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Towards Risk Scoring of Bitcoin Transactions

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Financial Cryptography and Data Security (FC 2014)

Part of the book series: Lecture Notes in Computer Science ((LNSC,volume 8438))

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Abstract

If Bitcoin becomes the prevalent payment system on the Internet, crime fighters will join forces with regulators and enforce blacklisting of transaction prefixes at the parties who offer real products and services in exchange for bitcoin. Blacklisted bitcoins will be hard to spend and therefore less liquid and less valuable. This requires every recipient of Bitcoin payments not only to check all incoming transactions for possible blacklistings, but also to assess the risk of a transaction being blacklisted in the future. We elaborate this scenario, specify a risk model, devise a prediction approach using public knowledge, and present preliminary results using data from selected known thefts. We discuss the implications on markets where bitcoins are traded and critically revisit Bitcoin’s ability to serve as a unit of account.

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Notes

  1. 1.

    Convention: We capitalize Bitcoin when referring to the name of the system and use lower case for the monetary unit (like dollar, euro). BTC is shorthand for the unit.

  2. 2.

    Intentionally “colored” coins have been proposed to deal with virtual goods of different value using Bitcoin as an infrastructure [29].

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Authors and Affiliations

  1. Department of Information Systems, University of Münster, Münster, Germany

    Malte Möser, Rainer Böhme & Dominic Breuker

Authors
  1. Malte Möser
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  2. Rainer Böhme
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  3. Dominic Breuker
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Corresponding author

Correspondence to Malte Möser .

Editor information

Editors and Affiliations

  1. University of Münster, Münster, Germany

    Rainer Böhme

  2. University of Hannover, Hannover, Niedersachsen, Germany

    Michael Brenner

  3. Southern Methodist University CS and Engineering Department, Dallas, Texas, USA

    Tyler Moore

  4. University of Bonn, Bonn, Germany

    Matthew Smith

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Möser, M., Böhme, R., Breuker, D. (2014). Towards Risk Scoring of Bitcoin Transactions. In: Böhme, R., Brenner, M., Moore, T., Smith, M. (eds) Financial Cryptography and Data Security. FC 2014. Lecture Notes in Computer Science(), vol 8438. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-44774-1_2

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  • DOI: https://doi.org/10.1007/978-3-662-44774-1_2

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  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-662-44773-4

  • Online ISBN: 978-3-662-44774-1

  • eBook Packages: Computer ScienceComputer Science (R0)

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