Team for Research in
Ubiquitous Secure Technology

Citation
Tyler Moore, Nicolas Christin. "Beware the Middleman: Empirical Analysis of Bitcoin-Exchange Risk". Proceedings of Financial Cryptography 2013, April, 2013.

Abstract
Bitcoin has enjoyed wider adoption than any previous crypto-currency; yet its success has also attracted the attention of fraudsters who have taken advantage of operational insecurity and transaction irreversibility. We study the risk investors face from Bitcoin exchanges, which convert between Bitcoins and hard currency. We examine the track record of 40 Bitcoin exchanges established over the past three years, and find that 18 have since closed, with customer account balances often wiped out. Fraudsters are sometimes to blame, but not always. Using a proportional hazards model, we find that an exchange's transaction volume indicates whether or not it is likely to close. Less popular exchanges are more likely to be shut than popular ones. We also present a logistic regression showing that popular exchanges are more likely to suffer a security breach.

Electronic downloads

• HTML

  Tyler Moore, Nicolas Christin. <a
  href="http://www.truststc.org/pubs/907.html"
  >Beware the Middleman: Empirical Analysis of
  Bitcoin-Exchange Risk</a>, Proceedings of Financial
  Cryptography 2013, April, 2013.

• Plain text

  Tyler Moore, Nicolas Christin. "Beware the Middleman:
  Empirical Analysis of Bitcoin-Exchange Risk".
  Proceedings of Financial Cryptography 2013, April, 2013.

• BibTeX

  @inproceedings{MooreChristin13_BewareMiddlemanEmpiricalAnalysisOfBitcoinExchangeRisk,
      author = {Tyler Moore and Nicolas Christin},
      title = {Beware the Middleman: Empirical Analysis of
                Bitcoin-Exchange Risk},
      booktitle = {Proceedings of Financial Cryptography 2013},
      month = {April},
      year = {2013},
      abstract = {Bitcoin has enjoyed wider adoption than any
                previous crypto-currency; yet its success has also
                attracted the attention of fraudsters who have
                taken advantage of operational insecurity and
                transaction irreversibility. We study the risk
                investors face from Bitcoin exchanges, which
                convert between Bitcoins and hard currency. We
                examine the track record of 40 Bitcoin exchanges
                established over the past three years, and find
                that 18 have since closed, with customer account
                balances often wiped out. Fraudsters are sometimes
                to blame, but not always. Using a proportional
                hazards model, we find that an exchange's
                transaction volume indicates whether or not it is
                likely to close. Less popular exchanges are more
                likely to be shut than popular ones. We also
                present a logistic regression showing that popular
                exchanges are more likely to suffer a security
                breach.},
      URL = {http://www.truststc.org/pubs/907.html}
  }
  

Posted by Nicolas Christin on 24 Feb 2013.
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