2016 may have been a big year for blockchain, but there were failed ideas, too. DeRose lists eight he thinks won’t carry over to the new year.
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A group of researchers published a paper to help the US State Public Utilities Commissions (PUC) establish an inexpensive framework that enables them to create a unique system for rewarding producers of renewable energy via “Renewable Energy Credits” REC in the form of a cryptocurrency released on Ethereum’s blockchain. The standards proposed by the researchers reward Renewable Energy Producers QP with REC that is equal to the amount of electrical energy produced from renewable sources including solar, geothermal and wind.
The Renewable Portfolio Standards RPS regulate the system that distributes REC and in many instances, have been described as lacking flexibility, overregulated and imposing inappropriately high transactional fees. The model proposed by the researchers aims at solving these issues via converting REC to a new cryptocurrency that would utilize Ethereum’s blockchain.
The Framework For Issuing Renewable Energy Credits REC as a Cryptocurrency:
The Ethereum platform has an innate object based script known as “Solidity” that can be utilized to issue a new cryptocurrency via a virtual wallet application. It is surprisingly simple to issue a new cryptocurrency via only copying the code from http://ift.tt/2iR9saN and then paste it to the wallet. The new identifiers will then automatically point to the address corresponding to the wallet.
Once a smart contract is deployed, a prompt window will calculate the amount of Ether required to deploy this contract according to the size of data it holds and the target speed for execution of the transaction. Once the amount of ether is determined, the smart contract will be sent to miners in order to develop a consensus and the ether reward of the mining process will be delivered to the address of the miner who processed the block containing the transaction. The issued contract will then enable the address that was initially associated with the executing wallet to send its newly issued cryptocurrency to any other address across the ethereum blockchain.
This model can be utilized by the PUC to convert REC to a cryptocurrency (crypto-REC) which could then be sent to the addresses of the renewable energy producer QP who can then transfer it to a cryptocurrency exchange to trade it, hedge it or exchange it to Fiat money. The PUC can buy back the crypto-REC it distributed or it can mint new coins to meet demand.
When the model fully develops, the crypto-REC can be set to be automatically minted and sent to the QP whenever the electrical energy they produce enters the power grid. This will consequently minimize the regulatory burden imposed by the PUC, but the PUC will still possess the ability to freeze accounts of bad actors e.g. those who attempt to execute fraudulent transactions.
Similar Models For Selling Renewable Energy Via Ethereum’s Blockchain:
For the past year or so, two New York residents from Brooklyn, have been already utilizing Ethereum’s blockchain to sale electrical energy they produce from solar energy at the full wholesale premium.
On the other hand, a technology company known as Accenture, is presently working on the development of a similar blockchain based project, known as “Smart plugs”, which can research through the prices of renewable energy from various suppliers and plug to the least expensive ones.
A German power company, named RWE, has partnered with a company to accept Ethereum payments from consumers who charge their electric vehicles.
The researchers see that PUC can follow the model of these companies and utilize ethereum’s blockchain as an inexpensive means for distributing REC to producers of renewable energy. Furthermore, when the model is fully functional, crypto-REC can be minted automatically to reward producers of renewable energy. The crypt-REC will comprise a proof of purchase and will be fully tradable and exchangeable to Fiat money on various cryptocurrency exchanges.
A group of researchers proposed a model to help the US Public Utilities Commission PUC incentivize producers of renewable energy via a releasing a new cryptocurrency on ethereum’s blockchain. The researchers are proposing a model that somehow resembles that of RWE, the German power company. The model is predicted to lessen the control imposed by the PUC on the renewable energy market and to markedly decrease the transactional fees that are in action by the present system.
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Counterfeiting a digital signature on bitcoin’s blockchain is a significantly hard task to execute successfully in terms of processing power. Accordingly, it is almost impossible to change a bitcoin transaction that has been already been signed. Nevertheless, it is still possible to alter the state of a valid transaction via a technique known as “double spend attack” that requires enormous processing power.
Here are the elements of a successful double spend attack:
1- The person performing the double spend attack A seeks a product or a service from another person B
2- A will create two bitcoin transactions; one that include payments for the product or service he seeks from B and the other pays the same amount to himself/herself.
3- A will broadcast the “A to B” transaction and then start secretly mining the block that includes the “A to A” payment. Once he/she successfully mines this block, further blocks will be added to it.
4- B will give the service or product to A, on seeing the transaction on the public ledger, whether or not the transaction was confirmed, if he/she doesn’t wait for the confirmation to send the products.
5- A can be lucky and the attack succeeds , if the fraudulent branch grows longer than the branch that includes the valid transaction when the nodes set up by the attackers broadcast all newly formed blocks to the new branch and all other nodes on the network agree on considering the valid branch the one that includes the fraudulent transaction.
Figure 1: Elements of a Successful Double Spend Attack
Two Classic Double Spend Attack Models:
Before delving into the new models, we will shortly outline the basic elements of the classic attack models. There were 2 double spend attack models proposed by S. Nakamoto and M.Rosenfeld. To better understand the models, we shall set the following parameters:
– Quantity q ∈ [0,1] represents the probability of success of attackers’ nodes to mine a block before the honest nodes given that they both started mining at the same time.
– Quantity K ∈ N represents a threshold of the number of confirmations needed to validate transactions belonging to a certain block.
– Quantity T ∈ R>0 represents the time in seconds needed by the mining nodes, both the attacker’s and the honest ones, to successfully mine a block.
– Also, we will use an N subscript to point out functions used exclusively in S. Nakamoto’s model and an R subscript to point out functions used exclusively in M. Rosenfeld’s attack model
DSN (q,K) and DSR (q,K) represent Nakamoto’s and Rosenfeld’s models respectively for measuring the probability of success of an attacker to perform a double spend given that he/she controls q percent of the network’s nodes and the remaining honest nodes have successfully mined the K th block.
Two New Double Spend Attack Models:
Two new double spend attack models were proposed in a research paper that was published a few days ago. The two models were named “The generalized model” and the “Time based model”.
The Generalized Model:
This model is a generalization mode of Rosenfeld’s model by adding an extra parameter to the formula that reflects the time advantage serving the attacker i.e. the time spent by the attacker to secretly mine the fraudulent block.
The Attacker potential progress can be represented by the following function:
P (q, m, n, t)
This function generalizes the progress of Rosenfeld’s model. Function P represents the probability of success of an attacker to mine exactly n blocks provided that the honest nodes have successfully mined the mth block (the proceeding block). The added parameter t represents the time advantage serving the attacker’s nodes to produce the block containing the fraudulent transaction.
The Time Based Model:
This new model is different from Nakamoto’s and Rosenfeld models. Throughout this attack model, states are setup via determination of lengths of both the valid and fraudulent blockchain branches and the difference between the time needed by the honest and the attacker’s nodes to mine the block in question (block n)
The attacker’s progress function can be represented by the following function:
PT (q, m, n, t)
The function represents that the probability of the time needed by the attacker’s nodes to mine the nth block is exactly equal to t seconds after the time needed by the honest nodes to mine the proceeding block (the mth block).
Two new double spend attack models were proposed by a group of researchers in a paper that was published a few days ago. The generalization model is a generalization mode of Rosenfeld classic attack model, while the new time based mode is different from both classic models; Nakamoto’s and Rosenfeld’s.
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