An important feature of Bitcoin is the irreversibility of its payments. While generally considered as an advantage over traditional payment systems, irreversibility poses new challenges when dealing with fraud and compromised IT infrastructure. The talk describes and shows how to overcome these challenges in common eCommerce use cases. A payment protocol with unmatched resistance against attacks is presented, in which Bitcoin's internal address and transaction design play a key role.
In this talk, we start by analyzing the security of using Bitcoin for fast payments, in which the time between the exchange of currency and goods is short (in the order of few seconds). We show that, unless new detection techniques are integrated in Bitcoin, double-spending attacks on fast payments succeed with considerable probability. In light of this misbehavior, we then proceed to investigate the privacy provisions of Bitcoin. Our results suggest that the profiles of a considerable number of users can be constructed using existing behavior-based clustering techniques.
The public ledger of the Bitcoin network consists of a continuosly updating list of blocks chained together. In order to keep the blockchain consistent some work has to be done, this is obtained through some proof of work methods which form the basis of mining. By distributing as much as possible the miners' contributions the network can be kept democratic and secure enough to prevent attacks to the protocol itself, therefore the role of mining is central. This talk explains how the mining process works and how it guarantees a controlled yet democratic network growth.