Skip to main content
Book cover

International Conference on Business Information Systems

BIS 2018: Business Information Systems Workshops pp 356–367Cite as

SmartExchange: Decentralised Trustless Cryptocurrency Exchange

Part of the Lecture Notes in Business Information Processing book series (LNBIP,volume 339)

Abstract

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.

Keywords

  • Cryptocurrency
  • Distributed
  • Exchange
  • Blockchain
  • Smart contract
  • Oracle
  • Ethereum
  • Bitcoin

This is a preview of subscription content, access via your institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • DOI: 10.1007/978-3-030-04849-5_32
  • Chapter length: 12 pages
  • Instant PDF download
  • Readable on all devices
  • Own it forever
  • Exclusive offer for individuals only
  • Tax calculation will be finalised during checkout
eBook
USD   84.99
Price excludes VAT (USA)
  • ISBN: 978-3-030-04849-5
  • Instant PDF download
  • Readable on all devices
  • Own it forever
  • Exclusive offer for individuals only
  • Tax calculation will be finalised during checkout
Softcover Book
USD   109.99
Price excludes VAT (USA)
Learn about institutional subscriptions
Fig. 1.
Fig. 2.
Fig. 3.
Fig. 4.

Notes

  1. 1.

    www.bitfinex.com.

  2. 2.

    www.coinbase.com.

  3. 3.

    www.bitstamp.com.

  4. 4.

    https://angel.co/0xproject/, https://idex.market/.

  5. 5.

    http://btcrelay.org/.

  6. 6.

    https://www.investopedia.com/terms/e/escrow.asp.

  7. 7.

    http://www.oraclize.it (https://github.com/oraclize).

  8. 8.

    https://remix.ethereum.org/.

  9. 9.

    https://github.com/web3j/web3j.

  10. 10.

    https://infura.io/.

  11. 11.

    kETH is used to indicate Kovan Ether.

  12. 12.

    https://coinmarketcap.com/.

References

  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). https://doi.org/10.1007/978-1-4757-0602-4_18

    CrossRef  Google Scholar 

  2. Popper, N., Abrams, R.: Apparent Theft at Mt. Gox Shakes Bitcoin World - The New York Times, February 2014

    Google Scholar 

  3. McIntosh, R.: How to Choose Crypto Exchanges, Store Money and Avoid Scams. Finance Magnates, January 2018

    Google Scholar 

  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. Nakamoto, S.: Bitcoin: A Peer-to-Peer Electronic Cash System

    Google Scholar 

  6. Hackett, R.: J.P. Morgan Chase Is Building an Ethereum-Based Blockchain: Here’s Why (2016)

    Google Scholar 

  7. Swan, M.: Blockchain: Blueprint for a New Economy, 1st edn. O’Reilly Media Incorporated, Sebastopol (2015)

    Google Scholar 

  8. Michael, N., Gomber, P., Oliver, H., Dirk, S.: Blockchain. Bus. Inf. Syst. Eng. 59(3), 183–187 (2017)

    CrossRef  Google Scholar 

  9. Buterin, V.: A next-generation smart contract and decentralized application platform (2014)

    Google Scholar 

  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). https://doi.org/10.1007/978-3-319-70278-0

    CrossRef  Google Scholar 

  11. Mik, E.: Smart contracts: terminology, technical limitations and real world complexity. Law Innov. Technol. 9(2), 269–300 (2017)

    CrossRef  Google Scholar 

  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). https://doi.org/10.1007/978-3-319-70972-7_20

    CrossRef  Google Scholar 

  13. Dannen, C.: Introducing Ethereum and Solidity. Apress, Berkeley (2017)

    CrossRef  Google Scholar 

  14. Mansfield-Devine, S.: Beyond Bitcoin: using blockchain technology to provide assurance in the commercial world. Comput. Fraud Secur. 2017(5), 14–18 (2017)

    CrossRef  Google Scholar 

  15. Ying, W., Jia, S., Du, W.: Digital enablement of blockchain: evidence from HNA group. Int. J. Inf. Manage. 39, 1–4 (2018)

    CrossRef  Google Scholar 

  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. 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). https://doi.org/10.1007/978-3-319-70278-0

    CrossRef  Google Scholar 

  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. Buterin, V.: Chain interoperability (2016)

    Google Scholar 

  20. Poon, J., Dryja, T.: The Bitcoin lightning network: scalable off-chain instant payments. Draft version 0.5 9, 14 (2016)

    Google Scholar 

  21. Weldon, J.: Building an “Oracle” for an Ethereum contract (2016)

    Google Scholar 

  22. Oraclize documentation (2018)

    Google Scholar 

  23. Dourlens, J.: Oracles: bringing data to the blockchain (2017)

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. CMI, Aalborg University Copenhagen, Copenhagen, Denmark

    Filip Adamik & Sokol Kosta

Authors
  1. Filip Adamik
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Sokol Kosta
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Filip Adamik .

Editor information

Editors and Affiliations

  1. Poznań University of Economics and Business, Poznań, Poland

    Witold Abramowicz

  2. Fraunhofer FOKUS, Berlin, Berlin, Germany

    Dr. Adrian Paschke

Rights and permissions

Reprints and Permissions

Copyright information

© 2019 Springer Nature Switzerland AG

About this paper

Verify currency and authenticity via CrossMark

Cite this paper

Adamik, F., Kosta, S. (2019). SmartExchange: Decentralised Trustless Cryptocurrency Exchange. In: Abramowicz, W., Paschke, A. (eds) Business Information Systems Workshops. BIS 2018. Lecture Notes in Business Information Processing, vol 339. Springer, Cham. https://doi.org/10.1007/978-3-030-04849-5_32

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-04849-5_32

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-04848-8

  • Online ISBN: 978-3-030-04849-5

  • eBook Packages: Computer ScienceComputer Science (R0)