Visualizing Bitcoin Using Big Data: Mempool Visualization, Visualization, Peer Visualization, Attack Visual Analysis, High-Resolution Visualization of Bitcoin Systems, Effectiveness

BITCOIN TRANSACTIONS

The advancement of Bitcoin is praised on recent years, also bitcoin referred to as an innovative kind of digital currency. The escalating Bitcoin rate and unstable market in the recent years have prompted substantial awareness from both the financial institutions and technology sectors, making this unfolding payment model one of the most persuasive issues recently. The flourishing of Bitcoin has also organized the evolution of several other cryptocurrencies, including Ethereum, Litecoin, and so on.

Bitcoin, also referred to as a virtual currency, is deposited and interchanged only in digital format. Compared to the conventional form of e-cash used, Bitcoin does not depend on a reliable organization like a government banking sector. On the other hand, it is structured based on an open social mechanism of confidence and on motivated alliance. With the inception of Bitcoin known only to a smaller population, Bitcoin has received significant acceptance as it has found to be useful anywhere, provided it has an internet connection. Due to this, several merchants and business establishments have started accepting the payment made by the customer via Bitcoins. Besides, various stock and trading centers now permit trading Bitcoins when compared to the conventional form of currency.

In addition, Bitcoin is found to be translucent and privacy. The property of translucent is said to be established by following certain level of open standards, i.e., by documenting all transactions via a public ledger. Also, the Bitcoin transaction integrity is in turn assisted by extensively believed cryptographic mechanisms. On the other hand, privacy is said to be attained by linking landlords of Bitcoins with nontransparent cryptographic methods that hide the authentic identities backing them.

Bitcoin and Visualization

Acquiring awareness into the opaque datasets produced by contemporary computing and sensing arrangements is still predominantly executed by humans in ownership of domain awareness and requisite mathematical and statistical techniques. Visualization has also been shown to be an efficient means in obtaining awareness into the accessible data. A system of interest that produces huge amount of correlated data and lacks significant organized visualization tools is that of Bitcoin. This Bitcoin cryptocurrency form consists of an approval-less public database to which any user holding a tokenized pseudonymous identity has the possibility to write the protocol-conformant data. Because of the identity is complicated through the utilization of tokenized addresses, the possibility to recognize and segregate malicious behavioral patterns pertaining to the data has resulted in the usage of several financial institutions and contract developers. Managing an inceptive graphical inspection is a competent initial step in the data scrutiny system to explore the systematic characteristics of such reciprocated abnormal behaviors.

Fundamentals of Bitcoin

In the recent few years, certain new types of payment nodes have gained an increased attention in various communities for exchanging money. Those payments most are specifically constructed on the basis of digital platforms. The transactions have made the customers to access their monetary benefits more flexibly and all over the world in a very swift manner. Some of the fundamentals of Bitcoin are given in Figure 7.1.

As shown in Figure 7.1, to find out why Bitcoin act as an unspecified payment mode, it is highly required to have a clearly understanding of the protocol design. The format mechanism of Bitcoin is in the form of a network that arrives

at the stature of consensus without possessing any third-party governing body. The entire Bitcoin network is said to be consist of nodes that are closely connected in a peer to peer network. All the nodes engaging the network share a blueprint of a data structure called the blockchain that holds a record of entire transactions in the network. The details of the Bitcoin fundamentals are provided in the following sections.

Blockchain

A blockchain [1] refers to a time stamped series of rigid record of data that is controlled by a group of computers not possessed by any single entity or computer. Each of these data blocks are said to be secured and bound to each other via cryptographic techniques.

Proof of Work

The main fundamentals and aspects of Bitcoin is the distributed trustless census and hence the elimination of double spending. Hence, during the creation of each block, it must be ensured if a stipulated time was spent into its creation, fortifying that double spending has been made and hence changes to the already created blocks are highly impossible. This is said to be ensured via proof-of-work. In blockchain, this proof-of-work is utilized to ensure transactions and generate new blocks to the existing chain. With proof-of-work, data miners compete against each other to ensure that the entire transactions is said to be completed in a precise manner and hence is said to be rewarded. Here, in this type of network, the users share digital tokens with each other.

With the assistance of a decentralized ledger, all the transactions are said to be collected in the form of blocks. However, utmost care and responsibility are said to be considered while designing the transactions and arranging the blocks accordingly. The utmost care is said to be taken care by the special nodes called the miners and hence the entire process is referred to as the mining. The working policy and methodology involves a complex mathematical puzzle to be solved and a probability to provide the solution precisely and concisely. With this objective, several cryptographic hashes are utilized in the current years possessing random nature and even minor changes that in turn produces completely different hash to be identified by abnormal persons. Figure 7.2 given below shows the schematic view of proof-of-work.

The proof-of-work scheme is designed on the basis of including a nonce to the existing hash value of the succeeding and prevailing block hashes, followed by which yet another hash is said to be produced. This is said to be either lesser or greater than the threshold. Here, the threshold is used to determine whether the proof of work was solved or not. The threshold is said to be designed in such a manner that it is neither found too complex nor found to be very simple. In certain cases, two or more nodes are said to satisfy the proof-of-work for a single and similar block at the same time. This would in turn results in the two branches of blockchain [13]. In this cases, upon obtaining of solution of another block, this new and updated nodes switch to the stronger branch, followed by which the other blocks are said to be eliminated, that again results in a valid single branch.

FIGURE 7.2 Schematic view of proof-of-work.

Consensus Rules

The nodes in the Bitcoin network is said to validate a block. It also includes all transactions so that durability and privacy of the blockchain is said to be ensured. In specific, the set of rules are said to be consensus rules and these rules are said to be fulfilled by a block. Certain consensus rules include, mining reward, ensuring format of data, double-spending of transaction inputs and signature correctness, and so on.

Transactions

A transaction involves the probability for a user to acquire or spend money. Certain basic components of transactions are listed in Figure 7.3.

As shown in the figure, the constituent of transaction includes four basic variants through which the entire transaction is said to be processed. They are input, output, version number, and lock time. Every transaction is said to possess several inputs

FIGURE 7.4 Transaction types.

and outputs. Each output is denoted as an unspent transaction output (UTXO). Six different transaction types are said to exist (see Figure 7.4).

The transaction types are said to be of six different types. They are Pay-to- Public-Key-Hash (P2PKH), Pay-to-Script-Hash (P2SH), Pay-to-Address (P2A), Multisignature Transaction, OP-RETURN_Bitcoin, and Non-standard Transactions. Each of the six different types of transactions is described in the following sections.

Pay-to-Public-Key-Hash (P2PKH)

One of the most preliminary forms of performing a transaction in a Bitcoin network is pay-to-public-key-hash. Transactions that are said to be paid to a Bitcoin address consist of a P2PKH scripts. The scripts are said to be resolved by sending the public key and a digital signature. Both this public key and digital signature are said to be created by the corresponding private key.

Pay-to-Script-Hash (P2SH)

The pay-to-script-hash permits all transactions to be sent to a script hash. The address here starts with 3 instead of a public hash key starting with 1. In order to send the Bitcoins via P2SH, the receiver of the Bitcoin must give a script that should match with the script of the hash value. In addition the data should make the script evaluate to true. Besides, with the usage of P2SH, the Bitcoins that are sent to an address is said to be of a secured form in several manners without the need of how the mechanism is said to be secured.

Pay-to-Address (P2A)

The pay-to-address involves the address of the Bitcoin receipt to whom the digital payment via digital cryptocurrency is said to be made.

Multisignature Transaction

Multisignature transactions—also referred to as the multisig—requires more than one key for successful authorization of a Bitcoin transaction. The purpose of using this multisignature transaction is to split the responsibility for holding of the Bitcoins.

The conventional type of transactions usually holds only single-signature transactions. This is because of the reason that transfers here only necessitates one or single signature from the owner with the corresponding Bitcoin address. Despite, singlesignature transactions the Bitcoin also supports complex transactions that usually necessitate the signatures of several users or people prior to the transferring of the funds. In that cases the multisignature transactions are used.

OP_RETURN

In order to perform validation, validation scripts are used in Bitcoin transaction. In turn, the validation scripts are said to be selected from a different palette of predefined functions. This is because of the security reasons only certain functions are allowed to be performed in conventional transaction types. This function is referred to as OP_RETURN.

Non-standard Transactions

When compared to standard transactions, non-standard transactions as the name implies are first non-standard in nature. Hence, these non-standard transactions are not said to be permitted in the mempool of default-configured nodes. Due to this, these transactions are not said to be transmitted or relayed via the Bitcoin network. In other words, whenever, a data miner looks into the non-standard transactions, only upon the successful pass of validity check, it is transferred to the next stage. Hence, as non-standard transactions are said to be made, they are said to be submitted only to the miner, resulting in systemic inefficiency.

Core Concepts in Bitcoin

Four key concepts are involved in Bitcoin. The four key concepts are given in the Figure 7.5.

The detailed description of the four core concepts in Bitcoin are disintermediated, distributed, decentralized and trustless nature and are described in the following sections.

Disintermediated

Whenever, monetary transactions have to be performed between users over internet, there arises a requirement of third party like banks in the banking sectors that manage all the financial transactions of the users. But in case of Bitcoin, transactions are said to be performed in a direct manner, without the aid of the third party over the internet. This type of transaction is said to be taken place in the Bitcoin network. This Bitcoin network, on the other hand and when compared to the third party, does the process of confirmation and verification of transfer of monetary transactions between two users. This concept is referred to as the disintermediated. Besides, the disintermediated refers to the act of removal of the middleman. This disintermei- dated principle remains the core elements that make blockhain valuable.

Distributed

The second core concept related to Bitcoin is that the entire Bitcoin network executes on a network of thousands of computers distributed in nature that shares the work of each other. So, rather than possessing a single centralized computer that handles the entire workload, the work is said to be distributed between multiple computers. Besides, the distributed network is said to be genuine as there is no single point of negligence. Therefore, the work is said to be dispensed covering thousands of computers that are executing and sharing the workload.

Decentralized

The third core concept in Bitcoin is the decentralized nature. In other words, it refers to that there remains no intermediate power, no intermediate data repository and no middle management that studies what Bitcoin does. Hence, there remains no intermediate point of failure.

Trustless

Finally, trustless remains the fourth core concept behind Bitcoin. This is because that it does not require a third-party. In other words, no bank is said to exist, instead the entire process is said to be performed by distributed trustless consensus. The consensus here refers to that all the nodes agree that a transaction has said to take place [27].

Challenges for Bitcoin and Cryptocurrencies

Blockchain, Bitcoin, and cryptocurrencies are the talk of the town in recent days. There are numerous of disputes as well as about the future of Bitcoin and cryptocurrencies. Some research persons judge that the coming of Bitcoin technique is very doubtful. Some business analysts have predicted that Bitcoin is the next comprehensive digital currency. It is anticipated to bring insurgence in the financial system. On the other hand, there are several disadvantages that could eventually result in its downfall. Some of the challenges for Bitcoin and cryptocurrencies are:

• • Volatility
• • Ease of utilization
• • Universal acceptance
• • Prospective for theft

Volatility

Bitcoin has been strangely volatile since its establishment. This nature has made Bitcoin exceptionally accepted between speculators who purchase anticipating the price will pursue to increase, but it isn’t serving to fire Bitcoin’s vogue as a currency.

Ease of Utilization

To be honest, it has acquired much easier to purchase, market, and utilize Bitcoin over the formerly several years. But it still isn’t user-friendly enough to motivate conventional application. For example, if a person wants to purchase Bitcoin, he or she has to open an account at a Bitcoin exchange, associate a checking account and in several cases delay several days for the transaction to be precise.

Universal Acceptance

There are several dealers, specifically online, via which customers pay for transactions in Bitcoin. However, the digital currency still isn’t anyplace close to being universally accepted.

Prospective for Theft

Security estimates survive that make Bitcoin practically unmanageable to theft. However, taking edge of them necessitates a composite comprehension of how Bitcoin works and hence, would necessitate appreciably more endeavor on the user side. Despite, with online Bitcoin wallets, there’s always certain level of possibility that the currency could be theft [18].