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Mixing Coins of Different Quality: A Game-Theoretic Approach

  • Svetlana AbramovaEmail author
  • Pascal Schöttle
  • Rainer Böhme
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 10323)

Abstract

Cryptocoins based on public distributed ledgers can differ in their quality due to different subjective values users assign to coins depending on the unique transaction history of each coin. We apply game theory to study how qualitative differentiation between coins will affect the behavior of users interested in improving their anonymity through mixing services. We present two stylized models of mixing with perfect and imperfect information and analyze them for three distinct quality propagation policies: poison, haircut, and seniority. In the game of perfect information, mixing coins of high quality remains feasible under certain conditions, while imperfect information eventually leads to a mixing market where only coins of the lowest quality are mixed.

Keywords

Bitcoin Anonymity Blacklisting Policy Game theory 

Notes

Acknowledgments

The authors are grateful to Daniel G. Arce for his insightful comments on an earlier version of this paper. The authors are responsible for all remaining errors and omissions. This work was funded by the German Bundesministerium für Bildung und Forschung (BMBF) under grant agreement No. 13N13505 and by Archimedes Privatstiftung, Innsbruck, Austria.

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Copyright information

© International Financial Cryptography Association 2017

Authors and Affiliations

  • Svetlana Abramova
    • 1
    • 2
    Email author
  • Pascal Schöttle
    • 1
  • Rainer Böhme
    • 1
    • 2
  1. 1.University of InnsbruckInnsbruckAustria
  2. 2.University of MünsterMünsterGermany

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