provider. As it has been proven several times, this could lead to funds being stolen, either due to malicious service providers that simply disappear or due to hacks that these platforms might suffer. In this work, we propose and develop a decentralised exchange solution based on smart contracts running on the Ethereum network that is open, verifiable, and does not require trust. The platform enables two parties to trade different currencies, limited to Ethereum and Bitcoin in the current status of the system. A smart contract, deployed on the Ethereum blockchain, functions as an escrow, which holds a user’s funds until a verified transaction has been made by the other party. To make the smart contract able to detect a Bitcoin transfer, we implement our solution by utilising an oracle. We define the system architecture and implement a working platform, which we test in a model scenario, successfully exchanging Bitcoin and Ether on the blockchain test networks. We conclude the paper identifying possible challenges and threats to such a system.


Cryptocurrency Distributed Exchange Blockchain Smart contract Oracle Ethereum Bitcoin 


  1. 1.
    Chaum, D.: Blind signatures for untraceable payments. In: Chaum, D., Rivest, R.L., Sherman, A.T. (eds.) Advances in Cryptology, pp. 199–203. Springer, Boston (1983). Scholar
  2. 2.
    Popper, N., Abrams, R.: Apparent Theft at Mt. Gox Shakes Bitcoin World - The New York Times, February 2014Google Scholar
  3. 3.
    McIntosh, R.: How to Choose Crypto Exchanges, Store Money and Avoid Scams. Finance Magnates, January 2018Google Scholar
  4. 4.
    Chen, L., Xu, L., Gao, Z., Shah, N., Lu, Y., Shi, W.: Smart contract execution - the (+-)-biased ballot problem. In: Okamoto, Y., Tokuyama, T. (eds.) 28th International Symposium on Algorithms and Computation (ISAAC 2017), vol. 92, pp. 21:1–21:12, Dagstuhl, Germany, Schloss Dagstuhl - Leibniz-Zentrum fuer Informatik (2017)Google Scholar
  5. 5.
    Nakamoto, S.: Bitcoin: A Peer-to-Peer Electronic Cash SystemGoogle Scholar
  6. 6.
    Hackett, R.: J.P. Morgan Chase Is Building an Ethereum-Based Blockchain: Here’s Why (2016)Google Scholar
  7. 7.
    Swan, M.: Blockchain: Blueprint for a New Economy, 1st edn. O’Reilly Media Incorporated, Sebastopol (2015)Google Scholar
  8. 8.
    Michael, N., Gomber, P., Oliver, H., Dirk, S.: Blockchain. Bus. Inf. Syst. Eng. 59(3), 183–187 (2017)CrossRefGoogle Scholar
  9. 9.
    Buterin, V.: A next-generation smart contract and decentralized application platform (2014)Google Scholar
  10. 10.
    Delmolino, K., Arnett, M., Kosba, A., Miller, A., Shi, E.: Step by step towards creating a safe smart contract: lessons and insights from a cryptocurrency lab. In: Brenner, M., et al. (eds.) Financial Cryptography and Data Security, pp. 79–94. Springer, Heidelberg (2016). Scholar
  11. 11.
    Mik, E.: Smart contracts: terminology, technical limitations and real world complexity. Law Innov. Technol. 9(2), 269–300 (2017)CrossRefGoogle Scholar
  12. 12.
    Patrick, M., Shahandashti, S.F., Feng, H.: A smart contract for boardroom voting with maximum voter privacy. In: Kiayias, A. (ed.) Financial Cryptography and Data Security, pp. 357–375. Springer, Cham (2017). Scholar
  13. 13.
    Dannen, C.: Introducing Ethereum and Solidity. Apress, Berkeley (2017)CrossRefGoogle Scholar
  14. 14.
    Mansfield-Devine, S.: Beyond Bitcoin: using blockchain technology to provide assurance in the commercial world. Comput. Fraud Secur. 2017(5), 14–18 (2017)CrossRefGoogle Scholar
  15. 15.
    Ying, W., Jia, S., Du, W.: Digital enablement of blockchain: evidence from HNA group. Int. J. Inf. Manage. 39, 1–4 (2018)CrossRefGoogle Scholar
  16. 16.
    Li, X., Jiang, P., Chen, T., Luo, X., Wen, Q.: A survey on the security of blockchain systems. Future Generation Computer Systems (2017)Google Scholar
  17. 17.
    Moore, T., Christin, N.: Beware the middleman: empirical analysis of bitcoin-exchange risk. In: Sadeghi, A.R. (ed.) Financial Cryptography and Data Security, pp. 25–33. Springer, Heidelberg (2013). Scholar
  18. 18.
    Hallgren, J., Hallgren, M., Fisher, S., Larsen, N., Hautop, J., Ross, O.: Hallex: a trust-less exchange system for digital assets. SSRN Electr. J. (2017)Google Scholar
  19. 19.
    Buterin, V.: Chain interoperability (2016)Google Scholar
  20. 20.
    Poon, J., Dryja, T.: The Bitcoin lightning network: scalable off-chain instant payments. Draft version 0.5 9, 14 (2016)Google Scholar
  21. 21.
    Weldon, J.: Building an “Oracle” for an Ethereum contract (2016)Google Scholar
  22. 22.
    Oraclize documentation (2018)Google Scholar
  23. 23.
    Dourlens, J.: Oracles: bringing data to the blockchain (2017)Google Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.CMIAalborg University CopenhagenCopenhagenDenmark

Personalised recommendations