Modeling Bitcoin plus Ethereum as an Open System of Systems of Public Blockchains to Improve Their Resilience against Intentional Risk

Abstract

In this article, we model the two most market-capitalised public, open and permissionless blockchain implementations, Bitcoin (BTC) and Ethereum (ETH), as a System of Systems (SoS) of public blockchains. We study the concepts of blockchain, BTC, ETH, complex networks, SoS Engineering and intentional risk. We analyse BTC and ETH from an open SoS perspective through the main properties that seminal System of Systems Engineering (SoSE) references propose. This article demonstrates that these public blockchain implementations create networks that grow in complexity and connect with each other. We propose a methodology based on a complexity management lever such as SoSE to better understand public blockchains such as BTC and ETH and manage their evolution. Our ultimate objective is to improve the resilience of public blockchains against intentional risk: a key requirement for their mass adoption. We conclude with specific measures, based on this novel systems engineering approach, to effectively improve the resilience against intentional risk of the open SoS of public blockchains, composed of a non-inflationary money system, “sound money”, such as BTC, and of a world financial computer system, “a financial conduit”, such as ETH. The goal of this paper is to formulate a SoS that transfers digital value and aspires to position itself as a distributed alternative to the fiat currency-based financial system.

The Structural Role of Smart Contracts and Exchanges in the Centralisation of Ethereum-Based Cryptoassets

“…An example of this importance is the result that we obtain in Section 3.3 when we study preferential attachment in AMP, DAI, BAT and UNI. Other studies [ 14 , 15 , 40 ] mention as well a heavy tail in the degree distribution for other tokens.…”

“…This indicates a large structural centralisation where those removed nodes were effectively acting as hubs in the transaction network, involved in the majority of the transactions. In the information security realm, intentional risk managers should protect these nodes the most [ 14 , 15 , 39 , 40 , 41 ]. We also performed additional dismantling for up to 10k nodes for each of the tokens, but this did not show qualitatively different results.…”

“…In DeFi, smart contracts run the logic required by these financial processes. At the time of writing, the Ethereum blockchain is the main DeFi platform [ 15 ].…”

An Optimized Method for Information System Transactions Based on Blockchain

“…Eq. (2) shows that the fork generation probability P is approximately proportional to the block generation probability P b . The faster the block generation speed, the greater the P b , the greater the fork generation probability P, and the easier forks to appear.…”

“…The traditional currency system usually has a unified agency or an authoritative third-party as the central node to handle all transactions, and Bitcoin subverts this design, so that people who do not trust each other can directly use Bitcoin to conduct transactions without any authoritative intermediary coordination. Also, they can pay and maintain a distributed public ledger in the peer-to-peer network using consensus and incentive mechanisms, and the data in the ledger ensures the security and legitimacy through cryptographic algorithms [2][3][4][5].…”