Bitcoin Blockchain System

Abstract

Apart from creating a billion-dollar worth of cryptocurrency ecosystem, Bitcoin revolutionized the whole domain of cryptocurrencies, and it largely influenced many other application areas (e.g., healthcare, supply-chain management, real estate) with its underlying technologies such as blockchain, consensus algorithms, and decentralized data management. Due to the reasons mentioned above, Bitcoin has attracted massive attention from the research community. Since its launch in 2009, the Bitcoin market capital has grown significantly, and it is now worth approximately 887 billion dollars. This huge and rapid growth is one of the key motivations for malicious entities to identify and exploit weaknesses to disrupt its normal functionality for financial reasons, and the same is also a reason for the researchers to discover and provide patches or solutions for the identified security- and privacy-related vulnerabilities in the system. Most of these security and privacy threats are on the critical underlying technologies of Bitcoin; thus, they are also valid for other Bitcoin-like cryptocurrencies. This chapter starts with an overview of the Bitcoin system by explaining the working methodology and interactions between its various building blocks. In the process, we conclude Bitcoin’s fundamental features and underlying structures and provide insights at the core of the Bitcoin protocol and its networking infrastructure. We also discuss the significant security and privacy threats to the Bitcoin system and the countermeasures proposed in the state of the art.